10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

x Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2006

Or

¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For The Transition Period From              To             

Commission File Number 000-50635

COLONY RESORTS LVH ACQUISITIONS, LLC

(Exact name of registration as specified in its charter)

Nevada	41-2120123
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
3000 Paradise Road Las Vegas, Nevada	89109
(Address of principal offices)	(Zip Code)

Registrant’s telephone number, including Area Code (702) 732-5111

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

Securities registered pursuant to Section 12(g) of the Act: Class A Membership Units

Indicate by check mark whether the registrant is a well-known seasoned issuer, as definer in Rule 405 of the Securities Act.    ¨  Yes    x  No

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

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

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

Large accelerated filer  ¨    Accelerated filer  ¨    Non-accelerated filer  x

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

The aggregate market value of voting and non-voting stock held by non-affiliates of Colony Resorts LVH Acquisitions, LLC as of March 15, 2007 was $0. As of March 15, 2007, there were 1.5 Class A Membership Units outstanding and there were 1,500,000 Class B Membership Units outstanding.

Colony Resorts LVH Acquisitions, LLC

Table of Contents

		Page
	PART I
ITEM 1.	BUSINESS	3
ITEM 1A.	RISK FACTORS	13
ITEM 2.	THE PROPERTY	18
ITEM 3.	LEGAL PROCEEDINGS	18
ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	18
	PART II
ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	19
ITEM 6.	SELECTED FINANCIAL DATA	20
ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	21
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	32
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	33
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	61
ITEM 9A.	CONTROLS AND PROCEDURES	62
ITEM 9B.	OTHER INFORMATION	62
	PART III
ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE OF THE REGISTRANT	63
ITEM 11.	EXECUTIVE COMPENSATION	65
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED MEMBER MATTERS	70
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	72
ITEM 14.	PRINCIPAL ACCOUNTANTS FEES AND SERVICES	75
	PART IV
ITEM 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.	76
SIGNATURES		79

Special Note Regarding Forward-Looking Statements

Certain statements in this section, and elsewhere in this Annual Report on Form 10-K (as well as information included in oral statements or other written statements made or to be made by the Company) constitute “forward-looking statements.” Such forward-looking statements include the discussions of the business strategies of the Company and expectations concerning future operations, margins, profitability, liquidity and capital resources. In addition, in certain portions of this Annual Report on Form 10-K, the words: “anticipates”, “believes”, “estimates”, “seeks”, “expects”, “plans”, “intends” and similar expressions, as they relate to the Company or its management, are intended to identify forward-looking statements. Although the Company believes that such forward-looking statements are reasonable, it can give no assurance that any forward-looking statements will prove to be correct. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, increased competition and other planned construction in Las Vegas, and increases in meeting and convention space, the completion of infrastructure projects in Las Vegas, government regulation of the casino industry, including gaming license approvals and regulation in foreign jurisdictions, the legalization of gaming in certain jurisdictions, such as Native American reservations in the States of California, Pennsylvania and New York and regulation of gaming on the Internet, leverage and debt service (including sensitivity to fluctuations in interest rates and other capital markets trends), uncertainty of casino spending and vacationing at casino resorts in Las Vegas, disruptions or reductions in travel to Las Vegas due to terrorist acts, the situation in Iraq and any future terrorist incidents, outbreaks of contagious illnesses in the Company’s market areas, new taxes or changes to existing tax rates, fluctuations in occupancy rates and average daily room rates in Las Vegas, demand for all-suites rooms, the popularity of Las Vegas as a convention and trade show destination, insurance risks, including the risk that the Company has not obtained sufficient coverage against acts of terrorism or will only be able to obtain additional coverage at significantly increased rates, litigation risks, and general economic and business conditions which may impact levels of disposable income, consumer spending and pricing of hotel rooms.

PART I

ITEM 1.—BUSINESS

General

Colony Resorts LVH Acquisitions, LLC, a Nevada limited liability company (the “Company”), was formed, under the laws of the State of Nevada on December 18, 2003. The Company owns and operates the Las Vegas Hilton, a casino resort located in Las Vegas, Nevada (the “Hotel”). The Company licenses from Hilton Inns, Inc. (“Hilton”) the right to use the name “Hilton” and is part of Hilton’s reservation system and Hilton’s “HHonors Programs ^™.”

The Company does not currently have any subsidiaries.

The Company’s principal executive offices are located at 3000 Paradise Road, Las Vegas, Nevada 89109 and its telephone number is 702-732-5111. The Company’s website is www.lvhilton.com. The Company is a voluntary filer and files annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, amendments to those reports and other information with the Securities and Exchange Commission (“SEC”). The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The public can obtain copies of these materials by contacting the SEC at 1-800-SEC-0330, or by accessing the SEC’s website at www.sec.gov.

Property History

The Las Vegas Hilton Hotel and Casino is located one block east of the Las Vegas Strip (the “Strip”) on approximately fifty-nine acres of land between Paradise Road and Joe W. Brown Drive adjacent to the Las Vegas Convention Center. Originally developed in 1969, the Hotel was purchased by Hilton in 1971 and has been operated as a Hilton-branded hotel ever since. The Hotel historically catered primarily to the high-end gaming customer segment.

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Since its opening, the Hotel has undergone numerous substantial expansions and renovations to its hotel and casino space. The original Hotel consisted of a central or “core” hotel tower with a North and East tower attached to it. Over the years, the East tower was expanded to its current size and the North tower was expanded twice to its current size. Expansions have also been made to the casino floor, including the 1997 addition of SpaceQuest – a 22,000 square feet themed-casino area that was developed in coordination with the ‘Star Trek: The Experience’ show, which is managed by Paramount Parks (“Paramount”).

The opening of new luxury upscale mega-resorts on the Strip during the 1990s resulted in increased competition for high-end and premium play gaming business. Due to the Hotel’s off-Strip location and intense competition from newer Strip assets, which offered customers a more updated package of rooms and amenities, the Hotel’s management decided to de-emphasize the premium gaming segment in 2000 and focus on the core convention and mid-level casino business.

The Hotel

The 30-story Las Vegas Hilton hotel tower has been a Hilton-branded hotel for over thirty-five years. The Hotel consists of approximately 2,650 standard rooms and 300 suites with the standard rooms ranging from 300 square feet to 500 square feet and suites beginning at 600 square feet. Other services offered to the guests include a business center, a spa and health club, 24-hour room service and in-room high-speed data ports.

The Casino

The Casino features an approximately 74,000 square feet gaming area with approximately 1,220 slot machines and approximately 61 table games. The Casino offers customers the latest slot machine games such as “Monopoly^™”, “Monte Carlo”, “In The Money”, “Star Wars^™” and “Wheel of Fortune^™” under applicable agreements with the manufacturers of such slot machines. The Casino’s approximately 61 table games include the traditional games of blackjack, craps, poker, roulette, pai gow poker, baccarat and mini-baccarat.

The Casino is marketed to attract a broad base of patrons, using database-marketing techniques, slot clubs and traditional incentives such as reduced room rates and complimentary meals and suites. The Company offers premium gaming customers luxury suites and special hotel and casino services.

Race and Sports Book

The 30,000 square-foot SuperBook^® has the capability to broadcast more than 50 different sporting events from around the world at any given time. The SuperBook^® features 40 projection screens and monitors and has a seating capacity for more than 400 guests.

Restaurants

The Hotel features twelve dining options with seating for approximately 1,582 customers, including the Benihana Village. The Hotel has six fine dining options with approximately 626 seats and six casual dining restaurants with approximately 956 seats. All the restaurants are owned or franchised by the Hotel, with the exception of Vegas Subs and Quark’s Restaurant, which are leased.

Entertainment

Show venues at the Hotel include the 1,600-seat Hilton Theater, the 300-seat Shimmer Cabaret and ‘Star Trek: The Experience’. The Hilton Theater has great historical relevance and has hosted performances by Elvis Presley, who performed at the Hotel from 1969 to 1976, and featured 24 performance weeks by Barry Manilow in 2006. In addition, the Hilton Theater hosted 18 different headliners in 2006. The Hotel also hosts ‘Star Trek: The Experience’, an approximately 65,000 square foot attraction featuring motion-based simulation rides, interactive video and virtual reality stations, dining and souvenir shops. This attraction was developed in collaboration with Paramount Parks and is owned and managed by Paramount Parks.

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Convention/Meeting Areas

The Hotel is located adjacent to the Las Vegas Convention Center, which has approximately 3.2 million square feet of total space, and features approximately three million square feet of exhibit space and 243,950 square feet of net meeting room space, accommodating 144 meeting rooms with seating capacities from 20 to 12,000.

Additionally, the Hotel itself has approximately 200,000 square feet of total meeting space including the Hilton Center, the Hilton Pavilion and the Hilton Ballroom. The Hilton Center is comprised of the Conrad Room and the Barron Room – each a pillar-free area with a total of 70,000 square feet. Using a partition, two smaller rooms can be created seating up to a total of 8,900 people depending on the seating arrangement. The Hilton Ballroom and Hilton Pavilion, located adjacent to the Hilton Center, offer a combined 72,285 square feet of space for meetings and conferences. Additionally, there are fourteen conference rooms available for meetings, each with moveable partitions and two large Board Rooms. Based upon demand for meeting space, some hotel rooms can also be converted to hospitality suites.

Las Vegas Monorail Station

The Hotel has one of only seven existing stations linking the four-mile monorail running from MGM Grand to the Sahara Hotel and Casino. The Hotel is currently the only property with a monorail station located directly at the front entrance to the property providing more convenient access to the monorail for its customers. Future plans for the monorail include extending it to downtown Las Vegas (Fremont Street), the McCarran Airport, as well as to the west side of the Strip.

Other Amenities

Other amenities offered by the Hotel include an outdoor pool and recreation area with individual cabanas, an indoor/outdoor spa, fitness room, six tennis courts, three temperature spas, dry and wet sauna, the Cabana Bar and the Cabana Shop. Additionally, the Hotel has a Sports Zone Video Arcade and a retail area.

Business Strategy

The Company’s business strategy includes:

Capital Improvement Program. The Company has made significant capital improvements in the Hotel and Casino and continues to make additional investments as part of its overall capital improvement program (the “Program”). The most important elements of the Program include the renovation and remodeling of the casino, the hotel lobby, the porte cochere, the Hilton Theater, the SuperBook^®, the 24 hour casual dining restaurant and 57 suites. In 2006, the Company acquired 207 new slot machines and remodeled and expanded the casino bar and the coffee/wine bar located in the hotel lobby. Management believes these changes will provide incentive for visitors to stay in the Casino longer and increase the number of visitors to the Hotel. In addition to the Program, the Company renovated 436 standard hotel rooms in 2006 and plans to renovate another 1,085 standard hotel rooms in 2007. The Company also plans to acquire approximately 200 new slot machines in 2007.

Focus on Customer Service. The Company continues to emphasize the importance of creating a culture focused on customer service. Each employee is extensively trained in their respective functional area to respond immediately to customer needs. Customer satisfaction is a key basis of employee evaluation. The Company believes this promotes an environment in which all employees feel a sense of commitment to customer service and customers feel welcome and happy in the Hotel.

Increase in Convention Business. The Company will leverage its position as the world’s largest Hilton hotel with an outstanding convention facility, an experienced staff, and a convenient drive-in location adjacent to the Las Vegas Convention Center. The Company plans to highlight its highly experienced sales/service staff as it competes against all other convention properties. Emphasis will be on size, amenities, superior date availability, and an improved room product. Differentiation from competition will occur through providing competitive amenities, quality and superior service at a better price point.

Targeted Customer Base. The Company is reengineering its customer databases to identify and target high margin repeat gaming customers, and to use sophisticated player tracking systems to award cash rebates or promotional allowances, such as complimentary rooms, food, beverage and entertainment to guests based on their level of profitability to the Company.

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Invest in State-of-the-Art Slot Machines. The Company is committed to offering its customers the latest themed slot machines and gaming technology. Since acquiring the Hotel in June of 2004, the Company has purchased approximately 628 state-of-the-art slot machines and plans to purchase another 200 slot machines in 2007. The Company will continue to focus on the continued acquisition of new slot product as it believes it is critical to retaining mid-level slot players who the Company believes are more knowledgeable and sophisticated than players in other gaming segments.

The Las Vegas Market

Las Vegas is one of the fastest-growing and largest entertainment markets in the country. Las Vegas hotel occupancy rates are among the highest of any major market in the United States. According to the Las Vegas Convention and Visitors Authority (the “LVCVA”), the number of visitors traveling to Las Vegas has increased at a steady and significant rate for the last ten years from 29.6 million visitors in 1996 to 38.9 million visitors in 2006. The projected number of visitors in 2007 is 39.3 million. The LVCVA management believes that the growth in the Las Vegas market has been enhanced by a dedicated program of the LVCVA and major Las Vegas hotels to promote Las Vegas as an exciting vacation and convention site, most recently through its highly successful ‘What happens in Vegas stays in Vegas’ advertising campaign. In February of 2006, the LVCVA announced plans for a $737 million expansion and renovation that will give a facelift to the 46 year old Las Vegas Convention Center and add approximately 255,000 square-feet of meeting space, create 3,200 new parking spaces, install a police station and build a concourse linking three buildings now joined by outdoor walkways. Construction is slated to begin in 2007 and be completed by 2010. The increased capacity of McCarran International Airport and the introduction of large, themed destination resorts in Las Vegas continue to support the growth rate.

Although visitation, demand and expectations may be impacted by international and domestic events and other factors and conditions, the Company expects hotel occupancy rates in Las Vegas to remain high as a result of the sustained growth in the number of visitors traveling to Las Vegas, despite several major hotel/casino expansions.

Las Vegas as a Trade Show, Convention and Meeting Destination

In 2004, according to the LVCVA, Las Vegas hosted more than three dozen tradeshow weeks, the most of any destination for 11 consecutive years. In 2005, the number of trade show and convention attendees increased to approximately 6.2 million and the amount spent by trade show and convention attendees was approximately $7.6 billion.

Trade shows are held for the purpose of getting sellers and buyers of products or services together in order to conduct business. Trade shows differ from conventions in that trade shows typically require substantial amounts of space for exhibition purposes and participant circulation. Conventions generally are gatherings of companies or groups that require space for breakout meetings and general meetings of the overall group. Las Vegas offers trade shows and conventions a unique infrastructure for handling the world’s largest shows, including the concentration of approximately 132,000 hotel rooms, three convention centers (the Expo Center, Mandalay Bay Convention Center, and the Las Vegas Convention Center) with a total of approximately 6.9 million square feet of convention and exhibition space, convenient air service from major cities throughout the United States and other countries, and significant entertainment attractions. In addition to the three convention centers described above, the MGM Grand Hotel and Casino has a conference and meeting facility of approximately 300,000 gross square feet, and the Mirage has 100,000 gross square feet of meeting space. Mandalay Bay opened its 1.8 million square foot convention center during January 2003.

In July of 2005, the World Market Center opened a 2.5 million square foot permanent showcase for the home and hospitality furnishings industry near downtown Las Vegas. In January 2007, a second building opened which adds 1.6 million square feet to the Center. The World Market Center is planned to grow to 8 buildings and 12 million square feet of showroom and exhibit space and, when completed, will be the largest trade show complex in the World. The Center is three miles from the hotel.

The Company’s Management believes that Las Vegas will continue to evolve as the country’s preferred trade show and convention destination.

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Expanding Hotel Market

During 2006, Las Vegas was among the most popular vacation destinations in the United States. Las Vegas has experienced a period of rapid hotel development with the number of hotel and motel rooms in Las Vegas increasing from approximately 86,000 in 1993 to approximately 132,000 in 2006, according to the LVCVA. The LVCVA predicts Las Vegas will add 3,010 hotel rooms in 2007 and by 2010 will have approximately 171,000 rooms. The Company expects that the concentration of quality themed casino hotels and resorts will increase visitor interest in Las Vegas as a business event and vacation destination, and, as a result, increase overall demand for hotel rooms, gaming and entertainment.

Growth of Las Vegas Retail Sector and Non-Gaming Revenue Expenditures

In order to draw additional visitors, an increasing number of destination resorts are developing non-gaming entertainment to complement their gaming activities. According to the LVCVA, gaming revenues in Clark County were approximately $10.6 billion in 2006 and non-gaming revenues were $8.2 billion. Non-gaming revenue increased 7.6% over 2005. Convention traffic rose 2.3% to 6.3 million visitors. The newer, large themed Las Vegas destination resorts have been designed to capitalize on this growth by providing better quality hotel rooms at higher rates and by providing expanded shopping, dining and entertainment opportunities to their patrons in addition to gaming.

Infrastructure Improvement

Clark County and metropolitan Las Vegas have completed several infrastructure improvements to accommodate the increase in travel to Las Vegas by all modes of transportation. According to the LVCVA, in 2005 (last full year for which data is available) visitors to Las Vegas arrived by the following methods of transportation: 47% by air and 53% by auto, recreational vehicle or bus.

McCarran International Airport Expansion

During the past five years, McCarran International Airport has been expanded to accommodate an increased number of airlines and passengers. The number of passengers traveling through McCarran International Airport has increased from approximately 36.3 million in 2003 to 46.2 million in 2006. Long-term expansion plans for McCarran International Airport provide for an additional runway, terminal concourse expansions, a new control tower and other facilities and are expected to be completed by 2010.

Customer Segmentation

The Company focuses its marketing efforts primarily on the convention segment, the mid-level casino segment and the leisure and tour and travel segment.

The convention business is the number one market segment for the Hotel, contributing approximately 42.7% total room nights. The Hotel’s prominent location next to the Las Vegas Convention Center allows it to effectively target large convention groups, thereby increasing mid-week demand for available room nights.

The Casino customers accounted for approximately 20.6% of total room nights. These customers represent the second most important market from a room night perspective for the Hotel after the convention business. The Hotel uses a reward program to track casino customers’ play and provides comps based on historical levels of play.

The leisure customers accounted for approximately 17.1% of the Hotel’s total room nights in 2006. Leisure customers are attracted to the Hotel due to the property’s Strip-like environment and extensive amenities offered at a more affordable and attractive cost relative to Strip properties. Within the leisure segment, the Hotel caters to the free and independent traveler leisure segment, tour and travel segment and package customers. The Hotel targets the leisure segment through added value packages, promotional discounts, and tour and travel operators. The tour and travel segment, which represents 14.7% of total room nights, is primarily used to increase occupancy during off-peak and low seasons.

The Hotel also attracts casino play from local residents due to its race and sports book, the ease of access through the east end of the Hotel and direct mail marketing efforts. With over 1.9 million people living in Clark

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County, the locals market represents an attractive customer base for the Hotel. The Hotel recently began targeting this segment through new advertising and marketing programs, such as a rewards program which provides discounts for shows and restaurants.

Advertising Strategy

In conjunction with the evolution of the overall image campaign and with a focus on major entertainment engagements (Barry Manilow and others), the property plans to develop compelling advertising campaigns utilizing print, outdoor and broadcast with an increased emphasis on local cable television, local bus wraps and Visitor Vision (in room television advertising at most Las Vegas hotel properties.) The Company’s media strategy will include expanded reach and frequency of media buys to include increased outdoor presence, traffic radio and cable television. The internet is increasingly being used to promote the Hotel through advertising on major internet sites and search engine optimization to ensure customer traffic is directed to the Hotel’s website.

Competition

The Hotel is located less than one mile east of the Strip and competes with other high-quality Las Vegas resorts and other Las Vegas hotel casinos, including those located on the Strip, on the basis of overall atmosphere, range of amenities, price, location, entertainment offered, theme and size. Currently, there are approximately 28 major gaming properties located on or near the Strip, thirteen additional major gaming properties in the downtown area and additional gaming properties located in other areas of Las Vegas. Many of the competing properties, such as the Rio, Wynn Resorts, Mandalay Bay, Paris, The Venetian, The Mirage, Treasure Island, Caesar’s Palace, Luxor, New York-New York, Bellagio, Aladdin, the Palms and the MGM Grand have themes and attractions which draw a significant number of visitors and directly compete with the Hotel’s operations. Some of these facilities are operated by companies that have more than one operating facility and may have greater name recognition and financial and marketing resources than the Hotel and market to the same target demographic group as the Hotel does. Furthermore, additional hotel casinos, containing a significant number of hotel rooms, are expected to open in Las Vegas within the coming years. There can be no assurance that the Las Vegas market will continue to grow or that hotel casino resorts will continue to be popular. A decline or leveling off of the growth or popularity of such facilities could result in reduced casino and hotel revenues.

To a lesser extent, the Hotel competes with hotel casinos in the Mesquite, Laughlin, Reno and Lake Tahoe areas of Nevada, and in Atlantic City, New Jersey. The Hotel also competes with state-sponsored lotteries, on and off-track wagering, card parlors, riverboat and Native American gaming ventures, and other forms of legalized gaming in the United States, as well as with gaming on cruise ships, internet gaming ventures and international gaming operations. In 1998, California enacted the Tribal Government Gaming and Economic Self-Sufficiency Act (the “Tribal Act”). The Tribal Act provides a mechanism for federally recognized Native American tribes to conduct certain types of gaming on their land. The California electorate approved Proposition 1A on March 7, 2000. Proposition 1A gives all California Indian tribes the right to operate a limited number of certain kinds of gaming machines and other forms of casino wagering on California Indian reservations. Continued proliferation of gaming activities permitted by Proposition 1A may materially reduce casino and hotel revenues in Nevada generally and at the Hotel. The Company is unable, however, to assess the magnitude of the impact on its business.

Employees

As of March 1, 2007, the Company had approximately 3,177 active employees.

The Company recognizes that the Hotel’s employees are critical to its success and has fostered a productive work culture. Employees are offered competitive salaries and a benefits package that includes medical and dental coverage.

The Company believes that it has a good working relationship with both its union and non-union work force. Labor unions represent approximately 67% of the work force at the Hotel with labor agreement terms ranging from one year to five years.

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Zoning, Real Estate and Environmental Issues

The Hotel is located on approximately fifty-nine acres of land designated with H-1 Limited Resort and Apartment District zoning. This H-1 Limited Resort and Apartment District was established to provide for the development of gaming enterprises, compatible commercial, and mixed commercial and residential uses, and to prohibit the development of incompatible uses that are detrimental to gaming enterprises. Subject to obtaining necessary special use permits and other land use approvals, permitted uses under H-1 Limited Resort and Apartment District zoning include, but are not limited to, hotels, casinos, condominiums and timeshares. The existing facility sits on approximately thirty-five acres. The remaining acreage could be suitable for future development projects by the Company, third parties or some combination thereof. Although the Company has contemplated preliminary plans for the development of this acreage, there are no definite or binding plans regarding such development. Additionally, the Company has not secured any financing in respect of such contemplated preliminary plans for development.

The Hilton Grand Vacations property, located adjacent to the Hotel, has an easement for use of approximately 260 parking spaces (out of approximately 4,800 parking spaces). There is also an easement for the use of the monorail that runs through the Hotel property.

An independent environmental consultant performed a Phase I environmental site assessment in accordance with American Society for Testing and Materials (“ASTM”) standards on the Las Vegas Hilton property in December 2003. This assessment involved visual inspection, interviews with site personnel, review of certain publicly available records, and preparation of a written report. The assessment did not include any testing of soil or groundwater at the property. According to certain historical data integrated into the Phase I report, in 2000 it was discovered that there is a plume of tetrachloroethene in the groundwater and the property was listed as a leaking underground storage tank site. The Phase I report states that levels of tetrachloroethene and total petroleum hydrocarbons in the groundwater beneath the property in 2000 exceeded certain limits allowed under a National Pollutant Discharge Elimination System permit. The Phase I report indicates that the allowable levels have been exceeded in the past and a treatment system is needed to ensure compliance with applicable requirements. The Phase I report also identified asbestos-containing materials at the Hotel. The Company expects to manage these materials pursuant to an operations and maintenance program.

On July 7, 2005, the Nevada Division of Environmental Protection (“NDEP”) requested the Company install three monitoring wells on the Hotel to monitor and evaluate the source of tetrachloroethene in the groundwater flowing beneath the Hotel. The Company engaged an independent consultant, which provided quarterly Discharge Monitoring Reports to NDEP. The independent consultant completed its Environmental Investigation Report on November 30, 2006, which concluded that the tetrachloroethene originates from an off-site source, near the southwest corner of the Hotel. The Company will continue to monitor the tetrachloroethene until advised otherwise by NDEP.

The Company does not expect that its compliance measures in respect of the groundwater issue or the asbestos issue will have a material effect upon its capital expenditures, earnings or competitive position. A filtration system required for the dewatering sump pumps and the monitoring wells have been installed at an annual operating cost of approximately $45,000. There can be no assurance, however, that the operating costs for the treatment system will not increase or that there will be no claims or other liabilities associated with the foregoing conditions.

Regulation and Licensing

The ownership and operation of casino gaming facilities in the State of Nevada are subject to the Nevada Gaming Control Act and the regulations promulgated thereunder (collectively, the “Nevada Act”) and various local regulations. The Company’s gaming operations are also subject to the licensing and regulatory control of the Nevada Gaming Commission, the Nevada Gaming Control Board (the NGCB) and the Clark County Liquor and Gaming Licensing Board (the “CCLGLB”). The CCLGLB, the Nevada Gaming Commission and the NGCB are collectively referred to as the “Nevada Gaming Authorities.”

The laws, regulations and supervisory procedures of the Nevada Gaming Authorities are based upon declarations of public policy that are concerned with, among other things: (i) the prevention of unsavory or unsuitable persons from having a direct or indirect involvement with gaming at any time or in any capacity; (ii) the establishment and maintenance of responsible accounting practices and procedures; (iii) the maintenance of effective

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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 requiring the filing of periodic reports with the Nevada Gaming Authorities; (iv) the prevention of cheating and fraudulent practices; and (v) the establishment of a source of state and local revenues through taxation and licensing fees. Any change in such laws, regulations and procedures could have an adverse effect on the Company’s gaming operations or on the operation of the Hotel.

The Company is licensed by the Nevada Gaming Authorities to operate a casino. The gaming license requires the periodic payment of fees and taxes and is not transferable. The Company was registered by the Nevada Gaming Commission as a publicly traded corporation (“Registered Corporation”) and as such, must periodically submit detailed financial and operating reports to the Nevada Gaming Authorities and furnish any other information that the Nevada Gaming Authorities may require. No person may become a stockholder of, or receive any percentage of profits from, the Company without first obtaining licenses and approvals from the Nevada Gaming Authorities. The Company possesses all state and local government registrations, approvals, permits and licenses required in order for the Company to engage in gaming activities at the Hotel.

The Nevada Gaming Authorities may investigate any individual who has a material relationship to or material involvement with the Company to determine whether such individual is suitable or should be licensed as a business associate of a gaming licensee. Officers, directors and certain key employees of the Company must file applications and be licensed by the Nevada Gaming Authorities.

The Nevada Gaming Authorities may deny an application for licensing or a finding of suitability for any cause they deem reasonable. A finding of suitability is comparable to licensing; both require submission of detailed personal and financial information followed by a thorough investigation. The applicant for licensing or a finding of suitability, or the gaming licensee by whom the applicant is employed or for whom the applicant serves, must pay all the costs of the investigation. Changes in licensed positions must be reported to the Nevada Gaming Authorities. 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 to have an inappropriate relationship with the Company, the Company would have to sever all relationships with such person. In addition, the Nevada Gaming Commission may require the Company 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.

The Company is required to submit periodic detailed financial and operating reports to the Nevada Gaming Commission. Substantially all material loans, leases, sales of securities and similar financing transactions by the Company must be reported to or approved by the Nevada Gaming Commission.

If it were determined that the Nevada Act was violated by the Company, the registration and gaming licenses it then holds could be limited, conditioned, suspended or revoked, subject to compliance with certain statutory and regulatory procedures. In addition, the Company and the persons involved could be subject to substantial fines for each separate violation of the Nevada Act at the discretion of the Nevada Gaming Commission. Further, a supervisor could be appointed by the Nevada Gaming Commission to operate the Hotel and, under certain circumstances, earnings generated during the supervisor’s appointment (except for the reasonable rental value of the Hotel) could be forfeited to the State of Nevada. Limitation, conditioning or suspension of any gaming registration or license or the appointment of a supervisor could (and revocation of any gaming license would) materially adversely affect the gaming operations of the Company.

Any beneficial holder of the Company’s voting securities, regardless of the number of shares owned, may be required to file an application, be investigated, and have their suitability as a beneficial holder of the Company’s voting securities determined if the Nevada Gaming Commission has reason to believe that such ownership would otherwise be inconsistent with the declared policies of the State of Nevada. The applicant must pay all costs of investigation incurred by the Nevada Gaming Authorities in conducting any such investigation.

The Nevada Act requires any person who acquires more than 5% of the Company’s voting securities to report the acquisition to the Nevada Gaming Commission. The Nevada Act requires that beneficial owners of more than 10% of the Company’s voting securities apply to the Nevada Gaming Commission for a finding of suitability within thirty days after the Chairman of the NGCB mails the written notice requiring such filing.

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On June 17, 2004, the Nevada Gaming Commission issued an order of registration of the Company (the “Final Order”). The Final Order was amended on June 22, 2006 in conjunction with the transfer of certain Class A Membership Units to WH/LVH Managers Voteco, LLC, and again amended on November 16, 2006 in conjunction with the transfer of certain Class A and Class B Membership Units to Nicholas L. Ribis. The Final Order (1) prohibits the current holders of the Company’s Membership Units or their respective affiliates from selling, assigning, transferring, pledging or otherwise disposing of Membership Units or any other security convertible into or exchangeable for Class A Units or Class B Units, without the prior approval of the Nevada Gaming Commission and (2) prohibits the Company from declaring cash dividends or distributions on any class of membership unit of the Company beneficially owned in whole or in part by Holdings, Co-Investment Partners, Voteco, Coinvestment Voteco, WH/LVH Managers Voteco, LLC or their respective affiliates, without the prior approval of the Nevada Gaming Commission. The Final Order sets forth a description of the Company and its affiliates and intermediary companies and the various gaming licenses and approvals obtained by those entities together with certain conditions and limitations pertaining to the licenses and approvals.

Under certain circumstances, an “institutional investor” as defined in the Nevada Act, which acquires more than 10% but not more than 15% of the Company’s voting securities, may apply to the Nevada Gaming Commission for a waiver of such finding of suitability if such institutional investor holds the voting securities only for investment purposes. An institutional investor shall not be deemed to hold voting securities only for investment purposes unless the voting securities were acquired and are held in the ordinary course of business as an institutional investment and not for the purpose of causing, directly or indirectly, the election of a majority of the members of the board of directors of the Company, any change in the Company’s corporate charter, bylaws, management, policies or operations of the Company or any of its gaming affiliates, or any other action which the Nevada Gaming Commission finds to be inconsistent with holding the Company’s voting securities only for investment purposes. Activities that are not deemed to be inconsistent with holding voting securities only for investment purposes 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 Gaming 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.

Any person who fails or refuses to apply for a finding of suitability or a license within thirty days after being ordered to do so by the Nevada Gaming Commission or the Chairman of the NGCB may be found to be unsuitable. The same restrictions apply to a record owner if the record owner, after request, fails to identify the beneficial owner. Any stockholder found to be unsuitable and who holds, directly or indirectly, any beneficial ownership of the common stock of a Registered Corporation beyond such period of time as may be prescribed by the Nevada Gaming Commission may be guilty of a criminal offense. The Company is subject to disciplinary action if, after it receives notice that a person is unsuitable to be a stockholder or to have any other relationship with the Company, it: (i) pays that person any dividend or interest upon voting securities of the Company; (ii) allows that person to exercise, directly or indirectly, any voting right conferred through securities held by that person; (iii) pays remuneration in any form to that person for services rendered or otherwise; or (iv) fails to pursue all lawful efforts to require such unsuitable person to relinquish his voting securities for cash at fair market value. Additionally, the CCLGLB has taken the position that it has the authority to approve all persons owning or controlling the stock of any corporation holding a gaming license.

