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, 2008

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 defined 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.    x  Yes    ¨  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 checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	x  (Do not check if a smaller reporting company)	Smaller reporting company	¨

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 20, 2009 was $0. As of March 20, 2009, 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	12
ITEM 1B.	UNRESOLVED STAFF COMMENTS	17
ITEM 2.	PROPERTIES	17
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	31
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	32
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	51
ITEM 9A.	CONTROLS AND PROCEDURES	51
ITEM 9B.	OTHER INFORMATION	51
	PART III
ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	52
ITEM 11.	EXECUTIVE COMPENSATION	54
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED MEMBER MATTERS	59
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	61
ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	64
	PART IV
ITEM 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	65
SIGNATURES		68

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, decreased tourism and business travel as a result of current domestic and international business conditions, 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-suite 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 HLT Existing Franchise Holding LLC (“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 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.

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. The opening of new luxury upscale mega-resorts on the Strip during the 1990s resulted in increased competition for

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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 has been a Hilton-branded hotel for over thirty-seven 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 1,270 slot machines and approximately 51 table games. The Casino offers customers the latest slot machine games available and a wide selection of video poker, video reel slot machines and traditional 3, 4 and 5 reel spinning slot machines . The Casino’s approximately 51 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 fourteen dining options with seating for approximately 1,702 customers, including the Benihana Village. The Hotel has six fine dining options with approximately 676 seats and eight casual dining restaurants with approximately 1,026 seats. All the restaurants are owned or franchised by the Hotel.

Entertainment

Show venues at the Hotel include the 1,600-seat Hilton Theater and the 300-seat Shimmer Cabaret . 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 23 performance weeks by Barry Manilow in 2008. In addition, the Hilton Theater hosted 15 different headliners in 2008. The Hotel previously featured “Star Trek: the Experience”, which ceased operations in September 2008.

The Hotel is located adjacent to the Las Vegas Convention Center, which has approximately 3.2 million square feet of total space. The facility which is operated by the Las Vegas Convention and Visitors Authority (“LVCVA”), has more than two million square feet of exhibit space and 144 meeting rooms which can handle seating capacities ranging from 20 to 2,500.

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 78,130 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.

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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 video arcade, a wedding chapel, a retail area, a car rental concession and a full-service business center.

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. 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 approximately 916 standard hotel rooms in 2006 and another 512 standard hotel rooms in 2007. The Company acquired 195 new slot machines in 2007 and approximately 98 new slot machines in 2008.

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, 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 targets high margin repeat gaming customers, and uses 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.

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 921 state-of-the-art slot machines and plans to purchase another 50 slot machines in 2009. The Company will continue to focus on the 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 the largest gaming market in the United States. Prior to the recent downturn in the economy, visitor volume increased at a steady and significant rate for 11 years. Visitor travel decreased in 2008, the first year of a decline since 1996. Las Vegas hotel occupancy rates have historically been among the highest of many major markets in the United States. During the fourth quarter of 2008, those occupancy rates and the average daily rates charged, decreased as demand fell. Convention bookings and leisure travel are expected to be less than 2008 levels through 2009. With significant major projects expected to open on the Las Vegas strip by 2010, including City Center, Fountainebleau Las Vegas and Cosmopolitan, occupancy rates and paying rates will continue to be highly competitive.

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Las Vegas as a Trade Show, Convention and Meeting Destination

In 2008, according to the LVCVA, Las Vegas hosted approximately 22,000 conventions and meetings. In 2008, the number of convention attendees was approximately 5.9 million.

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 142,000 hotel rooms, three convention centers (the Sands Expo Center, Mandalay Bay Convention Center, and the Las Vegas Convention Center) with a total of approximately 7.1 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.

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.

Expanding Hotel Market

During 2008, 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 142,000 in 2008, according to the LVCVA. The LVCVA predicts Las Vegas will add approximately 14,000 hotel rooms in 2009 and by 2010 will have approximately 159,000 rooms. The Company expects that the concentration of quality casino hotels and resorts will continue visitor interest in Las Vegas as a business event and vacation destination, and continue strong 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 $9.8 billion in 2008. Room revenue as calculated by the LVCVA’s average daily rate multiplied by number of occupied rooms was approximately $5.1 billion in 2008. The newer, large Las Vegas destination resorts have been designed to capitalize on non-gaming revenues 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.

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 47.7 million in 2007. In 2008, airline passengers decreased to 44.1 million from the peak achieved in 2007. Long-term expansion plans for McCarran International Airport continue and provide for an additional runway, terminal concourse expansions, a new control tower and other facilities and are expected to be completed by 2010.

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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 41% total room nights in 2008. 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 22% of total room nights in 2008. Because of the gaming profiles of these customers, this segment represents 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 34% of the Hotel’s total room nights in 2008. 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 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 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, Brooks & Dunn 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 Vista 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 29 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, Planet Hollywood, 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 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 a growing number of states across the country that have legalized gaming. 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.

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Employees

As of December 31, 2008, the Company had approximately 2,890 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 68% of the work force at the Hotel with labor agreement terms ranging from one year to five years. Approximately 2% of the labor workforce is covered by collective bargaining agreements that will expire within one year. The Company anticipates that these agreements will be renewed.

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 tetrachloroethylene (“PCE”) in the groundwater and the property was listed as a leaking underground storage tank site. The Phase I report states that levels of PCE 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 to monitor and evaluate the source of PCE 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 Reports on November 30, 2006 and February 28, 2007, which concluded that the PCE originates from an off-site source, near the southwest corner of the Hotel. On September 14, 2007 NDEP determined that the Company is no longer required to conduct an additional investigation of the source and extent of PCE in groundwater and closed its investigation as it relates to the Hotel.

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.

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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 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.

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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.

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 was 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, Nicholas L. Ribis, 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

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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.

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(T).—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 deteriorating economic conditions worldwide 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.

Continued weakness and further weakening in global economic conditions may adversely affect consumer and corporate spending and tourism trends, resulting in additional deterioration in our business.

Discretionary consumer spending has been adversely affected by the current economic crisis. Worldwide, consumers are traveling less and spending less when they do travel. Likewise, corporate spending on conventions and business development is being significantly curtailed as businesses cut their budgets. Since our business model relies on significant expenditures on luxury and discretionary items, continuation or deepening of the crisis will adversely affect our operations.

The current conditions in the world’s financial and credit markets adversely affects prospects of debt refinancing, availability of credit to us and to our customers and the profitability of our business.

There was unprecedented deterioration in financial and credit markets worldwide in 2008. There can be no assurance that the decline is over and there can be no assurance that government response to these conditions will successfully address the fundamental weakness, restore consumer confidence or lead to improvement or increase liquidity in the markets. Customer demand for leisure activities that we offer may be depressed or continue to decline.

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There has been and will continue to be large additions to the room supply in Las Vegas.

There has been and will continue to be large additions to the supply of hotel rooms in Las Vegas. Even after the global economy begins to recover, there may be excess supply which affect our ability to maximize the occupancy of the Hotel.

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;

• 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 law, taxes 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, 2008, the Company has a long-term term loan of $250 million secured by substantially all the assets of the property.

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

• create significant demand for, or otherwise restrict, its available free cash flow,

• 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.

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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;

• engage in any new businesses;

• issue preferred stock; and

• enter into certain transactions with our affiliates.

The terms of the Company’s debt instruments may hinder its ability or make it more costly to extend the loan agreement.

The Company’s current debt instruments contain provisions that may make it difficult or more expensive to extend the term of the Term Loan. Should the Company choose to extend the Term Loan, the Company would be required, among other things, to meet certain debt yield benchmarks. If the Company cannot meet those benchmarks, the Company would be required to 1) obtain a waiver from the lender, 2) pay down a portion of the indebtedness, 3) post a letter of credit or 4) refinance the entire indebtedness. Each of these options would reduce the Company’s liquidity.

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.

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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.

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 merger of Mandalay Resort Group with MGM MIRAGE and the acquisition of Caesar’s Entertainment Inc. by Harrah’s Entertainment, Inc. created the world’s two largest gaming companies.

