10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

þ 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

o 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 001-13641

PINNACLE ENTERTAINMENT, INC.

(Exact name of registrant as specified in its charter)

Delaware	95-3667491
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

3800 Howard Hughes Parkway
Las Vegas, Nevada 89169
(Address of principal executive offices) (Zip Code)

(702) 784-7777
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock, $.10 par value per share	New York Stock Exchange

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

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES o NO þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES o NO þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES þ NO o

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. o

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

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES o NO þ

The aggregate market value of the common stock held by non-affiliates of the registrant as of June 30, 2008 was $601 million based on a closing price of $10.49 per share of common stock.

The number of outstanding shares of the registrant’s common stock as of the close of business on March 5, 2009 was 59,988,181.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive 2009 proxy statement, anticipated to be filed with the Securities and Exchange Commission within 120 days after the end of the registrant’s fiscal year, are incorporated by reference into Part III of this Form 10-K.

PINNACLE ENTERTAINMENT, INC.

TABLE OF CONTENTS

PART I
Item 1. Business	1
Operating Properties	1
New Properties Under Construction and/or Development	3
Potential Future Development Sites	3
Asset Sales and Other	4
Competition	4
Government Regulation and Gaming Issues	4
Employees	5
Executive Officers of the Registrant	5
Directors of the Registrant	5
Available Information and CEO and CFO Certifications	5
Other	6
Item 1A. Risk Factors	6
Item 1B. Unresolved Staff Comments	17
Item 2. Properties	17
Item 3. Legal Proceedings	19
Item 4. Submission of Matters to a Vote of Security Holders	20
PART II
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	20
Stock Performance Graph	20
Item 6. Selected Financial Data	21
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Executive Overview	22
Results of Operations	23
Liquidity and Capital Resources	31
Contractual Obligations and Other Commitments	35
Critical Accounting Estimates	36
Recently Issued and Adopted Accounting Standards	38
Item 7A. Quantitative and Qualitative Disclosures About Market Risk	39
Item 8. Financial Statements and Supplementary Data	40
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	74
Item 9A. Controls and Procedures	74
Item 9B. Other Information	75
PART III
Item 10. Directors, Executive Officers and Corporate Governance	76
Item 11. Executive Compensation	77
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	77
Item 13. Certain Relationships and Related Transactions, and Director Independence	77
Item 14. Principal Accountant Fees and Services	77
PART IV
Item 15. Exhibits and Financial Statement Schedules	77
Signatures
Exhibit 4.12
Exhibit 10.9
Exhibit 10.10
Exhibit 10.11
Exhibit 10.12
Exhibit 10.13
Exhibit 10.45
Exhibit 10.46
Exhibit 10.47
Exhibit 10.48
Exhibit 10.49
Exhibit 11
Exhibit 12
Exhibit 21
Exhibit 23
Exhibit 31.1
Exhibit 31.2
Exhibit 32
Exhibit 99.1

PART I

Item 1. Business

Pinnacle Entertainment, Inc. is a developer, owner and operator of casinos and related hospitality and entertainment facilities. Domestically, we operate seven casinos. We have three other casino development projects in various stages of construction and planning and two other potential casino development sites. In addition, we have one substantial and several small casinos in Argentina. References to “Pinnacle,” “the Company,” “we,” “our” or “us” refer to Pinnacle Entertainment, Inc. and its subsidiaries, except where the context otherwise indicates.

Our long-term strategy is to build or acquire new resorts that are expected to produce favorable returns above our cost of capital; to maintain and improve each of our existing casinos; and to develop the systems to tie all of our casinos together into a national gaming network. Hence, we are developing new, high-quality gaming properties in attractive gaming markets; we are maintaining and improving our existing properties with disciplined capital expenditures; we are developing a customer-loyalty program designed to motivate customers to continue to patronize our casinos; and we may make strategic acquisitions at reasonable valuations, when and if available. At present, implementation of this strategy is constrained by the tightening of the credit markets.