The Nevada Gaming Commission may, in its discretion, require the holder of any debt security of a Registered Corporation to file an application, be investigated and be found suitable to own the debt security of such Registered Corporation. If the Nevada Gaming Commission determines that a person is unsuitable to own such security, then pursuant to the Nevada Act, the Registered Corporation can be sanctioned, including the loss of its approvals, if without the prior approval of the Nevada Gaming Commission, it: (i) pays to the unsuitable person any dividend, interest, or any distribution whatsoever; (ii) recognizes any voting right by such unsuitable person in connection with such securities; (iii) pays the unsuitable person remuneration in any form; or (iv) makes any payment to the unsuitable person by way of principal, redemption, conversion, exchange, liquidation, or similar transaction.

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The Company is 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 such disclosure may be grounds for finding the record holder unsuitable. The Company is also required to disclose the identity of the beneficial owner to the Nevada Gaming Authorities. A failure to make such disclosure may be grounds for finding the record holder unsuitable. The Company is also required to render maximum assistance in determining the identity of the beneficial owner.

The Company may not make a public offering of any securities without the prior approval of the Nevada Gaming Commission if the securities or the proceeds therefore are intended to be used to construct, acquire or finance gaming facilities in Nevada, or to retire or extend obligations incurred for such purposes. The hypothecation of the Company’s assets and restrictions on stock in connection with any public offering also require the prior approval of the Nevada Gaming Commission. In addition, the hypothecation of the Company’s assets and restrictions on stock in respect of any public offering require the approval of the Nevada Gaming Commission to remain effective.

Changes in control of the Company through a merger, consolidation, stock or asset acquisition, management or consulting agreement, or any act or conduct by any person whereby he or she obtains control, shall not occur without the prior approval of the Nevada Gaming Commission. Entities seeking to acquire control of a Registered Corporation must satisfy the NGCB and the Nevada Gaming Commission concerning a variety of stringent standards prior to assuming control of such Registered Corporation. The Nevada Gaming 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 of the transaction.

The Nevada legislature has declared that some corporate acquisitions opposed by management, repurchases of voting securities and corporate defense tactics affecting Nevada gaming licensees, and Registered Corporations that are affiliated with those operations, may be injurious to stable and productive corporate gaming. The Nevada Gaming Commission has established a regulatory scheme to ameliorate the potentially-adverse effects of these business practices upon Nevada’s gaming industry and to further Nevada’s policy to: (i) assure the financial stability of corporate gaming operators and their affiliates; (ii) preserve the beneficial aspects of conducting business in the corporate form; and (iii) promote a neutral environment for the orderly governance of corporate affairs. Approvals are, in certain circumstances, required from the Nevada Gaming Commission before the Company 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 the Company in response to a tender offer made directly to the Registered Corporation’s members for the purposes of acquiring control of the Registered Corporation.

License fees and taxes, computed in various ways depending upon the type of gaming or activity involved, are payable to the State of Nevada and to Clark County, Nevada. 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.

In addition, the Company pays live entertainment tax on admission fees for live entertainment provided at the property and on the sales of any food, refreshments and merchandise made in connection with taxable live entertainment.

Any person who is a “Licensee” pursuant to the Foreign Gaming Provisions of the Nevada Act, and who proposes to become involved in a gaming venture outside of Nevada, is required to deposit with the NGCB, and thereafter maintain, a revolving fund in the amount of $10,000 to pay the expenses of any investigation by the NGCB into their participation in such foreign gaming. The revolving fund is subject to increase or decrease at the discretion of the Nevada Gaming Commission. Thereafter, Licensees are also required to comply with certain reporting requirements imposed by the Nevada Act. Licensees are also subject to disciplinary action by the Nevada Gaming Commission if they knowingly violate any laws of any foreign jurisdiction pertaining to such foreign gaming operation, fail to conduct such foreign gaming operation in accordance with the standards of honesty and integrity required of Nevada gaming operations, engage in activities that are harmful to the State of Nevada or its ability to collect gaming taxes and fees, or employ a person in such foreign operation who has been denied a license or a finding of suitability in Nevada on the ground of personal unsuitability.

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The sale of alcoholic beverages by the Company on the premises of the Property is subject to licensing, control, and regulation by the applicable local authorities. The Company has obtained Clark County gaming and liquor licenses. All licenses are revocable and are not transferable. The agencies involved have full power to limit, condition, suspend or revoke any such licenses, and any such disciplinary action could (and revocation of such licenses would) have a material adverse effect upon the operations of the Company.

ITEM 1A.—RISK FACTORS

The risk factors set forth below as well as the other information contained in this Annual Report on Form 10-K should be carefully considered in connection with evaluating the Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially and adversely affect our business, financial condition, or results of operations. Certain statements in “Risk Factors” are forward-looking statements.

The Company’s business is particularly sensitive to reductions in discretionary consumer spending as a result of downturns in the economy.

Consumer demand for hotel casino resorts, trade shows and conventions and for the type of amenities that the Company offers is particularly sensitive to downturns in the economy. Changes in consumer preferences or discretionary consumer spending brought about by factors such as fear of war, future acts of terrorism, general economic conditions, disposable consumer income, fear of recession and changes in consumer confidence in the economy could reduce customer demand for the products and leisure services that the Company offers, thus imposing practical limits on pricing and harming the Company’s operations.

The Company’s business is sensitive to the willingness of its customers to travel. Acts of terrorism and developments in the conflict in Iraq could cause severe disruptions in air travel that reduce the number of visitors to our facilities, resulting in a material adverse effect on the Company’s financial condition, results of operations or cash flows.

The Company is dependent on the willingness of its customers to travel. A substantial number of our customers use air travel to come to Las Vegas. On September 11, 2001, acts of terrorism occurred in New York City, Pennsylvania and Washington, D.C. As a result of these terrorist acts, domestic and international travel was severely disrupted, which resulted in a decrease in customer visits to Las Vegas, including to the Hotel. In addition, developments in the conflict in Iraq could have a similar effect on domestic and international travel. Most of the Hotel’s customers travel to reach the Hotel. Only a small amount of the Company’s business is generated by local residents. Management cannot predict the extent to which disruptions in air or other forms of travel as a result of any further terrorist act, outbreak of hostilities or escalation of war would adversely affect the Company’s financial condition, results of operations or cash flows.

Because the Company is dependent upon one property in one market for all of its cash flow, the Company will be subject to greater risks than a gaming company with more operating properties or that operates in more markets.

The Company does not have material assets or operations other than the Hotel. As a result, the Company is entirely dependent upon the Hotel for all of its cash flow.

Given that the Company’s operation is conducted at one property in Las Vegas, the Company is subject to greater degrees of risk than a gaming company with more operating properties in more markets. The risks to which the Company will have a greater degree of exposure include the following:

• local economic and competitive conditions;

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• decline in air passenger traffic due to higher ticket costs or fears concerning air travel;

• changes in local and state governmental laws and regulations, including gaming laws and regulations;

• natural and other disasters, including outbreaks of infectious diseases;

• an increase in the cost of electrical power for the Hotel as a result of, among other things, power shortages in California or other western states with which Nevada shares a single regional power grid; and

• a decline in the number of visitors to Las Vegas.

The Company’s substantial debt could impair its financial condition, results of operations or cash flows.

The Company has substantial debt service obligations. As of December 31, 2006, the Company has a long term mortgage loan of $225 million.

This substantial indebtedness could have important consequences to the Company. For example, it could:

• make it more difficult for the Company to satisfy it’s debt obligations;

• increase the Company’s vulnerability to general adverse economic and industry conditions;

• impair the Company’s ability to obtain additional financing in the future for working capital needs, capital expenditures, development projects, acquisitions or general corporate purposes;

• require the Company to dedicate a significant portion of its cash flow from operations to the payment of principal and interest on its debt, which would reduce the funds available for the Company’s operations;

• limit the Company’s flexibility in planning for, or reacting to, changes in the business and the industry in which the Company operates;

• place the Company at a competitive disadvantage compared to its competitors that have less debt; and

• subject the Company to higher interest expense in the event of increases in interest rates to the extent the Company’s debt is and will continue to be at variable rates of interest.

The terms of the Company’s debt instruments may restrict its current and future operations, particularly its ability to finance additional growth, respond to changes or take certain actions.

The Company’s current debt instruments contain a number of restrictive covenants that impose significant operating and financial restrictions on the Company.

The Company’s Term Loan includes covenants restricting, among other things, the ability of the Company to:

• incur additional debt, including guarantees or credit support;

• incur liens securing indebtedness;

• dispose of assets;

• make certain acquisitions;

• pay dividends or make distributions and make other restricted payments, such as purchasing equity interests, repurchasing junior indebtedness or making investments in third parties;

• enter into sale and leaseback transactions;

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• engage in any new businesses;

• issue preferred stock; and

• enter into certain transactions with our affiliates.

The Company’s insurance coverage may not be adequate to cover all possible losses that the Hotel could suffer. In addition, the Company’s insurance costs may increase and the Company may not be able to obtain the same insurance coverage in the future.

Although the Company has all-risk property insurance covering damage caused by a casualty loss (such as fire and natural disasters), each such policy has certain exclusions. The Company’s level of insurance coverage for the Hotel may not be adequate to cover all losses in the event of a major casualty. In addition, certain casualty events, such as labor strikes, nuclear events, acts of war, loss of income due to cancellation of room reservations or conventions due to fear of terrorism, deterioration or corrosion, insect or animal damage and pollution, might not be covered at all under our policies. Therefore, certain acts could expose us to heavy, uninsured losses.

In addition, although the Company has insurance coverage for occurrences of terrorist acts and for certain losses that could result from these acts, the Company’s terrorism coverage is subject to the same risks and deficiencies as those described above for the Company’s all-risk property coverage. The lack of sufficient insurance for these types of acts could expose us to heavy losses in the event that any damages occur, directly or indirectly, as a result of terrorist attacks or otherwise, which could have a significant negative impact on the Company’s operations.

In addition to the damage caused to the Company’s property by a casualty loss (such as fire, natural disasters, acts of war or terrorism), the Company may suffer business disruption as a result of these events or be subject to claims by third parties injured or harmed. While the Company carries business interruption insurance and general liability insurance, this insurance may not be adequate to cover all losses in such event.

The Company renews its insurance policies on an annual basis. The cost of coverage may become so high that the Company may need to further reduce its policy limits or agree to certain exclusions from its coverage. Among other factors, it is possible that the situation in Iraq, homeland security concerns, other catastrophic events or any change in government legislation governing insurance coverage for acts of terrorism could materially adversely affect available insurance coverage and result in increased premiums on available coverage (which may cause the Company to elect to reduce its policy limits) and additional exclusions from coverage. Among other potential future adverse changes, in the future the Company may elect to not, or may not be able to, obtain any coverage for losses due to acts of terrorism.

The Company’s debt instrument and other material agreements require the Company to maintain a certain minimum level of insurance. Failure to satisfy these requirements could result in an event of default under these debt instruments or material agreements.

The Company depends on the continued services of key managers and employees. If the Company does not retain its key personnel or attract and retain other highly skilled employees, the Company’s business will suffer.

The Company’s ability to maintain its competitive position is dependent to a large degree on the services of its senior management team, including Mr. Prieto, Mr. Schaffhauser, and Mr. Ciancimino. While Mr. Prieto, Mr. Schaffhauser and Mr. Ciancimino have each entered into employment agreements, the Company cannot be assured that any of these individuals will remain with the Company. The Company currently does not have a life insurance policy on any of the members of the senior management team. The death or loss of the services of any of the Company’s senior managers or the inability to attract and retain additional senior management personnel could have a material adverse effect on the Company’s business.

The Company faces significant competition in Las Vegas which could materially adversely affect the Company’s financial condition, results of operations or cash flows. Some of the Company’s competitors have substantially greater resources and access to capital than the Company and several of them are expanding or renovating their facilities. In addition, any significant downturn in the trade show and convention business would significantly and adversely affect the Company’s mid-week occupancy rates and business.

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The hotel, resort and casino business in Las Vegas is highly competitive. The Hotel competes with a large number of major hotel-casinos and a number of smaller casinos located on and near the Las Vegas Strip and in and near Las Vegas. Competitors of the Hotel include all of the other hotel-casino facilities in Las Vegas. The Company also competes, to some extent, with other hotel-casino facilities in Nevada and in Atlantic City, as well as hotel-casinos and other resort facilities and vacation destinations elsewhere in the United States. Many of the Company’s competitors are subsidiaries or divisions of large public companies and may have greater financial and other resources than the Company. In particular, the recent merger of Mandalay Resort Group with MGM MIRAGE and the recent acquisition of Caesar’s Entertainment Inc. by Harrah’s Entertainment created the world’s two largest gaming companies.

According to the LVCVA, there were approximately 132,000 hotel and motel rooms in Las Vegas as of December 31, 2006. Various competitors on the Las Vegas Strip are expanding and renovating their existing facilities. For example, Wynn Resorts Limited is constructing a second hotel tower at the Wynn Las Vegas Resort, which is expected to include approximately 2,000 rooms, consisting of approximately 150 suites and approximately 1,850 guest rooms and additional casino, retail and convention space that is expected to open in the second half of 2008. The Las Vegas Sands is constructing The Palazzo adjacent to The Venetian. The Palazzo will consist of 3,025 suites, a gaming facility of approximately 105,000 square feet and a 450,000 square foot mall that will include dining, entertainment and approximately 80 high-end to mid-end retailers. In addition, a renovation and rebranding of the approximately 2,600-room Aladdin is expected to be completed in 2008. MGM MIRAGE is also developing and building a multi-billion dollar urban complex known as Project CityCenter consisting of hotels and condominium towers, and casino and retail, dining and entertainment venues. The first phase of Project CityCenter, is expected to open in 2009. Boyd Gaming Corporation also plans to develop Echelon Place, a four hotel complex occupying 63 acres on the Las Vegas Strip and containing 5,300 guest rooms and suites. The development is scheduled to open in 2010. A newly formed company, Fontainebleau Resorts, plans to build a 4,000-room hotel and casino on the north end of the Las Vegas Strip. This project is expected to open in 2009. If demand for hotel rooms does not keep up with the increase in the number of hotel rooms, competitive pressures may cause reductions in average room rates.

The Company also competes with legalized gaming from casinos located on Native American tribal lands. Native American tribes in California are permitted to operate casinos with video slot machines, black jack and house-banked card games. The governor of California has entered into compacts with numerous tribes in California and has announced the execution of a number of new compacts with no limits on the number of gaming machines (which had been limited under the prior compacts). The federal government has approved numerous compacts in California and casino-style gaming is now legal on those tribal lands. While the competitive impact on our operations in Las Vegas from the continued growth of Native American gaming establishments in California remains uncertain, the proliferation of gaming in California and other areas located near the Hotel could have an adverse effect on the Company’s results of operations.

In addition, certain states have legalized, and others may legalize, casino gaming in specific areas, including metropolitan areas from which we traditionally attract customers, such as New York, Philadelphia, Los Angeles, San Francisco and Boston. In October 2001, the New York legislature approved a bill for expanded casino gaming on Native American reservations and video lottery terminals at certain race tracks. In 2003 and 2004, Maine and Pennsylvania, respectively, approved legislation legalizing slot machines or similar electronic gaming devices at certain locations, and in November of 2006 the first slot parlor in Pennsylvania opened near Wilkes-Barre Pennsylvania. A number of states have permitted or are considering permitting gaming at “racinos,” on Native American reservations and through expansion of state lotteries. The current global trend toward liberalization of gaming restrictions and resulting proliferation of gaming venues could result in a decrease in the number of visitors to the Hotel by attracting customers close to home and away from Las Vegas, which could adversely affect the Company’s financial condition, results of operations or cash flows.

The loss of the Company’s gaming license or the Company’s failure to comply with the extensive regulations that govern the Company’s operations could have an adverse effect on the Company’s financial condition, results of operations or cash flows.

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The Company’s gaming operations and the ownership of the Company’s securities are subject to extensive regulation by the Nevada Gaming Commission, the Nevada State Gaming Control Board and the Clark County Liquor and Gaming Licensing Board. These gaming authorities have broad authority with respect to licensing and registration of our business entities and individuals investing in or otherwise involved with the Company.

Although the Company currently holds gaming licenses issued by the Nevada Gaming Authorities, these authorities may, among other things, revoke the gaming license of any corporate entity or the registration of a registered corporation or any entity registered as a holding company of a corporate licensee for violations of gaming regulations.

In addition, the Nevada Gaming Authorities may, under certain conditions, revoke the license or finding of suitability of any officer, director, controlling person, stockholder, noteholder or key employee of a licensed or registered entity. If our gaming licenses were revoked for any reason, the Nevada Gaming Authorities could require the closing of the Casino, which would have a material adverse effect on our business. In addition, compliance costs associated with gaming laws, regulations or licenses are significant. Any change in the laws, regulations or licenses applicable to our business or gaming licenses could require us to make substantial expenditures or could otherwise have a material adverse effect on the Company’s financial condition, results of operations or cash flows.

The Nevada State Gaming Control Board investigates or reviews the records of gaming companies for compliance with gaming regulations as part of its regular oversight functions.

For a more complete description of the gaming regulatory requirements affecting our business, see “Item 1 — Business — Regulation and Licensing.”

The Company extends credit to a large portion of its customers, and it may not be able to collect gaming receivables from its credit players.

The Company conducts its gaming activities on a credit basis as well as a cash basis. This credit is unsecured. Table games players typically are extended more credit than slot players, and high-stakes players typically are extended more credit than patrons who tend to wager lower amounts. High-end gaming is more volatile than other forms of gaming, and variances in win-loss results attributable to high-end gaming may have a positive or negative impact on cash flow and earnings in a particular quarter.

The Company extends credit to those customers whose level of play and financial resources warrant, in the opinion of management, an extension of credit. For the year ended December 31, 2006, the table games drop at the Hotel was approximately 32% from credit-based guest wagering. The default rate on credit extended to the Hotels table gaming customers was less than one tenth of one percent of the total amount of credit issued since the Hotel was acquired.

While gaming debts evidenced by a credit instrument, including what is commonly referred to as a “marker,” and judgments on gaming debts are enforceable under the current laws of Nevada, and Nevada judgments on gaming debts are enforceable in all states under the Full Faith and Credit Clause of the U.S. Constitution, other jurisdictions may determine that enforcement of gaming debts is against public policy. Although courts of some foreign nations will enforce gaming debts directly and the assets in the United States of foreign debtors may be reached to satisfy a judgment, judgments on gaming debts from U.S. courts are not binding on the courts of many foreign nations.

The Company is controlled by entities that may have conflicts of interest with us

The majority of the Company’s voting equity is controlled by investment funds affiliated with Colony Capital, LLC and its subsidiaries. Colony Capital is a global real estate investment firm and may from time to time acquire and hold interests in businesses that compete directly or indirectly with us. Colony Capital, through its subsidiaries and investment funds currently owns and operates casinos and/or casino-hotels in Atlantic City, New Jersey, East Chicago, Indiana, and Tunica, Mississippi. In addition, Colony Capital recently announced that it has entered into an agreement to acquire Station Casinos, Inc. Station Casinos owns and operates 14 casinos in the Las Vegas metropolitan area.

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An outbreak of highly infectious disease could adversely affect the number of visitors to Las Vegas and disrupt the Company’s operations, resulting in a material adverse effect on the Company’s financial condition, results of operations and cash flows.

In 2003, Taiwan, China, Hong Kong, Singapore and certain other regions experienced an outbreak of a new and highly contagious form of atypical pneumonia now known as severe acute respiratory syndrome (“SARS”). As a result of the outbreak, there was a decrease in travel to and from, and economic activity in, affected regions. In addition, there have been recent fears concerning the spread of an “avian flu” in Asia. Potential future outbreaks of SARS, avian flu or other highly infectious diseases in Las Vegas may adversely affect the number of visitors to Las Vegas. Furthermore, an outbreak might disrupt the Company’s ability to adequately staff its business and could generally disrupt its operations. If any of the Company’s customers or employees is suspected of having contracted certain highly contagious diseases, the Hotel may be required to quarantine these customers or employees or the affected areas of our facilities and temporarily suspend part or all of our operations at affected facilities. Any outbreak of such a highly infectious disease could have a material adverse effect on the Company’s financial condition, results of operations and cash flows.

ITEM 1B.—UNRESOLVED STAFF COMMENTS

None

ITEM 2.—THE PROPERTY

Prior to June 18, 2004, the Company owned no property. On June 18, 2004, the Company acquired substantially all of the assets and certain liabilities of LVH, including the Hotel.

The Hotel is located one block east of the Las Vegas Strip (the “Strip”) on approximately fifty-nine acres of land between Paradise Road and Joe W. Brown Drive adjacent to the Las Vegas Convention Center. It has approximately 2,950 hotel rooms, an approximately 74,000 square feet casino with approximately 61 table games and 1,220 slot machines, a race and sports book, 12 restaurants, approximately 4,800 parking spaces, approximately 200,000 square feet of meeting/convention space, a 1,600-seat showroom, a 300 seat cabaret theater, retail outlets, an outdoor pool and a spa and health club.

All of the assets of the Company, including the Hotel, serve as collateral for the new Term Loan.

ITEM 3.—LEGAL PROCEEDINGS

In the normal course of business, the Company is subject to various litigation, claims and assessments. The Company is not currently a party to any material litigation and, it is not aware of any material action, suit or proceeding against it that has been threatened by any person.

ITEM 4.—SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

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PART II

ITEM 5.— MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

No established public trading market exists for the Company’s common equity. There are no current plans, proposals, arrangements or understandings with any person with regard to the development of a trading market in the Company’s equity.

Holders

As of December 31, 2006, the Company had four holders of record of its Class A Membership Units and three holders of record of its Class B Membership Units.

Securities Issued Under Equity Compensation Plans

The following table provides information as of December 31, 2006, regarding the number of Membership Units that may be issued under the Company’s 2004 Incentive Plan.

	Number of securities to be issued upon exercise of outstanding options		Weighted-average exercise price of outstanding options				Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the first column)
Plan Category	Class A Units	Class B Units	Class A Units		Class B Units
Equity compensation plans approved by security holders	0.167	166,667	$	100	$	100	0
Equity compensation plans not approved by security holders	—	—		—		—	0
Total	0.167	166,667	$	100	$	100	0

Distributions

The Company has never paid nor does it anticipate paying in the foreseeable future any distributions on their Membership Units. The Credit Agreement governing the new Term Loan, as well as the gaming approvals granted by the Nevada Gaming Authorities, contain restrictions on the payment of dividends or other distributions by the Company.

Purchases of Equity Securities by the Company

During the year ended December 31, 2006, the Company did not repurchase any units of its common equity, either as part of a publicly announced plan or program or otherwise. No publicly announced plans or programs are currently in place under which the Company may purchase shares of its common equity.

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ITEM 6.—SELECTED FINANCIAL DATA

The historical selected financial data of the Company (“Successor”) and of LVH Corporation (“Predecessor”) set forth below should be read in conjunction with “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations” and their respective financial statements and notes thereto included elsewhere in this Annual Report on Form 10-K. The statement of operations data for the years ended December 31, 2006, 2005 and 2004, and the balance sheet data at December 31, 2006 and 2005 of the Company are derived from, and are qualified by reference to, the audited financial statements included elsewhere in this Annual Report on Form 10-K.

	SUCCESSOR
	Years Ended or as of December 31,
	2006			2005			2004(1)
	(dollars in thousands)
Results of Operations:
Net revenues	$	290,824		$	252,890		$	117,218
Operating expenses (2)		260,189			230,558			115,948
Depreciation		13,337			10,058			4,173
Pre-opening expense		—			—			6,682
Total operating income (loss)		17,298			12,274			(9,585	)
Interest expense, net		(22,405	)		(20,873	)		(10,758	)
Net loss		(5,107	)		(8,599	)		(20,343	)
Balance Sheet:
Total assets		393,930			369,699			365,397
Long term debt		225,096			200,000			200,000
Total liabilities		275,843			249,053			236,152
Members’ equity		58,087			60,646			69,245

(1) The Company acquired the Hotel on June 18, 2004 and the results of operation reflect the results of operations from June 18, 2004 through December 31, 2004.

(2) Excludes pre-opening and depreciation expense.

The following historical information of LVH Corporation is derived from its audited financial statements for 2001 through June 17, 2004. LVH Corporation’s audited financial statements and related notes thereto for the period from January 1 through June 17, 2004 appear elsewhere in this Annual Report on Form 10-K.

	PREDECESSOR
	Years Ended or as of December 31,
	2004(1)		2003			2002
	(dollars in thousands)
Results of Operations:
Net revenues	$	117,196	$	214,011		$	215,651
Depreciation and amortization		8,741		18,190			16,708
Total operating (loss) income		6,106		(15,525	)		(6,429	)
Net (loss) income		6,106		(15,525	)		(6,417	)
Balance Sheet:
Total assets		188,233		207,211			207,256
Total stockholder’s equity		124,818		118,712			134,237

(1) Reflects results of operations of LVH for the period from January 1, 2004 through June 17, 2004 and Balance Sheet data as of June 17, 2004.

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ITEM 7.— MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with, and is qualified in its entirety by, the financial statements and related notes thereto and other financial information included in this Annual Report on Form 10-K. Certain statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” are forward-looking.

Overview

Prior to June 18, 2004, Colony Resorts LVH Acquisitions, LLC (the “Company”) conducted no business other than in connection with the completion of the acquisition of substantially all of the assets and certain liabilities of LVH Corporation, a Nevada corporation. LVH Corporation is a wholly owned subsidiary of Harrah’s Entertainment, Inc. (“Harrah’s”), and was previously owned by Caesars Entertainment, Inc. (“Caesars”) prior to the merger of Caesars with and into Harrah’s. Since June 18, 2004, the Company has owned and operated the Las Vegas Hilton (the “Hotel”) and accordingly has a limited operating history.

The following discussion of the Hotel’s results of operations compares the year ended December 31, 2006 to the year ended December 31, 2005 and the year ended December 31, 2005 to the year ended December 31, 2004 as if the acquisition of the Hotel had occurred on January 1, 2004. Accordingly, the discussion compares

• the 2006 and 2005 operating results when owned by the Company;

• the 2005 operating results of the Hotel when owned by the Company to the 2004 calendar year results combining Caesars operations from January 1 to June 17, 2004 and the Company operations from June 18 to December 31, 2004

Casino revenue is derived primarily from patrons wagering on slot machines, table games and other gaming activities. Table games generally include blackjack or twenty one, poker, craps, baccarat, mini-baccarat, pai-gow poker and roulette. Other gaming activities include race book and a sports book. Casino revenue is defined as the win from gaming activities, computed as the difference between gaming wins and losses, not the total amounts wagered. “Table game volume,” “table game drop” (terms which are used interchangeably), and “slot handle” are casino industry specific terms that are used to identify the amount wagered by patrons for a casino table game or slot machine, respectively. “Table game hold” and “slot hold” represent the percentage of the total amount wagered by patrons that the casino has won. Hold is derived by dividing the amount won by the casino by the amount wagered by patrons. Casino revenue is recognized at the end of each gaming day.

Casino revenues vary from time to time due to general economic conditions, popularity of entertainment offerings, table game hold, slot hold, and occupancy percentages in the hotel. Casino revenues also vary depending upon the amount of gaming activity, as well as variations in the odds for different games of chance. Casino revenues, room revenues, food and beverage revenues and other revenues vary due to general economic conditions and competition.

Rooms revenue is derived from rooms and suites rented to guests. “Average daily rate” is an industry specific term used to define the average amount of revenue per rented room per day. “Occupancy percentage” defines the total percentage of rooms occupied, and is computed by dividing the number of rooms occupied by the total number of rooms available. Room revenue is recognized at the time the room is provided to the guest.

Food and beverage revenues are derived from food and beverage sales in the food outlets of the Hotel, including restaurants, room service and banquets. Food and beverage revenue is recognized at the time the food and/or beverage are provided to the guest.

Other revenue includes retail sales, entertainment sales, and other miscellaneous income at the casino/hotel. Such revenue is recognized at the time the goods or services are provided to the guest.

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Summary Financial Results

The Hotel offers hotel, gaming, dining, entertainment, retail and spa amenities at one location in Las Vegas and under one operating segment. Approximately 35.0% of the Hotel’s gross revenue is derived from gaming, while 32.4% is derived from room revenue. Room revenue is significant because of the Hotel’s location next to the Las Vegas Convention Center and its related emphasis on the group, convention and trade show business.

The following table summarizes the Hotel’s results of operations (in thousands):

	2006			2005			Proforma 2004
Net revenues	$	290,824		$	252,890		$	234,414
Operating income (loss)	$	17,298		$	12,274		$	(3,479	)
Net loss	$	(5,107	)	$	(8,599	)	$	(14,237	)

Comparison of the Year Ended December 31, 2006 with the Year Ended December 31, 2005

Revenue Information

The breakdown of the Property’s net revenue is as follows (dollars in thousands):

	Year Ended December 31,
	2006			2005			Percent Change
Casino	$	111,004		$	89,877		23.5	%
Rooms		102,867			97,725		5.3	%
Food and beverage		73,409			66,794		9.9	%
Other		30,238			24,367		24.1	%
		317,518			278,763		13.9	%
Less – Promotional Allowances		(26,694	)		(25,873	)	3.2	%
Net revenue	$	290,824		$	252,890		15.0	%

Net revenue for the year ended December 31, 2006 was $290.8 million, representing an increase of $37.9 million or 15.0% when compared with $252.9 million of net revenues during 2005. The increase in net revenue was due to: (1) a $21.1 million increase in casino revenue due to increased slot revenue, table games revenue and race and sportsbook revenue, (2) an increase in room revenue of $5.1 million primarily as a result of an increase in the average daily hotel room rates, (3) an increase in food and beverage revenue of $6.6 million due primarily to price increases, and (3) an increase in other revenue of $5.9 million primarily as a result of increased entertainment sales.

In 2006, table games volume increased approximately 14.4% and slot handle remained virtually flat. The table games win percentage was 13% for the year ended December 31, 2006 compared to 12% for the year ended December 31, 2005; the Hotel’s slot win percentage was 6.8% for the year ended December 31, 2006 compared to 6.0% for the year ended December 31, 2005. The increase in table games win percentage is a result of a shift in the mix of table games play and a smaller proportion of skilled table games players visiting the Hotel. The increase in slot win percentage is a result of the slot game type and denomination being offered on the casino floor. Table games volume increased primarily due to more frequent and robust casino marketing programs aimed specifically at table games players. Slot handle was static due to the decrease in recycled coin from the higher slot win percentage.

The Hotel’s casino operating margin increased to 27.8% for the year ended December 31, 2006 compared to 19.1% for the year ended December 31, 2005. The increase in casino margin was primarily attributable to an increase in table games volume and slot win percentage. Casino operating expenses increases were attributed to variable expenses such as labor and benefits, gaming taxes and casino marketing expenses. The Company anticipates that continued increases in convention activity at the Las Vegas Convention Center, as shown by historical data provided by the Las Vegas Convention and Visitors Authority, combined with the implementation of new promotional programs, will continue to improve casino volume and revenue in future years.