According to the LVCVA, there were approximately 142,000 hotel and motel rooms in Las Vegas as of December 31, 2008. Various competitors on the Las Vegas Strip are expanding and renovating their existing facilities. For example in December 2008, Wynn Resorts Limited opened Encore, a second hotel casino located adjacent to Wynn Las Vegas, which includes approximately 2,000 rooms, consisting of approximately 150 suites and approximately 1,850 guest rooms and additional casino, retail and convention space. In January 2008, Las Vegas Sands opened The Palazzo adjacent to The Venetian. The Palazzo consists of 3,025 suites, a gaming facility of approximately 105,000 square feet and a 450,000 square foot mall that includes dining, entertainment and approximately 80 high-end to mid-end retailers. MGM MIRAGE is also developing and building a multi-billion dollar urban complex known as Project City Center consisting of a 61-story, 4,004-room gaming resort; two combination non-gaming luxury hotels and condominium towers, dual 37-story towers with 335 condominiums each as well as retail, dining and entertainment venues. The first phase of Project City Center, 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. Construction began in 2008 but was halted indefinitely due to the downturn in the economy. Fontainebleau Resorts is building 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.

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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. Pennsylvania currently has seven casinos – six classified as “racinos” and, in total, the state houses approximately 16,000 slot machines. 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.

The Company’s gaming operations and the ownership of the Company’s securities are subject to extensive regulation by the Nevada Gaming Authorities. 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 entity or the registration of a registered corporation or any entity registered as a holding company of a 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, 2008, the table games drop at the Hotel was approximately 25% from credit-based guest wagering. The default rate on credit extended to the Hotel’s table gaming customers was less than one percent of the total amount of credit issued since the Hotel was acquired. However, economic conditions in the United States and elsewhere could cause this default rate to significantly increase.

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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 and Tunica, Mississippi. In addition, on November 7, 2007, Colony Capital completed a merger transaction with the management and certain shareholders of Station Casinos, Inc. Station Casinos owns and operates 14 casinos in the Las Vegas metropolitan area.

On February 20, 2008, Whitehall Street Real Estate Funds, an affiliate of WH/LVH Managers Voteco, a minority owner of the Company’s Class A Units, acquired American Casino & Entertainment Properties. American Casino & Entertainment Properties owns three casino/hotels in Las Vegas and one casino/hotel in Laughlin, Nevada.

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(T).—UNRESOLVED STAFF COMMENTS

None

ITEM 2.—PROPERTIES

The Company owns and operates the Las Vegas Hilton, a casino resort located in Las Vegas, Nevada.

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 and suites, an approximately 74,000 square feet casino with approximately 51 table games and 1,270 slot machines, a race and sports book, 14 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, a wedding chapel, an outdoor pool and a spa and health club.

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

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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, 2008, 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, 2008, 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 any distributions on its Membership Units. The Credit Agreement governing the Term Loan, as well as the gaming approvals required 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, 2008, 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 set forth below should be read in conjunction with “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the 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, 2008, 2007 and 2006, and the balance sheet data at December 31, 2008 and 2007 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.

	Years Ended December 31,
	2008			2007			2006
	(dollars in thousands)
Results of Operations:
Net revenues	$	280,403		$	296,725		$	290,306
Operating expenses (excluding depreciation)		245,431			257,611			259,671
Depreciation		20,426			17,572			13,337
Total operating income		14,546			21,542			17,298
Interest expense, net		(14,983	)		(19,534	)		(22,405	)
Net (Loss) Income		(437	)		2,008			(5,107	)
Balance Sheet:
Total assets		406,552			411,808			393,930
Long term debt		250,000			244,279			225,096
Total liabilities		285,553			290,372			275,843
Members’ equity		60,999			61,436			58,087

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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

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 is 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.

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 31% of the Hotel’s gross revenue is derived from gaming and 37% 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 group, convention and trade show business.

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

	2008			2007		2006
Net revenues	$	280,403		$	296,725	$	290,306
Operating income	$	14,546		$	21,542	$	17,298
Net (Loss) Income	$	(437	)	$	2,008	$	(5,107	)

Comparison of the Year Ended December 31, 2008 with the Year Ended December 31, 2007

Revenue Information

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

	Year Ended December 31,
	2008			2007			Percent Change
Casino	$	95,978		$	111,770		(14.1	)%
Rooms		115,608			112,482		2.8	%
Food and beverage		75,525			75,603		(0.1	)%
Other		22,482			27,641		(18.7	)%
		309,593			327,496		(5.5	)%
Less – Promotional Allowances		(29,190	)		(30,771	)	(5.1	)%
Net revenue	$	280,403		$	296,725		(5.5	)%

Net revenue for the year ended December 31, 2008 was $280.4 million, representing a decrease of $16.3 million or 5.5% when compared to $296.7 million of net revenues during 2007. The decrease in net revenue was due to: (1) a decrease in casino revenue of $15.8 million due to decreased table games and slot revenue partially offset by increased race and sportsbook revenue, (2) an increase in room revenue of $3.1 million primarily as a result of an increase in the average daily hotel room rates, and (3) a decrease in other revenue of $5.2 million primarily as a result of decreased entertainment revenue.

In 2008, table games volume decreased approximately 28.7% and slot handle decreased approximately 13.1%. Table games and slot volume decreased primarily due to lower Las Vegas visitor volume and fierce competition in the Las Vegas market. The economic downturn and higher gas prices in the summer limited the number of visitors. Multi-location competitors offered gaming guests higher credit limits, longer payment terms, increased player incentives and enriched casino marketing programs. Similar programs were considered by the Hotel but not implemented because they did not meet our profitability benchmarks.

The Company’s casino operating margin decreased to 19.7% for the year ended December 31, 2008 compared to 25.9% for the year ended December 31, 2007. The decrease in casino margin was primarily attributable to the decrease in table games revenue and an increase in casino marketing expenses. The Company anticipates that visitor volume and competition will continue to be a challenge in 2009. The Company will focus on increasing operating efficiencies, maintaining high conventioneer hotel occupancy and taking advantage of the Hilton affiliation to maintain visitor volume.

The Hotel maintained an average daily room rate of $125 in 2008 as compared to $119 in 2007. Room revenues during 2008 were $115.6 million, representing an increase of $3.1 million or 2.8% when compared to $112.5 million during 2007. The increase in room revenue was primarily 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 41% of occupied rooms in 2008. Operating margins were maintained at 71.0% in 2008 as compared to 70.9% in 2007.

Food and beverage revenues were $75.5 million during 2008 compared to $75.6 million for 2007. Food and beverage revenue was flat from 2007 to 2008. The number of covers was similar between the two periods as well as the pricing.

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The Hotel’s food and beverage operating margin for the year ended December 31, 2008 was 29.3% compared to 28.3% for the year ended December 31, 2007. This increase in margin was achieved by lower food costs.

Other revenues include retail sales, entertainment sales and miscellaneous income at the Hotel. Other revenue decreased $5.2 million or 18.7% in 2008 from $27.6 million in 2007. The decrease is attributable to a decrease in entertainment ticket sales due to fewer performances by headliners.

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 hotel, casino, food and beverage, entertainment, spa and retail outlets.

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

	Year Ended December 31,
	2008		2007		Percent Change
Casino	$	77,092	$	82,771	(6.9	)%
Rooms		33,568		32,712	2.6	%
Food and beverage		53,411		54,224	(1.5	)%
Other		15,534		17,284	(10.1	)%
General and administrative		65,826		70,620	(6.8	)%
Depreciation		20,426		17,572	16.2
Total	$	265,857	$	275,183	(3.4	)%

Operating costs and expenses decreased $9.3 million, or 3.4%, to $265.9 million for the year ended December 31, 2008 compared to $275.2 million for the year ended December 31, 2007. The decrease was primarily attributable to decreased wage and benefit expenses caused by lower business volumes at the Hotel.

Casino

The decrease in casino expense is primarily related to a decrease in the volume of gaming activity. Spending levels for wages and benefits and promotional spending was decreased in relation to lower gaming revenue volume.

Rooms

Operating expense for the Hotel’s room department increased slightly year-over-year. The increase was primarily due to increased laundry expenses and sales commissions paid for group room blocks.

Food and Beverage

Operating expense for the Hotel’s food and beverage was slightly lower year-over-year. Cost of sales was lower due to the shift of sales from fine-dining to casual outlets.

Other

Other operating expenses decreased approximately $1.7 million, or 10.1%, for the year ended December 31, 2008. The decrease is primarily attributable to decreases in entertainment expenses. Lower artist fees, which are included in other expenses, were incurred because the Hotel entered into more contracts in which the artist fees were absorbed by the producers of such events.

General and Administrative

General and administrative expenses decreased $4.8 million or 6.8% to $65.8 million for the year ended December 31, 2008. The decrease was attributed to a decrease in discretionary wages, lower fees paid to an affiliate for common management expenses and a decrease in electricity due to “green” initiatives.

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Depreciation and Amortization

The increase in depreciation expense in 2008 versus 2007 is primarily a result of the continued capitalized expenses related to the ongoing renovation of the property. Renovations which were completed in 2007 were depreciated for a full year in 2008.

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, 2008 (in thousands, except percentages):

Interest expense	$	15,612
Interest income		(629	)
Interest expense, net	$	14,983
Cash paid for interest	$	14,602
Average total debt balance	$	250,000
Weighted average interest rate		6.26	%

Interest expense includes $1.0 million of amortization related to deferred financing costs and $13,000 reflecting the change in the value of the interest rate cap. No interest was capitalized during 2008.

Net Income (Loss)

The Hotel recorded a net loss of $437,000 for the year ended December 31, 2008, compared with a net income of $2.0 million for the year ended December 31, 2007.

The $2.4 million decrease in the net income is attributed to the decrease in operating income offset by the decrease in interest expense. A reconciliation follows (in thousands):

2007 Net Income	$	2,008
Decrease in 2008 Operating Revenue		(16,322	)
Decrease in 2008 Operating Expense		9,326
Decrease in interest expense, net		4,551
2008 Net Loss	$	(437	)

Comparison of the Year Ended December 31, 2007 with the Year Ended December 31, 2006

Revenue Information

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

	Year Ended December 31,
	2007			2006			Percent Change
Casino	$	111,770		$	111,004		0.7	%
Rooms		112,482			102,867		9.3	%
Food and beverage		75,603			73,409		3.0	%
Other		27,641			29,720		(7.0	)%
		327,496			317,000		3.3	%
Less – Promotional Allowances		(30,771	)		(26,694	)	15.3	%
Net revenue	$	296,725		$	290,306		2.2	%

Net revenue for the year ended December 31, 2007 was $296.7 million, representing an increase of $6.4 million or 2.2% when compared with $290.3 million of net revenues during 2006. The increase in net revenue was due to: (1) an increase in casino revenue of $0.8 million due to increased slot revenue, and race and sportsbook revenue offset by a decrease in table games revenue, (2) an increase in room revenue of $9.6 million primarily as a result of an increase in the average daily hotel room rates, (3) an increase in food and beverage revenue of $2.2 million due primarily to price increases, and (3) a decrease in other revenue of $2.1 million primarily as a result of decreased entertainment sales.

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In 2007, table games volume decreased approximately 17% and slot handle increased approximately 2%. Table games volume decreased primarily due to fierce competition in the Las Vegas market for quality table games players. Higher credit limits, longer payment terms and increased player incentives offered at multi-location competitors, if matched, would make table game revenue highly volatile and possibly unprofitable. Slot handle increased due to more frequent and robust casino marketing programs, additional slot machines and a favorable mix of game type.

The Company’s casino operating margin decreased to 25.9% for the year ended December 31, 2007 compared to 27.8% for the year ended December 31, 2006. The decrease in casino margin was primarily attributable to the decrease in table games revenue and an increase in casino marketing expenses.

The Hotel maintained an average daily room rate of $119 in 2007 as compared to $107 in 2006. Room revenues during 2007 were $112.5 million, representing an increase of $9.6 million or 9.3% when compared to $102.9 million during 2006. The increase in room revenue was primarily the result of an increase in the average daily room rate. Convention traffic continued to be the mainstay of the Hotel’s occupied room nights accounting for 39% of occupied rooms in 2007. Operating margins increased to 70.9% in 2007 as compared to 68.8% in 2006. The increase in operating margins was due to higher revenue compared to static costs.

Food and beverage revenues were $75.6 million during 2007, representing an increase of $2.2 million, or 3.0%, compared to $73.4 million for 2006. 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, 2007 was 28.3% compared to 26.1% for the year ended December 31, 2006. This increase in margin was due to increased revenues compared to static costs.

Other revenues included retail sales, entertainment sales and miscellaneous income at the Hotel. Other revenue decreased $2.1 million or 7.0% in 2007 from $29.7 million in 2006. The decrease was attributable to a decrease in entertainment’s sales due to fewer performances by headliners.

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,
	2007		2006		Percent Change
Casino	$	82,771	$	80,194	3.2	%
Rooms		32,712		32,136	1.8	%
Food and beverage		54,224		54,246	—
Other		17,284		19,812	(12.8	)%
General and administrative		70,620		73,283	(3.6	)%
Depreciation		17,572		13,337	31.8	%
Total	$	275,183	$	273,008	0.8	%

Operating costs and expenses increased $2.2 million, or 0.8%, to $275.2 million for the year ended December 31, 2007 compared to $273.0 million for the year ended December 31, 2006. The increase was primarily attributable to increased business volumes at the Hotel and, in particular, year-to-year depreciation and wage and benefit increases.

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Casino

The increase in casino expense was primarily related to an increase in the volume of gaming activity. Increases in promotional spending was required to maintain gaming volume.

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 expense for the Hotel’s food and beverage was relatively flat year-to-year. Slight labor and benefits increases were offset by decreases in operating supplies.

Other

Other operating expenses decreased approximately $2.5 million, or 12.8%, for the year ended December 31, 2007. The decrease was primarily attributable to decreases in entertainment expenses. Fewer performances of Manilow, Music and Passion and non-resident headliners yielded less artist fees which were included in other expenses.

General and Administrative

General and administrative expenses decreased $2.7 million, or 3.6%, to $70.6 million for the year ended December 31, 2007. The decrease was attributed to a decrease in the amortization of stock option expense, lower fees paid to an affiliate for common management expenses and a decrease in general liability insurance and workers compensation. During the year ended December 31, 2007 there was six months of amortization of stock option expense in accordance with FAS 123(R). During the year ended December 31, 2006 there was 12 months of amortization of stock option expense.

Depreciation and Amortization

The increase in depreciation expense in 2007 versus 2006 was primarily a result of the continued capitalized expenses related to the ongoing renovation of the property. Approximately one-third of the hotel rooms were renovated in 2006 and placed in service at the end of the year. A full year’s depreciation of these rooms was included in the 2007 expenses.

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, 2007 (in thousands, except percentages):

Interest expense	$	20,397
Interest income		(863	)
Interest expense, net	$	19,534
Cash paid for interest	$	17,806
Average total debt balance	$	235,591
Weighted average interest rate		8.30	%

Interest expense includes $2.6 million of amortization related to deferred financing costs and $608,000 reflecting the change in the value of the interest rate cap. Approximately $764,000 of interest was capitalized during 2007.

Net Income (Loss)

The Hotel recorded net income of $2.0 million for the year ended December 31, 2007, compared with a net loss of $5.1 million for the year ended December 31, 2006.

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The $7.1 million increase in the net income was attributed to the improvement of operating income, a decrease in interest expense and a reduction of loss on extinguishment of debt. A reconciliation follows (in thousands):

2006 Net Loss	$	(5,107	)
Improvement in 2007 Operating Income		4,244
Decrease in 2007 Interest, net		1,553
Reduction of loss on extinguishment of debt		1,318
2007 Net Income	$	2,008

Liquidity and Capital Resources

Cash flows of the Company for the year ended December 31, 2008 compared to the year ended December 31, 2007 consisted of the following:

Cash Flows – Operating Activities

Cash flow provided by operations was $17.8 million in 2008 which was comparable to the $17.5 million provided by operations in 2007. An increase in depreciation and amortization and a decrease in accounts receivable was offset by decreases in net income, accounts payable and accrued expenses.

Cash Flows – Investing Activities

During the year ended December 31, 2008, the Company completed numerous maintenance capital projects. The Company expended approximately $10 million on capital projects in 2008 and expects to spend nominal amounts on capital expenditure projects in 2009.

Any 2009 capital expenditure projects will be financed from existing cash balances and 2009 operating cash flow.