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The Hotel maintained an average daily room rate of $107 in 2006 as compared to $100 in 2005. Room revenues during 2006 were $102.9 million, representing an increase of $5.1 million or 5.3% when compared to $97.7 million during 2005. The increase in room revenue was the result of an increase in the average daily room rate. Convention traffic continues to be the mainstay of the Hotel’s occupied room nights accounting for 43% of occupied rooms in 2006. Operating margins did not vary significantly from year-to-year.

Food and beverage revenues were $73.4 million during 2006, representing an increase of $6.6 million or 9.9% compared to $66.8 million for 2005. The increase in food and beverage revenue was primarily due to increased menu prices.

The Hotel’s food and beverage operating margin for the year ended December 31, 2006 was 26.1% compared to 21.7% for the year ended December 31, 2005. This increase in margin was due to operating efficiencies and increased revenues.

Other revenues include retail sales, entertainment sales and miscellaneous income at the Hotel. Other revenue increased $5.9 million or 24.1% in 2006 from $24.4 million in 2005. The increase is attributable to entertainment sales relating to attendance at performances by non-resident headliners and by the resident off-Broadway musical, Menopause.

Operating Cost and Expense Information

Fluctuations in the Hotel’s operating costs and expenses are generally based upon the change in volume of guests staying in the Hotel and utilizing the Hotel’s amenities, including the casino, food and beverage, spa and retail outlets.

The breakdown of operating costs and expenses is as follows (dollars in thousands)

	Year Ended December 31,
	2006		2005		Percent Change
Casino	$	80,194	$	72,701	10.3	%
Rooms		32,136		30,242	6.3	%
Food and beverage		54,246		52,317	3.7	%
Other		20,330		13,658	48.9	%
General and administrative		73,283		61,640	18.9	%
Depreciation		13,337		10,058	32.6	%
Total	$	273,526	$	240,616	13.7	%

Operating costs and expenses increased $32.9 million, or 13.7%, to $273.5 million for the year ended December 31, 2006 compared to $240.6 million for the year ended December 31, 2005. The increase was primarily attributable to increased business volumes at the Hotel and, in particular, year-to-year wage and benefit increases.

Casino

The increase in casino expense is primarily related to an increase in the volume of gaming activity. Increases in promotional spending and payroll were required to achieve increased gaming volume in table games and slots.

Rooms

Operating expense for the Hotel’s room department was relatively flat year-to-year with operating efficiencies offsetting wage and benefit increases.

Food and Beverage

Operating expenses for the Hotel’s food and beverage department increased primarily due to volume. Labor and benefits increased due to increases in wages and benefits.

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Other

Other operating expenses increased approximately $6.7 million, or 48.9%, for the year ended December 31, 2006. The increase is entirely the result of an expanded entertainment schedule in 2006. Headliners (other than Manilow) and the off-Broadway resident show Menopause, were added during the year ended December 31, 2006 resulting in increased artist fees which are included in Other expenses.

General and Administrative

General and Administrative expenses increased $11.6 million or 18.9% to $73.3 million for the year ended December 31, 2006. The increase is due to increases in fees paid to an affiliate for common management expenses, increases in advertising expense to promote the expanded entertainment schedule and increases in labor and benefits in order to fully transition certain functions previously handled as a centralized function under Caesars. Also included in general and administrative expenses is $2.5 million of stock option amortization in accordance with FAS 123(R) which was implemented during the year ended December 31, 2006.

Depreciation and Amortization

The increase in depreciation expense in 2006 versus 2005 is primarily a result of the continued capitalized expenses related to the ongoing renovation of the property. The renovation of the casino floor, a coffee bar and the main casino bar area were all completed in December of 2005. A full year of depreciation has been reflected in the 2006 financials.

Interest (Income) Expense

The following table summarizes information related to the Company’s interest expense on long-term debt and interest income during the year ended December 31, 2006 (in thousands, except percentages):

Interest expense	$	21,500
Interest income		(413	)
Interest expense, net	$	21,087
Cash paid for interest	$	20,951
Average total debt balance	$	212,531
Weighted average interest rate		9.15	%

Interest expense includes $2.1 million of amortization related to deferred financing costs and $517,000 reflecting the change in the value of the interest rate cap. Approximately $673,000 of interest was capitalized during 2006.

Net Loss

The Hotel recorded a net loss of $5.1 million for the year ended December 31, 2006, compared with a net loss of $8.6 million for the year ended December 31, 2005.

The $3.5 million decrease in the net loss is attributed to the improvement of operating income offset by the increase in interest expense. A reconciliation follows (in thousands):

2005 Net Loss	$	(8,599	)
Improvement in 2006 Operating Income		5,024
Increase in 2006 Interest, net		(1,532	)
2006 Net Loss	$	(5,107	)

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Comparison of the Year Ended December 31, 2005 with the Year Ended December 31, 2004

Revenue Information

The breakdown of the Property’s net revenue is as follows (dollars in thousands):

	Year Ended December 31,
	2005			Proforma 2004			Percent Change
Casino	$	89,877		$	84,877		5.9	%
Rooms		97,725			94,103		3.8	%
Food and beverage		66,794			63,644		4.9	%
Other		24,367			15,991		52.4	%
		278,763			258,615		7.8	%
Less – Promotional Allowances		(25,873	)		(24,201	)	6.9	%
Total	$	252,890		$	234,414		7.9	%

Net revenue for the year ended December 31, 2005 was $252.9 million, representing an increase of $18.5 million or 7.9% when compared with $234.4 million of net revenues during 2004. The increase in net revenue was due to: (1) a $5 million increase in casino revenue primarily due to increased table games and slot revenue, (2) an increase in room revenue of $3.6 million as a result of an increase in the average daily hotel room rates and hotel room occupancy percentages; (3) an increase in food and beverage revenue of $3.2 million which resulted primarily from price increases, and (4) an increase in other revenue of $8.4 million as a result of increased entertainment sales. Revenue increases were offset by an increase of $1.7 million in promotional allowances as a result of increased spending to drive revenues primarily in the gaming area.

In 2005, table games volume increased approximately 5.9% and slot volume increased approximately 9.3%; however, the table games win percentage was 12% for the year ended December 31, 2005 compared to 14% for the year ended December 31, 2004. The Hotel’s slot win percentage did not vary significantly from the prior year. The abnormally low table games win percentage is a result of a shift in the mix of table games play to games with traditionally lower win percentages and a larger proportion of skilled table games players visiting the Hotel. The increase in casino volume is primarily due to increased hotel occupancy, refinement of the Hotel’s slot club loyalty program, and more frequent and robust casino marketing programs aimed specifically at table games players.

The Hotel’s casino operating margin decreased to 19.1% for the year ended December 31, 2005 compared to 22.9% for the year ended December 31, 2004. The decrease in casino margin was primarily attributable to an increase in promotional spending to drive the increase in table games and slot volume. The casino operating margin was also adversely affected by the decrease in hold percentage. The Company anticipates that continued increases in convention activity at the Las Vegas Convention Center, as shown by historical data provided by the Las Vegas Convention and Visitors Authority, combined with the implementation of new promotional programs, will improve casino volume and revenue in future years.

The Hotel maintained an average daily room rate of $100 in 2005 as compared to $104 in 2004. Room revenues during 2005 were $97.7 million, representing an increase of $3.6 million or 3.8% when compared to $94.1 million during 2004. The increase in room revenue was the result of an increase in the average daily room rate and a slight increase in room occupancy. Convention traffic continues to be the mainstay of the Hotel’s occupied room nights. The Hotel room department’s operating margin for the year ended December 31, 2005 remained constant between the two years (69.1% in 2005 versus 69.2% in 2004).

Food and beverage revenues were $66.8 million during 2005, representing an increase of $3.2 million or 4.9% compared to $63.6 million for 2004. The increase was attributable to an increase in banquet and casual dining restaurant revenue, which resulted from increased Hotel convention room nights and price increases during 2005.

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The Hotel’s food and beverage operating margin for the year ended December 31, 2005 was 21.7% compared to 17.4% for the year ended December 31, 2004. This increase in margin was due to an increase in banquet and casual dining revenue.

Other revenues included retail sales, entertainment sales and miscellaneous income at the Hotel. Other revenue increased $8.4 million or 52.4% in 2005 from $16.0 million in 2004. The increase is attributable to entertainment sales relating to attendance at performances by Barry Manilow. Barry Manilow performed 100 shows at the Hotel in 2005. Barry Manilow did not perform at the Hotel in 2004.

Operating Cost and Expense Information

Fluctuations in the Hotel’s operating costs and expenses are generally based upon the change in volume of guests staying in the Hotel and utilizing the Hotel’s amenities, including the casino, food and beverage, spa and retail outlets.

The breakdown of operating costs and expenses is as follows (dollars in thousands):

	Year Ended December 31,
	2005		Proforma 2004		Percent Change
Casino	$	72,701	$	65,456	11.1	%
Rooms		30,242		28,985	4.3	%
Food and beverage		52,317		52,595	-0.5	%
Other		13,658		8,713	56.8	%
General and administrative		61,640		58,981	4.5	%
Management fee to affiliate		—		3,567	—
Pre-opening		—		6,682	—
Depreciation		10,058		12,914	-22.1	%
Total	$	240,616	$	237,893	1.1	%

Excluding $6.7 million of pre-opening expenses incurred in 2004, operating costs and expenses increased $9.4 million, or 4.1%, to $240.6 million for the year ended December 31, 2005 compared to $231.2 million for the year ended December 31, 2004. The $6.7 million of 2004 pre-opening expenses include payroll, professional services and other general and administrative expenses related to the acquisition of the Hotel. The increase was primarily attributable to an increase in casino expenses as a direct result of increased business volumes at the Hotel and an increase in other expenses as a result of an expanded entertainment schedule.

Casino

The increase in casino expense is primarily related to an increase in promotional spending to drive greater table games and slot volume.

Rooms

Operating expense for the Hotel’s room department increased $1.3 million to $30.2 million for the year ended December 31, 2005. Wage rate increases were somewhat offset by operating efficiencies.

Food and Beverage

Operating expenses for the Hotel’s food and beverage department were flat for the year ended December 31, 2005 primarily due to operating efficiencies implemented in the Hotel’s first full year of operations.

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Other

Other operating expenses increased approximately $4.9 million, or 56.8%, for the year ended December 31, 2005. The increase is entirely the result of the Hotel’s robust entertainment schedule in 2005 that included performances by 23 major headliners (other than Manilow) and two new shows in the Hotel’s cabaret theater.

General and Administrative

General and administrative expenses increased $2.7 million or 4.5% between the years ended December 31, 2005 and 2004. Salary and wage increases, and employee benefit cost increased slightly during the Hotel’s first full year of operation under new ownership.

Included in general and administrative expense for 2005 is $1.8 million in expense associated with certain management services provided by an affiliate. No management fee was charged to the Company by any of its existing affiliates in 2004. The $3.6 million management fee reported in 2004 was paid by the predecessor to its parent.

Depreciation and Amortization

The reduction in depreciation expense in 2005 versus 2004 resulted from the acquisition of the Hotel in June 2004. Based on a third party appraisal, a significant amount of the purchase price was allocated to land from building and improvements.

Interest (Income) Expense

The following table summarizes information related to the Company’s interest expense on long-term debt and interest income during the year ended December 31, 2005 (in thousands, except percentages):

Interest expense	$	21,297
Interest income		(424	)
Interest expense, net	$	20,873
Cash paid for interest	$	19,738
Average total debt balance	$	200,000
Weighted average interest rate		9.73	%

Interest expenses includes $2.1 million of amortization related to deferred financing costs and $58,000 reflecting the change in the value of the interest rate cap. Approximately $563,000 of interest was capitalized during 2005.

Net Loss

The Hotel recorded a net loss of $8.6 million for the year ended December 31, 2005, compared with a proforma net loss of $14.2 million for the year ended December 31, 2004.

The $5.6 million decrease in the net loss is attributed to (1) the absence of any pre-opening expenses in 2005, (2) a full year of interest expenses in 2005, and (3) improved operating income in 2005, which is reconciled as follows (in thousands):

2004 proforma net loss	$	(14,237	)
2004 pre-opening cost		6,682
Improvement in 2005 operating income		9,071
Increase in 2005 interest, net		(10,115	)
2005 proforma net loss	$	(8,599	)

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Liquidity and Capital Resources

Cash flows of the Company for the year ended December 31, 2006 compared to the year ended December 31, 2005 consisted of the following:

Cash Flows – Operating Activities

Cash flow provided by operations was $18.0 million in 2006 compared to the $11.1 million provided by operations in 2005. The $18.0 million provided by operations in 2006 primarily resulted from increased revenue and operating income.

As of December 31, 2006, the Company had cash and equivalents of $22.9 million of which $11.7 million was cash in the Hotel used to fund daily operations. For the next twelve months, the Company expects to fund property operations, capital and debt service requirements from existing cash balances and operating cash flow. The Company will use cash provided by the new Term Loan to renovate hotel guest rooms.

Cash Flows – Investing Activities

During the year ended December 31, 2006, the Company substantially completed the renovations of 436 rooms, acquired 207 new slot machines and completed a variety of maintenance capital projects. The Company expended approximately $35 million on capital projects in 2006 and expects to spend approximately $35 million on capital expenditure projects in 2007, including the renovation of approximately 1,085 standard guest rooms.

The Company expects to fund 2006 capital expenditure projects from existing cash balances, operating cash flow and the proceeds from the Company’s new Term Loan, which closed in May 2006.

Cash Flows – Financing Activities

On May 11, 2006, the Company entered into a new Loan Agreement with Goldman Sachs Commercial Mortgage Capital, L.P. (the “new Term Loan”). The new Term Loan was for an initial principal amount of $209.2 million and is for an initial term of two (2) years with three one-year extensions. The Company has drawn an additional $15.9 million against the new Term Loan. The new Term Loan is subject to future funding to a maximum of $250 million.

Interest on the new Term Loan accrues at a rate of one month LIBOR plus 2.9%. The new Term Loan provides for no amortization during the term. The new Term Loan is collateralized by a first priority deed of trust on the Hotel.

Pursuant to the terms of the new Term Loan, the Company purchased an interest rate cap with LIBOR strike rate of 5.75% for the first two years of the new Term Loan and an interest rate cap with LIBOR strike rate of 6.25% for any extension periods.

Proceeds from the new Term Loan were used to extinguish the Term Loan dated June 18, 2004.

Other Factors Affecting Liquidity

While the Company believes that the cash available from the new Term Loan and its cash flows from operations together with cash on hand will be adequate to fund its activities, including the capital expenditures that the Company plans to make, no assurances can be made that such sources will be sufficient to meet such requirements. Covenants under the new Term Loan restrict the Company’s future borrowing capacity. However, subject to certain conditions, the new Term Loan does permit the Company to incur additional debt to fund working capital. If circumstances warrant, the Company may seek to obtain a working capital line of credit.

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A downturn in the economy, increase in revenue or wagering taxes, acts of terrorism, war or military actions would impact the Company’s casino operations and negatively impact its cash flows from operations. If this were to occur, the Company would be required to adjust its capital spending plans.

Contractual Obligation and Other Commitments

The following table summarizes the Company’s contractual obligations and commitments (amount in thousands):

	Payments Due by Period
	Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years		Total
	(In thousands)
Long-Term Debt Obligations
New Term Loan (a)	$	—	$	225,096	$	—	$	—	$	225,096
Variable interest payments (b)		18,570		6,706		—		—		25,276
Contractual Obligations
Employment agreements (c)		3,070		2,787		87		—		5,944
Licensing agreement (d)		2,000		2,000		—		—		4,000
Entertainment contracts (e)		13,088		11,288		—		—		24,376
	$	36,728	$	247,877	$	87	$	—	$	284,692

(a) The new Term Loan, with an initial funding of $209,000,000, originated May 11, 2006. As of December 31, 2006, the outstanding balance on the new Term Loan was $225,096,000. The loan accrues interest at a rate of 2.9% plus one-month LIBOR which was 5.35% at December 31, 2006. The Loan has a two-year term and can be extended for three one-year extensions options. Additional funding is available for a maximum balance of $250,000,000. The loan is collateralized by a first priority deed of trust on the property and has no amortization.

(b) Based on December 31, 2005 LIBOR rates of 5.35% plus the applicable interest rate.

(c) The Company is party to employment agreements with 15 of its senior executives, with original terms of two to five years.

(d) The Company licenses from Hilton the right to use the mark “Hilton” and is part of Hilton’s reservation system and Hilton’s “HHonors Program ™”. The license expires on December 31, 2008 and, during the term of the license, the Company is required to pay Hilton an annual fee of $2 million plus 1% of the Hotel’s gross room revenue.

(e) The Company is party to certain contracts to retain specific entertainers for recurring performances. These agreements expire during 2007 and 2008.

Off-Balance Sheet Arrangements

The Company is not currently subject to any off-balance sheet arrangements which it believes will have a material adverse impact on its financial condition.

Debt Instruments

The following table provides information about the Company’s long-term debt at December 31, 2006 (amounts in thousands):

	Maturity date	Face amount		Carrying value		Estimated fair value
New Term Loan	May 2008	$	225,096	$	225,096	$	225,096

The new Term Loan originated May 11, 2006 and had an initial principal amount of $209 million with interest accruing at a rate of one month LIBOR plus 2.9%. The initial term is two years with three one-year extension options. The new Term Loan contains certain restrictions that, among other things, limit the ability of the Company to incur additional indebtedness, create certain liens, enter into certain transactions with affiliates, enter into certain mergers or consolidations or sell assets of the Company without prior approval of the lenders or noteholders. See Item 8 – Financial Statements and Supplementary Data — Notes to Financial Statements — Note 7 — Long-Term Debt.”

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Litigation Contingencies and Available Resources

In the normal course of business, the Company is subject to various litigation, claims and assessments. The Company is not currently a party to any material litigation and it is not aware of any material action, suit or proceeding against it that has been threatened by any person.

Critical Accounting Policies

Significant Accounting Policies and Estimates

The Company prepares its financial statements in conformity with accounting principles generally accepted in the United States. Certain of its accounting policies, including the determination of slot club promotion liability, the estimated useful lives assigned to its assets, asset impairment, insurance reserves, purchase price allocations made in connection with its acquisitions and the calculation of its income tax liabilities, require that it apply significant judgment in defining the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. The Company’s judgments are based on its historical experience, terms of existing contracts, observance of trends in the gaming industry and information available from other outside sources. There can be no assurance that actual results will not differ from the Company’s estimates. To provide an understanding of the methodology the Company applies, its significant accounting policies and basis of presentation are discussed below, as well as where appropriate in this discussion and analysis and in the notes to the Company’s financial statements.

Slot Club Promotions

The Company’s Slot Club allows customers to redeem points earned from their gaming activity for cash and complimentary food, beverage, rooms, entertainment and merchandise. At the time redeemed, the retail value of complimentaries is recorded as revenue with a corresponding offsetting amount included in promotional allowances. The cost associated with complimentary food, beverage, rooms, entertainment and merchandise redeemed is recorded in casino costs and expenses. The Company also records a liability for the estimated cost of the outstanding points that it believes will ultimately be redeemed. For the period June 18, 2004 through December 31, 2006, approximately 86% of the points earned have been redeemed or are estimated to be redeemed.

The Company also participates in a slot club with five affiliated casinos under the auspices of the Joint Marketing Agreement with RIH Resorts LLC.

The RIH Resorts slot club allows customers to earn points from their gaming activity at their home property and redeem them for complimentary food, beverage, rooms, entertainment and merchandise at a destination property referred to as “Destiny Dollars”. The RIH Resorts slot club does not permit customers to redeem Destiny Dollars at the property where they are earned. The cost associated with complimentary food, beverage, rooms, entertainment and merchandise is recorded as casino costs and expenses by the property redeeming the points during the period in which the points are redeemed.

Self-Insurance Reserve

The Company is self insured up to certain stop loss amounts for workers’ compensation. In estimating this accrual, the Company considers historical loss experience and make judgments about the expected levels of costs per claim. The Company believes its estimates of future liability are reasonable based upon its methodology; however, changes in accident frequency and severity and other factors could materially affect the estimate for this liability.

Derivative Investments and Hedging Activities

The Company’s new Term Loan requires it to enter into interest rate caps in order to manage interest rate risks associated with this borrowing. The Company has adopted SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” (and as amended by SFAS No. 138 and 149) to account for its interest rate cap arrangement.

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Allowance for Doubtful Accounting Reserves

The Company’s receivables balances relate primarily to its hotel and casino operations. The Company reserves an estimated amount for receivables that may not be collected. The Company estimates the allowance for doubtful accounts by applying standard reserve percentages to aged account balances under a specific dollar amount and specifically analyzing the collectiblity of each account with a balance over the specified dollar amount, based on the age of the account, the customer’s financial condition, collection history and any other known information.

The allowance for doubtful accounts as a percentage of receivables at December 31, 2006 increased when compared to December 31, 2005 primarily as a result of the increase in casino receivables. The increase in casino receivables is commensurate with the increase in marker play throughout 2006. The Company maintains strict controls over the issuance of markers and aggressively pursues collection from those customers who fail to pay after issuance of the marker.

Property and Equipment

Property and equipment are stated at cost. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets or the terms of the capitalized lease, whichever is less. Costs of major improvements are capitalized, while costs of normal repairs and maintenance are charged to expense as incurred.

The Company evaluates its property and equipment and other long-lived assets for impairment in accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”. For assets to be disposed of, the Company recognizes the asset to be sold at the lower of carrying value or fair market value less costs of disposal. Fair market value for assets to be disposed of is generally estimated based on comparable asset sales, solicited offers or a discounted cash flow model. For assets to be held and used, the Company reviews fixed assets for impairment whenever indicators of impairment exist. If an indicator of impairment exists, the Company compares the estimated future cash flows of the asset, on an undiscounted basis, to the carrying value of the asset. If the undiscounted cash flows exceed the carrying value, no impairment is indicated. If the undiscounted cash flows do not exceed the carrying value, impairment is measured based on fair value compared to carrying value, with fair value typically based on a discounted cash flow model.

Recent Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 123(R), “Share-Based Payment”, which requires that the compensation costs relating to share-based payments transactions be recognized in financial statements based on alternative fair value models. The share-based compensation cost will be measured on fair value models of the equity or liability instruments issued. The Company currently disclosed pro forma compensation expense quarterly and annually by calculating the membership unit option grants’ fair value using the Black-Scholes or other valuation model and disclosing the impact on net loss and loss per membership unit in a note to the financial statements. Upon adoption, pro forma disclosure will no longer be an alternative. The Company began to apply SFAS No. 123(R) using the modified prospective method as to the interim reporting period ended March 31, 2006.

In December 2004, the FASB issued SFAS No. 153, “Exchanges of Nonmonetary Assets.” This statement is based on the principle that exchanges of nonmonetary assets should be measured based on fair value of the assets exchanged. This statement is effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. The adoption of this statement did not have a material effect on the Company’s financial condition or results of operations.

In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections-a replacement of APB Opinion No. 20 and FASB Statement No. 3”, which changes the requirements for the accounting for and reporting of a change in accounting principle. SFAS No. 154 applies to all voluntary changes in accounting principle, as well as to changes required by an accounting pronouncement if the pronouncement does not include specific transition provisions. This statement requires retrospective application to prior periods’ financial statements of changes in accounting principle. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The adoption on January 1, 2006 of SFAS No. 154 did not have a material effect on the Company’s financial position, results of operations or cash flows.

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In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS No. 157”), which clarifies the definition of fair value, establishes a framework for measuring fair value and expands the disclosures on fair value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007. The Company will adopt the provisions of SFAS No.157 beginning in the first quarter of 2008 and therefore, has not yet determined the effect, if any, the adoption of SFAS No. 157 will have on its results of operations or financial position.

In September 2006, the SEC issued SAB No. 108 which addresses how the effects of prior-year uncorrected misstatements should be considered when quantifying misstatements in current-year financial statements. SAB No. 108 requires companies to quantify misstatements using both the balance-sheet and income-statement approaches and to evaluate whether either approach results in quantifying an error that is material in light of relevant quantitative and qualitative factors SAB No. 108 is effective for the first fiscal year ending after November 15, 2006. The Company adopted the provisions of SAB No. 108 as of December 31, 2006. The Company’s adoption of SAB No. 108 as of December 31, 2006 did not have a material impact on its consolidated financial statements.

ITEM 7A.—QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk of loss from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices. The Company’s primary exposure to market risk is interest rate risk associated with its variable rate long-term debt. If LIBOR were to increase 100 basis points and there were no additional borrowings, interest expense would increase approximately $2.3 million for the year ending December 31, 2007. The Company attempts to manage its interest rate risk by entering into interest rate cap agreements. The Company does not hold or issue financial instruments for trading purposes and does not enter into derivative transactions that would be considered speculative positions. The derivative financial instruments consist exclusively of interest rate cap agreements. Differentials resulting from these agreements are recorded on an accrual basis as an adjustment to interest expenses.

To manage counterparty credit risk in interest rate cap agreements, the Company only enters into agreements with highly rated institutions that can be expected to perform under terms of such agreements.

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ITEM 8.—FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO FINANCIAL STATEMENTS

The following financial statements of Colony Resorts LVH Acquisitions, LLC and the financial statements of LVH Corporation are presented herein on the page indicated:

COLONY RESORTS LVH ACQUISITIONS, LLC
AUDITED FINANCIAL STATEMENTS:
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	34
BALANCE SHEETS AS OF DECEMBER 31, 2006 AND 2005	35
STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004	36
STATEMENTS OF MEMBERS’ EQUITY	37
STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004	38
NOTES TO FINANCIAL STATEMENTS	40
LVH CORPORATION
AUDITED FINANCIAL STATEMENTS:
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	53
STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT FOR THE PERIOD FROM JANUARY 1, 2004 THROUGH JUNE 17, 2004	54
STATEMENT OF CASH FLOWS FOR THE PERIOD FROM JANUARY 1, 2004 THROUGH JUNE 17, 2004	55
NOTES TO FINANCIAL STATEMENTS	56

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Report of Independent Registered Public Accounting Firm

To the Members of Colony Resorts LVH Acquisitions, LLC:

We have audited the accompanying balance sheets of Colony Resorts LVH Acquisitions, LLC (the “Company”) as of December 31, 2006 and 2005 and the related statements of operations, members’ equity , and cash flows for each of the three years in the period ended December 31, 2006. Our audits also included the financial statement schedule Item 15(a)(2). These financial statements and the financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2006 and 2005, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2006, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

As discussed in Note 3 to the financial statements, the Company changed its method of accounting for Share-Based Payments in accordance with Statement of Financial Accounting Standard No. 123 (revised 2004) on January 1, 2006.

/s/ Ernst & Young LLP

Las Vegas, Nevada

March 30, 2007

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COLONY RESORTS LVH ACQUISITIONS, LLC

BALANCE SHEETS

(In thousands, except membership unit data)

	December 31, 2006			December 31, 2005
ASSETS
CURRENT ASSETS:
Cash and equivalents	$	22,943		$	17,218
Restricted cash		3,396			2,278
Accounts receivable, net		18,826			18,415
Due from affiliates		—			2,370
Inventories		2,921			3,099
Prepaid expenses and other current assets		4,501			4,830
Total current assets		52,587			48,210
PROPERTY AND EQUIPMENT, net		334,602			312,967
RESTRICTED CASH		2,882			5,471
OTHER ASSETS, net		3,859			3,051
Total assets	$	393,930		$	369,699
LIABILITIES AND MEMBERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	11,850		$	12,849
Accrued expenses		35,783			36,204
Due to affiliates		3,114			—
Total current liabilities		50,747			49,053
TERM LOAN		225,096			200,000
Total liabilities		275,843			249,053
COMMITMENTS AND CONTINGENCIES
REDEEMABLE MEMBERS’ EQUITY		60,000			60,000
MEMBERS’ EQUITY:
Class A Membership Units issued and outstanding: 1.50 units at $100 per unit		—			—
Class B Membership Units issued and outstanding: 900,000 units at $100 per unit		90,000			90,000
Accumulated Deficit		(31,913	)		(29,354	)
Total members’ equity		58,087			60,646
Total liabilities and members’ equity	$	393,930		$	369,699

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

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COLONY RESORTS LVH ACQUISITIONS, LLC

STATEMENTS OF OPERATIONS

(In thousands, except membership unit data)

	Year Ended December 31, 2006			Year Ended December 31, 2005			Year Ended December 31, 2004
Revenues:
Casino	$	111,004		$	89,877		$	46,406
Rooms		102,867			97,725			45,433
Food and beverage		73,409			66,794			31,669
Other revenue		30,238			24,367			7,216
Total revenues		317,518			278,763			130,724
Less: promotional allowances		(26,694	)		(25,873	)		(13,506	)
Net revenues		290,824			252,890			117,218
Operating Costs and Expenses:
Casino		80,194			72,701			36,553
Rooms		32,136			30,242			15,293
Food and beverage		54,246			52,317			27,663
Other expense		20,330			13,658			4,646
General and administrative		73,283			61,640			31,793
Depreciation		13,337			10,058			4,173
Pre-opening expenses		—			—			6,682
Total Operating Expenses		273,526			240,616			126,803
Operating income (loss)		17,298			12,274			(9,585	)
Other income (expense):
Interest expense		(21,500	)		(21,297	)		(10,924	)
Interest income		413			424			166
Loss on extinguishment of debt		(1,318	)		—			—
		(22,405	)		(20,873	)		(10,758	)
Net loss	$	(5,107	)	$	(8,599	)	$	(20,343	)
Net loss allocation:
Allocable to Class A	$	—		$	—		$	—
Allocable to Class B	$	(5,107	)	$	(8,599	)	$	(20,343	)
Basic weighted average Class A membership units outstanding		1.50			1.50			1.50
Basic weighted average Class B membership units outstanding		1,500,000			1,500,000			1,500,000
Diluted weighted average membership units outstanding		1,500,001.50			1,500,001.50			1,500,001.50
Net loss per Class A membership unit-basic	$	(3.40	)	$	(5.73	)	$	(13.56	)
Net loss per Class B membership unit-basic	$	(3.40	)	$	(5.73	)	$	(13.56	)
Per membership unit-diluted	$	(3.40	)	$	(5.73	)	$	(13.56	)

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

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COLONY RESORTS LVH ACQUISITIONS,

LLC STATEMENTS OF MEMBERS’ EQUITY

(In thousands)

	Capital Contribution
	Class A Membership Units			Class B Membership Units
	Units	Value		Units	Value		Accumulated Deficit			Total
Balance, December 31, 2003	—	$	—	—	$	—	$	(412	)	$	(412	)
Issuance of membership units	—		—	726		72,638		—			72,638
Conversion to equity—due to affiliates balance	—		—	174		17,362		—			17,362
Net loss	—		—	—		—		(20,343	)		(20,343	)
Balance, December 31, 2004	—		—	900		90,000		(20,755	)		69,245
Net loss	—		—	—		—		(8,599	)		(8,599	)
Balance, December 31, 2005	—		—	900		90,000		(29,354	)		60,646
Stock-based employee compensation	—		—	—		—		2,548			2,548
Net loss	—		—	—		—		(5,107	)		(5,107	)
Balance, December 31, 2006	—	$	—	900	$	90,000	$	(31,913	)	$	58,087

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

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COLONY RESORTS LVH ACQUISITIONS, LLC

STATEMENTS OF CASH FLOWS

(In thousands)

	Year ended December 31, 2006			Year ended December 31, 2005			Year ended December 31, 2004
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(5,107	)	$	(8,599	)	$	(20,343	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		13,337			10,058			4,173
Valuation change in interest rate cap agreement		517			58			690
Amortization of deferred financing costs		743			2,230			1,207
Loss on extinguishment of debt		1,318
Provision for doubtful accounts		2,154			2,243			133
Stock-based employee compensation		2,548			—			—
Changes in assets and liabilities:
Accounts receivable		(2,564	)		(6,359	)		(4,142	)
Inventories		178			177			(1,021	)
Prepaid expenses		330			51			(3,634	)
Other assets		471			(1,665	)		(121	)
Accounts payable		(1,000	)		10,814			1,628
Accrued liabilities		(422	)		2,087			7,374
Due to (from) affiliates		5,485			(43	)		—
Net cash provided by (used in) operating activities		17,988			11,052			(14,056	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment		(34,972	)		(26,534	)		(9,246	)
Decrease (increase) in restricted cash		1,472			19,822			(12,571	)
Payment of purchase of LVH assets, net of cash acquired		—			—			(277,082	)
Acquisition costs		—			—			(3,518	)
Net cash used in investing activities		(33,500	)		(6,712	)		(302,417	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from new Term Loan		225,096			—			—
Proceeds from (payment of) Archon Term Loan		(200,000	)		—			200,000
Proceeds from issuance of membership units		—			—			72,638
Proceeds from issuance of redeemable membership units		—			—			60,000
Debt issuance costs		(3,859	)		(10	)		(3,277	)
Net cash provided by (used in) financing activities		21,237			(10	)		329,361
Increase in cash and equivalents		5,725			4,330			12,888
Cash and equivalents at beginning of year		17,218			12,888			—
Cash and equivalents at end of year	$	22,943		$	17,218		$	12,888

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

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COLONY RESORTS LVH ACQUISITIONS, LLC

STATEMENTS OF CASH FLOWS (continued)

(In thousands)

	Year ended December 31, 2006		Year ended December 31, 2005		Year ended December 31, 2004
Supplemental Cash Flow Disclosure:
Cash paid for interest	$	20,951	$	19,738	$	8,259
Non-cash investing and financing activity:
Conversion of due to affiliates balance to members’ equity	$	—	$	—	$	17,362

On June 18, 2004, the Company purchased substantially all of the assets and assumed certain liabilities of LVH Corporation. In conjunction with the Acquisition, the assets and liabilities were purchased as follows:

Fair value of assets acquired	$	303,006
Cash paid		277,082
Liabilities assumed	$	25,924

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

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COLONY RESORTS LVH ACQUISITIONS, LLC

NOTES TO FINANCIAL STATEMENTS

Note 1 – ORGANIZATION AND BUSINESS OF COMPANY

Colony Resorts LVH Acquisitions, LLC, a Nevada limited liability company (the “Company”), was formed at the direction of Colony Investors VI, L.P., a Delaware limited partnership (“Colony VI”) and an affiliate of Colony Capital, LLC (“Colony Capital”), under the laws of the State of Nevada on December 18, 2003. Pursuant to the Company’s Amended and Restated Operating Agreement, dated June 18, 2004 (the “Operating Agreement”), the Company will continue in existence perpetually. Members of the Company, however, may terminate the Operating Agreement and dissolve the Company at any time.