Cash Flows – Financing Activities

The Company received approximately $6 million in additional funding during 2008 from the term loan which originated as of May 11, 2006, with Goldman Sachs Commercial Mortgage Capital, L.P. (the “Term Loan”). The term loan had an original funding of $209 million and was subject to future funding to a maximum of $250 million. As of December 31, 2008, there is no additional funding available on the term loan.

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

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

The term loan had an original expiration date of May 10, 2008. Upon the satisfaction of certain conditions, the term loan provides for three, one year extensions.

The Company exercised the first extension option in 2008. The Company intends to exercise the second one-year extension in 2009. In order to exercise this extension, the Company will be required to 1) obtain a new extension interest rate cap agreement, 2) pay an extension fee and any out-of-pocket expenses incurred by the lender and 3) meet certain debt yield benchmarks. The debt yield benchmarks will be based on results of operations through March 31, 2009. If the Company is unable to meet any of the above noted conditions, the Company would be required to refinance the term loan.

Other Factors Affecting Liquidity

While the Company believes that the cash generated from cash flows from operations and cash currently on hand will be adequate to fund its activities, including the capital expenditures that the Company plans to make, no assurance can be made that such sources will be sufficient to meet such requirements. Covenants under the term loan restrict the Company’s future borrowing capacity. However, subject to certain conditions, the 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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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
Term Loan (a)	$	—	$	250,000	$	—	$	—	$	250,000
Variable interest payments (b)		11,950		—		—		—		11,950
Contractual Obligations
Hilton agreement (c)		—		—		—		—		—
Employment agreements (d)		1,725		312		—		—		2,037
Operating leases (e)		327		537		126		—		990
Entertainment contracts (f)		6,728		—		—		—		6,728
	$	20,730	$	250,849	$	126	$	—	$	271,705

(a) The Term Loan, with an initial funding of $209,000,000, originated May 11, 2006. As of December 31, 2008, the outstanding balance on the Term Loan was $250,000,000. The loan accrues interest at a rate of 2.9% plus one-month LIBOR which was 1.88% at December 31, 2008 for a total interest rate of 4.78%. The Loan originally had a two-year term and could be extended for three one-year extensions options. The Company exercised the first extension in 2008. The Company intends to exercise the second one-year extension in 2009. No additional funding is available since the maximum loan amount if $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, 2008 LIBOR rate, interest is calculated at 4.78% .

(c) The Company has signed a new agreement with Hilton commencing January 1, 2009. The agreement expires December 31, 2015 and allows the Hotel to use the Hilton name, advertise on the Hilton Hotels web site, utilize the Hilton reservation system and other Hilton amenities. In exchange, the Hotel is required to make certain capital improvements and will pay varying percentage fees of Food and Beverage Revenue (as defined in the agreement) and Hotel Revenue (as defined in the agreement) and also is obligated to participate in the Hilton Honors rewards program. For the year ending December 31, 2009 the Company will expense 1% of defined Food and Beverage and 4.25% of defined Hotel Revenue in accordance with this agreement.

(d) The Company is party to employment agreements with 18 of its senior executives, with original terms of one to three years.

(e) The Company is party to operating leases for office and telephone equipment with original terms of three to five years.

(f) The Company is party to certain contracts to retain specific entertainers for recurring performances. These agreements expire during 2009.

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, 2008 (amounts in thousands):

	Maturity date	Face Amount		Carrying value		Estimated fair value
Term Loan	May 2009	$	250,000	$	250,000	$	212,500

The 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 was two years with three one-year extension options. The 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. The Company has notified the lender of its intention to exercise its right to extend the loan for one year. 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.

Self-Insurance Reserve

The Company is self insured up to certain stop loss amounts for workers’ compensation and general liability claims. In estimating this accrual, the Company considers historical loss experience and makes 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 Instruments and Hedging Activities

The Company seeks to manage its market risk, including interest rate risk associated with variable rate borrowings, through balancing fixed-rate and variable-rate borrowings with the use of derivative financial instruments. The Company accounts for derivative financial instruments in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended. The fair value of derivative financial instruments are recognized as assets or liabilities at each balance sheet date, with changes in fair value affecting net income (loss) or comprehensive income (loss) as applicable. The Company’s current interest rate swaps do not qualify for hedge accounting. Accordingly, changes in the fair value of the interest rate swaps are presented as an increase (decrease) in fair value of swaps in the accompanying Statements of Operations.

Allowance for Doubtful Accounts

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 collectability 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 as of December 31, 2008 increased when compared to December 31, 2007 primarily as a result of the increase in the allowance for doubtful accounts. The allowance for doubtful accounts has increased due to the overall downturn in the economy. 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.

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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.

Long-Lived Assets

Long-lived assets, which are not to be disposed of, including intangibles and property and equipment, are periodically reviewed by management for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. For assets to be held and used, the Company reviews these 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, then impairment is measured as the difference between fair value and carrying value, with fair value typically based on a discounted cash flow model. If an asset is still under development, future cash flows include remaining construction costs.

Recent Accounting Pronouncements

In September 2006, the Financial Accounting Standards Board (the “FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value Measurements”. This statement defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements under other accounting pronouncements that require or permit fair value measurements. Accordingly, this statement does not require any new fair value measurements. In February 2008, the FASB issued FASB Staff Position FAS 157-2, which defers the effective date of SFAS 157 for non-financial assets and liabilities that are recognized or disclosed at fair value in the entity’s financial statements on a recurring basis to fiscal years beginning after November 15, 2008 and interim periods within those fiscal years. The Company partially adopted the provisions of SFAS 157 effective January 1, 2008 and will adopt the remaining provisions of SFAS 157 on January 1, 2009. The adoption of this statement did not have a material impact the Company’s financial statements.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities Including an Amendment of FASB Statement No. 115.” SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value, with unrealized gains and losses related to these financial instruments reported in earnings at each subsequent reporting date. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. The adoption of this statement did not have a material impact on the Company’s financial statements.

In March 2008, the FASB issued SFAS No. 161, “Disclosures About Derivative Instruments and Hedging Activities, an amendment of SFAS No. 133”. SFAS No. 161 is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash flows. This statement is effective for fiscal years beginning after November 15, 2008. SFAS No. 161 is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

In October 2008, the FASB issued FASB Staff Position No. FAS 157-3, Deterrmining the Fair Value of a Financial Asset When the Market for That Asset is Not Active (FSP 157-3 or the FSP). FSP 157-3 clarifies the application of SFAS No. 157, Fair Value Measurements (Statement 157), in a market that is not active. The FSP amends Statement 157 to include an example that illustrates key considerations when applying the principles in Statement 157 to financial assets when the market for these instruments is not active.

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ITEM 7A(T).—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 $2.5 million for the year ending December 31, 2009. 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 expense.

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 the Company are presented herein on the page indicated:

AUDITED FINANCIAL STATEMENTS:
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	33
BALANCE SHEETS AS OF DECEMBER 31, 2008 AND 2007	34
STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2008, 2007, 2006	35
STATEMENTS OF MEMBERS’ EQUITY FOR THE YEARS ENDED DECEMBER 31, 2008, 2007, 2006	36
STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2008, 2007, 2006	37
NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2008, 2007, 2006	38

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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, 2008 and 2007, and the related statements of operations, members’ equity, and cash flows for each of the three years in the period ended December 31, 2008. Our audits also included the financial statement schedule listed in the index at Item 15(a)(2). These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement 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 Colony Resorts LVH Acquisitions, LLC at December 31, 2008 and 2007, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2008, 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.