The Company’s members consist of Colony Resorts LVH Holdings, LLC (“Holdings”), which is a wholly owned subsidiary of Colony VI, a discrete investment fund managed by an affiliate of Colony Capital, Colony Resorts LVH Co-Investment Partners, L.P. (“Co-Investment Partners”), Colony Resorts LVH Coinvestment Voteco, LLC (“Co-Investment Voteco”) and Colony Resorts LVH Voteco, LLC (“Voteco”), each of which purchased Class A or Class B Membership Units on June 18, 2004 in connection with the equity financing described in Note 9. On July 19, 2006, WH/LVH Managers Voteco, LLC (“Whitehall Voteco”) joined the Company as a member upon its acquisition of certain Class A Membership Units from Co-Investment Voteco. On November 21, 2006, Nicholas L. Ribis (“Mr. Ribis”) joined the Company as a member upon the transfer of certain Class A and Class B Membership Units from Voteco and Holdings, respectively.

Prior to June 18, 2004, the Company had conducted no business other than in connection with the execution of the Purchase and Sale Agreement (as defined below), relating to the acquisition of substantially all of the assets and certain liabilities of LVH Corporation, a Nevada corporation (“LVH”) (the “Acquisition”). LVH is a wholly owned subsidiary of Caesars Entertainment, Inc., formerly Park Place Entertainment Corporation (“Caesars”) that prior to the Acquisition (further discussed in Note 2) operated the Las Vegas Hilton, a casino resort located in Las Vegas, Nevada (the “Hotel” or the “Property”). Commencing June 18, 2004, the operations, assets and liabilities of the Property are included in the Company’s financial statements.

Note 2 – THE ACQUISITION

On June 18, 2004, the Company completed the Acquisition of substantially all of the assets of LVH for $291 million, which included the purchase price of $280 million, a working capital adjustment of $6 million and professional fees and other expenses related to the acquisition of $5 million. The purchase and sale agreement dated December 24, 2003 included a provision whereby the purchase price of $280 million was subject to adjustment related to the working capital of LVH. The initial working capital adjustment of $6 million was determined based upon the preliminary closing balance sheet as of May 31, 2004. The final working capital adjustment was determined based upon the June 17, 2004 closing balance sheet. The working capital adjustment was finalized in the quarter ended September 30, 2004 and was determined to be $6.7 million. The Company therefore paid an additional $741,000 to Caesars in October 2004. The Acquisition has been accounted for as a purchase and, accordingly, the purchase price and working capital adjustment were allocated to the assets acquired and liabilities assumed based upon their estimated fair values at the date of Acquisition. The estimated fair values of property were based upon a third-party valuation and management’s estimates.

The following proforma financial information for the Company has been prepared assuming the Acquisition had occurred on the first day of the year ended December 31, 2004 (in thousands, except unit data):

Net revenues	$	234,414
Net loss	$	(14,237	)
Net loss per Class A membership, unit-basic	$	(9.49	)
Net loss per Class B membership, unit-basic	$	(9.49	)
Per membership, unit-diluted	$	(9.49	)

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Note 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Management’s Use of Estimates

The preparation of the financial statements in accordance with accounting principles generally accepted in the United States of America requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, management evaluates those estimates, including those related to asset impairment, accruals for slot marketing points, self-insurance, compensation and related benefits, revenue recognition, allowance for doubtful accounts, contingencies and litigation. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash and short-term investments with original maturities not in excess of 90 days.

Restricted Cash

The Company has on deposit $6.3 million and $7.7 million in various escrow accounts as of December 31, 2006 and 2005, respectively. The accounts segregate funds to be used solely for renovation projects, property taxes and insurance, and certificates of deposit securing letters of credit in connection with self insurance policies issued by its insurance carriers.

Accounts Receivable

Accounts receivable are recorded net of amounts estimated to be uncollectible. The Company estimates an allowance for doubtful accounts to reduce the Company’s receivables to their carrying amount which approximates fair value. The Company estimates an allowance for doubtful accounts based on a specific review of customer accounts, collection experience, and current business conditions.

Concentrations of Credit Risk

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of short-term investments and receivables. The short-term investments (including restricted cash equivalents) are placed with a high credit quality financial institution, which invests primarily in money market funds.

Inventories

Inventories are stated at the lower of cost or market. Cost is determined by the first-in, first-out and specific identification methods. Inventories consist primarily of food, beverage and retail products.

Property and Equipment

Property and equipment are stated at cost. Depreciation and amortization are provided on a straight-line basis over the estimated useful lives of the assets as follows:

Building and improvements	15 to 40 years
Furniture, fixtures and equipment	5 to 7 years
Leasehold improvements	5 to 15 years

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Maintenance, repairs and renewals that neither materially add to the value of the property nor appreciably prolong its life are charged to expense as incurred. Gains or losses on disposition of property and equipment are included in the statements of operations.

Management evaluates property and equipment and other long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets exceeds their fair value in accordance with Financial Accounting Standards Board’s (“FASB’s”) Statement of Financial Accounting Standards No. 144 “Accounting for the Impairment or Disposal of Long Lived Assets.” Impairment losses are recognized when estimated future undiscounted cash flows expected to result from the use of the assets and their eventual disposition are less than their carrying amounts.

Capitalized Interest

The interest cost associated with major construction projects is capitalized and included in the cost of the project. When no debt is incurred specifically for a project, interest is capitalized on amounts expended on the project using the weighted-average cost of the Company’s outstanding borrowings. Capitalization of interest ceases when the project is substantially complete or development activity is suspended for more than a brief period. During the years ended December 31, 2006. 2005 and 2004 the Company incurred $23.5 million, $21.9 million and $11.9 million in interest expense, respectively, and capitalized approximately $673,000, $563,000 and $0 of interest, respectively.

Deferred Financing Costs

Deferred financing costs of $3.2 million relate to the Company’s new Term Loan described in Note 7. The Company has amortized loan costs since the closing of the Acquisition using the effective interest method. On May 11, 2006, the Company entered into a new Term Loan with Goldman Sachs Commercial Mortgage, LLC. The unamortized loan costs associated with the Acquisition were written off and the loan costs associated with the new loan were capitalized for amortization over the life of the loan. Amortization expense for the years ended December 31, 2006, 2005 and 2004 was $2.1 million, $2.3 million and $1.7 million respectively.

Casino Revenue and Promotional Allowances

Casino revenue is the aggregate of gaming wins and losses. Revenues are recognized net of certain sales incentives in accordance with the Emerging Issues Task Force (“EITF”) consensus in Issue 01-9 “Accounting for Consideration Given by a Vendor to a Customer (Including a Reseller of the Vendor’s Products).” The Consensus in EITF 01-9 recognizes that sales incentives be recorded as a reduction of revenue and that points covered in point loyalty programs such as our slot club loyalty program must be recorded as a reduction of revenue. The Company recognizes incentives related to points earned in the slot-club loyalty program as a direct reduction of casino revenue. Industry practice has historically treated the retail value of accommodations, food and beverage, and other services furnished to hotel/casino guests without charge as promotional allowances. The estimated departmental cost of providing such promotional allowances is included primarily in casino operating expenses for the years ended December 31 as follows (in thousands):

	2006		2005		2004
Food and Beverage	$	13,217	$	12,454	$	6,552
Rooms		3,963		3,771		2,163
Other		1,307		1,208		756
	$	18,487	$	17,433	$	9,471

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The estimated retail value of such promotional allowances included in operating revenues for the years ended December 31 is as follows (in thousands):

	2006		2005		2004
Food and Beverage	$	14,352	$	12,900	$	6,563
Rooms		10,990		11,487		6,178
Other		1,551		1,486		765
	$	26,893	$	25,873	$	13,506

Hotel and Food and Beverage Revenues

Hotel revenue recognition criteria are generally met at the time of occupancy. Food and beverage revenue recognition criteria are generally met at the time of service. Deposits for future hotel occupancy or food and beverage services contracts are recorded as deferred income until revenue recognition criteria are met. Cancellation fees for hotel and food and beverage services are recognized upon cancellation by the customer as defined by a written contract entered into with the customer.

Slot Club Promotion and Progressive Jackpot Payouts

The Company accrues for points earned by members of the Company’s slot club as a reduction to revenue based upon the estimates for expected redemptions. The Company maintains a number of progressive slot machines and table games. As wagers are made on the respective progressive games, the amount available to win (to be paid out when the appropriate jackpots are hit) increases. The Company has recorded the progressive jackpots as a liability with a corresponding charge against casino revenue.

Advertising Costs

Costs for advertising are expensed as incurred. Advertising costs expensed during the years ended December 31, 2006. 2005 and 2004 were $6.9 million, $4.8 million and $3.7 million respectively.

Income Taxes

The Company is a limited liability company and is therefore taxed as a partnership for federal income tax purposes. Because the Company does not pay corporate federal income taxes at the entity level on its taxable income, no provision for federal income taxes is reflected in the accompanying financial statements.

Pre-opening Expenses

Pre-opening expenses representing primarily direct personnel and other costs incurred prior to the Acquisition were expensed as incurred.

Accounting for Derivative Instruments and Hedging Activities

The Company uses an interest rate cap (the “Cap”) to assist in managing interest cost being incurred on its new Term Loan. The difference between amounts received and amounts paid under such agreements, as well as any fees, is recorded as a reduction of, or addition to, interest expense as incurred over the life of the Cap.

The Company has a policy aimed at managing interest rate risk associated with its current and anticipated future borrowings. This policy enables the Company to use any combination of interest rate swaps, futures, options, caps and similar instruments. To the extent the Company employs such financial instruments pursuant to this policy, and the instruments qualify for hedge accounting, they are accounted for as hedging instruments. In order to qualify for hedge accounting, the underlying hedged item must expose the Company to risks associated with market fluctuations and the financial instrument used must be designated as a hedge and must reduce the Company’s exposure to market fluctuation throughout the hedge period. If these criteria are not met, a change in the market value of the financial instrument is recognized as a gain or loss in the period of change. The Company does not apply hedge accounting. Accordingly, net interest paid or received pursuant to the financial instrument is included as interest expense.

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Loss Per Membership Unit

The Company’s loss per membership unit was calculated using the two-class method. Under the two-class method, losses are allocated to each class of membership unit based on the respective members’ participation rights in undistributed losses.

The diluted loss per membership unit includes the effect of the assumed conversion of the Class B Membership Units into Class A Membership Units at a 1:1 ratio. The 0.167 options to purchase Class A Membership Units and 166,667 options to purchase Class B Membership Units have been excluded from the diluted loss per membership unit calculation because the assumed conversion of these options would be anti-dilutive.

2004 Incentive Plan

In connection with the closing of the Acquisition, the Company’s board and members approved the Company’s 2004 Incentive Plan (the “Plan”). As of June 18, 2004, the Company had a total of 0.167 Class A Units and 166,667 Class B units reserved for issuance under the Plan. The Plan was amended by the board on May 16, 2006 in order to (1) comply with Section 409A of the Internal Revenue Code of 1986, as amended from time to time, and (2) eliminate the provision that excludes the value attributable to the Development Parcels (as defined in the Plan).

Subsequent to the closing of the Acquisition, the Company granted 0.167 options of Class A Units and 166,667 options of Class B Units to certain executives, in accordance with the Plan. The options have a 10 year life, vest over three years and have an exercise price of $100 per unit in both classes which was equal to, or greater than, the fair market value of the membership units at the date of grant. As a result of the amendment on May 16, 2006 which eliminated the exclusion of the value of the Development Parcels, the options increased in value.

On June 7, 2004, Voteco and Holdings granted the Vice Chairman of the Company an option to acquire 0.015 Class A Units and 15,000 Class B Units of the Company, respectively. These additional options were exercised on November 21, 2006.

Effective January 1, 2006, the Company adopted the provisions of Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (SFAS No. 123(R)) requiring that compensation cost relating to share-based payment transactions be recognized in the financial statements. The cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the employee’s estimated requisite service period (generally the vesting period of equity award) on a straight-line basis. Estimates are revised if key elements of the options change. The cumulative effect on compensation cost as a result of changes to key elements or forfeiture estimates are recognized in the period of the change. The amendment on May 16, 2006 triggered a revaluation of the options. The increase in value will be recorded on a straight-line basis over the remaining vesting period of the options.

Prior to January 1, 2006, the Company accounted for share-based compensation to employees in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (APB No.25), and related interpretations. The Company adopted SFAS No. 123(R) using the modified prospective method and accordingly, financial statement amounts for prior periods presented in the Form 10-K have not been restated to reflect the fair value method of recognizing compensation cost relating to these options.

The fair value of the option awards is estimated on the date of grant using an appraisal of the value of the Company and its membership units. No additional grants have been awarded subsequent to the Acquisition date.

There was approximately $2.5 million of compensation cost related to the 166,667 options recognized in general and administrative expenses for the twelve months ended December 31, 2006 in the implementation of SFAS No. 123(R). The estimated fair value of the options at the date of grant was $27.73 per membership unit and was computed using the Black-Scholes-Merton option pricing model with the following weighted average

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assumptions: risk free interest rate of 3.24%; no expected dividend yields; and expected vesting periods of 36 months. The estimated afir value of the options at the date of amendment was $38.21 per membership unit and was also computed using the Black-Scholes-Merton option pricing model with the following weighted average assumptions: risk free interest rate of 5.07%, no expected dividend yield, and expected vesting periods of 36 months. The following table sets forth the assumptions used to determine compensation cost for these options consistent with the requirements of SFAS No. 123(R).

Weighted-average assumptions:	2006 (Post Amendment)			2006 (Pre Amendment)			2005			2004
Model		Black-Scholes			Black-Scholes			Black-Scholes			Black-Scholes
Number of options		166,667 options			166,667 options			166,667 options			166,667 options
Membership unit price	$	104		$	100		$	100		$	100
Exercise unit price	$	100		$	100		$	100		$	100
Dividend Yield		N/A			N/A			N/A			N/A
Volatility		37	%		40	%		40	%		40	%
Risk-Free rate		5.07	%		3.24	%		3.24	%		3.24	%
Valuation Date		June 30, 2006			June 18, 2004			June 18, 2004			June 18, 2004
Expiration Date		June 18, 2014			June 18, 2014			June 18, 2014			June 18, 2014
Term		36 months						36 months			36 months
Up movement		N/A						N/A			N/A
Down movement		N/A						N/A			N/A
Risk Neutral Probability		N/A						N/A			N/A

Under APB No. 25 there was no compensation cost recognized for these options and thus the financial statements for the twelve months ended December 31, 2005 and 2004 include no such costs. The following table sets forth pro forma information as if compensation cost had been determined consistent with the requirements of SFAS No. 123.

For the Year Ended December 31,

(in thousands, except membership unit data)

	2005					2004
	CLASS A MEMBERSHIP UNITS		CLASS B MEMBERSHIP UNITS			CLASS A MEMBERSHIP UNITS		CLASS B MEMBERSHIP UNITS
Net loss as reported	$	—	$	(8,599	)	$	—	$	(20,343	)
Stock-based compensation cost		—		(1,541	)		—		(770	)
Pro-forma net loss	$	—	$	(10,140	)	$	—	$	(21,113	)
Basic loss per membership unit as reported	$	—	$	(5.73	)	$	—	$	(13.56	)
Stock-based compensation cost	$	—		(1.03	)		—		(0.51	)
Pro-forma basic and diluted Loss per share	$	—	$	(6.76	)	$	—	$	(14.07	)

Recent Accounting Pronouncements

In December 2004, the FASB issued SFAS No. 153, “Exchanges of Nonmonetary Assets.” This statement is based on the principle that exchanges of nonmonetary assets should be measured based on fair value of the assets exchanged. This statement is effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. The adoption of this statement did not have a material effect on the Company’s financial condition or results of operations.

In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections-a replacement of APB Opinion No. 20 and FASB Statement No. 3”, which changes the requirements for the accounting for and

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reporting of a change in accounting principle. SFAS No. 154 applies to all voluntary changes in accounting principle, as well as to changes required by an accounting pronouncement if the pronouncement does not include specific transition provisions. This statement requires retrospective application to prior periods’ financial statements of changes in accounting principle. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The adoption on January 1, 2006 of SFAS No. 154 did not have a material effect on the Company’s financial position, results of operations or cash flows.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS No. 157”), which clarifies the definition of fair value, establishes a framework for measuring fair value and expands the disclosures on fair value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007. The Company will adopt the provisions of SFAS No.157 beginning in the first quarter of 2008 and therefore, has not yet determined the effect, if any, the adoption of SFAS No. 157 will have on its results of operations or financial position.

In September 2006, the SEC issued SAB No. 108 which addresses how the effects of prior-year uncorrected misstatements should be considered when quantifying misstatements in current-year financial statements. SAB No. 108 requires companies to quantify misstatements using both the balance-sheet and income-statement approaches and to evaluate whether either approach results in quantifying an error that is material in light of relevant quantitative and qualitative factors. Upon initial adoption, if the effect of the misstatement is determined to be material, SAB No. 108 allows companies to record that effect as a cumulative-effect adjustment to beginning of year retained earnings. SAB No. 108 is effective for the first fiscal year ending after November 15, 2006. The Company adopted the provisions of SAB No. 108 as of December 31, 2006. The Company’s adoption of SAB No. 108 as of December 31, 2006 did not have a material impact on its consolidated financial statements.

Income Taxes

The Company is a limited liability company and is therefore taxed as a partnership for federal income tax purposes. Because the Company does not pay corporate federal income taxes at the entity level on its taxable income, no provision for federal income taxes is reflected in the accompanying financial statements.

Reclassifications

Certain amounts in the December 31, 2005 and 2004 financial statements have been reclassified to conform to the December 31, 2006 presentation. These reclassifications had no effect on the previously reported net loss.

Note 4 – ACCOUNTS RECEIVABLE, NET

Components of accounts receivable as of December 31 were as follows (thousands):

	2006			2005
Casino	$	14,615		$	11,294
Hotel		7,571			8,920
Other		1,201			577
		23,387			20,791
Less: allowance for doubtful accounts and discounts		(4,561	)		(2,376	)
	$	18,826		$	18,415

The Company extends credit to approved casino customers following background checks and investigations of creditworthiness.

An estimated allowance for doubtful accounts and discounts is maintained to reduce the Company’s receivables to their estimated net realizable value. Although management believes the allowance is adequate, it is possible that the estimated amount of cash collections with respect to the casino accounts receivable could change.

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Note 5 – PROPERTY AND EQUIPMENT, NET

Property and equipment as of December 31 consist of the following (in thousands):

	2006			2005
Land and land improvements	$	153,982		$	153,982
Building and improvements		137,165			109,425
Equipment, furniture, fixtures and leasehold improvements		63,868			50,660
Construction in progress		7,104			13,130
		362,119			327,197
Less: accumulated depreciation		(27,517	)		(14,230	)
	$	334,602		$	312,967

Note 6 – ACCRUED EXPENSES

Accrued expenses as of December 31 consist of the following (in thousands):

	2006		2005
Customer deposits	$	4,093	$	5,255
Payroll and related		13,669		11,869
Taxes and licenses		2,688		2,274
Casino related		10,252		11,174
License royalties		208		186
Interest		—		934
Other accruals		4,873		4,512
	$	35,783	$	36,204

Customer deposits relate to Casino front money, hotel, and banquet advance payments and are all due within one year.

Note 7– LONG-TERM DEBT

On June 18, 2004 in connection with the consummation of the Acquisition, the Company entered into the Archon Loan (the “Term Loan”). The Term Loan was for a principal amount of $200 million and was for an initial term of two (2) years with two one-year extensions. Interest on the Term Loan accrued at a rate of 6.50% plus the greater of (i) one-month LIBOR (which was 4.8% and 4.5% at December 31, 2005 and 2004 respectfully) or (ii) 1.5%. The Term Loan provided for no amortization during the term. The Term Loan was collateralized by a first priority deed of trust on the Property.

The Term Loan agreement required the Company to purchase an interest rate cap at the funding of the Term Loan for $769,000 with a LIBOR strike rate of 5% for the first two years of the Term Loan and an interest rate cap with a LIBOR strike rate of 6% for any extension periods. As of December 31, 2004, the interest rate cap was valued at $79,000 and the Company recorded a corresponding mark-to-market adjustment of $690,000, which is included in interest expense in the accompanying statement of operations. As of December 31, 2005, the interest rate cap was valued at $21,000. An additional $58,000 was included in interest expense during the year ended December 31, 2005.

On May 11, 2006, the Company entered into a new Loan Agreement with Goldman Sachs Commercial Mortgage Capital, L.P. (the “new Term Loan”). The new Term Loan is for an initial principal amount of $209.2 million and is for an initial term of two (2) years with three one-year extensions. The Company has drawn an additional $15.9 million against the new Term Loan. The new Term Loan is subject to future funding to a maximum of $250 million.

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Interest on the new Term Loan accrues at a rate of one month LIBOR plus 2.9%. The new Term Loan provides for no amortization during the term. The new Term Loan is collateralized by a first priority deed of trust on the Property.

Pursuant to the terms of the new Term Loan, the Company purchased an interest rate cap with LIBOR strike rate of 5.75% for the first two years of the new Term Loan and an interest rate cap with LIBOR strike rate of 6.25% for any extension periods.

Proceeds from the new Term Loan were used to extinguish the Term Loan dated as of June 18, 2004 and to pay a $1.0 million exit fee.

The Company recorded a loss on extinguishment of debt of approximately $1,318,000 relating to loan costs associated with the original Term Loan.

Fair Value

Estimated fair values of the Company’s debt and related financial instruments as of December 31, are as follows (in thousands):

	2006				2005
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Term Loan	$	225,096	$	225,096	$	200,000	$	200,000
Cap Agreement	$	111	$	111	$	21	$	21

The fair values of the Term Loan approximate its carrying amount based on the variable nature of the facilities. The fair value of the interest rate cap is based upon a quote from a broker.

Note 8 – REDEEMABLE MEMBERS’ INTERESTS

In connection with the closing of the Acquisition, the Company, Voteco, Co-Investment Voteco, Co-Investment Partners and Holdings entered into a Sale Right Agreement, dated June 18, 2004 (the “Sale Right Agreement”). Pursuant to the terms of Co-Investment Partners’ partnership agreement, at any time after May 23, 2008, Whitehall (a limited partner in Co-Investment Partners and an affiliate of Goldman Sachs Commercial Mortgage Capital, L.P.,, the lender under the new Term Loan) has the right to request that Co-Investment Partners purchase all of Whitehall’s interest in Co-Investment Partners at a purchase price determined by Whitehall. Pursuant to the Sale Right Agreement, upon receiving notice from Whitehall that it has exercised the sale right the Company must, within forty-five days elect to either (i) purchase that portion of the Class B Membership Units which represent Whitehall’s interest in Co-investment Partners or (ii) sell the Company in its entirety. If the Company elects not to redeem the Class B Membership Units, it must appoint Goldman Sachs & Co. as its sole and exclusive agent for a period of one year to seek to sell the Company at a price extrapolated from the price Whitehall established for its interest in Co-Investment Partners. In addition, on June 18, 2010, if the Company has not been sold pursuant to sale right above or otherwise, the Company shall appoint Goldman Sachs & Co. as its sole agent to seek to sell the Company at the best price obtainable unless Whitehall and Co-Investment Partners both agree not to sell the Company or to postpone such sale. For purposes of the diluted membership unit calculation, it is assumed that the redemption of Whitehall’s interest or sale of the property will be consummated at fair value.

Note 9 – MEMBERSHIP INTERESTS

In connection with and immediately prior to the Acquisition, the Company issued Class A Membership Units (“Class A Units”) to Co-Investment Voteco and Voteco on a pro rata basis in proportion to the equity contributions made by each entity. In addition, the Company issued Class B Membership Units (“Class B Units” and together with the Class A Units, the “Membership Units”) to Co-Investment Partners and to Holdings, on a pro rata basis in proportion to the equity contributions made by each entity. All of these entities are existing affiliates of the Company. Pursuant to the Operating Agreement and upon receipt of all required approvals from the Nevada Gaming Authorities, Co-Investment Voteco transferred certain Class A Units to Whitehall Voteco, and as a result,

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Whitehall Voteco joined the Company as a member and became a party to the Operating Agreement effective July 19, 2006. Pursuant to an Option Agreement between Mr. Ribis, Voteco and Holdings, Mr. Ribis exercised options to acquire Class A Units and Class B Units directly from Voteco and Holdings, respectively, and as a result, Mr. Ribis joined the company as a member and became a party to the Operating Agreement effective November 21, 2006.

As of December 31, 2006, Voteco owns 0.585 Class A Units, Co-Investment Voteco owns 0.30 Class A Units,Whitehall Voteco owns 0.60 Class A Units and Mr. Ribis owns 0.015 Class A Units. In addition, as of December 31, 2006, Holdings owns 585,000 Class B Units, Co-Investment Partners owns 900,000 Class B Units and Mr. Ribis owns 15,000 Class B Units. Prior to the closing of the Acquisition, the Company executed the Operating Agreement. Pursuant to the Operating Agreement, holders of Class A Units are entitled to one vote per unit in all matters to be voted on by voting members of the Company. Holders of Class B Units are not entitled to vote, except as otherwise expressly required by law.

On June 18, 2004, the Company issued Class A Units and Class B Units in connection with the organizational structure that was put in place in order to consummate the Acquisition. Pursuant to that organizational structure, Holdings and Co-Investment Partners, through their purchase of the non-voting Class B Units, acquired substantially all of the assets of LVH without having any voting power or other power to control the affairs or operations of the Company, except as otherwise expressly required by law.

At the time of the closing of the Acquisition, a Transfer Restriction Agreement was executed by and among Thomas J. Barrack, Jr. (“Mr. Barrack”), Mr. Ribis, Co-Investment Partners and Co-Investment Voteco (the “Coinvestment Transfer Restriction Agreement”) and a Transfer Restriction Agreement was executed by and among Mr. Barrack, Voteco and Holdings (the “Voteco Transfer Restriction Agreement”). At the time of the transfer of certain Class A Units to Whitehall Voteco from Co-Investment Voteco, a Transfer Restriction Agreement was executed by and among Stuart Rothenberg (“Mr. Rothenberg”), Brahm Cramer (“Mr. Cramer”) and Jonathan Langer (“Mr. Langer”) and together with Mr. Rothenberg and Mr. Cramer, the “Whitehall Voteco Members”, Whitehall Voteco and Co-Investment Partners (the “Whitehall Voteco Transfer Restriction Agreement”).

The Company’s Class A Units issued to Co-Investment Voteco are subject to the Co-Investment Transfer Restriction Agreement, which provides, among other things, that:

• Co-Investment Partners has the right to acquire Class A Units from Co-Investment Voteco on each occasion that Class B Units held by Co-Investment Partners would be transferred to a proposed purchaser who, in connection with such proposed sale, has obtained all licenses, permits, registrations, authorizations, consents, waivers, orders, findings of suitability or other approvals required to be obtained from, and has made all findings, notices or declarations required to be made with, all gaming authorities under all applicable gaming laws;

• A specific purchase price, as determined in accordance with the Co-Investment Transfer Restriction Agreement, will be paid to acquire the Class A Units from Coinvestment Voteco; and

• Co-Investment Voteco will not transfer ownership of Class A Units owned by it except pursuant to such option of Co-Investment Partners.

The Company’s Class A Units issued to Voteco are subject to the Voteco Transfer Restriction Agreement, which provides, among other things, that:

• Holdings has the right to acquire Class A Units from Voteco on each occasion that Class B Units held by Holdings would be transferred to a proposed purchaser who, in connection with such proposed sale, has obtained all licenses, permits, registrations, authorizations, consents, waivers, orders, findings of suitability or other approvals required to be obtained from, and has made all findings, notices or declarations required to be made with, all gaming authorities under all applicable gaming laws;

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• A specific purchase price, as determined in accordance with the Voteco Transfer Restriction Agreement, will be paid to acquire the Class A Units from Voteco; and

• Voteco will not transfer ownership of Class A Units owned by it except pursuant to such option of Holdings.

The Company’s Class A Units issued to Whitehall Voteco are subject to the Whitehall Voteco Transfer Restriction Agreement, which provides, among other things, that:

• Co-Investment Partners has the right to acquire Class A Units from Whitehall Voteco on each occasion that Class B Units held by Co-Investment Partners would be transferred to a proposed purchaser who, in connection with such proposed sale, has obtained all licenses, permits, registrations, authorizations, consents, waivers, orders, findings of suitability or other approvals required to be obtained from, and has made all findings, notices or declarations required to be made with, all gaming authorities under all applicable gaming laws;

• A specific purchase price, as determined in accordance with the Whitehall Voteco Transfer Restriction Agreement, will be paid to acquire the Class A Units from Whitehall Voteco; and

• Whitehall Voteco will not transfer ownership of Class A Units owned by it except pursuant to such option of Co-Investment Partners.

It is currently anticipated that any future holders of the Company’s Membership Units will become a party to the Operating Agreement.

Note 10 – EMPLOYEE BENEFIT PLAN

Participation in the Resorts Hotels and Casinos 401(k) employee savings plan is available for all full time employees who are not covered under a collective bargaining agreement. The savings plan allows participants to defer, on a pre-tax basis, a portion of their salary and accumulate tax-deferred earnings as a retirement fund. The Company matches 50% of the first 6% of employee contributions, up to a maximum of 3% of participating employee’s eligible gross wages. For the years ended December 31, 2006 and 2005, matching contributions expensed under the savings plans were $934,000 and $773,000 respectively. For the period June 18, 2004 through December 31, 2004, matching contributions expensed under the savings plan was $309,000

Colony Resorts LVH Savings Plan was established for employees not covered under a collective bargaining agreement as part of the acquisition of the Hotel. On November 18, 2005 all assets of the plan were merged into the Resorts Hotels & Casinos 401(k) Plan.

Employees of the Company who are members of various unions are covered by union-sponsored, collective bargained, multiemployer health and welfare and defined benefit pension plans. The Company recorded expenses of $17.3 million for the year ended December 31, 2005 related to these plans and $18.2 million for the year ended December 31, 2006. The plan’s sponsors have not provided sufficient information to permit the Company to determine its share of unfunded vested benefits, if any.

Note 11 – RELATED PARTY TRANSACTIONS

Colony VI funded the escrow deposit and deferred financing costs and paid certain expenses related to the Company’s operations during the period from December 18, 2003 (inception) through June 17, 2004. At the completion of the Acquisition, these advances were converted to members’ equity.

The Company entered into a Services Agreement, Joint Services Agreement and Joint Marketing Agreement with Resorts International Hotel, Inc. (“Resorts”) an affiliate of the Company (through common control) on June 18, 2004. On April 25, 2005, the Joint Services Agreement and the Joint Marketing Agreement were amended and restated to add RIH Resorts, LLC, an affiliate of the Company (through common capital), as a party to the agreements. These agreements provide for an initial term of three years with automatic one year renewal periods. The agreements provide that the Company and Resorts will cooperatively develop and implement joint services and marketing programs.

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The Company provides and/or receives services from affiliated companies. The total net value of services received from the affiliated companies was approximately $5.5 million for the year ended December 31, 2006, $2.1 million for the year ended December 31, 2005 and $376,000 for the year ended December 31, 2004.

Note 12 – COMMITMENTS AND CONTINGENCIES

Letters of Credit

In September 2006 and 2005, the Company was required to deliver irrevocable standby letters of credit in the amount of $1,435,000 and $1,437,000, respectively, in connection with self insurance policies issued by its insurance carriers. These letters of credit are secured by certificates of deposit for $1,435,000 and $1,437,000 which are included in restricted cash as of December 31, 2006 and 2005. The initial expiration dates of these letters of credit are October 2007 and 2006, respectively, and are automatically extended for one year from their expiration date unless the issuing bank notifies the Company sixty days prior to such expiration dates that the letters of credit will not be renewed. As of December 31, 2006, there are no amounts outstanding on either letter of credit.

Employment Agreements

The Company has entered into a Vice Chairman’s agreement and employment agreements, as amended, with several executives. The employment agreements have initial terms of six months to five years and some are subject to one-year extensions. The employment agreements provide that the executives will receive a base salary with either mandatory increases or annual adjustments and annual bonus payments.

In addition, under the Vice Chairman’s agreement, the Company granted the Vice Chairman an option to purchase 0.125 Class A and 125,000 Class B Membership Units. The employment agreements provided that the Company grant certain executives options to purchase the Company’s Class A Units and Class B Units that are issued and outstanding as of the date on which the Acquisition was completed. The options were granted under the 2004 Incentive Plan adopted by the Company. Depending on the terms of the employment agreement, executives were granted options to purchase 0.5% to 7.5% of the Membership Units.

Hilton License Agreement

Concurrently with the closing of the Acquisition, the Company entered into a License Agreement pursuant to which the Company licenses from Hilton the right to use the mark “Hilton” and is part of Hilton’s reservation system and Hilton’s “HHonors Program™”. The License Agreement commenced on the date of the closing of the Acquisition and expires on December 31, 2008. During the term of the License Agreement, the Company is required to pay Hilton an annual fee of $2,000,000 plus 1% of the Hotel’s gross room revenue to fund national and regional group advertising and sales and business promotion efforts by Hilton.

Easements

The Hilton Grand Vacations property, located adjacent to the Hotel, has an easement for use of approximately 260 parking spaces (out of approximately 4,800 parking spaces). There is also an easement for the use of the monorail that runs through the Hotel property.

Environmental

An independent environmental consultant performed a Phase I environmental site assessment in accordance with American Society for Testing and Materials (“ASTM”) standards on the Las Vegas Hilton property in December 2003. This assessment involved visual inspection, interviews with site personnel, review of certain publicly available records, and preparation of a written report. The assessment did not include any testing of soil or groundwater at the property. According to certain historical data integrated into the Phase I report, in 2000 it was

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discovered that there is a plume of tetrachloroethene in the groundwater and the property was listed as a leaking underground storage tank site. The Phase I report states that levels of tetrachloroethene and total petroleum hydrocarbons in the groundwater beneath the property in 2000 exceeded certain limits allowed under a National Pollutant Discharge Elimination System permit. The Phase I report indicates that the allowable levels have been exceeded in the past and a treatment system is needed to ensure compliance with applicable requirements. The Phase I report also identified asbestos-containing materials at the Hotel. The Company expects to manage these materials pursuant to an operations and maintenance program.

On July 7, 2005, the Nevada Division of Environmental Protection (“NDEP”) requested the Company install three monitoring wells on the Hotel to monitor and evaluate the source of tetrachloroethene in the groundwater flowing beneath the Hotel. The Company engaged an independent consultant, which provided quarterly Discharge Monitoring Reports to NDEP. The independent consultant completed its Environmental Investigation Report on November 30, 2006, which concluded that the tetrachloroethene originates from an off-site source, near the southwest corner of the Hotel. The Company will continue to monitor the tetrachloroethene until advised otherwise by NDEP.

The Company does not expect that its compliance measures in respect of the groundwater issue or the asbestos issue will have a material effect upon its capital expenditures, earnings or competitive position. A filtration system required for the dewatering sump pumps and the monitoring wells have been installed at an annual operating cost of approximately $45,000. There can be no assurance, however, that the operating costs for the treatment system will not increase or that there will be no claims or other liabilities associated with the foregoing conditions.

Litigation

In the normal course of business, the Company is subject to various litigation, claims and assessments. The Company is not currently a party to any material litigation and, it is not aware of any material action, suit or proceeding against it that has been threatened by any person.

Note 13 – QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

	Net Revenues		Operating Income (loss)			Net Income (loss)			Net Income (loss) applicable to membership units			Diluted income (loss) per membership unit
	(amounts in thousands, except per share amounts)
Year ended December 31, 2006
First quarter	$	76,785	$	12,440		$	6,616		$	6,616		$	4.41
Second quarter		73,495		3,745			(3,026	)		(3,026	)		(2.02	)
Third quarter		67,404		(876	)		(6,086	)		(6,086	)		(4.06	)
Fourth quarter		73,140		1,989			(2,611	)		(2,611	)		(1.74	)
Year ended December 31, 2005
First quarter	$	70,293	$	10,590		$	5,657		$	5,657		$	3.77
Second quarter		64,077		5,094			(188	)		(188	)		(0.13	)
Third quarter		59,696		(1,720	)		(6,985	)		(6,985	)		(4.66	)
Fourth quarter		58,824		(1,690	)		(7,083	)		(7,083	)		(4.71	)
Year ended December 31, 2004
First quarter (a)	$	—	$	(1,902	)	$	(1,902	)	$	(1,902	)	$	(1.27	)
Second quarter (b)		7,259		(5,650	)		(6,271	)		(6,271	)		(4.18	)
Third quarter		53,684		(1,195	)		(5,465	)		(5,465	)		(3.64	)
Fourth quarter		56,275		(838	)		(6,705	)		(6,705	)		(4.47	)

(a) There were no operations in the first quarter of 2004, as the Company was in the process of completing the Acquisition. Membership units had not been unitized as of December 31, 2005.

(b) The Acquisition was completed on June 18, 2004 and the Company took over operations of the Hotel on this date.

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Report of Independent Registered Public Accounting Firm

To LVH Corporation:

We have audited the accompanying statements of operations and accumulated deficit and of cash flows of LVH Corporation (a wholly owned subsidiary of Caesars Entertainment, Inc.) for the period from January 1, 2004 through June 17, 2004. These financial statements are the responsibility of LVH Corporation’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material respects, the results of operations and cash flows of LVH Corporation for the period from January 1, 2004 through June 17, 2004 in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared from the separate records maintained by LVH Corporation and may not necessarily be indicative of the conditions that would have existed or the results of operations if LVH Corporation had been operated as an unaffiliated company. Portions of certain expenses represent charges and allocations made from home-office items applicable to Caesars Entertainment, Inc. as a whole or transactions with other wholly owned subsidiaries of Caesars Entertainment, Inc., most of which are transacted at amounts which approximate “cost” rather than market rates for similar transactions with companies outside the controlled group.

/s/ Deloitte & Touche LLP

Las Vegas, Nevada

October 12, 2004

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LVH CORPORATION

STATEMENTS OF INCOME AND ACCUMULATED DEFICIT

(In Thousands)

FOR THE PERIOD FROM JANUARY 1, 2004 THROUGH JUNE 17, 2004

	2004
Revenues
Casino	$	38,471
Rooms		48,670
Food and beverage		31,975
Other revenue		8,775
Gross revenues		127,891
Less promotional allowances		(10,695	)
Net revenues		117,196
Expenses
Casino		28,903
Rooms		13,692
Food and beverage		24,932
Other expense		4,067
General and administrative		27,188
Depreciation and amortization		8,741
Management fee to parent		3,567
		111,090
Operating income		6,106
Interest income		—
Net income		6,106
Accumulated deficit, beginning of period		(214,036	)
Accumulated deficit, end of period	$	(207,930	)

See notes to financial statements.

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LVH CORPORATION

STATEMENT OF CASH FLOWS

(In Thousands)

FOR THE PERIOD FROM JANUARY 1, 2004 THROUGH JUNE 17, 2004

	2004
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	6,106
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		8,741
Provision for bad debts		(375	)
Other		32
Change in working capital components:
Accounts receivable		12,021
Inventories, prepaid expenses and other current assets		(1,228	)
Accounts payable and accrued expenses		(18,945	)
Net cash provided by operating activities		6,352
CASH FLOWS USED IN INVESTING ACTIVITIES-Additions to property and equipment		(2,998	)
CASH FLOWS USED IN FINANCING ACTIVITIES-Change in due to affiliated companies		(6,139	)
Decrease in cash and equivalents		(2,785	)
Cash and equivalents at beginning of period		12,734
Cash and equivalents at end of period	$	9,949

See notes to financial statements.

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LVH CORPORATION

NOTES TO FINANCIAL STATEMENTS

FOR THE PERIOD FROM JANUARY 1, 2004 THROUGH JUNE 17, 2004

1. BASIS OF PRESENTATION AND OPERATIONS

The accompanying financial statements present the accounts of LVH Corporation (the “Company” or “LVH”). The Company is a wholly owned indirect subsidiary of Caesars Entertainment, Inc. (“Caesars” or the “Parent”). The accompanying financial statements have been prepared from the separate records maintained by the Company and may not necessarily be indicative of the conditions that would have existed or the results of operations if the Company had been operated as an unaffiliated company.

The Company owns and operates the Las Vegas Hilton Hotel and Casino (the “Property”), a hotel and casino that is located on approximately 59 acres adjacent to the Las Vegas Convention Center. With this prominent convention location, the Property focuses its marketing toward convention groups. The Property features 2,968 guest rooms and suites, approximately 74,000 square feet of casino space, 12 restaurants and 225,000 square feet of meeting and convention area. The Property also includes a 1,600-seat showroom featuring top entertainers, a night club, and a spa and health club.

On December 24, 2003, Caesars entered into a definitive agreement to sell the Property to an affiliate of Colony Capital, LLC (“Colony”), a Los Angeles based international private investment firm, for approximately $280,000,000. The transaction closed on June 17, 2004.

Under the terms of the agreement, Colony purchased most the assets of the Company, and assumed certain related current liabilities. The aggregate consideration was adjusted for changes in net working capital. In addition, certain gaming devices leased from a wholly owned subsidiary of Caesars (as discussed in Note 4) were included in the assets sold to Colony.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and Equivalents—LVH considers all highly liquid investments purchased with maturities of three months or less to be cash equivalents. The carrying amount of cash and equivalents approximates its fair value.

Inventories—Inventories consist primarily of food and beverage items and operating supplies and are stated at the lower of cost or market. Cost is determined by the weighted-average cost method.

Property and Equipment—Property and equipment are stated at cost. Costs of improvements are capitalized. Costs of normal repairs and maintenance are charged to expense as incurred. Upon the sale or retirement of property and equipment, the cost and related accumulated depreciation are removed from the respective accounts, and the resulting gain or loss, if any, is included in the statements of operations.

Depreciation is provided on a straight-line basis over the estimated useful life of the assets. Leasehold improvements are amortized over the shorter of the asset life or lease term. The service lives of assets are generally 30 to 40 years for buildings and 3 to 10 years for furniture and equipment.

The carrying values of LVH’s assets are reviewed when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Asset impairment is determined to exist if estimated future cash flows, undiscounted and without interest charges, are less than the carrying amount. If it is determined that an impairment has occurred, then an impairment loss is recognized in the statement of operations.

Self-Insurance—LVH is self-insured for various levels of general liability, workers’ compensation, and non-union employee medical and life insurance coverage. Self-insurance reserves are estimated based on LVH’s claims experience.

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LVH CORPORATION

NOTES TO FINANCIAL STATEMENTS

FOR THE PERIOD FROM JANUARY 1, 2004 THROUGH JUNE 17, 2004

Revenue Recognition—Casino revenue is derived primarily from patrons wagering on slot machines, table games and other gaming activities. Table games generally include Blackjack or Twenty One, Craps, Baccarat and Roulette. Other gaming activities include Keno and Race and Sports. Casino revenue is defined as the win from gaming activities, computed as the difference between gaming wins and losses, not the total amounts wagered. Casino revenue is recognized at the end of each gaming day.

Rooms revenue is derived from rooms and suites rented to guests. Rooms revenue is recognized at the time the room is provided to the guest.

Food and beverage revenues are derived from food and beverage sales in the food outlets of our casino hotel, including restaurants, room service and banquets. Food and beverage revenue is recognized at the time the food and/or beverage is provided to the guest.

Other revenue includes retail sales, entertainment sales, telephone, and other miscellaneous income at the casino hotel.

The revenue components presented in the statement of operations include the retail value of rooms, food and beverage, and other goods or services provided to customers on a complimentary basis. Complimentary revenues which are included in the accompanying statement of operations are as follows:

	2004
	(in thousands)
Rooms	$	4,707
Food and beverage		5,306
Other revenue		682
Total complimentary revenues	$	10,695

Promotional allowances consist principally of the retail value of complimentary food and beverages, accommodations, admissions and entertainment provided to casino patrons. The estimated departmental costs of providing these complimentaries are classified in the statement of operations as an expense of the department issuing the complimentary, primarily the casino department and are as follows:

	2004
	(in thousands)
Rooms	$	1,401
Food and beverage		4,785
Other revenue		635
Total cost of promotional allowances	$	6,821

Income Taxes—LVH is included in the consolidated federal income tax return of Caesars. LVH computes its income tax expense based on its separate stand-alone operating results using the asset and liability method. Due to recurring losses, no current federal income tax expense is recognized and deferred tax assets related to such Net Operating Loss carryforwards have been recorded. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Valuation allowances are recorded as deemed necessary based upon the uncertainty surrounding the realization of deferred tax assets.

Reclassifications—Certain reclassifications have been made to the 2004 financial statements in order for them to be comparable to the 2006 presentation. These reclassifications include certain departmental expenses (namely casino accounting, security and surveillance) previously included in general and administrative expense now charged to the casino division; and other departments (telephone operations and valet) previously included in other expense now charged to the rooms division.

Additionally, promotional allowances for room, food, beverage and other miscellaneous items were previously netted against the corresponding divisional revenue. The reclassified statement of operations now shows the promotional allowances as revenue with an overall reduction of gross revenue for all promotional allowances. The promotional allowance detail of room, food, beverage and other miscellaneous items was previously disclosed in a footnote.

The reclassifications had no effect on operating income or net income.

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LVH CORPORATION

NOTES TO FINANCIAL STATEMENTS

FOR THE PERIOD FROM JANUARY 1, 2004 THROUGH JUNE 17, 2004

Use of Estimates—The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

3. INCOME TAXES

LVH is included in the consolidated federal income tax return of Caesars. Accordingly, the current federal tax liability or benefit resulting from the taxable income or loss generated by LVH is recognized by Caesars in its consolidated federal tax return.

The income tax provision for the period ended June 17, 2004 is as follows:

	2004
	(in thousands)
Deferred federal provision	$	1,724
Valuation allowance		(1,724	)
Total	$	—

A reconciliation of LVH’s income tax provision as compared to the benefit calculated by applying the federal statutory rate (35%) is as follows for the period ended June 17, 2004:

	2004
	(in thousands)
Computed expected income tax provision	$	2,137
General business credits differential		(436	)
Other		23
Valuation allowance		(1,724	)
Total	$	—

Management has considered certain tax planning strategies as permitted by SFAS No. 109, Accounting for Income Taxes. Management has determined that tax benefits associated with deferred tax assets are more likely than not unrealizable through reduction of LVH’s future taxable income and future reversals of existing temporary differences and has recorded a full valuation allowance.

The Internal Revenue Service is currently examining the Parent’s federal income tax returns for the years ended December 31, 2002 and 2003. In LVH’s opinion, any tax liability arising from the examinations will not have a material adverse impact on LVH’s financial statements.

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LVH CORPORATION

NOTES TO FINANCIAL STATEMENTS

FOR THE PERIOD FROM JANUARY 1, 2004 THROUGH JUNE 17, 2004

4. RELATED PARTY TRANSACTIONS

Caesars

LVH has ongoing related party transactions with Caesars and certain other wholly owned subsidiaries of Caesars, most of which are transacted at amounts which approximate “cost” rather than market rates for similar transactions with companies outside the controlled group. Caesars allocates certain common expenses to LVH, which are described below. These costs were allocated based on LVH’s proportionate usage of these services, using methods the management believes are reasonable and appropriate, such as number of employees, room reservations booked and actual usage. Certain expenses are not necessarily indicative of what would have existed if LVH had operated as a stand alone Company. A description of the primary related party transactions that have been accounted for in the books and records of LVH is as follows:

LVH leases gaming devices from a wholly owned subsidiary of Caesars. Lease expense for such gaming devices pursuant to these lease agreements totaled approximately $353,000 for the period ended June 17, 2004.

Employees of LVH are eligible to participate in a 401(k) savings plan sponsored by Caesars (the “Plan”) after meeting certain age and length of employment requirements. Caesars remits all payroll deductions, employer matching and administrative expenses to the trustee of the Plan. These charges totaled approximately $2,164,000 for the period ended June 17, 2004.

Certain executive level employees of LVH are eligible to participate in a deferred compensation plan sponsored by Caesars and remits all payroll deductions, employer matching and administrative expenses to the trustee of the deferred compensation plan. These charges totaled approximately $524,000 for the period ended June 17, 2004.

Medical benefits for employees of LVH as well as certain other employee related benefits such as a wellness center, employee assistance program and health fairs are provided and funded by Caesars. Charges for these items totaled approximately $4,160,000 for the period ended June 17, 2004.

LVH is included with Caesars and its other domestic subsidiaries for general liability, workers’ compensation, theft, errors and omissions and other insurance purposes. Costs for the self-insured general liability and workers’ compensation programs are allocated to Caesars’ subsidiaries based upon actual claim data and costs for the other coverage are allocated to Caesars’ subsidiaries based on relative premium by subsidiary. Insurance costs allocated to LVH totaled approximately $793,000 for the period ended June 17, 2004.

Caesars and other wholly owned subsidiaries of Caesars provide marketing and advertising services for LVH. Included in these costs are the costs of advertising for LVH in various media outlets and direct marketing efforts to certain patrons. Marketing and advertising costs allocated to LVH totaled approximately $297,000 for the period ended June 17, 2004.

Caesars and other wholly owned subsidiaries of Caesars provide various support services for LVH. Included in these services are accounts payable, call center, collections, human resources, payroll, public relations, purchasing and race and sports book administration. Support services costs allocated to LVH totaled approximately $1,145,000 for the period ended June 17, 2004.

Wholly owned subsidiaries of Caesars provide various services for LVH. Included in these services are food preparation, laundry, dry cleaning and other professional services. Service costs allocated to LVH totaled approximately $2,816,000 for the period ended June 17, 2004.

LVH utilizes the facilities of other wholly owned subsidiaries of Caesars as a marketing mechanism for certain patrons, including Cascata, the Caesars owned golf course. Costs allocated to LVH totaled approximately $93,000 for the period ended June 17, 2004.

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LVH CORPORATION

NOTES TO FINANCIAL STATEMENTS

FOR THE PERIOD FROM JANUARY 1, 2004 THROUGH JUNE 17, 2004

LVH and other wholly owned subsidiaries of Caesars buy and sell tickets to various events to be distributed to certain patrons as well as host events attended by patrons of other Caesars’ hotels and casinos. The net amount of such purchases and sales was an expense of approximately $422,000 for the period ended June 17, 2004.

Certain significant construction projects are managed through Caesars. Caesars purchases the materials and manages the construction process, charging LVH the total cost of both the materials and labor. The total amount of such costs was approximately $363,000 for the period ended June 17, 2004.

Caesars funds postage costs to the third party vendor as well and charging such postage costs to LVH. Postage costs allocated to LVH totaled approximately $265,000 for the period ended June 17, 2004.

LVH and other wholly owned subsidiaries of Caesars share race and sports book revenues and the gaming taxes associated with such revenues based upon race and sports book handle. In conjunction with this revenue sharing, LVH recorded a net expense of approximately $1,219,000 for the period ended June 17, 2004.

Caesars and other wholly owned subsidiaries of Caesars provide various support services and products for sale in LVH’s retail outlets. The costs for such products and support services allocated to LVH totaled approximately $1,200,000 for the period ended June 17, 2004.

LVH receives a credit from Caesars for commissions on ATM and cash advance transactions as well as rebates associated with LVH purchases. The credits allocated to LVH totaled approximately $739,000 for the period ended June 17, 2004.

Caesars receives a management fee for services provided to LVH by the Parent that is based upon certain operating results. The services provided to LVH by the Parent include centralized information technology, internal audit, risk management, legal and other administrative functions. The fee charged totaled approximately $3,567,000 for the period ended June 17, 2004.

Hilton

On December 31, 1998, Hilton Hotels Corporation (“Hilton”) completed the transfer of the operations, assets and liabilities of its gaming business to the Parent. Hilton and Caesars have several members of their Boards of Directors in common. LVH has ongoing related party transactions with Hilton and certain other wholly owned subsidiaries of Hilton. A description of the primary related party transactions that have been accounted for in the books and records of LVH is as follows:

LVH pays a franchise fee for the rights to use the Hilton trade name. Franchise fees paid to Hilton pursuant to the franchise fee agreement totaled approximately $1,160,000 the period ended June 17, 2004.

LVH pays a fee for the right to be included in the Hilton group and convention marketing literature and program. Group and convention marketing fees paid to Hilton totaled approximately $424,000 for the period ended June 17, 2004.

LVH pays a fee for the usage of a centralized reservations system. Reservations fees paid to Hilton totaled approximately $112,000 for the period ended June 17, 2004.

LVH pays a fee for the HHonors^™ customer loyalty program. HHonors^™ fees paid to Hilton totaled approximately $272,000 for the period ended June 17, 2004. LVH receives a fee from Hilton when a patron utilizes their HHonors^™ points at the Property. HHonors^™ fees received from Hilton totaled approximately $514,000 for the period ended June 17, 2004.

5. COMMITMENTS AND CONTINGENCIES

Litigation

LVH is involved in various legal proceedings relating to its business. LVH believes that all the actions brought against it are without merit and will continue to vigorously defend against them. While any proceeding or litigation has an element of uncertainty, LVH believes that the final outcome of these matters is not likely to have a material adverse effect upon its results of operations or financial position.

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LVH CORPORATION

NOTES TO FINANCIAL STATEMENTS

FOR THE PERIOD FROM JANUARY 1, 2004 THROUGH JUNE 17, 2004

Contracts

Pursuant to agreements between LVH and Paramount Parks, Inc. (“Paramount”), under which Paramount operates a themed simulation ride attraction at the Property called Star Trek: The Experience (the “Attraction”). LVH recorded net expense of approximately $174,000 for the period ended June 17, 2004.

In addition, LVH paid approximately $171,000 for the period ended June 17, 2004, respectively, toward advertising making reference to the Attraction. Effective January 1, 2004, the agreements were amended to eliminate the annual payments to Paramount, eliminate the annual Star Trek advertising, except for approximately $250,000 to be paid in 2004, and required LVH to provide $2,000,000 to be used for improvements to the Attraction, which LVH paid to Paramount in December 2003.

Other

LVH is obligated under other contracts for various items such as advertising, equipment maintenance and employment.

The following is a schedule of future minimum commitments under noncancellable contacts as of June 17, 2004 (in thousands):

2004	$	1,894
2005		1,348
2006		292
2007		38
2008		25
Thereafter		25
Total	$	3,622

6. QUARTERLY INFORMATION (UNAUDITED)

	Net revenues		Operating income (loss)			Income (loss) before income taxes and change in accounting principle			Net income (loss) applicable to common stock			Diluted earnings (loss) per common share
	(amounts in thousands, except per share amounts)
For the Period ended June 17, 2004
First quarter	$	66,921	$	6,763		$	6,763		$	6,763		$	—
Second quarter		50,275		(657	)		(657	)		(657	)		—

ITEM 9.—CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

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ITEM 9A.—CONTROLS AND PROCEDURES

a) Evaluation of Disclosure Controls and Procedures. Disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in the reports that the Company files or submits, is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. The Company’s Chief Executive Officer and its Executive Vice President, Finance (its principal financial officer) have evaluated the disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) of the Company as of December 31, 2006 and have concluded that they are effective within the reasonable assurance threshold described above.

b) Changes in Internal Control over Financial Reporting. There were no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

ITEM 9B.—OTHER INFORMATION

None

- 62 -

PART III

ITEM 10.—DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE OF THE REGISTRANT

The directors and executive officers of the Company as of December 31, 2006 are as follows:

NAME	AGE	POSITION
Directors
Thomas J. Barrack, Jr.	59	Chairman of the Board
Nicholas L. Ribis	61	Vice-Chairman of the Board
Jonathan Langer	37	Member of the Board
Clive S. Cummis	78	Independent Member of the Board
Executive Officers
Rodolfo Prieto	62	Chief Executive Officer and General Manager
Robert Schaffhauser	60	Executive Vice President, Finance
Kenneth M. Ciancimino	45	Executive Vice President, Administration

THOMAS J. BARRACK, JR. has served as a Manager and Board Member of the Company since its formation. Mr. Barrack also holds a majority membership interest in Coinvestment Voteco and all of the membership interests in Voteco. Mr. Barrack has served as Chairman and Chief Executive Officer of each of Colony Capital, LLC (“Colony Capital”) and Colony Advisors, LLC (“Colony Advisors”) since their organization in August 1992 and September 1991, respectively. Colony Capital and Colony Advisors are international real estate investment and management firms. Mr. Barrack is a Director of Continental Airlines, Inc., a commercial airline, First Republic Bank, a full-service private banking, investment management and trust services company, and Kerzner International Limited, a private developer of resort and gaming properties worldwide. Mr. Barrack is also a Director of Colony RIH Holdings, Inc. and Resorts International Hotel & Casino, Inc., which own and operate Resorts Atlantic City, a casino hotel in Atlantic City, New Jersey. Mr. Barrack also serves as a Director of RIH Resorts, LLC., which owns and operates casino hotels in Atlantic City, New Jersey, Tunica, Mississippi and East Chicago, Indiana.

NICHOLAS L. RIBIS has served as a Manager and Board Member of the Company since its formation. Mr. Ribis currently is the Vice Chairman of Colony RIH Holdings, Inc. and Vice Chairman of Resorts International Hotel & Casino, Inc., which own and operate Resorts Atlantic City, a casino hotel in Atlantic City, New Jersey. Mr. Ribis is also currently serving as Vice Chairman of RIH Resorts, LLC, which owns and operates casino hotels in Atlantic City, New Jersey, Tunica, Mississippi and East Chicago, Indiana. Mr. Ribis served as President, Chief Executive Officer and director of Trump Hotels and Casino Resorts from 1995 to 2000. Trump Hotels and Casino Resorts engages in investments in real estate and gaming facilities. From January 1993 to January 1995, Mr. Ribis was Chairman of the Casino Association of New Jersey, and has served for seven years on the board of trustees of the New Jersey Casino Reinvestment Development Authority.

JONATHAN LANGER was appointed as a Board Member on July 19, 2006. Mr Langer is a partner at Goldman Sacks & Co. where he is head of US acquisitions and global head of hospitality and gaming investing for the Real Estate Principal Investment Area. He is a member of the Whitehall Investment Committee and the GS Real Estate Partners Fund Investment Committee. Prior to joining Goldman Sachs, Mr. Langer was an associate at JMB Realty from 1992 to 1994. Mr. Langer received his BSE from the Wharton School of the University of Pennsylvania in 1992.

CLIVE S. CUMMIS has served as the Independent Member of the Board since June 18, 2004. Since 1971, Mr. Cummis has been a partner with Sills Cummis Epstein & Gross P.C. in Newark, New Jersey and has served as Chairman Emeritus since 2002. Between 1998 and 2005, Mr. Cummis served as a director of Caesars Entertainment, Inc. (now Harrah’s Entertainment, Inc.), a publicly held company, and as vice chairman of the board between 2000 and 2005. Mr. Cummis also served as Executive Vice President, Law and Corporate Affairs and Secretary of Caesars Entertainment, Inc. from 1998 until 2001. Mr. Cummis received a B.A. in General Studies from Tulane University in 1949, a J.D. from the University of Pennsylvania Law School in 1952 and a LL.M. in Administrative Law and Public Policy from New York University Law School in 1959.

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RODOLFO PRIETO has served as the Chief Executive Officer and General Manager of the Company since February 26, 2004. Mr. Prieto has over forty years of experience in the entertainment, hospitality, and gaming industries. Prior to joining the Company, Mr. Prieto was Senior Vice President of Operations for Boyd Gaming Corporation (“Boyd”). From 1995 to 1999, Mr. Prieto worked at the Trump Taj Mahal Casino in Atlantic City. Initially serving as Executive Vice President of Operations, Mr. Prieto became President and Chief Executive Officer of the Taj Mahal for the four years prior to his move to Las Vegas in 2000. Prior to joining the Trump Organization, Mr. Prieto served as Executive Vice President of the Tropicana Resort in Las Vegas. Mr. Prieto attended the Universidad Autonoma de Guadalajara in Guadalajara, Mexico from 1960 to 1963. He then attended La Salle University in Mexico City, where he studied Business Administration. Mr. Prieto is a member of the Nevada Hotel and Motel Association.