/s/ Ernst & Young LLP

Las Vegas, Nevada

March 23, 2009

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COLONY RESORTS LVH ACQUISITIONS, LLC

BALANCE SHEETS

DECEMBER 31,

(In thousands, except membership unit data)

	2008			2007
ASSETS
CURRENT ASSETS:
Cash and equivalents	$	32,444		$	23,645
Restricted cash		8,107			3,168
Accounts receivable, net of allowance for doubtful accounts of $7,153 at December 31, 2008 and $5,912 at December 31, 2007		11,942			18,168
Inventories		3,047			3,089
Prepaid expenses and other current assets		5,238			5,853
Total current assets		60,778			53,923
PROPERTY AND EQUIPMENT, NET		342,267			352,327
RESTRICTED CASH		2,549			3,772
OTHER ASSETS, NET		958			1,786
Total assets	$	406,552		$	411,808
LIABILITIES AND MEMBERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	7,589		$	11,710
Accrued expenses		27,136			33,041
Due to affiliates		767			1,311
Total current liabilities		35,492			46,062
TERM LOAN		250,000			244,279
LONG TERM DEPOSITS		61			31
Total liabilities		285,553			290,372
COMMITMENTS AND CONTINGENCIES (Note 13)
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		(29,001	)		(28,564	)
Total members’ equity		60,999			61,436
Total liabilities and members’ equity	$	406,552		$	411,808

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

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COLONY RESORTS LVH ACQUISITIONS, LLC

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31,

(In thousands, except membership unit data)

	2008			2007			2006
Revenues:
Casino	$	95,978		$	111,770		$	111,004
Rooms		115,608			112,482			102,867
Food and beverage		75,525			75,603			73,409
Other revenue		22,482			27,641			29,720
Total revenues		309,593			327,496			317,000
Less: promotional allowances		(29,190	)		(30,771	)		(26,694	)
Net revenues		280,403			296,725			290,306
Operating Costs and Expenses:
Casino		77,092			82,771			80,194
Rooms		33,568			32,712			32,136
Food and beverage		53,411			54,224			54,246
Other expense		15,534			17,284			19,812
General and administrative		65,826			70,620			73,283
Depreciation and amortization		20,426			17,572			13,337
Total Operating Expenses		265,857			275,183			273,008
Operating income		14,546			21,542			17,298
Other income (expense):
Interest expense		(15,612	)		(20,397	)		(21,500	)
Interest income		629			863			413
Loss on extinguishment of debt		—			—			(1,318	)
		(14,983	)		(19,534	)		(22,405	)
Net (Loss) Income	$	(437	)	$	2,008		$	(5,107	)
Net (loss) income allocation:
Allocable to Class A	$	—		$	—		$	—
Allocable to Class B	$	(437	)	$	2,008		$	(5,107	)
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			1,666,668.67			1,500,001.50
Net income (loss) per Class A membership unit-basic		(.29	)	$	1.34		$	(3.40	)
Net income (loss) per Class B membership unit-basic		(.29	)	$	1.34		$	(3.40	)
Per membership unit-diluted		(.29	)	$	1.20		$	(3.40	)

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

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COLONY RESORTS LVH ACQUISITIONS, LLC

STATEMENTS OF MEMBERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31,

(In thousands)

	Capital Contribution						Accumulated Deficit			Total
	Class A Membership Units			Class B Membership Units
	Units	Value		Units	Value
Balance, January 1, 2006	—	$	—	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
Stock-based employee compensation	—		—	—		—		1,341			1,341
Net income	—		—	—		—		2,008			2,008
Balance, December 31, 2007	—		—	900		90,000		(28,564	)		61,436
Net loss	—		—	—		—		(437	)		(437	)
Balance, December 31, 2008		$		900	$	90,000	$	(29,001	)	$	60,999

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

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COLONY RESORTS LVH ACQUISITIONS, LLC

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31,

(In thousands)

	2008			2007			2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (Loss) Income	$	(437	)	$	2,008		$	(5,107	)
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		20,426			17,572			13,337
Valuation change in interest rate cap agreement		13			111			517
Amortization of deferred financing costs		997			1,616			743
Loss on extinguishment of debt		—			—			1,318
Provision for doubtful accounts		1,812			2,027			2,154
Stock-based employee compensation		—			1,341			2,548
Changes in assets and liabilities:
Accounts receivable		4,414			(1,368	)		(2,564	)
Inventories		42			(168	)		178
Prepaid expenses and other current assets		289			(747	)		330
Other assets		814			(259	)		471
Accounts payable		(4,121	)		(141	)		(1,000	)
Accrued expenses		(5,904	)		(2,710	)		(422	)
Due to affiliates		(544	)		(1,803	)		5,485
Long term deposits		30			—			—
Net cash provided by operating activities		17,831			17,479			17,988
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment		(10,365	)		(35,296	)		(34,972	)
Change in restricted cash		(3,716	)		(663	)		1,472
Net cash used in investing activities		(14,081	)		(35,959	)		(33,500	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Term Loan		5,720			19,183			225,096
Payment of Archon Term Loan		—			—			(200,000	)
Debt issuance costs		(671	)		(1	)		(3,859	)
Net cash provided by financing activities		5,049			19,182			21,237
Increase in cash and equivalents		8,799			702			5,725
Cash and equivalents at beginning of year		23,645			22,943			17,218
Cash and equivalents at end of year	$	32,444		$	23,645		$	22,943
Supplemental Cash Flow Disclosure:
Cash paid for interest, net of capitalized interest	$	14,602		$	17,806		$	20,951

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

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COLONY RESORTS LVH ACQUISITIONS, LLC

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2008, 2007, 2006

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.

Note 2 – THE ACQUISITION

On June 18, 2004, the Company completed the acquisition of substantially all of the assets of the Hotel 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 the Hotel. 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.

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.

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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 $10.7 million and $6.9 million in various escrow accounts as of December 31, 2008 and 2007, 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, operating supplies 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

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

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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, 2008, 2007, and 2006 the Company incurred $15.6 million, $20.4 million and $21.5 million in net interest expense, respectively, and capitalized approximately $0, $764,000 and $673,000 respectively.

Deferred Financing Costs

Deferred financing costs of $0.7 million relate to the Company’s first extension of the Term Loan described in Note 7. The Company has amortized loan costs since the closing of its acquisition of the Hotel in June, 2004 using the effective interest method. On May 11, 2006, the Company entered into a Term Loan with Goldman Sachs Commercial Mortgage Capital, L.P. The unamortized loan costs associated with the acquisition of the Hotel were written off and the loan costs associated with the Term Loan were capitalized for amortization over the life of the loan. Amortization expense for the years ended December 31, 2008, 2007 and 2006 was $1.0 million, $1.6 million and $2.1 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):

	2008		2007		2006
Food and Beverage	$	13,546	$	13,798	$	13,136
Rooms		4,058		4,282		3,926
Other		1,585		2,274		1,301
	$	19,189	$	20,354	$	18,363

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

	2008		2007		2006
Food and Beverage	$	15,253	$	15,306	$	14,263
Rooms		12,088		12,633		10,887
Other		1,849		2,832		1,544
	$	29,190	$	30,771	$	26,694

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.

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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, 2008, 2007 and 2006 were $10.5, $10.8, and $10.1 million respectively.

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 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. This difference was approximately $13,000 for the year ended December 31, 2008.

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.

Income (Loss) Per Membership Unit

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

The diluted income (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 acquisition of the Hotel, 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 of the Hotel, 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 (as defined in the Plan), the options increased in value.

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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 was 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 Company’s adoption of the Plan.

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 assumptions: risk free interest rate of 3.24%; no expected dividend yields; and expected vesting periods of 36 months. The estimated fair 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)
Model		Black-Scholes			Black-Scholes
Number of options		166,667			166,667
Membership unit price	$	104		$	100
Exercise unit price	$	100		$	100
Dividend Yield		N/A			N/A
Volatility		37	%		40	%
Risk-Free rate		5.07	%		3.24	%
Valuation Date		June 30, 2006			June 18, 2004
Expiration Date		June 18, 2014			June 18, 2014
Term		36 months
Up movement		N/A
Down movement		N/A
Risk Neutral Probability		N/A

Recent Accounting Pronouncement

In September 2006, the Financial Accounting Standards Board (the “FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value Measurements”. This statement defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements under other accounting pronouncements that require or permit fair

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value measurements. Accordingly, this statement does not require any new fair value measurements. In February 2008, the FASB issued FASB Staff Position FAS 157-2, which defers the effective date of SFAS 157 for non-financial assets and liabilities that are recognized or disclosed at fair value in the entity’s financial statements on a recurring basis to fiscal years beginning after November 15, 2008 and interim periods within those fiscal years. The Company partially adopted the provisions of SFAS 157 effective January 1, 2008 and expects to adopt the remaining provisions of SFAS 157 on January 1, 2009. The adoption of this statement did not have a material impact on the Company’s financial statements.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities Including an Amendment of FASB Statement No. 115.” SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value, with unrealized gains and losses related to these financial instruments reported in earnings at each subsequent reporting date. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. The adoption of this statement did not have a material impact on the Company’s financial statements.

In March 2008, the FASB issued SFAS No. 161, “Disclosures About Derivative Instruments and Hedging Activities, an amendment of SFAS No. 133”. SFAS No. 161 is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash flows. This statement is effective for fiscal years beginning after November 15, 2008. SFAS No. 161 is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

In October 2008, the FASB issued FASB Staff Position No. FAS 157-3, Determining the Fair Value of a Financial Asset When the Market for That Asset is Not Active (FSP 157-3 or the FSP). FSP 157-3 clarifies the application of SFAS No. 157, Fair Value Measurements (Statement 157), in a market that is not active. The FSP amends Statement 157 to include an example that illustrates key considerations when applying the principles in Statement 157 to financial assets when the market for these instruments is not active.

Income Taxes

The Company is a limited liability company and is 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, 2007 financial statements have been reclassified to conform to the December 31, 2008 presentation. These reclassifications had no effect on the previously reported net income.

Note 4 – ACCOUNTS RECEIVABLE, NET

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

	2008			2007
Casino	$	12,177		$	14,088
Hotel		5,409			8,394
Other		1,509			1,598
		19,095			24,080
Less: allowance for doubtful accounts and discounts		(7,153	)		(5,912	)
	$	11,942		$	18,168

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

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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.

Note 5 – PROPERTY AND EQUIPMENT, NET

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

	2008			2007
Land and land improvements	$	154,311		$	153,982
Building and improvements		158,423			156,448
Equipment, furniture, fixtures and leasehold improvements		91,862			85,496
Construction in progress		3,185			1,489
		407,781			397,415
Less: accumulated depreciation		(65,514	)		(45,088	)
	$	342,267		$	352,327

Note 6 – ACCRUED EXPENSES

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

	2008		2007
Customer deposits	$	2,603	$	4,101
Payroll and related		9,412		10,331
Taxes and licenses		1,781		2,547
Casino related		8,552		9,897
License royalties		205		225
Other accruals		4,583		5,940
	$	27,136	$	33,041

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 of the Hotel, the Company entered into a term loan with Archon Financial, L.P. (the “Archon Loan”). The Archon 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 Archon 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 Archon Loan provided for no amortization during the term. The Archon Loan was collateralized by a first priority deed of trust on the Hotel.

The Archon 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.

On May 11, 2006, the Company entered into a new Loan Agreement with Goldman Sachs Commercial Mortgage Capital, L.P. (the “Term Loan”). The Term Loan was for an initial principal amount of $209.2 million and for an initial term of two (2) years. The Company has drawn an additional $40.8 million against the Term Loan, the maximum funding of the Term Loan.

The Company exercised the first extension option in 2008. The Company intends to exercise the second one-year extension in 2009. The Company will be required to 1) obtain a new extension interest rate cap agreement, 2) pay an extension fee and any out-of-pocket expenses incurred by the lender and 3) meet certain debt yield benchmarks. The debt yield benchmarks will be based on results of operations through March 31, 2009.

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

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

Proceeds from the Term Loan were used to extinguish the Archon 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 Archon Loan.

Fair Value

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

	2008				2007
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Term Loan	$	250,000	$	212,500	$	244,279	$	244,279
Cap Agreement	$	—	$	—	$	—	$	—

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 of the Hotel, 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 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 the 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. As of December 31, 2008, Whitehall has not exercised the sale right.

Note 9 – MEMBERSHIP INTERESTS

In connection with and immediately prior to the acquisition of the Hotel, 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 Company’s Operating Agreement (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, Whitehall Voteco joined the Company as a member and

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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, 2008, 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, 2008, 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. 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.

At the time of the closing of the acquisition of the Hotel, 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;

• 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;

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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.

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. Through December 31, 2008, the Company matched 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, 2008, 2007, and 2006; matching contributions expensed under the savings plans were $772,000, $830,000, and $934,000 respectively. As of January 1, 2009, the Company has suspended matching contributions.

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 $18.2 million for the year ended December 31, 2006 related to the plans, and $17.3 million for the years ended December 31, 2007 and 2008. 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

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 control), 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.

The Company provides and/or receives services from affiliated companies. The total net value of services received from the affiliated companies was approximately $4.7 million for the year ended December 31, 2008, $4.9 million for the year ended December 31, 2007, and $5.5 million for the year ended December 31, 2006.

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Note 12 – OPERATING LEASES

The Hotel is the lessee under leases for office and telephone equipment. At December 31, 2008, the Company was obligated under non-cancelable operating leases to make future minimum lease payments as follows:

Year Ending December 31
2009	$	327,186
2010		327,186
2011		209,784
2012		84,111
2013		42,055
	$	990,322

Equipment rent expense for the years ended December 31, 2008, 2007, and 2006 was $937,414, $853,154 and $703,500 respectively.

Note 13 – COMMITMENTS AND CONTINGENCIES

Letters of Credit

Beginning in 2005 and annually thereafter, the Company was required to deliver irrevocable standby letters of credit in connection with its workers’ compensation insurance policies issued by its insurance carriers. The letters of credit are secured by certificates of deposits in the same notional amounts as the corresponding letters of credit. The initial expiration dates of these letters of credit are for one year 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, 2008, December 31, 2007 and December 31, 2006, the certificates of deposit which secure the letters of credit total $2,538,750, $3,762,000 and $2,872,000, respectively, and are included in restricted cash. As of December 31, 2008, 2007 and 2006, there were no amounts outstanding on the letters 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 discretionary annual bonus payments.

In addition, under the Vice Chairman’s agreement, the Company granted Mr. Ribis 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 of the Hotel 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 licensed from Hilton Inns, Inc. the right to use the mark “Hilton” and is part of Hilton’s reservation system and Hilton’s

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“HHonors Program™”. The License Agreement commenced on the date of the closing of the acquisition of the Hotel and expired on December 31, 2008. During the term of the License Agreement, the Company was 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.

Effective January 1, 2009, the Company entered into a new License Agreement with HLT Existing Franchise Holding LLC (“Hilton”). The new agreement has a seven-year term and requires payments based on annually increasing percentages of room revenue and food and beverage revenue. Fees in 2009 will be 4.25% of Gross Rooms revenue (as defined in the Agreement) and 1% of Gross Food and Beverage revenue (as defined in the Agreement). Fees will increase to 5.25% of Gross Rooms revenue and 1% of Gross Food and Beverage revenue during the years 2011 through and including 2015. The Company is also required to pay fees associated with reservations made through the Hilton reservation system and fees to participate in the Hilton loyalty program.

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 discovered that there is a plume of tetrachloroethylene (“PCE) in the groundwater and the property was listed as a leaking underground storage tank site. The Phase I report states that levels of PCE 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 to monitor and evaluate the source of PCE 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 and February 28, 2007, which concluded that the PCE originates from an off-site source, near the southwest corner of the Hotel. On September 14, 2007, NDEP determined that the Company is no longer required to conduct an additional investigation of the source and extent of PCE in groundwater and closed its investigation as it relates to the Hotel.

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.

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Sales and Use Tax on Complimentary Meals

In March 2008, the Nevada Supreme Court ruled, in the matter captioned Sparks Nugget, Inc. vs. The State of Nevada Ex Rel. Department of Taxation, that food and non-alcoholic beverages purchased for use in providing complimentary meals to customers and to employees was exempt from sales and use tax. In July, 2008, the Court denied the State’s motion for rehearing. For the three year period ended February 2008, the Company paid use tax on these items and has filed for refunds for the periods March 2005 through February 2008. The amount subject to these refunds, excluding interest, is approximately $1.1 million. As of December 31, 2008, the Company had not recorded a receivable related to this matter.

Note 14 – 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, 2008
First quarter	$	80,617	$	11,016		$	6,628		$	6,628		$	3.98
Second quarter		75,457		6,996			3,394			3,394			2.04
Third quarter		63,468		(2,776	)		(6,171	)		(6,171	)		(4.11	)
Fourth quarter		60,861		(690	)		(4,288	)		(4,288	)		(2.86	)
Year ended December 31, 2007
First quarter	$	79,265	$	11,816		$	7,086		$	7,086		$	4.72
Second quarter		72,352		4,303			(494	)		(494	)		(.33	)
Third quarter		69,414		874			(4,212	)		(4,212	)		(2.81	)
Fourth quarter		75,694		1,549			(372	)		(372	)		(.24	)
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		72,622		1,989			(2,611	)		(2,611	)		(1.74	)

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

None.