ROBERT SCHAFFHAUSER has served as the Executive Vice President, Finance, since February 16, 2004. Prior to joining the Company, Mr. Schaffhauser was Senior Vice President of KMA Direct Communications, Inc. where he was responsible for the business planning and administrative functions (including finance, legal, human resources, information technology, risk management, and purchasing) relating to the operation of a boutique advertising agency. From 1993 to 2000, Mr. Schaffhauser worked for the Trump organization, most recently as Executive Vice President of the Trump Plaza Hotel and Casino, where he was responsible for the business planning, credit, and financial functions relating to the operation of the casino, 1,500 room hotel, retail outlets, and an entertainment venue. Mr. Schaffhauser also served as Executive Vice President of Trump’s Castle Casino Resort & Marina where he managed the financial functions of the hotel and casino complex. In addition, Mr. Schaffhauser was an Internal Consultant for Trump Hotels & Casinos, Inc., where he was responsible for research and analysis of gaming opportunities in jurisdictions other than Atlantic City. Mr. Schaffhauser holds a Bachelor’s degree in Accounting from Rutgers University. He is licensed as a Certified Public Accountant in the State of New Jersey.

KENNETH M. CIANCIMINO has served as the Executive Vice President, Administration since February 26, 2004. Prior to joining the Company, Mr. Ciancimino served as Vice President of Business Development and Strategic Planning for The Media and Marketing Group, a full-service advertising, marketing and communications agency specializing in casino gambling. From 1993 to 2000, Mr. Ciancimino served in various positions within Trump Hotels & Casino Resorts, Inc. As Vice President of Corporate Affairs, he was primarily responsible for the investor relations function of the NYSE company with $1.4 billion in revenues and 16,000 employees. Within Trump Hotels & Casino Resorts, Inc., Mr. Ciancimino also served as Executive Director of Corporate Affairs, Business Analysis Manager, and as a Development Analyst. Mr. Ciancimino received a Bachelor’s degree in Psychology and Sociology from Rutgers University, and an MBA in Finance and Management from Seton Hall University.

Pursuant to the terms of his employment agreement, Mr. Prieto will serve for an initial term of five years with the possibility of one year renewals after the initial term. The employment agreements for Messrs. Schaffhauser and Ciancimino are for an initial term of three years and are subject to one-year extensions. See “Item 13: Certain Relationships and Related Transactions”.

Pursuant to the terms of the Operating Agreement, Mr. Barrack and Mr. Ribis (and any subsequent Managers) will serve as Managers of the Company until replaced by a vote of the holders of a majority of Class A Units or until such Manager resigns. The Company has no audit committee nor an audit committee financial expert.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s directors and executive officers, and persons who own more than 10% of a registered class of the Company’s equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities of the Company. Executive officers, directors and greater-than-10% stockholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file.

To the Company’s knowledge, based solely on a review of the copies of such reports furnished to the Company or written representations that any such reports were timely filed or that no such reports were required, during the year ended December 31, 2006, all Section 16(a) filing requirements applicable to its executive officers, directors, and greater-than-10% beneficial owners were satisfied.

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Code of Ethics

The Company has adopted a Code of Ethics that applies to the Company’s principal executive officer, principal financial officer and all professionals serving in a finance, accounting, treasury, tax or investor relations role. A copy of The Code of Ethics is available without charge to any security holder who requests it.

Company Governance

Colony Resorts LVH Voteco, LLC and Colony Resorts LVH Co-Investment Voteco, LLC, entities controlled by Thomas J. Barrack, Jr., collectively own more than 50% of the voting power of the Company and, as a result, have extensive control over the policies and operations of the Company including the ability to set the size of the managing board of the Company and to appoint all members of the Company’s managing board other than the Whitehall member. As a result, the Company does not maintain a nominating committee or compensation committee.

ITEM 11.—EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Overview

This compensation discussion describes the material elements of compensation awarded to, earned by, or paid to each of our executive officers during 2006. This compensation discussion focuses on the information contained in the following tables and related footnotes and narrative for primarily the Company’s last completed fiscal year, but we also describe compensation actions taken prior to 2006 to the extent it enhances the understanding of our executive compensation disclosure.

The principal elements of our compensation program for our top executive officers are base salary, annual cash incentives, long-term equity incentives in the form of equity options, and post-termination severance provisions upon termination following a change of control. Our other benefits and perquisites consist of life and health insurance benefits, a qualified 401(k) savings plan, and include reimbursement for certain medical insurance and automobile payments.

In general, the objectives of the Company’s compensation program are to attract, motivate and retain talented executive officers. The existing compensation arrangements of each of the named executive officers were individually negotiated at the time of their respective hire and were designed to attract the executives to the Company and to provide stable leadership immediately following the Company’s acquisition of the Hotel.

Elements of Executive Compensation

Mr. Prieto’s employment agreement with the Company provides for a five-year term, with automatic one-year renewals after the completion of the initial five-year term unless terminated by either party. Pursuant to the terms of his employment agreement with the Company, Mr. Prieto received a base salary of $750,000 during 2006, and will receive a base salary of $800,000 for 2007. As an inducement to enter into the employment agreement, Mr. Prieto received a signing bonus of $130,000, which was paid shortly after the completion of the Company’s acquisition of the Hotel. Mr. Prieto participates in the Company’s annual bonus plan, which provides for the payment of annual bonus awards based on the achievement of performance goals established by the Company’s Board; provided, that Mr. Prieto’s annual bonus payment shall not be less than $100,000 in any year during the term

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of his employment. Mr. Prieto received a cash bonus of $135,000 in 2006. Mr. Prieto received a cash payment of $350,000 in February 2007 to compensate Mr. Prieto for stock options forfeited by him in connection with the termination of his employment with his previous employer. Mr. Prieto is also eligible to participate in the Company’s medical, dental, retirement and other standard benefit plans maintained by the Company. In addition, the Company will fund up to $51,415 annually for the premium payments associated with maintaining a whole-life insurance policy for the benefit of Mr. Prieto.

Mr. Prieto was granted an option to purchase 1.5% of the Company’s Class A Units and Class B Units issued and outstanding as of the date on which the Company’s acquisition of the Hotel was completed. Pursuant to the terms of the option, the Class A Units and Class B Units are purchasable at a price of $100 per Unit, the fair value of the units as of the date on which the acquisition was completed, as determined by the Company’s Board. Subject to Mr. Prieto’s continued employment with the Company, the Class A Units and Class B Units subject to the Option vest as to 33.33% of the total number of Class A Units and Class B Units awarded on each of the first three anniversaries of the date on which the option was granted. The option was granted pursuant to the Company’s 2004 Incentive Plan, and is subject to such other terms and conditions determined by the Company.

In the event the Company terminates Mr. Prieto’s employment without cause, he will receive a severance payment equal to at least 18 months of base salary, a prorated portion of the annual bonus, and continued participation in the Company’s medical plan for a period not to exceed 18 months. Mr. Prieto would be entitled to certain severance payments in the event of his death or termination due to a disability. Mr. Prieto will generally be bound by certain restrictive covenants. Specifically, should Mr. Prieto voluntarily terminate his employment or should the Company terminate his employment for cause, then Mr. Prieto will be prohibited from competing against the Company for a period of 6 months following his termination. Also, if Mr. Prieto’s employment is terminated with or without cause, he is prohibited from soliciting the Company’s employees for a period of 6 months following his termination. Mr. Prieto is also restricted from soliciting the Company’s clients for a period of one year following termination of employment for any reason.

The Company has also entered into employment agreements with Messrs. Schaffhauser and Ciancimino, which employment agreements provide for a term of employment expiring in February 2010, subject to automatic one year renewal thereafter unless terminated by either party. Mr. Schaffhauser will receive a base salary of $367,500 in 2007 and Mr. Ciancimino will receive a base salary of $297,000. Mr. Schaffhauser’s employment agreement provides that his base salary will be increased each year during the term by not less than 5%. Messrs. Schaffhauser and Ciancimino each are eligible to participate in the Company’s annual bonus plan and receive awards, if any, at the discretion of the Company’s Board. They are also eligible to participate in the medical, dental, retirement and other standard benefit plans maintained by the Company. The Company will pay the full cost of the premiums associated with Mr. Ciancimino’s coverage under the Company’s group medical plan during his term of employment.

In the event of a termination of employment by the Company without cause, each of Messrs. Schaffhauser and Ciancimino would be entitled to receive a severance payment equal to their base salary for the remainder of the unexpired term and continued participation in the Company’s medical plan for a period of not more than 6 months.

Concurrently with the Company’s acquisition of the Hotel, Messrs. Schaffhauser and Ciancimino were each granted an option to purchase 0.5% of the Company’s Class A Units and 0.5% of the Company’s Class B Units. Pursuant to the terms of the option, the Class A Units and Class B Units are purchasable at a price of $100 per Unit, the fair value of the units as of the date on which the acquisition was completed, as determined by the Company’s Board. The options vest at the same rate as provided under Mr. Prieto’s employment agreement. The Options were granted under the Company’s 2004 Incentive Plan, and are subject to such other terms and conditions as may be determined by the Company.

Elements of Executive Compensation

Base Salary.

Base salaries, as well as annual salary increases, for each of the executive officers were determined as a result of the negotiation of employment contracts. The base salaries for Messrs. Prieto, Schaffhauser and Ciancimino in 2006 were $750,000, $292,000 and 295,000, respectively, and in 2007 are $800,000, $367,500 and $297,000, respectively.

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Cash Bonus Opportunities.

The executive officers are eligible to participate in the Company’s annual bonus program. Mr. Prieto is guaranteed an annual bonus of at least $100,000 during each year of his employment contract with the Company. In addition, in February 2007, Mr. Prieto received a cash payment in the amount of $350,000 to compensate him for stock options forfeited as a result of the termination of his employment with his previous employer. Messrs. Schaffhauser and Ciancimino may receive annual cash incentive awards at the discretion of the Company’s Board of Directors based on the achievement of the Company’s performance goals. Mr. Schaffhauser received a bonus of $63,000 and Mr. Ciancimino received a bonus of $54,000 in 2006.

Equity Grants.

The executive officers were granted options under the terms and conditions of the Company’s 2004 Incentive Plan. The option grants fulfilled inducements made to secure the services of the executive officers prior to the Company’s acquisition of the Hotel. Messers. Prieto, Schaffhauser and Ciancimino were granted options at the time of the Company’s acquisition of the Hotel. No additional options have been granted since the initial grants in 2004.

Executive Benefits and Perquisites.

The executive officers participate in a Company sponsored 401(k) savings plan, as well as group medical, dental, life and disability insurance programs that are offered to all Company employees who are not covered by a collective bargaining agreement. Under the terms of Mr. Prieto’s employment agreement, the Company is obligated to pay up to $51,415 annually for the premium payments associated with maintaining a whole-life insurance policy for the benefit of Mr. Prieto. Under the terms of Mr. Ciancimino’s employment agreement, the Company is obligated to pay the full cost of premiums associated with Mr. Ciancimino’s coverage under the Company’s group medical insurance plan. The executive officers also participate in a supplemental medical insurance plan that covers all senior management personnel at the vice president level and above. The plan provides reimbursement for medical costs that are not covered by the group health and dental insurance plan. In addition, Mr. Prieto and Mr. Ciancimino each receive an annual automobile allowance of $9,000.

Severance Benefits.

In the event the Company terminates Mr. Prieto’s employment without cause, he will receive a severance payment equal to at least 18 months of base salary, a prorated portion of the annual bonus, and continued participation in the Company’s medical plan for a period not to exceed 18 months. Mr. Prieto would also be entitled to certain severance payments in the event of his death or termination due to a disability.

In the event of a termination of employment by the Company without cause, each of Schaffhauser and Ciancimino would be entitled to receive a severance payment equal to their base salary for the remainder of the unexpired term and continued participation in the Company’s medical plan for a period of not more than 6 months.

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Summary Compensation Table

The following table sets forth compensation earned by the executive officers during 2006.

SUMMARY COMPENSATION TABLE

(in thousands of $)

Name and Principal Positions	Year	Salary (1)		Bonus		Stock Awards	Options (2)		Non-Equity Incentive Plan Compensation	Change in Pension Value and Nonqualified Deferred Compensation Earnings	All Other Compensation			Total
Rodolfo Prieto (PEO) Chief Executive Officer and General Manager	2006	$	750	$	135	—	$	382	—	—	$	60	(3)	$	1,327
Robert Schaffhauser (PFO) Executive Vice President, Finance	2006	$	292	$	63	—	$	127	—	—	$	—		$	482
Kenneth M. Ciancimino Executive Vice President, Administration	2006	$	295	$	54	—	$	127	—	—	$	11	(4)	$	487

(1) The amounts represent the annual base salary for each Named Executive Officer for 2006.

(2) Each Named Executive Officer received an option to purchase a certain number of the Company’s Membership Units subject to the terms of the Named Executive Officer’s employment agreement and the equity compensation plan put in place by the Company. The amount reflects the 2006 amortized value of the options in accordance with FAS123R

(3) Includes $51,415 paid toward life insurance premiums and a $9.000 annual car allowance. Mr Prieto designates the beneficiary of the life insurance policy.

(4) Includes a $9,000 fixed annual car allowance and $2,184 medical insurance premium.

Grants of Under the 2004 Incentive Plan

There were no options granted during the year ended December 31, 2006.

Outstanding Equity Awards

The following table sets forth existing equity awards at December 31, 2006 that have not been exercised as of that date:

OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2006

Name and Principal Positions	Year	Securities Underlying Unexercised Options Exerciseable	Securities Underlying Unexercised Options Unexercisable	Securities Underlying Unexercised Unearned Options	Option Exercise Price		Option Expiration Date
Rodolfo Prieto (PEO) Chief Executive Officer and General Manager	2006	20,833	—	4,167	$	100 per share	June 17, 2014
Robert Schaffhauser (PFO) Executive Vice President, Finance	2006	6,945	—	1,389	$	100 per share	June 17, 2014
Kenneth M. Ciancimino Executive Vice President, Administration	2006	6,945	—	1,389	$	100 per share	June 17, 2014

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The Company made no equity awards during the year ended December 31, 2006.

Options Exercised and Stock Vested

During the year ended December 31, 2006, no options were exercised. During the year ended December 31, 2006, no equity awards were made to officers or employees of the Company.

Post-Employment Compensation

The Company has no post-employment compensation plans.

Nonqualified Deferred Compensation

The Company has no nonqualified deferred compensation plans.

Director Compensation

The Company does not provide any compensation to Mr. Barrack or to Mr. Langer for their services as Board members. Mr. Cummis, who serves as the independent member of the Board as required under the Term Loan, receives annual compensation of $100,000. Mr. Ribis receives compensation pursuant to the Vice Chairman Agreement.

On June 18, 2004, the Company entered into a Vice Chairman’s Agreement with Mr. Ribis. The current term of this agreement expires on June 18, 2007, with automatic one-year renewals after the completion of the initial three-year term, unless either party provides written notice of intention not to renew the agreement. Pursuant to the terms of the Vice Chairman Agreement, Mr. Ribis will receive annual base compensation of $600,000. Mr. Ribis is entitled to an annual bonus based upon achievement of the Company’s annual budget and business plan targets approved by the Company’s Board. Under this agreement, and as set forth in a separate Membership Unit Option Agreement, the Company granted Mr. Ribis an option to purchase 0.125 Class A Units at a price of $100 per unit and 125,000 Class B Units at $100 per unit. The option is subject to five-year vesting under which Mr. Ribis may, subject to his continued service to the Company, exercise one-fifth of the Membership Units subject to the option each year on and after each of the first, second, third, fourth and fifth anniversaries of June 18, 2004. Upon termination of this agreement under certain circumstances, the Company has the right to purchase and Mr. Ribis has the right to sell, any Membership Units held by Mr. Ribis. The agreement also contains confidentiality, non-competition and non-solicitation provisions.

The agreement includes the following termination benefits:

• If Mr. Ribis is terminated without “cause,” as defined in the agreement or Mr. Ribis terminates his services for “good reason,” as defined in the agreement, he will be entitled to receive his salary for the remainder of the term of the agreement. The options that would vest in the two-year period following the date of termination shall immediately vest and shall be exercisable for a period of 90 days following the date of termination.

• If Mr. Ribis dies or becomes disabled, he will be entitled to receive his base compensation for a period of six months following the date of termination. The options that would vest in the two-year period following the date of termination shall immediately vest and shall be exercisable for a period of one year following the date of death and 180 days following the date of termination due to disability.

• If Mr. Ribis is terminated for “cause,” as defined in the agreement or Mr. Ribis terminates his services “without good reason,” he will receive no additional compensation and all outstanding but unexercised options shall be cancelled.

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Director Compensation for 2006

Name	Fees Earned or Paid in Cash		Stock Awards	Option Awards	Non-Equity Incentive Plan Compensation	Change in Pension Value and Nonqualified Deferred Compensation Earnings	All Other Compensation	Total
Barrack		—	—	—	—	—	—		—
Ribis	$	600,000	—	—	—	—	—	$	600,000
Langer		—	—	—	—	—	—		—
Cummis	$	100,000	—	—	—	—	—	$	100,000

ITEM 12.—SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED MEMBER MATTERS

The table below sets forth the information regarding beneficial ownership of the Company’s Class A Units and Class B Units as of March 1, 2007 for:

• each Member who beneficially owns more than 5% of the outstanding Class A Units and Class B Units;

• each of the Company’s board members;

• each of the Company’s named executive officers; and

• all of the Company’s board members and officers as a group.

Beneficial ownership is determined in accordance with the rules and regulations of the SEC. Except as indicated in the footnotes to this table and subject to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all Class A Units listed as beneficially owned by them. Except as otherwise indicated, the address for each of the Company’s named executive officers is 1999 Avenue of the Stars, Suite 1200, Los Angeles, California 90067.

							Long-Term Compensation Awards Securities Underlying Options (#)
Name of Beneficial Owner	Class A Units Beneficially Owned	Percent of Class A Units		Class B Units Beneficially Owned	Percent of Class B Units		Class A Units		Class B Units
Colony Resorts LVH Voteco, LLC (1)	0.585	39	%	—	—		—		—
Colony Resorts LVH Co-Investment Voteco, LLC(1)	0.30	20	%	—	—		—		—
Colony Resorts LVH Holdings, LLC(1)	—	—		585,000	39	%	—		—
Colony Resorts LVH Co-Investment Partners, L.P.(1)	—	—		900,000	60	%	—		—
WH/LVH Managers Voteco, LLC (1)	0.60	40	%
Thomas J. Barrack, Jr.(2)	0.885	59	%	1,485,000	99	%	—		—
Stuart Rothenberg (3)	0.60	40	%
Bram Cramer (3)	0.60	40	%
Jonathan Langer (3)	0.60	40	%
Nicholas L. Ribis(4)	0.015	1	%	15,000	1	%	.125	(5)	125,000
Rodolfo Prieto	—	—		—	—		.025	(5)	25,000
Robert Schaffhauser	—	—		—	—		.0085	(5)	8,333.5
Kenneth M. Ciancimino	—	—		—	—		.0085	(5)	8,333.5
All board members and executive officers as a group (7 persons)	1.5	100	%	1,500,000	100	%	—		—

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(1) The principal address of Colony Resorts LVH Voteco, LLC or, Voteco, Colony Resorts LVH Co-Investment Voteco, LLC, or Co-Investment Voteco, Colony Resorts LVH Holdings, LLC, or Holdings, and Colony Resorts LVH Co-Investment Partners, L.P., or Co-Investment Partners, is 1999 Avenue of the Stars, Suite 1200, Los Angeles, California 90067. The principal address of WH/LVH Managers Voteco, LLC, or Whitehall Voteco, is 85 Broad Street, New York, New York 10004.

(2) Mr. Barrack is the sole member of Voteco and the controlling member of Coinvestment Voteco and thereby is deemed to have beneficial ownership of the Class A Units owned by Voteco and Coinvestment Voteco. Mr. Barrack and Mr. Ribis are the members and managers of Coinvestment Voteco. As all decisions regarding the power to vote or dispose of the Class A Units are controlled Mr. Barrack, Mr. Ribis is not deemed to have beneficial ownership of the Class A Units held by Coinvestment Voteco. Mr. Barrack is also deemed to have beneficial ownership of the Class B Units owned by Holdings and Co-Investment Partners.

(3) Mr. Rothenberg, Mr. Cramer and Mr. Langer are the sole members of Whitehall Voteco and are deemed to have beneficial ownership of the Class A Units owned by Whitehall Voteco.

(4) Pursuant to an Option Agreement with Voteco and Holdings, Mr. Ribis exercised his right to acquire 0.015 Class A Units and 15,000 Class B Units from Voteco and Holdings, respectively.

(5) Each Named Executive Officer received an option to purchase the percentage of the Company’s Membership Units noted in the table that are issued and outstanding as of June 18, 2004, subject to the terms of each Named Executive Officer’s employment agreement and the equity compensation plan put in place by the Company.

Prior to and in anticipation of the acquisition of the Hotel, the Company entered into employment arrangements and letter agreements with Messrs. Prieto, Schaffhauser and Ciancimino. The Company entered into additional letter agreements with Messrs. Prieto, Schaffhauser and Ciancimino as of the closing of the Acquisition. Pursuant to the employment arrangements and letter agreements, the Company granted options to purchase Class A Units and Class B Units, subject to the terms of the employment arrangements and other relevant documents, including the Company’s 2004 Incentive Plan. However, the Company will not grant to any one of the executive officers an option to purchase more than 5% of the Class A Units outstanding at the time such option is granted. The Class A Units and Class B Units subject to the options granted to Messrs. Prieto, Schaffhauser and Ciancimino may be purchased at an exercise price of $100 per unit.

Under a similar agreement, and as set forth in a separate Membership Unit Option Agreement, the Company granted Mr. Ribis an option to purchase 0.125 Class A Units at a price of $100 per unit and 125,000 Class B Units at $100 per unit. The option is subject to five-year vesting under which Mr. Ribis may, subject to his continued service to the Company, exercise one-fifth of the Membership Units subject to the option each year on and after each of the first, second, third, fourth and fifth anniversaries of June 18, 2004. Upon termination of this agreement under certain circumstances, the Company has the right to purchase and Mr. Ribis has the right to sell, any Membership Units held by Mr. Ribis. Mr. Ribis has not exercised any options under this agreement.

The Class A Units held by Voteco, Co-Investment Voteco and Whitehall Voteco are subject to the Voteco Transfer Restriction Agreement, the Co-Investment Voteco Transfer Restriction Agreement and the Whitehall Voteco Transfer Restriction Agreement, respectively.

Pursuant to the Voteco Transfer Restriction Agreement, Holdings will have the right to acquire such Class A Units on each occasion that Holdings proposes to transfer any Class B Units held by it to a proposed purchaser who, in connection with such proposed transfer, has obtained all licenses, permits, registrations, authorizations, consents, waivers, orders, findings of suitability or other approvals required to be obtained from, and has made all filings, notices or declarations required to be made with, all gaming authorities under all applicable gaming laws (an “Approved Sale”). In such event, Holdings shall have an option to purchase from Voteco the number of Class A Units equal to the product of (a) the number of Class A Units held by Voteco and (b) the fraction whose numerator is the number of Class B Units proposed to be sold by Holdings in the Approved Sale and whose denominator is the number of Class B Units held by Holdings.

Pursuant to the Co-Investment Voteco Transfer Restriction Agreement, Co-Investment Partners will have the right to acquire such Class A Units on each occasion that Co-Investment Partners proposes to transfer any Class B Units held by it to a proposed purchaser in connection with an Approved Sale. In such event, Co-Investment Partners shall have an option to purchase from Coinvestment Voteco the number of Class A Units equal to the product of (a) the number of Class A Units held by Coinvestment Voteco and (b) the fraction whose numerator is the number of Class B Units proposed to be sold by Co-Investment Partners in the Approved Sale and whose denominator is the number of Class B Units held by Co-Investment Partners.

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Pursuant to the Whitehall Voteco Transfer Restriction Agreement, Co-Investment Partners will have the right to acquire such Class A Units on each occasion that Co-Investment Partners proposes to transfer any Class B Units held by it to a proposed purchaser in connection with an Approved Sale. In such event, Co-Investment Partners shall have an option to purchase from Whitehall Voteco the number of Class A Units equal to the product of (a) the number of Class A Units held by Whitehall Voteco and (b) the fraction whose numerator is the number of Class B Units proposed to be sold by Co-Investment Partners in the Approved Sale and whose denominator is the number of Class B Units held by Co-Investment Partners.

ITEM 13.—CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Operating Agreement

Pursuant to the terms of the Operating Agreement, the Board of the Company was initially comprised of two members, Mr. Barrack and Mr. Ribis. In addition, there was also two nonvoting Board observers for certain ERISA purposes, on behalf of certain private equity fund investors. The Operating Agreement also provides that, subject to receiving all required prior approvals of the Nevada Gaming Authorities permitting the appointment of (i) any one of Stuart Rothenberg, Brahm Cramer and/or Jonathan Langer (or an alternative manager of Whitehall Street Global Real Estate Partnership, an affiliate of Goldman Sachs & Co. (“Whitehall”) in their stead, if such alternative manager is another managing director of Goldman Sachs & Co. with comparable seniority) (collectively the “Whitehall Managers”) as a member of the Board and (ii) the purchase at cost by the Whitehall Managers of certain Class A Units, then one of the Whitehall Managers would become a member of the Board. After receiving all the required approvals from the Nevada gaming authorities, Jonathan Langer was appointed to the Board, effective July 19, 2006. As a member of the Board, Mr. Langer has the right to vote on all matters that come before the Board and will have veto rights over certain actions. Pursuant to the Term Loan documents, the Company is also required to appoint an independent board member to the Board. The Company has appointed Mr. Cummis as independent board member. Pursuant to the Operating Agreement, the independent board member will have a veto right over certain matters as long as the Term Loan is outstanding, including dissolving or liquidating the Company, consolidation or merger, engaging in any business other than the management of the Hotel, amending the Operating Agreement or transactions with affiliates not in the ordinary course of business. The Board shall not have the right to approve such matters without the consent of the independent board member. The independent board member shall not be entitled to vote on any other matters that may come before the Board.

The Operating Agreement, provides that in the event the Company seeks to raise additional equity capital, each member of the Company will have a preemptive right, to the extent permitted by law, to make additional investments in the Company as are necessary to maintain such Member’s pro rata interest in the Company.

Pursuant to the Operating Agreement, Mr. Ribis and any employee members (an “Employee Member”) will be prohibited from transferring any Membership Units prior to the initial public offering of the Company’s equity. In the event Mr. Ribis or any Employee Member proposes to transfer any Membership Units, then the Company has a right of first offer on such transfer. In the event that the Company does not elect to purchase any or all of the Membership Units, the right of first offer passes to Holdings, Co-Investment Partners, Voteco, Coinvestment Voteco and Whitehall Voteco on a pro rata basis among themselves (based on the number of Membership Units then owned by each entity) or as they shall otherwise agree. If Holdings, Co-Investment Partners, Voteco, Coinvestment Voteco or Whitehall Voteco offer to sell their respective holdings or a substantial portion of their respective holdings of the Company’s Membership Units, Mr. Ribis and other Qualified Members (as defined in the Operating Agreement) have the right to participate in the sale on the same terms.

All holders of the Membership Units have “piggyback” registration rights. If the Company registers any of its equity securities, the holders may require the Company to include all or a portion of their registrable securities in the registration and in any related underwriting, subject to customary underwriter cutback provisions.

The Company does not currently intend to make an initial public offering, however, in the event the Company applies to make a public offering of any of its securities, it will first apply to the Nevada Gaming Commission to obtain any required approval of that offering pursuant to Nevada Gaming Commission Regulation 16.110.

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Additionally, if the Nevada Gaming Authorities determine that any member of the Company is not suitable to continue to be a member of the Company and requires that such member be removed from the Company, then the Company will give notice to the member and the member will be entitled to receive in consideration for its Membership Units an amount equal to the fair value in cash or promissory notes. Fair value in such event will be determined by the Board.

Pursuant to the Operating Agreement, upon liquidation or dissolution of the Company, the proceeds from the liquidation of the Company’s assets will be applied and distributed first to the payment and discharge of all of the Company’s debts and liabilities and second to the members in accordance with capital accounts at such time.

Indemnification

The Purchase and Sale Agreement provides that the Company will provide directors and officers liability insurance coverage to the current directors and officers of the Company for a term of six years following the closing of the Acquisition. In addition, the Operating Agreement contains indemnity provisions pursuant to which the Company will indemnify the directors and officers under certain circumstances.

Transfer Restriction Agreements

On June 18, 2004, the following transfer restriction agreements were executed: (a) the Coinvestment Transfer Restriction Agreement and (b) the Voteco Transfer Restriction Agreement. In connection with the transfer of certain Class A Units to Whitehall Voteco from Co-Investment Voteco, the Whitehall Voteco Transfer Restriction Agreement was executed.

The Company’s Class A Units issued to Coinvestment Voteco are subject to the Coinvestment Transfer Restriction Agreement, which provides, among other things, that:

• Co-Investment Partners has the right to acquire Class A Units from Coinvestment Voteco on each occasion that Class B Units held by Co-Investment Partners would be transferred to a proposed purchaser who, in connection with such proposed sale, has obtained all licenses, permits, registrations, authorizations, consents, waivers, orders, findings of suitability or other approvals required to be obtained from, and has made all findings, notices or declarations required to be made with, all gaming authorities under all applicable gaming laws,

• A specific purchase price will be paid to acquire the Class A Units from Coinvestment Voteco, and

• Coinvestment Voteco will not transfer ownership of Class A Units owned by it except pursuant to such option of Co-Investment Partners.

The Company’s Class A Units issued to Voteco are subject to the Voteco Transfer Restriction Agreement, which the provides, among other things, that:

• Holdings has the right to acquire Class A Units from Voteco on each occasion that Class B Units held by Holdings would be transferred to a proposed purchaser who, in connection with such proposed sale, has obtained all licenses, permits, registrations, authorizations, consents, waivers, orders, findings of suitability or other approvals required to be obtained from, and has made all findings, notices or declarations required to be made with, all gaming authorities under all applicable gaming laws,

• A specific purchase price will be paid to acquire the Class A Units from Voteco, and

• Voteco will not transfer ownership of Class A Units owned by it except pursuant to such option of Holdings.

The Company’s Class A Units issued to Whitehall Voteco are subject to the Whitehall Voteco Transfer Restriction Agreement, which provides, among other things, that:

• Co-Investment Partners has the right to acquire Class A Units from Whitehall Voteco on each occasion that Class B Units held by Co-Investment Partners would be transferred to a proposed purchaser who, in connection with such proposed sale, has obtained all licenses, permits, registrations, authorizations, consents, waivers, orders, findings of suitability or other approvals required to be obtained from, and has made all findings, notices or declarations required to be made with, all gaming authorities under all applicable gaming laws;

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• A specific purchase price, as determined in accordance with the Whitehall Voteco Transfer Restriction Agreement, will be paid to acquire the Class A Units from Whitehall Voteco; and

• Whitehall Voteco will not transfer ownership of Class A Units owned by it except pursuant to such option of Co-Investment Partners.