ITEM 9A(T).—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) (the Exchange Act) of the Company as of December 31, 2008 and have concluded that they are effective within the reasonable assurance threshold described below.

b) Management’s Report on Internal Control Over Financial Reporting. Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2008. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework.

Based on our assessment, management believes that, as of December 31, 2008, the Company’s internal control over financial reporting was effective.

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

c) Changes in Internal Control over Financial Reporting. There were no changes in our internal control over financial reporting that occurred during our fourth fiscal quarter to which this report relates 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

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PART III

ITEM 10.—DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The directors and executive officers of the Company as of December 31, 2008 are as follows:

NAME	AGE	POSITION
Directors
Thomas J. Barrack, Jr.	61	Chairman of the Board
Nicholas L. Ribis	63	Vice-Chairman of the Board
Jonathan Langer	39	Member of the Board
Joseph L. Garrubbo	71	Independent Member of the Board
Executive Officers
Rodolfo Prieto	64	Chief Executive Officer and General Manager
Robert Schaffhauser	62	Executive Vice President, Finance
Kenneth M. Ciancimino	47	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 Kerzner International Limited, a private developer of resort and gaming properties worldwide. Mr. Barrack is 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, and Tunica, Mississippi. Mr. Barrack is a director of Station Casinos, Inc.

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 Sachs & 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. Since February 2008, Mr. Langer has been a board member of American Casino & Entertainment Properties, LLC.

JOSEPH L. GARRUBBO was appointed as the Independent Board Member on February 13, 2009. Mr. Garrubbo is an attorney in private practice with the firm of Garrubbo Capice & Millman, PC and was the firm’s founding member. He has been in private practice since 1972. Mr. Garrubbo received his law degree from Seton Hall University School of Law. He also holds an undergraduate degree in Psychology from Seton Hall University. Mr. Garrubbo’s has served as a member of the Board of Freeholders and as a member of the New Jersey General Assembly. He has also served as municipal court judge in the State of New Jersey. Mr. Garrubo is admitted to practice law in the State of New Jersey. Mr. Garrubo is the father-in-law of Kenneth M. Ciancimino, the Executive Vice President, Administration of the Company.

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

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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.

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. Mr. Ciancimino is the son-in-law of Joseph L. Garrubbo, a Board Member of the Company.

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 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 Operating Agreement further provides that so long as Whitehall maintains its investment in the Company, it shall be entitled to appoint one Manager to the Company’s Board of Managers. The Company has does not have an independent 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, 2008, all Section 16(a) filing requirements applicable to its executive officers, directors, and greater-than-10% beneficial owners were satisfied.

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 attached as an exhibit to the Company’s filings with the SEC, and will also be provided without charge to any security holder of the Company who requests it.

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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 2008. 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 2008 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.

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 $800,000 during 2008, and will receive a base salary of $800,000 for 2009. 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 of his employment. Mr. Prieto received a cash bonus of $336,000 in 2008. Mr. Prieto also received a cash bonus of $485,000 in 2007. The 2007 bonus included 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 $52,616 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.

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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 2011, subject to automatic one year renewal thereafter unless terminated by either party. Mr. Schaffhauser will receive a base salary of $403,200 in 2009 and received $384,000 in 2008. Mr. Ciancimino will receive a base salary of $342,300 in 2009 and received $326,000 in 2008. Mr. Schaffhauser’s and Mr. Ciancimino’s employment agreements provide that their 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 2008 were $800,000, $384,000 and $326,000 respectively, and in 2009 are $800,000, $403,200 and $342,300 respectively.

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 2008, Mr. Prieto received a bonus of $336,000. In 2007, Mr. Prieto received a bonus of $485,000 which included 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 bonuses of $77,000 and Mr. Ciancimino received bonuses of $66,000 in 2008. Mr. Schaffhauser received bonuses of $140,175 and Mr. Ciancimino received bonuses of $119,181 in 2007.

Equity Grants.

The executive officers were granted options under the terms and conditions of the Company’s 2004 Incentive Plan and as negotiated in the executive officers’ employment agreements. The option grants fulfilled inducements made to secure the services of

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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 $52,616 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 Messers 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 2008, 2007 and 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	2008	$	800	$	336	—		—	—	—	$	62	(3)	$	1,198
	2007	$	800	$	485	—	$	201	—	—	$	60	(3)	$	1,546
	2006	$	750	$	135	—	$	382	—	—	$	60	(3)	$	1,327
Robert Schaffhauser (PFO) Executive Vice President, Finance	2008	$	384	$	77	—		—	—	—	$	6	(5)	$	467
	2007	$	368	$	140	—	$	67	—	—	$	5	(5)	$	580
	2006	$	292	$	63	—	$	127	—	—		—		$	482
Kenneth M. Ciancimino Executive Vice President, Administration	2008	$	326	$	66	—		—	—	—	$	24	(4)	$	416
	2007	$	312	$	119	—	$	67	—	—	$	12	(4)	$	510
	2006	$	295	$	54	—	$	127	—	—	$	11	(4)	$	487

(1) The amounts represent the annual base salary for each Named Executive Officer for 2008, 2007 and 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 2008, 2007 and 2006 amortized value of the options in accordance with FAS123( R ).

(3) Includes paid life insurance premiums ($52,616 in 2008 and $51,415 in 2007 and 2006) 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 each year and $24,095 medical insurance premium in 2008, $2,931 medical insurance premiums in 2007 and $2,184 medical insurance premiums in 2006.

(5) Includes $5,929 medical reimbursement costs in 2008 and $5,323 of medical reimbursement costs in 2007.

Grants of Under the 2004 Incentive Plan

There were no options granted during the year ended December 31, 2008 or 2007.

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Outstanding Equity Awards

The following table sets forth existing equity awards at December 31, 2008 that have not been exercised as of that date:

OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2008

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	2008	25,000	—	—	$	100 per share	June 17, 2014
Robert Schaffhauser (PFO) Executive Vice President, Finance	2008	8,334	—	—	$	100 per share	June 17, 2014
Kenneth M. Ciancimino Executive Vice President, Administration	2008	8,334	—	—	$	100 per share	June 17, 2014

The Company made no equity awards during the year ended December 31, 2008 or 2007.

Options Exercised and Stock Vested

During the years ended December 31, 2008 or 2007, no options were exercised. During the years ended December 31, 2008 and 2007, 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. Garrubbo will receive an annual retainer of $50,000 for his services as a Board Member.

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, 2009, 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

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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.

Director Compensation for 2008

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 (1)		—	—	—	—	—	—		—

(1) Mr. Cummis resigned for his position as a Board Member on May 30, 2008

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 December 31, 2008 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.

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							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	%	—		—

(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. As of March 9, 2009 Mr. Rothenberg relinquished his voting rights in WH/LVH Voteco, LLC, and therefore will no longer be considered a beneficial owner of the Company.

(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 of the Hotel. 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.

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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.

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 recently appointed Mr. Garrubbo 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.

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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.

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 pursuant to which the Company acquired the Hotel 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.

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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;

• 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. Whitehall has not exercised the sale right.

Services Agreement

In connection with the execution of the Vice Chairman Agreement, on June 18, 2004, the Company and 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. On April 25, 2005, this agreement was amended and restated to add RIH Resorts, LLC, an affiliate of the Company (through common control), as a party to the agreement.

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Joint Services Agreement

On June 18, 2004, the Company and Resorts 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 Resorts 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 Resorts. 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, 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 $4.7 million in 2008 and $4.9 million in 2007.

Joint Marketing Agreement

On June 18, 2004, the Company and Resorts 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 Resorts 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 Resorts also agreed to use reasonable efforts to cross-advertise their respective casino hotels. Pursuant to the agreement, the Company and Resorts 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 ACCOUNTANT FEES AND SERVICES

Audit Fees

Audit fees recognized as expense in 2008, 2007 and 2006 were $216,475, $200,293 and $190,671 respectively.

Audit-related Fees

Audit-related fees recognized as expense in 2008, 2007, and 2006 were $0, $0 , and $20,000. respectively.