Sale Right Agreement

The Company, Voteco, Coinvestment Voteco, Co-Investment Partners and Holdings entered into a Sale Right Agreement, dated June 18, 2004 (the “Sale Right Agreement”). Pursuant to the terms of Co-Investment Partners’ partnership agreement, at any time after May 23, 2008, Whitehall (a limited partner in Co-Investment Partners and an affiliate of Goldman Sachs & Co. and Goldman Sachs Commercial Mortgage Capital, L.P., the lender under the new Term Loan) has the right to request that Co-Investment Partners purchase all of Whitehall’s interest in Co-Investment Partners at a purchase price determined by Whitehall. Pursuant to the Sale Right Agreement, upon receiving notice from Whitehall that it has exercised the sale right above the Company must, within forty-five days elect to either (i) purchase Whitehall’s interest in Co-Investment Partners or (ii) sell the Company in its entirety. If the Company elects not to purchase Whitehall’s interest, it must appoint Goldman Sachs & Co. as its sole and exclusive agent for a period of one year to seek to sell the Company at a price extrapolated from the price Whitehall established for its interest in Co-Investment Partners. In addition, on June 18, 2010, if the Company has not been sold pursuant to sale right above or otherwise, the Company shall appoint Goldman as its sole agent to seek to sell the Company at the best price obtainable.

Services Agreement

In connection with the execution of the Vice Chairman Agreement, on June 18, 2004, the Company and Resorts International Hotel and Casino, Inc., an affiliate of Colony Capital (“Resorts”), entered into a Services Agreement (the “Services Agreement”). Pursuant to the terms of the Services Agreement, the Company and Resorts agreed to allocate the costs of all benefits provided to Mr. Ribis by the Company and Resorts pursuant to the terms of Mr. Ribis’ Vice Chairman agreements with each of the Company and Resorts, respectively, based on the proportion of business time Mr. Ribis dedicates to each of the Company and Resorts.

Joint Services Agreement

On June 18, 2004, the Company and Resorts International Hotel, Inc., a wholly owned subsidiary of Resorts (“RIH”) entered into a Joint Services Agreement (the “Joint Services Agreement”). Pursuant to the Joint Services Agreement, for an initial term of three years with automatic one year renewal periods, the Company and RIH agreed to cooperatively develop and implement joint programs as they shall mutually agree upon with the goal of achieving collective cost savings and efficiencies for each of the Company and RIH. The Joint Services Agreement is terminable by either party with six months notice. On April 25, 2005, this agreement was amended and restated to add RIH Resorts, LLC, an affiliate of the Company (through common capital), as a party to the agreement.

The Company provides and/or receives services under the Joint Services Agreement. The total net value of services received from affiliated companies was approximately $5.5 million in 2006.

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Joint Marketing Agreement

On June 18, 2004, the Company and RIH entered into a Joint Marketing Agreement (the “Joint Marketing Agreement”). Pursuant to the Joint Marketing Agreement, for an initial term of three years with automatic one year renewal, the Company and RIH agreed to cooperatively develop and implement such joint advertising and marketing programs for the casino hotel owned by each company as they may mutually agree upon. Each of the Company and RIH also agreed to use reasonable efforts to cross-advertise their respective casino hotels. Pursuant to the agreement, the Company and RIH also granted a non-exclusive royalty-free license to each other during the term of the agreement to use the other party’s trademarks in connection with joint marketing promotions. The Joint Marketing Agreement is terminable by either party with six months notice. On April 25, 2005, this agreement was amended and restated to add RIH Resorts, LLC, an affiliate of the Company as a party to the agreement.

Policies Dealing with Related Party Transactions

The Company is in the process of adopting written procedures for the review and approval of transactions with related persons. These procedures will cover, among other things, any transaction in which the Company is a participant and in which a related party has a direct or indirect material stake or interest. Related party transactions that will be covered by these procedures are generally considered by the Chief Executive Officer or, in the case of any Board member, by the disinterested members of the Board.

ITEM 14.—PRINCIPAL ACCOUNTANTS FEES AND SERVICES

Audit Fees

Audit fees recognized as expense in 2006, 2005 and 2004 were $190,671, $367,531 and $0 respectively.

Audit-related Fees

Audit-related fees recognized as expense in 2006, 2005 and 2004 were $20,000, $24,269 and $29,500, respectively.

Tax Fees

Tax fees recognized as expense in 2006, 2005 and 2004 were $53,600, $0 and $2,900, respectively.

All Other Fees

Other professional fees recognized as expense in 2006, 2005 and 2004 were $74,711, $42,169 and $60,400 respectively.

The Company does not have an audit committee; therefore, none of the above fees were pre-approved by the audit committee.

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PART IV

ITEM 15.—EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

(a) Documents filed as part of the report.

(1) List of Financial Statements

Colony Resorts LVH Acquisitions, LLC

Report of Independent Registered Public Accounting Firm

Balance Sheets

Statements of Operations

Statements of Members’ Equity

Statements of Cash Flows

Notes to Financial Statements

LVH Corporation

Report of Independent Registered Public Accounting Firm

Statements of Operations and Accumulated Deficit Statements of Cash Flows

Notes to Financial Statements

(2) Financial Statement Schedule

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS

(In thousands)

Description	Balance at beginning of period		Additions Charge to costs and expense		Deductions Accounts charged off (recovered)		Balance at end of period
Allowance for doubtful accounts and discounts:
Year ended December 31:
2005	$	133	$	2,243	$	—	$	2,376
2006	$		$		$		$

We have omitted schedules other than the ones listed above because they are not required or not applicable or the required information is shown in the Financial Statements or Notes to the Financial Statements.

(3) List of Exhibits

EXHIBIT NUMBER
2.1	Purchase and Sale Agreement, dated as of December 24, 2003, by and among Colony Resorts LVH Acquisitions, LLC, LVH Corporation and Caesars Entertainment Corporation*
3.1	Articles of Organization, dated as of December 18, 2003, for Colony Resorts LVH Acquisitions, LLC*
3.2	Operating Agreement, dated as of December 22, 2003, for Colony Resorts LVH Acquisitions, LLC*
3.3	Amended and Restated Operating Agreement, dated June 18, 2004, for Colony Resorts LVH Acquisitions, LLC+
3.4	Amendment No. 1 to the Amended and Restated Operating Agreement, dated July 23, 2004, for Colony Resorts LVH Acquisitions, LLC****

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EXHIBIT NUMBER
3.5	Amendment to Articles of Organization, dated June 25, 2004, for Colony Resorts LVH Acquisitions, LLC******
10.1	Deposit Escrow Agreement, dated as of December 24, 2003, by and among LVH Corporation, Colony Resorts LVH Acquisitions, LLC and Nevada Title Company*
10.2	Coinvestment Transfer Restriction Agreement, dated June 18, 2004, by and among Mr. Barrack, Mr. Ribis, Co-Investment Partners and Coinvestment Voteco+
10.3	Transfer Restriction Agreement, dated June 18, 2004, by and among Mr. Barrack, Holdings and Voteco+
10.4	Employment Agreement, dated as of March 9, 2004, by and between Colony Resorts LVH Acquisitions, LLC and Rodolfo Prieto*
10.5	Employment Agreement, dated as of March 9, 2004, by and between Colony Resorts LVH Acquisitions, LLC and Robert Schaffhauser*
10.6	Employment Agreement, dated as of March 9, 2004, by and between Colony Resorts LVH Acquisitions, LLC and Kenneth Ciancimino*
10.7	Letter Agreement, dated as of March 10, 2004, by and between Colony Resorts LVH Acquisitions, LLC and Rodolfo Prieto*
10.8	Letter Agreement, dated as of March 10, 2004, by and between Colony Resorts LVH Acquisitions, LLC and Robert Schaffhauser*
10.9	Letter Agreement, dated as of March 10, 2004, by and between Colony Resorts LVH Acquisitions, LLC and Kenneth Ciancimino*
10.10	Employment Agreement, dated as of May 17, 2004, by and between Colony Resorts LVH Acquisitions, LLC and Gonzalo De Varona.***
10.11	Employment Agreement, dated as of April 12, 2004, by and between Colony Resorts LVH Acquisitions, LLC and Robert Stewart.***
10.12	Vice Chairman Agreement, dated June 18, 2004, between Colony Resorts LVH Acquisitions, LLC and Nicholas L. Ribis.****
10.13	Colony Resorts LVH Acquisitions, LLC 2004 Incentive Plan****
10.14	Loan Agreement, dated June 18, 2004, by and between Colony Resorts LVH Acquisition, LLC and Archon Financial, L.P.+
10.15	Sale Right Agreement, dated June 18, 2004, by and among Colony Resorts LVH Acquisitions, LLC, Colony Resorts LVH Holdings, LLC, Colony Resorts LVH Coinvestment Voteco, LLC, Colony Resorts LVH Voteco, LLC and Colony Resorts LVH Co-Investment Partners, L.P.****
10.16	Services Agreement, dated June 18, 2004, between Colony Resorts LVH Acquisitions, LLC and Resorts International Hotel and Casino, Inc.****
10.17	Joint Marketing Agreement, by and between Colony Resorts LVH Acquisitions, LLC and Resorts International Hotel, Inc.****
10.18	Joint Services Agreement, by and between Colony Resorts LVH Acquisitions, LLC and Resorts International Hotel, Inc.****
10.19	Employment Agreement, dated as of May 11, 2003, between LVH Corporation and Thomas Page.****
10.20	Addendum to Employment Agreement, dated as of June 22, 2004, by and between Colony Resorts LVH Acquisitions, LLC and Thomas Page.****
10.21	Addendum to Employment Agreement, dated as of April 28, 2006, by and between Colony Resorts LVH Acquisitions, LLC and Robert Schaffhauser ++
10.22	Addendum to Employment Agreement, dated as of April 28, 2006, by and between Colony Resorts LVH Acquisitions, LLC and Ken Ciancimino ++
10.23	Loan Agreement dated as of May 11, 2006, between Colony Resorts LVH Acquisitions, LLC and Goldman Sachs Commercial Mortgage Capital, L.P. +++
10.24	First Amendment to the Colony Resorts LVH Acquisitions, LLC 2004 Incentive Plan ++++
10.25	Amended and Restated Joint Services Agreement, dated as of April 26, 2005 by and between Colony Resorts LVH Acquisitions, LLC, Resorts International Hotel, Inc. and Resorts International Holdings, LLC.
10.26	Amended and Restated Joint Marketing Agreement dated as of April 26, 2006 by and between Colony Resorts LVH Acquisitions, LLC, Resorts International Hotel, Inc. and Resorts International Holdings, LLC.
14.1	Code of Ethics*******
31.1	Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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EXHIBIT NUMBER
32.2	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*	Incorporated by reference to the Registrant’s Form 10, filed March 15, 2004 (File Number 0-50635).
**	Incorporated by reference to the Registrant’s Amendment No. 1 to Form 10, filed April 26, 2004 (File Number 0-50635).
***	Incorporated by reference to the Registrant’s Post-Effective Amendment No. 1 to Form 10, filed June 17, 2004 (File Number 0-50635).
+	Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q, filed June 28, 2004 (File Number 0-50635).
****	Incorporated by reference to Registrant’s Post-Effective Amendment No. 2 to Form 10 filed August 13, 2004 (File Number 0-50635).
*****	Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q filed August 23, 2004 (File Number 0-50635).
******	Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q/A filed September 9, 2004 (File Number 0-50635).
******	Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q filed November 15, 2004 (File Number 0-50635).
*******	Incorporated by reference to Registrant’s Annual Report on Form 10-K filed March 31, 2004 (File Number 000-50635)
++	Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q filed August 14, 2006.
+++	Incorporated by reference to Registrant’s Current Report on Form 8-K, filed May 19, 2006.
++++	Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q filed November 14, 2006.

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SIGNATURES

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

	COLONY RESORTS LVH ACQUISITIONS, LLC
March 30, 2007	By:	/s/ RODOLFO PRIETO
		Rodolfo Prieto
		Chief Executive Officer and General Manager (Principal Executive Officer)
March 30, 2007	By:	/s/ ROBERT SCHAFFHAUSER
		Robert Schaffhauser
		Executive Vice President of Finance (Principal Financial Officer)

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EX-10.25

Exhibit 10.25

Amended and Restated Joint Services Agreement

THIS AMENDED AND RESTATED JOINT SERVICES AGREEMENT (this “Agreement”) is made as of this 26th day of April 2005, by and among Resorts International Hotel, Inc., a New Jersey corporation (“RIH”) having a place of business at 1133 Boardwalk, Atlantic City, New Jersey 08401, Colony Resorts LVH Acquisitions, LLC, a Nevada limited liability company (“LVH”) having a place of business at The Las Vegas Hilton, 3000 Paradise Road, Las Vegas, Nevada 89109 and Resorts International Holdings, LLC, a Delaware limited liability company (“RIH Resorts,” and together with the direct and indirect subsidiaries of RIH Resorts set forth on Schedule A hereto, “Resorts”), having places of business at Resorts East Chicago, 777 Harrah’s Boulevard, East Chicago, Indiana 46312, Resorts Tunica, 1100 Casino Strip Boulevard, Robinsonville, Mississippi 38664, The Atlantic City Hilton, Boston Avenue & The Boardwalk, Atlantic City, New Jersey 08401 and Bally’s Tunica, 1450 Bally’s Boulevard, Robinsonville, Mississippi 38664.

RECITALS:

A. RIH owns and operates “Resorts Atlantic City,” a hotel and casino resort facility located in Atlantic City, New Jersey (“RIH Casino”).

B. LVH owns and operates “The Las Vegas Hilton,” a hotel and casino resort facility located in Las Vegas, Nevada (“LVH Casino”).

C. Resorts owns and operates “Resorts East Chicago,” a hotel and casino resort facility located in East Chicago, Indiana, “Resorts Tunica,” a hotel and casino resort facility located in Robinsonville, Mississippi, “The Atlantic City Hilton,” a hotel and casino resort facility located in Atlantic City, New Jersey and “Bally’s Tunica,” a hotel and casino resort facility located in Robinsonville, Mississippi (collectively, the “Resorts Casinos,” and together with RIH Casino and LVH Casino, the “Casinos”).

D. RIH, LVH and Resorts believe it to be in their best interests to jointly procure certain products and services, and to otherwise cooperate in the use and implementation of such products and services, in the areas of insurance, risk management, legal, information technology, entertainment booking and purchasing, in accordance with the terms and conditions set forth in this Agreement, and that by so doing each of RIH, LVH and Resorts can achieve substantial cost savings and efficiencies in the operation of the Casinos.

E. Each of RIH, LVH and Resorts believes it to be in its best interests to permit, upon occasion, certain of its employees to provide certain services to another party hereunder in accordance with the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the premises and mutual promises and representations contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

1. JOINT PROPOSALS.

1.1 Cooperative Covenant. The parties agree to cooperatively develop and implement such joint programs for the Casinos for the procurement and implementation of insurance products and services, risk management services, legal services, information technology products and services, entertainment products and services and general purchasing needs as they may mutually agree upon. In connection with the efforts of the parties under this Agreement, each party shall utilize such personnel, resources, skills, know-how and information, as it considers necessary and consistent with its internal policies.

1.2 Joint Efforts. Each of RIH, LVH and Resorts shall, by notice to the other, designate one officer or director (a “Liaison”) to serve as a primary liaison to the other party in each of the areas of insurance, risk management, legal, information technology, entertainment and purchasing. Each Liaison shall confer with his or her counterpart in order to explore opportunities for collective cost savings and efficiencies in the procurement by the Casinos of products or services within their respective areas of expertise, and, to the extent feasible, develop programs or proposals to achieve such cost savings and efficiencies (a “Joint Proposal”). A Joint Proposal may consist of a single transaction (such as the using combined purchasing power to command more favorable terms for the purchase of commonly needed supplies) or an on-going program (such as joint liability insurance coverage).

1.3 Acceptance of Joint Proposals. RIH, LVH and Resorts may accept or reject any Joint Proposal in their respective sole and absolute discretion. In the event RIH, LVH and Resorts all accept a Joint Proposal, then the parties shall implement such Joint Proposal in accordance with its terms and the terms and conditions set forth in this Agreement. In the event of any conflict between the terms of a Joint Proposal and the terms and conditions of this Agreement, the terms and conditions of this Agreement shall control.

2. TERM.

2.1 Term. The term of this Agreement shall commence on the date hereof and shall continue for a period of three (3) years (the “Initial Term”) and, at the end of the Initial Term and each year thereafter, shall automatically renew for an additional one (1) year (Initial Term together with any renewal, the “Term”) unless the Initial Term or Term are sooner terminated as provided for herein.

2.2 Termination. This Agreement may be terminated with respect to any party:

a. Upon six (6) months’ prior written notice to the other parties; or

b. Upon the mutual written consent of all parties.

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2.3 Automatic Termination. This Agreement shall automatically terminate with respect to any party or, in the case of subclause (f) below, with respect to LVH only, upon the occurrence of any of the following events:

a. The breach by such party of any of its obligations hereunder provided that the other parties have given written notice of the alleged breach and such breach is continuing after thirty (30) days from the date of said notice;

b. The loss by such party of any license required to operate any Casino;

c. Any material part of such party’s rights under this Agreement shall be declared invalid or unenforceable;

d. Such party ceases to function as a going concern, becomes insolvent, makes an assignment for the benefit of creditors, files a petition or has a petition filed against it under any bankruptcy, insolvency, reorganization or similar law in any country, commits an act of bankruptcy or similar law or takes any action to effect any of the foregoing; or

e. The acquisition of such party by a third party, whether by way of merger, consolidation, asset sale or stock sale.

f. In the event Archon Financial, L.P. exercises any of it remedies pursuant to the Loan Agreement dated as of June 18, 2004 between LVH, as Borrower, and Archon Financial, L.P., as Lender, including foreclosure on the LVH Casino or the tender by LVH of a deed in lieu of foreclosure.

3. COSTS OF PREPARING AND IMPLEMENTING JOINT PROPOSALS.

3.1 Consideration for Joint Proposals. All Joint Proposals shall be on terms that would be available to RIH, LVH and Resorts on an arm’s length basis with third parties and which are no less favorable to RIH, LVH and Resorts than those that would have been obtained in a comparable transaction with an unrelated person.

3.2 Cost Allocation.

Any party that incurs costs in excess of its direct share or any expense which is directly allocable to or incurred on behalf of another party shall be reimbursed by such party so long as such party consented to such expense prior to the incurrence of same. Unless an alternative reimbursement method is specified in an accepted Joint Proposal, a party seeking reimbursement shall issue a reimbursement request to the other parties detailing the costs and expenses incurred for which reimbursement is sought, the calculation of each party’s share of such costs and expenses, and such supporting documentation and other information as the other parties may reasonably request. Within twenty (20) days of receipt of a reimbursement request and supporting documentation, the parties with the reimbursement obligations shall reimburse the party seeking reimbursement for such costs and expenses. All expenses associated with the compliance of any governmental authority regulating gaming in the States of New Jersey,

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Nevada, Indiana and Mississippi, including without limitation the New Jersey Casino Control Commission, the New Jersey Division of Gaming Enforcement, the Nevada Gaming Commission, the Nevada State Gaming Control Board, the Indiana Gaming Commission, the Indiana State Police, Gaming Division and the Mississippi Gaming Commission, shall be the expense of the party regulated by such authority.

3.3 Expenses. Each of RIH, LVH and Resorts agrees to be solely responsible for and to pay out of its own funds all expenses incurred by such party relating to or arising out of such party’s performance of this Agreement and the implementation of any Joint Proposal, including without limitation, fees, taxes, insurance premiums, legal and accounting service fees, all secretarial, photocopying, telecommunications, office supplies and other support services, and travel, food and lodging expenses.

3.4 Employee Compensation Allocation. It is contemplated by the parties hereto that one party may permit certain employees of such party to provide services to another party (the “Shared Employees”). For purposes of Section 3.2 above, the parties hereto agree that the party that receives the benefit of the services of any Shared Employee shall reimburse such Shared Employee’s employer for that portion of the Shared Employee’s total compensation attributable to the business time such Shared Employee spends for the benefit of such receiving party. In no event shall any Shared Employee be deemed an employee of any other party, and the party who the Shared Employee is initially employed with shall remain the employer for all purposes under all applicable laws. For purposes of this Section 3.4, “compensation” shall include salary, wages, benefits, reasonable business expenses and federal, state and local payroll taxes, and “claims” shall include disability, workers’ compensation, discrimination or other employer liability or tort claim.

4. CONFIDENTIALITY.

4.1 Confidentiality. Each of RIH, LVH and Resorts acknowledges that it may acquire Confidential Information (as defined below) with respect to the other parties and the businesses such parties conduct. In connection therewith, each party covenants to refrain from disclosing at any time any such Confidential Information with respect to the other parties unless legally compelled to disclose such information in response to a summons, order or subpoena issued by a court or governmental agency (provided that such party shall have provided the other affected party or parties with prompt written notice of any such request or requirement so that it or they may seek a protective order or other appropriate remedy). Upon any termination of this Agreement, each party agrees to return to each other party all documents or recorded material of any type (including all copies thereof) which may be in its possession or under its control and which constitutes or relates to Confidential Information of each such other party.

For purposes of this Agreement “Confidential Information” shall mean all confidential information with respect to a party and its affiliates and the business they conduct, including, without limitation, confidential information and trade secrets concerning such business and other plans, customer names, customer requirements and supplier names, profit formulas and financial plans. “Confidential Information” shall not include (i) information generally known to the public, and (ii) information properly and legally received from a third party which is not an affiliate of RIH, LVH or Resorts and which is not under any duty to the other party not to disclose such information.

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4.2 Remedies. Each of RIH, LVH and Resorts hereby acknowledges and agrees that the prohibitions against disclosure of Confidential Information recited herein are in addition to, and not in lieu of, any rights or remedies each may have available to it pursuant to the laws of any jurisdiction or common law or judicial precedent to prevent the disclosure of proprietary or Confidential Information, and the enforcement by any of them of its rights and remedies pursuant to this Agreement shall not be construed as a waiver of any other rights or available remedies that it may possess in law or equity absent this Agreement.

4.3 Survival. The provisions of this Article 4 shall survive any termination of this Agreement.

5. INDEMNIFICATION.

5.1 Each of RIH, LVH and Resorts (each an “Indemnitor”) agrees to indemnify each other party and such party’s officers, members, shareholders, employees, agents and controlling persons (collectively, “Indemnitees”) from and against any and all liabilities imposed on such party and its Indemnitees by any governmental authority by reason of Indemnitor’s performance of its obligations under this Agreement or the implementation by Indemnitor of a Joint Proposal.

5.2 Each of RIH, LVH and Resorts agrees to indemnify and hold each other party and such party’s Indemnitees free and harmless from and against any damages, liability, cost, claim, fee, obligation or expense, including attorneys’ fees and expenses incurred in defense of any of the foregoing (“Losses”), arising out of or in connection with the performance by Indemnitor of its obligations under this Agreement or the implementation by Indemnitor of a Joint Proposal; provided, however, that the obligation to indemnify and hold harmless hereunder shall not include any Losses suffered by any party or its Indemnitees arising out of the gross negligence or willful misconduct of any such party or its Indemnitees or the performance of duties not in conformity with, or in breach of, this Agreement.

5.3 The provisions of this Section 5 shall survive any termination of this Agreement.

6. REPRESENTATIONS AND WARRANTIES.

6.1 RIH Representations and Warranties. RIH represents and warrants as follows:

a. RIH is a corporation duly organized, validly existing and in good standing under the laws of the State of New Jersey, and has all requisite power and authority to conduct its business as now conducted.

b. The execution, delivery and performance by it of this Agreement and the consummation of the transactions contemplated hereby do not and will not violate or conflict with any provision of its organizational documents of RIH, or any other agreement to which it is a party or pursuant to which any of its assets are bound.

5

c. This Agreement has been duly executed and delivered by RIH and constitutes the legal, valid and binding obligation of RIH enforceable against it in accordance with its terms.

6.2 LVH Representations and Warranties. LVH represents and warrants as follows:

a. LVH is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Nevada, and has all requisite power and authority to conduct its business as now conducted.

b. The execution, delivery and performance by it of this Agreement and the consummation of the transactions contemplated hereby do not and will not violate or conflict with any provision of its organizational documents or operating agreement of LVH, or any other agreement to which it is a party or pursuant to which any of its assets are bound.

c. This Agreement has been duly executed and delivered by LVH and constitutes the legal, valid and binding obligation of LVH enforceable against it in accordance with its terms.

6.3 RIH Resorts Representations and Warranties. RIH Resorts represents and warrants as follows:

a. RIH Resorts is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware, and has all requisite power and authority to conduct its business as now conducted. Each of the subsidiaries of RIH Resorts set forth on Schedule A hereto is a limited liability company duly organized, validly existing and in good standing under the laws of the jurisdiction set forth on Schedule A hereto, and has all requisite power and authority to conduct its business as now conducted.

b. The execution, delivery and performance by RIH Resorts of this Agreement and the consummation of the transactions contemplated hereby do not and will not violate or conflict with any provision of the organizational documents or operating agreement of RIH Resorts or any of its subsidiaries set forth on Schedule A hereto, or any other agreement to which it is a party or pursuant to which any of its assets are bound.

c. This Agreement has been duly executed and delivered by RIH Resorts, and constitutes the legal, valid and binding obligation of Resorts, enforceable against it in accordance with its terms.

7. MISCELLANEOUS.

7.1 No Third Party Beneficiaries. This Agreement is exclusively for the benefit of the parties hereto and it may not be enforced by any party other than the parties to this Agreement and shall not give rise to liability to any third party other than the authorized successors and assigns of the parties hereto.

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7.2 Relationship of the Parties. For all purposes herein, RIH, LVH and Resorts shall be deemed to be independent contractors of one another and no party shall act, represent or hold itself out as having authority to act as an agent or partner of either of the other parties. Nothing express or implied in this Agreement is intended or shall be construed to create or establish a joint venture or a partnership among the parties hereof.

7.3 Limitation on Damages. None of the parties shall be liable to the other parties for any consequential damages resulting from a breach hereof.

7.4 Further Acts. RIH Resorts shall cause any of its direct or indirect subsidiaries to take any and all actions required to be taken by any such subsidiary pursuant to the terms of this Agreement and the transactions contemplated hereby.

7.5 Force Majeure. None of the parties shall be responsible for delays, failures or omissions due to any cause beyond its reasonable control, wherever arising and not due to its own negligence and which cannot be overcome by the exercise of due diligence, including, but not limited to, labor disturbances, riots, fires, earthquakes, floods, storms, lightening, epidemics, war, civil disorders, hostilities, expropriation or confiscation of properties, failure of or delays by carriers, interference by civil or military authorities, acts of God, acts or regulations of Federal, state or local governments or branches or agencies thereof. When the event operating to excuse performance by any party shall cease this Agreement shall continue in full force and effect.

7.6 Assignments. This Agreement shall not be assigned by any party without the prior written consent of the other parties, which consent shall not be unreasonably withheld. No such assignment shall be valid until approved to the extent required by the New Jersey Casino Control Commission, the Nevada Gaming Commission, the Indiana Gaming Commission, the Mississippi Gaming Commission or any other applicable regulatory authority. If an assignment is so approved, this Agreement shall inure to the benefit of and be binding on the assignee or subcontractor.

7.7 Dispute Resolution. Any dispute or controversy arising under, out of, in connection with or in relation to this Agreement, any amendments thereof, or the breach thereof, shall be determined and settled by arbitration in New York, New York in accordance with the Rules of the American Arbitration Association. Any award rendered therein shall be final and binding on the parties, and judgment may be entered thereon in any court having jurisdiction thereof. All costs of arbitration shall be borne equally.

7.8 Amendments. This Agreement may not be amended, modified, altered or waived, in whole or in part, except by a subsequent writing, signed by all parties.

7.9 Notices. Any notice required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given to the applicable party (i) on the date of personal delivery or delivery by telecopier, (ii) on the business day immediately following transmittal to a major overnight commercial courier, or (iii) five (5) days after deposit in the United States mail, postage prepaid, in any case addressed to the address or telecopy number of the applicable party set forth below, or such other address or number as such party may hereafter specify by notice to the others:

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If to RIH:	Resorts International Hotel, Inc.
	1133 Boardwalk
	Atlantic City, New Jersey 08401
	Facsimile:	609-340-7892
	Attention:	Nicholas R. Amato
		Sr. Vice President & General Counsel
If to LVH:	Colony Resorts LVH Acquisitions, LLC
	The Las Vegas Hilton
	3000 Paradise Road
	Las Vegas, Nevada 89109
	Facsimile:	702-739-5927
	Attention:	Lou Dorn
		Vice President & General Counsel
If to Resorts:	Resorts International Holdings, LLC
	c/o Colony Capital, LLC
	660 Madison Avenue, Suite 1600
	New York, New York 10021
	Facsimile:	212-593-5433
	Attention:	Eric J. Matejevich
With a copy to:	Colony Capital, LLC
	1999 Avenue of the Stars, Suite 1200
	Los Angeles, California 90067
	Facsimile:	310-282-8816
	Attention:	Joy Mallory

7.10 Governing Law. The rights and obligations of the parties and the interpretation and performance of this Agreement shall be governed by the internal laws of the State of New Jersey.

7.11 Casino/Gambling Acts. Notwithstanding anything to the contrary contained in this Agreement, this Agreement shall be deemed to include all provisions required by the gaming laws and the regulations of the States of Indiana, Mississippi, Nevada, and New Jersey (collectively, the “Applicable Gaming Laws”), incorporate by reference such provisions as if fully restated in this Agreement and shall, to the extent required, be conditioned upon approval of the New Jersey Casino Control Commission, the Nevada Gaming Commission, the Indiana Gaming Commission and the Mississippi Gaming Commission. To the extent that any term or provision contained in this Agreement shall be inconsistent with the Applicable Gaming Laws, the provisions of such Applicable Gaming Laws shall govern. To the extent so required pursuant to the laws of the State of New Jersey, the State of Nevada, the State of Indiana or the State of Mississippi, the New Jersey Casino Control Commission, the Nevada Gaming Commission, the

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Indiana Gaming Commission, the Mississippi Gaming Commission and any other applicable regulatory authority shall have the right to subsequently disapprove and cancel this Agreement. Each party agrees to perform its duties under this Agreement in accordance with the laws, ordinances, regulations and rules of any and all qualified public authorities having jurisdiction over the conduct of each of the parties’ business and Casinos, including without limitation, New Jersey Casino Control Commission, the Nevada Gaming Commission, the Indiana Gaming Commission and the Mississippi Gaming Commission.

7.12 Entire Agreement. This document constitutes the entire agreement between the parties, all prior oral or written agreements being merged herein, and supersedes all prior representations. There are no representations, agreements, arrangements or understandings, oral or written, between or among the parties relating to the subject matter of this Agreement that are not fully expressed herein.

7.13 Captions. The captions used herein are for convenience only and do not in any way affect, limit, amplify or otherwise modify the terms and provisions of this Agreement.

7.14 Counterparts. This Agreement may be executed in one or more counterparts with each such counterpart deemed to be an original hereof and all such counterparts deemed to be one and the same Agreement.

[Signature page follows]

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IN WITNESS WHEREOF, the undersigned have executed this Amended and Restated Joint Services Agreement as of the day and year first written above.

Resorts International Hotel, Inc.
By:	/s/ Audrey Oswell
	Audrey Oswell
	President and Chief Executive Officer
Colony Resorts LVH Acquisitions, LLC
By:	/s/ Rodolfo Prieto
	Rodolfo Prieto
	Chief Executive Officer
	and General Manager
Resorts International Holdings, LLC
By:	/s/ Eric J. Matejevich
	Eric J. Matejevich
	Chief Financial Officer and Treasurer

SCHEDULE A

SUBSIDIARIES

Subsidiary	Jurisdiction of Organization
RIH Acquisitions NJ, LLC	New Jersey
RIH NJ Holdings, LLC	New Jersey
RIH Acquisitions IN, LLC	Indiana
RIH Acquisitions MS I, LLC	Mississippi
RIH Acquisitions MS II, LLC	Mississippi

EX-10.26

Exhibit 10.26

AMENDED AND RESTATED JOINT MARKETING AGREEMENT

THIS AMENDED AND RESTATED JOINT MARKETING AGREEMENT (this “Agreement”) is made as of this 26th day of April 2005, by and between Resorts International Hotel, Inc., a New Jersey corporation having a place of business at 1133 Boardwalk, Atlantic City, New Jersey 08401 (“RIH”), Colony Resorts LVH Acquisitions, LLC, a Nevada limited liability company having a place of business at The Las Vegas Hilton, 3000 Paradise Road, Las Vegas, Nevada 89109 (“LVH”) and Resorts International Holdings, LLC, a Delaware limited liability company (“RIH Resorts,” and together with the direct and indirect subsidiaries of RIH Resorts set forth on Schedule A hereto, “Resorts”), having places of business at Resorts East Chicago, 777 Harrah’s Boulevard, East Chicago, Indiana 46312, Resorts Tunica, 1100 Casino Strip Boulevard, Robinsonville, Mississippi 38664, The Atlantic City Hilton, Boston Avenue & The Boardwalk, Atlantic City, New Jersey 08401 and Bally’s Tunica, 1450 Bally’s Boulevard, Robinsonville, Mississippi 38664.

RECITALS:

A. RIH owns and operates “Resorts Atlantic City,” a hotel and casino resort facility located in Atlantic City, New Jersey (“RIH Casino”).

B. LVH owns and operates “The Las Vegas Hilton” a hotel and casino resort facility located in Las Vegas, Nevada (“LVH Casino”).

C. Resorts owns and operates “Resorts East Chicago,” a hotel and casino resort facility located in East Chicago, Indiana (the “IN Casino”), “Resorts Tunica,” a hotel and casino resort facility located in Robinsonville, Mississippi (“MS I Casino”), “The Atlantic City Hilton,” a hotel and casino resort facility located in Atlantic City, New Jersey (the “NJ Casino”) and “Bally’s Tunica,” a hotel and casino resort facility located in Robinsonville, Mississippi (the “MS II Casino” and together with the IN Casino, the MS I Casino, and the NJ Casino, the “Resorts Casinos”). The RIH Casino, the LVH Casino and the Resorts Casinos are referred to herein collectively as the “Casinos”.

D. By virtue of extensive marketing and promotion, and adhering to the highest standards of service, the name “RESORTS INTERNATIONAL” and the related marks listed on Schedule B hereto (collectively, the “Resorts International Marks”) have become well-known to the public, and enjoy a superior reputation and widespread goodwill with respect to the quality of services and products bearing the Resorts International Marks.

E. RIH, LVH and Resorts each has substantial experience in the marketing and operation of hotel and casino resort facilities, and independently possesses unique and proprietary knowledge in the areas of marketing database systems management and premium player development.

F. RIH, LVH and Resorts each believe it to be in their best interests to promote its respective Casino(s) by undertaking certain joint advertising and marketing efforts in accordance with the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the premises and mutual promises and representations contained herein, and other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

1. JOINT ADVERTISING AND MARKETING EFFORTS.

1.1 Cooperative Covenant. The parties agree to cooperatively develop and implement such joint advertising and marketing programs for the Casinos as they may mutually agree upon. In connection with the efforts of the parties under this Agreement, each party shall utilize such personnel, resources, skills, know-how and information, as it considers necessary and consistent with its internal policies. It is understood by the parties that the nature of this cooperative effort is such that results cannot be guaranteed and that these efforts are being performed on a best efforts basis.

1.2 Joint Advertising and Marketing Efforts. Each of RIH, LVH and Resorts shall (a) use reasonable efforts to cross-advertise one another’s Casino through their promotional materials and customer service representatives and (b) undertake and coordinate such additional promotional and marketing initiatives as the parties may agree from time to time. Each of the parties specifically agree that the form, content and design of any and all advertisements and promotional materials featuring the other party shall at all times during the Term (as defined below) be subject to such party’s final approval.

1.3 Participation in Promotions. Each of RIH, LVH and Resorts may, to the extent practicable, participate in promotional events sponsored by the other parties. Such participation shall in each case be on a case-by-case basis.

1.4 Identification in Promotional Materials. Throughout the Term of this Agreement, each of the parties agree to include a prominent references to the RIH Casino, the LVH Casino and the Resorts Casinos, as the case may be, on all promotional and advertising material where such a reference would be appropriate.

1.5 Joint Review. Each of LVH, RIH and Resorts shall designate a person with authority to review and approve on behalf of such party all promotional materials using the Marks (as hereinafter defined) of such party. There shall be overall joint cooperation and review of all proposed promotional and marketing initiatives. Periodic conferences shall be held among RIH, LVH and Resorts personnel to review the progress of the advertising and marketing initiatives implemented pursuant to this Agreement and to discuss and review in advance any new advertising and marketing strategies. The parties shall make a good faith effort to agree on

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any necessary changes to the advertising and marketing strategies developed under this Agreement, but final approval of any program or use of the Marks of a party shall be in such party’s sole discretion.

1.6 Mutual Covenant as to Advertisement. Each of RIH, LVH and Resorts agrees that its marketing and advertising efforts shall at all times comply with all applicable laws, rules and regulations and will not contain any material which is obscene, threatening, fraudulent, harassing, libelous, infringing of third party intellectual property rights, or otherwise illegal or offensive.

1.7. LVH Hilton Agreement. RIH and Resorts acknowledge that LVH is subject to certain limitations and is required to comply with certain procedures in connection with advertising and marketing under the License Agreement dated as of June 18, 2004 between LVH and Hilton Inns, Inc. (the “LVH Hilton License”). The parties agree that any advertising and/or marketing of the LVH Casino is subject in all respects to the terms of the LVH Hilton License, and that in connection with any advertising and/or marketing of the LVH Casino by any means, including, without limitation, the use of websites, RIH and Resorts shall comply with all applicable terms, conditions and limitations set forth in the LVH Hilton License.

1.8. AC Hilton Agreement. RIH and LVH acknowledge that Resorts is subject to certain limitations and is required to comply with certain procedures in connection with advertising and marketing under the License Agreement dated as of April     , 2005 between RIH Acquisitions NJ, LLC and Hilton Inns, Inc. (the “AC Hilton License”). RIH and LVH agree that any advertising and/or marketing of the NJ Casino is subject in all respects to the terms of the AC Hilton License, and that in connection with any advertising and/or marketing of the NJ Casino by any means, including, without limitation, the use of websites, RIH and LVH shall comply with all applicable terms, conditions and limitations set forth in the AC Hilton License.

1.9. Bally’s Tunica Agreement. RIH and LVH acknowledge that Resorts is subject to certain limitations and is required to comply with certain procedures in connection with advertising and marketing under the License Agreement dated as of March 2, 2005 between Caesars Entertainment, Inc. and RIH Acquisitions MS II, LLC (the “Bally’s License”). RIH and LVH agree that any advertising and/or marketing of the MS II Casino is subject in all respects to the terms of the Bally’s License, and that in connection with any advertising and/or marketing of the MS II Casino by any means, including, without limitation, the use of websites, RIH and LVH shall comply with all applicable terms, conditions and limitations set forth in the Bally’s License.

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2. TERM.

2.1 Term. The term of this Agreement shall commence on the date hereof and shall continue for a period of ten (10) years (the “Initial Term”) and, at the end of the Initial Term and each year thereafter, shall automatically renew for an additional one (1) year (Initial Term together with any renewal, the “Term”) unless the Initial Term or Term are sooner terminated as provided for herein.

2.2 Termination. This Agreement may be terminated:

a. Upon six (6) months’ prior written notice to the other parties; or

b. Upon the mutual written consent of all parties.

2.3 Automatic Termination. This Agreement shall automatically terminate upon the occurrence of any of the following events:

a. The breach by a party of any of its obligations hereunder provided that the other party has given written notice of the alleged breach and such breach is continuing after thirty (30) days from the date of said notice;

b. The loss by such party of any license required to operate any Casino;

c. Any material part of the parties’ rights under this Agreement shall be declared invalid or unenforceable;

d. Such party ceases to function as a going concern, becomes insolvent, makes an assignment for the benefit of creditors, files a petition or has a petition filed against it under any bankruptcy, insolvency, reorganization or similar law in any country, commits an act of bankruptcy or similar law or takes any action to effect any of the foregoing;

e. The acquisition of such party by a third party, whether by way of merger, consolidation, asset sale or stock sale.

f. In the event Archon Financial, L.P. exercises any of it remedies pursuant to the Loan Agreement dated as of June 18, 2004 between LVH, as Borrower, and Archon Financial, L.P., as Lender, including foreclosure on the LVH Casino or the tender by LVH of a deed in lieu of foreclosure.

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3. CROSS-LICENSING PROVISIONS.

3.1 Trademark Licensing.

a. License Grant to RIH and Resorts. LVH hereby grants to RIH and Resorts a non-exclusive, limited, worldwide, non-assignable and royalty-free license throughout the Term of this Agreement (i) to display the LVH Trademarks (as defined below) on RIH’s and Resorts’ Internet web sites and RIH’s and Resorts’ promotional materials in order to promote the LVH Casino and (ii) to otherwise carry out RIH’s and Resorts’ obligations under this Agreement. RIH and Resorts hereby agree not to use the LVH Trademarks or any confusingly similar marks in connection with any goods or services other than those relating to the LVH Casino. For purposes of this Agreement, the “LVH Trademarks” shall mean those trademarks, service marks, names, logos and designations identified in Schedule C attached hereto, together with such other marks that may be adopted by LVH after the date hereof and included within the scope of this Agreement by notice from LVH to RIH and Resorts.

b. License Grant to LVH and Resorts. RIH hereby grants to LVH and Resorts a non-exclusive, limited, worldwide, non-assignable and royalty-free license throughout the Term of this Agreement (i) to display the RIH Trademarks (as defined below) on LVH’s and Resorts’ Internet web sites and LVH’s and Resorts’ promotional materials in order to promote the RIH Casino and (ii) to otherwise carry out LVH’s and Resorts’ obligations under this Agreement. LVH and Resorts hereby agree not to use the RIH Trademarks or any confusingly similar marks in connection with any goods or services other than those relating to the RIH Casino other than as expressly provided herein. For purposes of this Agreement, the “RIH Trademarks” shall mean those trademarks, service marks, names, logos and designations identified in Schedule D attached hereto, together with such other marks that may be adopted by RIH after the date hereof and included within the scope of this Agreement by notice from RIH to LVH and Resorts. In addition, RIH hereby grants to LVH and Resorts a non-exclusive, worldwide, non-assignable and royalty-free license throughout the Term of this Agreement to use the Resorts International Marks in connection with the operation, advertising and promotion of the LVH Casino, and the Resorts Casinos and the right to sublicense the Resorts International Marks to Hilton Inns, Inc. pursuant to the LVH Hilton License.

c. License Grant to RIH and LVH. Resorts hereby grants to RIH and LVH a non-exclusive, limited, worldwide, non-assignable and royalty-free license throughout the Term of this Agreement (i) to display the Resorts Trademarks (as defined below) on RIH’s and LVH’s Internet web sites and RIH’s and LVH’s promotional materials in order to promote the Resorts Casinos and (ii) to otherwise carry out RIH’s and LVH’s obligations under this Agreement. RIH and LVH hereby agree not to use the Resorts Trademarks or any confusingly similar marks in connection with any goods or services other than those relating to the Resorts Casinos. For purposes of this Agreement, the “Resorts Trademarks” shall mean those trademarks, service marks, names, logos and designations identified in Schedule E attached hereto, together with such other marks that may be adopted by Resorts after the date hereof and included within the scope of this Agreement by notice from Resorts to RIH and LVH (the Resorts Trademarks, the LVH Trademarks, the RIH Trademarks and the Resorts International Marks shall be collectively referred to as the “Marks”).

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3.2 Title to Marks. Each of the parties acknowledges that nothing contained in this Agreement transfers to the other party any right, title or proprietary interest (including without limitation any intellectual property rights), in any part of the marketing or promotional efforts which are the subject matter hereof, or any proprietary information including, without limitation, the Marks, trade secrets, know-how, inventions, patents (including applications, extensions, continuations, renewals and re-issues thereof), copyrights and designs. Except as provided herein, no licenses of the parties’ respective Marks are granted or implied under this Agreement.

3.3 Goodwill Associated with Marks. The parties agree that protection of the goodwill associated with their respective Marks and the protection of consumers against trademark confusion are of paramount importance to each of them. Accordingly, the parties covenant not to do anything that would damage the goodwill presently associated with the LVH Trademarks, the RIH Trademarks, the Resorts International Marks or the Resorts Trademarks, as the case may be, and to always cooperate with each other to prevent consumers from being confused as to the source or origin of the goods and services produced and marketed by each of them under their respective Marks.

3.4 Use of Resorts International Marks and RIH Trademarks. RIH shall have the right to exercise quality control over the Resorts International Marks and the RIH Trademarks to the extent necessary to maintain the validity of the Resorts International Marks and the RIH Trademarks and to protect the goodwill associated therewith. In using the Resorts International Marks and the RIH Trademarks, LVH and Resorts shall adhere to a level of quality consistent with the standards of quality established for the Resorts International Marks and the RIH Trademarks by RIH. In addition, whenever LVH or Resorts uses the Resorts International Marks or RIH Trademarks in any media of general circulation, including the Internet, LVH or Resorts, as the case may be, shall use the Resorts International Marks or RIH Trademarks, as the case may be, in such fashion as to identify clearly LVH or Resorts, as the case may be, as the origin of such use. Upon RIH’s reasonable request, LVH or Resorts shall submit to RIH for its approval samples of proposed or actual uses by LVH or Resorts, as the case may be, of the Resorts International Marks and the RIH Trademarks.

3.5. Use of LVH Trademarks. LVH shall have the right to exercise quality control over the LVH Trademarks to the extent necessary to maintain the validity of the LVH Trademarks and to protect the goodwill associated therewith. In using the LVH Trademarks, RIH and Resorts shall adhere to a level of quality consistent with the standards of quality established for the LVH Trademarks by LVH. In addition, whenever RIH or Resorts uses the LVH Trademarks in any media of general circulation, including the Internet, RIH or Resorts, as the case may be, shall use the LVH Trademarks in such fashion as to identify clearly RIH or Resorts, as the case may be, as the origin of such use. Upon LVH’s reasonable request, RIH or Resorts shall submit to LVH for its approval samples of proposed or actual uses by RIH or Resorts, as the case may be, of the LVH Trademarks.

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3.6. Use of Resorts Trademarks. Resorts shall have the right to exercise quality control over the Resorts Trademarks to the extent necessary to maintain the validity of the Resorts Trademarks and to protect the goodwill associated therewith. In using the Resorts Trademarks, RIH and LVH shall adhere to a level of quality consistent with the standards of quality established for the Resorts Trademarks by Resorts. In addition, whenever RIH or LVH uses the Resorts Trademarks in any media of general circulation, including the Internet, RIH or LVH, as the case may be, shall use the Resorts Trademarks in such fashion as to identify clearly RIH or LVH, as the case may be, as the origin of such use. Upon Resorts’ reasonable request, RIH or LVH shall submit to Resorts for its approval samples of proposed or actual uses by RIH or LVH, as the case may be, of the Resorts Trademarks.

3.7. Use of LVH Trademarks. RIH and Resorts acknowledge that LVH licenses certain of the LVH Trademarks from Hilton Inns, Inc. pursuant to the LVH Hilton License (the “LVH Hilton Marks”). RIH and Resorts agree that the sub-license of the LVH Hilton Marks set forth in Section 3.1(a) herein is subject in all respects to the terms of the LVH Hilton License, and that in connection with any use by RIH or Resorts of the LVH Hilton Marks, RIH or Resorts, as the case may be, shall comply with all applicable terms, conditions and limitations set forth in the LVH Hilton License.

3.8. Use of Resorts Trademarks. RIH and LVH acknowledge that RIH Acquisitions NJ, LLC (“RIH NJ”), a wholly owned subsidiary of RIH Resorts, licenses certain of the Resorts Trademarks from Hilton Inns, Inc. pursuant to the AC Hilton License (the “AC Hilton Marks”) and that RIH Acquisitions MS II, LLC (“RIH MS II”), a wholly owned subsidiary of RIH Resorts, licenses certain of the Resorts Trademarks from Caesars Entertainment, Inc. pursuant to the Bally’s License (the “Bally’s Marks”). RIH and LVH agree that the license of the AC Hilton Marks and the Bally’s Marks set forth in Section 3.1(c) herein is subject in all respects to the terms of the AC Hilton License and the Bally’s Marks, respectively, and that in connection with any use by RIH or LVH of the AC Hilton Marks or the Bally’s Marks (as affiliated entities of RIH NJ and RIH MS II), RIH or LVH, as the case may be, shall comply with all applicable terms, conditions and limitations set forth in the AC Hilton License or the Bally’s License, as the case may be.

4. COST ALLOCATION.

4.1 Cost Allocation.

Any party that incurs costs in excess of its direct share or any expense which is directly allocable to or incurred on behalf of another party shall be reimbursed by such party so long as such party consented to such expense prior to the incurrence of same, it being acknowledged that the intent of this Section 4.1 shall be to allocate all such costs and expenses among RIH, LVH and Resorts in proportion to the benefits received by each party as a result of such costs and expenses. RIH, LVH and Resorts agree to use their reasonable best efforts to

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determine the relative benefits derived by each party from each of the costs and expenses incurred pursuant to this Agreement and to allocate each such cost or expense among the parties accordingly. A party seeking reimbursement shall issue a reimbursement request to the other parties detailing the costs and expenses for which reimbursement is sought, the calculation of each party’s share of such costs and expenses, and such supporting documentation and other information as the other parties may reasonably request. Within twenty (20) days of receipt of a reimbursement request and supporting documentation, the parties with the reimbursement obligations shall reimburse the party seeking reimbursement for such costs and expenses. All expenses associated with the compliance of any governmental authority regulating gaming in the States of New Jersey, Nevada, Indiana and Mississippi, including without limitation the New Jersey Casino Control Commission, the New Jersey Division of Gaming Enforcement, the Nevada Gaming Commission, the Nevada State Gaming Control Board, the Indiana Gaming Commission, the Indiana State Police, Gaming Division and the Mississippi Gaming Commission shall be the expense of the party regulated by such authority.

4.2 Expenses. Each of RIH, LVH and Resorts agrees to be solely responsible for and to pay out of its own funds all expenses incurred by such party relating to or arising out of such party’s performance of this Agreement, including without limitation, fees, taxes, insurance premiums, legal and accounting service fees, all secretarial, photocopying, telecommunications, office supplies and other support services, and travel, food and lodging expenses.

4.3 Employer Liability. Unless otherwise mutually agreed among the parties, each party agrees that its shall be solely responsible for, and that the other parties shall have no liability with respect to, the compensation of and any claims asserted by its respective officers, directors, partners, members, employees or agents assigned or requested to perform under this Agreement. For purposes of this Section 4.3, “compensation” shall include salary, wages, benefits and federal, state and local payroll taxes, and “claims” shall include disability, workers’ compensation, discrimination or other employer liability or tort claim.

5. CONFIDENTIALITY.

5.1 Confidentiality. Each of RIH, LVH and Resorts acknowledges that it may acquire Confidential Information (as defined below) with respect to the other parties and the businesses such parties conducts. In connection therewith, each party covenants to refrain from disclosing at any time any such Confidential Information with respect to the other parties unless legally compelled to disclose such information in response to a summons, order or subpoena issued by a court or governmental agency (provided that such party shall have provided the other affected party or parties with prompt written notice of any such request or requirement so that it or they may seek a protective order or other appropriate remedy). Upon any termination of this Agreement, each party agrees to return to each other party all documents or recorded material of any type (including all copies thereof) which may be in its possession or under its control and which constitutes or relates to Confidential Information of such other party.

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For purposes of this Agreement “Confidential Information” shall mean all confidential information with respect to a party and its affiliates and the business they conduct, including, without limitation, confidential information and trade secrets concerning business and other plans, customer names, customer requirements and supplier names, profit formulas and financial plans. “Confidential Information” shall not include (i) information generally known to the public, and (ii) information properly and legally received from a third party which is not an affiliate of RIH, LVH or Resorts and which is not under any duty to the other party not to disclose such information.

5.2 Remedies. Each of RIH, LVH and Resorts hereby acknowledges and agrees that the prohibitions against disclosure of Confidential Information recited herein are in addition to, and not in lieu of, any rights or remedies each may have available to it pursuant to the laws of any jurisdiction or common law or judicial precedent to prevent the disclosure of proprietary or Confidential Information, and the enforcement by either of them of its rights and remedies pursuant to this Agreement shall not be construed as a waiver of any other rights or available remedies that it may possess in law or equity absent this Agreement.

5.3 Survival. The provisions of this Section 5 shall survive any termination of this Agreement.

6. INDEMNIFICATION.

6.1 Each of RIH, LVH and Resorts (each an “Indemnitor”) agrees to indemnify each other party and such party’s officers, members, shareholders, employees, agents and controlling persons (collectively, “Indemnitees”) from and against any and all liabilities imposed on such party and its Indemnitees by any governmental authority by reason of Indemnitor’s performance of its obligations under this Agreement.

6.2 Each of RIH, LVH and Resorts agrees to indemnify and hold each other party and such party’s Indemnitees free and harmless from and against any damages, liability, cost, claim, fee, obligation or expense, including attorneys’ fees and expenses incurred in defense of any of the foregoing (“Losses”), arising out of or in connection with this Agreement; provided, however, that the obligation to indemnify and hold harmless hereunder shall not include any Losses suffered by any party or its Indemnitees arising out of the gross negligence or willful misconduct of any such party or its Indemnitees or the performance of duties not in conformity with, or in breach of, this Agreement.

6.2 The provisions of this Section 6 shall survive any termination of this Agreement.

7. REPRESENTATIONS AND WARRANTIES.

7.1 RIH Representations and Warranties. RIH represents and warrants as follows:

a. RIH is a corporation duly organized, validly existing and in good standing under the laws of the State of New Jersey, and has all requisite power and authority to conduct its business as now conducted.

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b. The execution, delivery and performance by it of this Agreement and the consummation of the transactions contemplated thereby do not and will not violate or conflict with any provision of its organizational documents or operating agreement, or any other agreement to which it is a party or pursuant to which any of its assets are bound.

c. This Agreement has been duly executed and delivered by RIH and constitutes the legal, valid and binding obligation of RIH enforceable against it in accordance with its terms.

7.2 LVH Representations and Warranties. LVH represents and warrants as follows:

a. LVH is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Nevada, and has all requisite power and authority to conduct its business as now conducted.

b. The execution, delivery and performance by it of this Agreement and the consummation of the transactions contemplated thereby do not and will not violate or conflict with any provision of its organizational documents or operating agreement, or any other agreement to which it is a party or pursuant to which any of its assets are bound.

c. This Agreement has been duly executed and delivered by LVH and constitutes the legal, valid and binding obligation of LVH enforceable against it in accordance with its terms.

7.3 RIH Resorts Representations and Warranties. RIH Resorts represents and warrants as follows:

a. RIH Resorts is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware, and has all requisite power and authority to conduct its business as now conducted. Each of the subsidiaries of RIH Resorts set forth on Schedule A hereto is a limited liability company duly organized, validly existing and in good standing under the laws of the jurisdiction set forth on Schedule A hereto, and has all requisite power and authority to conduct its business as now conducted.

b. The execution, delivery and performance by RIH Resorts of this Agreement and the consummation of the transactions contemplated thereby do not and will not violate or conflict with any provision of the organizational documents or operating agreement of RIH Resorts, or any of its subsidiaries set forth on Schedule A hereto, or any other agreement to which it is a party or pursuant to which any of its assets are bound .

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c. This Agreement has been duly executed and delivered by RIH Resorts and constitutes the legal, valid and binding obligation of Resorts enforceable against it in accordance with its terms.

8. MISCELLANEOUS.

8.1 No Third Party Beneficiaries. This Agreement is exclusively for the benefit of the parties hereto and it may not be enforced by any party other than the parties to this Agreement and shall not give rise to liability to any third party other than the authorized successors and assigns of the parties hereto.

8.2 Relationship of the Parties. For all purposes herein, RIH, LVH and Resorts shall be deemed to be independent contractors of one another and neither party shall act, represent or hold itself out as having authority to act as an agent or partner of the other party. Nothing express or implied in this Agreement is intended or shall be construed to create or establish a joint venture or a partnership between the parties hereof.

8.3 Limitation on Damages. None of the parties shall be liable to the other parties for any consequential damages resulting from a breach hereof.

8.4 Further Acts. RIH Resorts shall cause any of its direct or indirect subsidiaries to take any and all actions required to be taken by any such subsidiary pursuant to the terms of this Agreement and the transactions contemplated hereby.

8.5 Force Majeure. None the parties shall be responsible for delays, failures or omissions due to any cause beyond its reasonable control, wherever arising and not due to its own negligence and which cannot be overcome by the exercise of due diligence, including, but not limited to, labor disturbances, riots, fires, earthquakes, floods, storms, lightening, epidemics, war, civil disorders, hostilities, expropriation or confiscation of properties, failure of or delays by carriers, interference by civil or military authorities, acts of God, acts or regulations of Federal, state or local governments or branches or agencies thereof. When the event operating to excuse performance by either party shall cease this Agreement shall continue in full force and effect.

8.6 Assignments. This Agreement shall not be assigned by any of the parties without the prior written consent of the other parties, which consent shall not be unreasonably withheld. No such assignment shall be valid until approved to the extent required by the New Jersey Casino Control Commission, the Nevada Gaming Commission, the Indiana Gaming Commission, the Mississippi Gaming Commission or any other applicable regulatory authority. If an assignment is so approved, this Agreement shall inure to the benefit of and be binding on the assignee or subcontractor.

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8.7 Dispute Resolution. Any dispute or controversy arising under, out of, in connection with or in relation to this Agreement, any amendments thereof, or the breach thereof, shall be determined and settled by arbitration in New York, New York in accordance with the Rules of the American Arbitration Association. Any award rendered therein shall be final and binding on the parties, and judgment may be entered thereon in any court having jurisdiction thereof. All costs of arbitration shall be borne equally.

8.8 Amendments. This Agreement may not be amended, modified, altered or waived, in whole or in part, except by a subsequent writing, signed by both parties.

8.9 Notices. Any notice required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given to the applicable party (i) on the date of personal delivery or delivery by telecopier, (ii) on the business day immediately following transmittal to a major overnight commercial courier, or (iii) five (5) days after deposit in the United States mail, postage prepaid, in any case addressed to the address or telecopy number of the applicable party set forth below, or such other address or number as such party may hereafter specify by notice to the other:

If to RIH:	Resorts International Hotel, Inc.
	1133 Boardwalk
	Atlantic City, New Jersey 08401
	Facsimile: 609-340-7892
	Attention: Nicholas R. Amato
	Sr. Vice President & General Counsel

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If to LVH:	Colony Resorts LVH Acquisitions, LLC
	The Las Vegas Hilton
	3000 Paradise Road
	Las Vegas, Nevada 89109
	Facsimile: 702-739-5927
	Attention: Lou Dorn
	Vice President & General Counsel
If to Resorts:	Resorts International Holdings, LLC
	c/o Colony Capital, LLC
	660 Madison Avenue
	New York, New York 10021
	Facsimile: 212-593-5433
	Attention: Eric J. Matejevich
With a copy to:	Colony Capital, LLC
	1999 Avenue of the Stars, Suite 1200
	Los Angeles, California 90067
	Facsimile: 310-282-8816
	Attention: Joy Mallory

8.10 Governing Law. The rights and obligations of the parties and the interpretation and performance of this Agreement shall be governed by the internal laws of the State of New Jersey.

8.11 Casino/Gambling Acts. Notwithstanding anything to the contrary contained in this Agreement, this Agreement shall be deemed to include all provisions required by the gaming laws and the regulations of the States of Indiana, Mississippi, Nevada and New Jersey (collectively, the “Applicable Gaming Laws”), incorporate by reference such provisions as if fully restated in this Agreement and shall, to the extent required, be conditioned upon approval of the New Jersey Casino Control Commission, the Nevada Gaming Commission, the Indiana Gaming Commission and the Mississippi Gaming Commission. To the extent that any term or provision contained in this Agreement shall be inconsistent with the Applicable Gaming Laws, the provisions of such Applicable Gaming Laws shall govern. To the extent so required pursuant to the laws of the laws of the State of New Jersey, the State of Nevada, the State of Indiana or the State of Mississippi, the New Jersey Casino Control Commission, the Nevada Gaming Commission, the Indiana Gaming Commission, the Mississippi Gaming Commission and any other applicable regulatory authority shall have the right to subsequently disapprove and cancel this Agreement. Each party agrees to perform its duties under this Agreement in accordance with the laws, ordinances, regulations and rules of any and all qualified public authorities having jurisdiction over the conduct of each of the parties’ business and Casinos, including without limitation, New Jersey Casino Control Commission, the Nevada Gaming Commission, the Indiana Gaming Commission and the Mississippi Gaming Commission.

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8.12 Entire Agreement. This document constitutes the entire agreement between the parties, all prior oral or written agreements being merged herein, and supersedes all prior representations and agreements including, without limitation, the Original Agreement. There are no representations, agreements, arrangements or understandings, oral or written, between or among the parties relating to the subject matter of this Agreement that are not fully expressed herein.

8.13 Captions. The captions used herein are for convenience only and do not in any way affect, limit, amplify or otherwise modify the terms and provisions of this Agreement.

8.14 Counterparts. This Agreement may be executed in one or more counterparts with each such counterpart deemed to be an original hereof and all such counterparts deemed to be one and the same Agreement.

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IN WITNESS WHEREOF, the undersigned have executed this Amended and Restated Joint Marketing Agreement as of the day and year first written above.

Resorts International Hotel, Inc.
By:	/s/ Audrey S. Oswell
	Audrey S. Oswell
	President and Chief Executive Officer
Colony Resorts LVH Acquisitions, LLC
By:	/s/ Rodolfo Prieto
	Rodolfo Prieto
	Chief Executive Officer and General Manager
Resorts International Holdings, LLC
By:	/s/ Eric J. Matejevich
	Eric J. Matejevich
	Chief Financial Officer and Treasurer

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EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Rodolfo Prieto, certify that:

1. I have reviewed this report on Form 10-K of Colony Resorts LVH Acquisitions, LLC;

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 Rules 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. 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

c. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent 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 or 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 30, 2007

/s/ RODOLFO PRIETO

Rodolfo Prieto

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Robert Schaffhauser, certify that:

1. I have reviewed this report on Form 10-K of Colony Resorts LVH Acquisitions, LLC;

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 Rules 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. 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

c. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent 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 or 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 30, 2007

/s/ ROBERT SCHAFFHAUSER

Robert Schaffhauser

Executive Vice President of Finance

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 Colony Resorts LVH Acquisitions, LLC (the “Company”) on Form 10-K for the year ended December 31, 2006, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Rodolfo Prieto, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ RODOLFO PRIETO

Rodolfo Prieto

Chief Executive Officer

March 30, 2007

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 Colony Resorts LVH Acquisitions, LLC (the “Company”) on Form 10-K for the year ended December 31, 2006, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robert Schaffhauser, Executive Vice President of Finance, respectively, of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/S/ ROBERT SCHAFFHAUSER

Robert Schaffhauser

Executive Vice President of Finance

March 30, 2007