Tax Fees

Tax fees recognized as expense in 2008, 2007 and 2006 were $38,501, $47,285 and $53,600 respectively.

All Other Fees

Other professional fees recognized as expense in 2008, 2007 and 2006 were $0, $1,147 and $74,711 respectively.

The Company does not have an independent audit committee; therefore, none of the above fees were pre-approved by the audit committee. However, these fees have been approved by executive management.

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PART IV

ITEM 15.—EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(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

(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:
2006	$	2,379	$	2,182	$	—		$	4,561
2007	$	4,561	$	2,027	$	(676	)	$	5,912
2008	$	5,912	$	1,812	$	(571	)	$	7,153

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****
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+

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EXHIBIT NUMBER
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 and Resorts International Hotel, Inc. +++++
10.26	Amended and Restated Joint Marketing Agreement, dated as of April 26, 2005 by and between Colony Resorts LVH Acquisitions, LLC and Resorts International Hotel, Inc. +++++
10.27	Employment Agreement dated as of October 15, 2007 by and between Colony Resorts LVH Acquisition, LLC and Joseph DeRosa ++++++
10.28	Amended and Restated License Agreement dated as of January 1, 2009 by and between Colony Resorts LVH Acquisitions, LLC and HLT Existing Franchise Holding, LLC+++++++
10.29	Second Addendum to Employment Agreement dated as of December 8, 2008 by and between Colony Resorts LVH Acquisitions, LLC and Robert E. Schaffhauser
10.30	Second Addendum to Employment Agreement dated as of December 8, 2008 by and between Colony Resorts LVH Acquisitions, LLC and Kenneth M. Ciancimino
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.

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

+++++ Incorporated by reference to Registrant’s Annual Report on Form 10-K filed March 30, 2007.

++++++ Incorporated by reference to Registrant’s Quarterly Report on Form 10-Q filed November 14, 2007

+++++++ Incorporate by reference to Registrant’s Current Report on Form 8-K filed January 5, 2009

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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 26, 2009	By:	/s/ RODOLFO PRIETO
		Rodolfo Prieto
		Chief Executive Officer and General Manager
		(Principal Executive Officer)
March 26, 2009	By:	/s/ ROBERT SCHAFFHAUSER
		Robert Schaffhauser
		Executive Vice President of Finance
		(Principal Financial Officer)

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EX-10.29

Exhibit 10.29

SECOND ADDENDUM TO EMPLOYMENT AGREEMENT

This Second Addendum to Employment Agreement (“Second Addendum”) is made and entered into as of this 8th day of December, 2008, by and between Colony Resorts LVH Acquisitions, LLC, a Nevada limited liability company (the “Company”) and Robert E. Schaffhauser (“Executive”).

RECITALS

WHEREAS, the Company and Executive entered into an Employment Agreement dated as of March 9, 2004, as amended by Letter Agreement dated as of March 10, 2004, as further amended by Addendum to Employment Agreement, dated as of April 28, 2006 (collectively, the “Agreement”), which sets forth the specific terms of employment and compensation of Executive;

WHEREAS, unless otherwise extended, the Term of the Agreement will expire on February 15, 2010, and the parties desire to extend such term.

NOW THEREFORE, in consideration of the mutual promises, covenants and agreements contained herein, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows:

1. Paragraph 2 of the Agreement shall be replaced in its entirety with the following new Paragraph 2:

“2. Term. Executive’s employment under the terms and conditions of the Agreement commenced as of February 16, 2004 (the “Commencement Date”) for a period of three (3) years (the “Initial Term”). Upon the expiration of the Initial Term, this Agreement automatically renewed for an additional three (3) years (the “First Renewal Term”) subject to the same terms and conditions of this Agreement. Upon the expiration of the First Renewal Term, this Agreement shall automatically renew for an additional one (1) year term (the “Second Renewal Term”) subject to the same terms and conditions of this Agreement. Upon the expiration of the Second Renewal Term, this Agreement shall automatically renew subject to the same terms and conditions for additional one (1) year terms (each a “Renewal Term”) unless terminated by either party by providing the other party with a written termination notice at least ninety (90) days prior to the end of the Second Renewal Term or any subsequent Renewal Term. The Initial Term, First Renewal Term, Second Renewal Term and each subsequent Renewal Term are hereinafter collectively referred to as the “Term”. Notwithstanding anything to the contrary herein, in the event of any termination of this Agreement, Executive shall nevertheless continue to be bound, to the extent applicable, by the terms and conditions set forth in Paragraphs 7 and 8.

2. Other than the amendment to the Agreement as provided herein, all other terms and conditions of the Agreement shall remain in full force and effect. In the event any terms of the Agreement are inconsistent or contrary to this Second Addendum, the terms of this Second Addendum shall control. All capitalized terms used herein shall have the same meaning as set forth in the Agreement.

[Signature page follows]

COLONY RESORTS LVH ACQUISITIONS, LLC
By:	/s/ Rodolfo E. Prieto
	Rodolfo E. Prieto, CEO and General Manager
EXECUTIVE
By:	/s/ Robert E. Schaffhauser
	Robert E. Schaffhauser

EX-10.30

Exhibit 10.30

SECOND ADDENDUM TO EMPLOYMENT AGREEMENT

This Second Addendum to Employment Agreement (“Second Addendum”) is made and entered into as of this 8th day of December, 2008, by and between Colony Resorts LVH Acquisitions, LLC, a Nevada limited liability company (the “Company”) and Kenneth M. Ciancimino (“Executive”).

RECITALS

WHEREAS, the Company and Executive entered into an Employment Agreement dated as of March 9, 2004, as amended by Letter Agreement dated as of March 10, 2004, as further amended by Addendum to Employment Agreement, dated as of April 28, 2006 (collectively, the “Agreement”), which sets forth the specific terms of employment and compensation of Executive;

WHEREAS, unless otherwise extended, the Term of the Agreement will expire on February 22, 2010, and the parties desire to extend such term.

NOW THEREFORE, in consideration of the mutual promises, covenants and agreements contained herein, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows:

1. Paragraph 2 of the Agreement shall be replaced in its entirety with the following new Paragraph 2:

“2. Term. Executive’s employment under the terms and conditions of the Agreement commenced as of February 23, 2004 (the “Commencement Date”) for a period of three (3) years (the “Initial Term”). Upon the expiration of the Initial Term, this Agreement automatically renewed for an additional three (3) years (the “First Renewal Term”) subject to the same terms and conditions of this Agreement. Upon the expiration of the First Renewal Term, this Agreement shall automatically renew for an additional one (1) year term (the “Second Renewal Term”) subject to the same terms and conditions of this Agreement. Upon the expiration of the Second Renewal Term, this Agreement shall automatically renew subject to the same terms and conditions for additional one (1) year terms (each a “Renewal Term”) unless terminated by either party by providing the other party with a written termination notice at least ninety (90) days prior to the end of the Second Renewal Term or any subsequent Renewal Term. The Initial Term, First Renewal Term, Second Renewal Term and each subsequent Renewal Term are hereinafter collectively referred to as the “Term”. Notwithstanding anything to the contrary herein, in the event of any termination of this Agreement, Executive shall nevertheless continue to be bound, to the extent applicable, by the terms and conditions set forth in Paragraphs 7 and 8.

2. Other than the amendment to the Agreement as provided herein, all other terms and conditions of the Agreement shall remain in full force and effect. In the event any terms of the Agreement are inconsistent or contrary to this Second Addendum, the terms of this Second Addendum shall control. All capitalized terms used herein shall have the same meaning as set forth in the Agreement.

[Signature page follows]

COLONY RESORTS LVH ACQUISITIONS, LLC
By:	/s/ Rodolfo E. Prieto
	Rodolfo E. Prieto, CEO and General Manager
EXECUTIVE
By:	/s/ Kenneth M. Ciancimino
	Kenneth M. Ciancimino

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)) and internal controls over financial reporting (as defined in Exchange Act Rules 13(a)-15(f) and 15(d)-15(f)) 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. Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s 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 26, 2009

/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)) and internal controls over financial reporting (as defined in Exchange Act Rules 13(a)-15(f) and 15(d)-15(f)) 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. Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s 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 26, 2009

/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, 2008, 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 26, 2009

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, 2008, 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 26, 2009