Highlights of 2008 and early 2009 include the following:

• The opening in February 2008 of the 200-guestroom Four Seasons Hotel St. Louis, the 294 all-suites HoteLumière and other amenities at Lumière Place in downtown St. Louis, Missouri. The Lumière Place Casino opened in December 2007;

• Record results at L’Auberge du Lac, our most profitable casino location, which benefitted from the completion of 252 new guestrooms and other new amenities in January 2008;

• Completion of our 32-guestroom hotel adjoining our casino in Neuquén, Argentina;

• Ongoing construction of our River City casino in south St. Louis County, which we expect to open in early 2010;

• Approval by voters of a local referendum in February 2008, permitting construction of our proposed casino-hotel in Baton Rouge, Louisiana;

• Approval by Missouri voters of a referendum, effective November 7, 2008, eliminating certain betting restrictions, limiting the number of gaming licenses available in the state and increasing the tax on casino revenue from 20 percent to 21 percent; and

• Continuing development and implementation of the technology and infrastructure required to create a national customer-loyalty program.

Operating Properties

Our largest casino resort is L’Auberge du Lac in Lake Charles, Louisiana, which opened in May 2005 and offers the closest full-scale casino-hotel facilities to Houston (the sixth-largest metropolitan statistical area in the United States), as well as the Austin and San Antonio metropolitan areas. Our property is approximately 142 miles from Houston and approximately 300 miles and 335 miles from Austin and San Antonio, respectively.

L’Auberge du Lac offers 1,601 slot machines, 62 table games and 995 guestrooms and suites, inclusive of our recent expansion. The expansion project, in which we invested approximately $72 million, included 252 additional guestrooms (10 of which are new private garden villas), additional retail shops, an expanded pool area and other amenities. The facility also offers several restaurants, approximately 28,000 square feet of meeting space, a championship golf course designed by Tom Fazio, and a full-service spa. Unlike most other riverboat casinos, all of the public areas at L’Auberge du Lac (except the parking garage), and in particular the casino, are situated entirely on one level. The casino is surrounded on three sides by the hotel tower and other guest amenities. The hotel at L’Auberge du Lac is the largest in Louisiana outside of New Orleans.

L’Auberge du Lac competes with other full-service regional and national casinos, including those in New Orleans, Louisiana, Biloxi, Mississippi, and Las Vegas, Nevada. It also competes with another casino-hotel in Lake Charles; a land-based Native American casino, which is approximately 43 miles east of Lake Charles; a racetrack slot operation located approximately 25 miles to the west; and numerous truck stops with slot machines in many parishes of Louisiana, some of which call themselves “casinos”.

Our Boomtown New Orleans property is the only casino in the West Bank neighborhood, across the Mississippi River from downtown New Orleans. It features a dockside riverboat casino with 1,553 slot machines and 35 table games, two restaurants, a delicatessen, a 350-seat nightclub, 4,600 square feet of meeting space, an arcade and approximately 1,700 parking spaces. The property opened in 1994. Boomtown New Orleans competes with a large land-based casino in downtown New Orleans, one other riverboat casino, a racetrack with slot machines and numerous truck stop casinos.

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Our southern Indiana property, Belterra Casino Resort, opened in October 2000 and is located along the Ohio River near Vevay, Indiana, approximately 50 minutes from downtown Cincinnati, Ohio, 70 minutes from Louisville, Kentucky and 90 minutes from Lexington, Kentucky. Belterra is also approximately two and a half hours from Indianapolis, Indiana. The total population within 300 miles of Belterra is approximately 48 million.

Belterra attracts customers by offering amenities that are generally superior to those at competing regional properties, several of which are closer to the population centers than Belterra. Belterra features a large casino with 1,604 slot machines and 54 table games and a 608-guestroom hotel, six restaurants, 33,000 square feet of meeting and conference space, a 1,553-seat entertainment showroom, retail shops, a swimming pool, a championship golf course designed by Tom Fazio and a full-service spa. The resort provides approximately 2,000 parking spaces, most of which are in a multi-level parking structure. In 2007, we added five retail shops and refurbished 11 of the 51 high-end suites at Belterra.

Belterra currently competes with four dockside riverboats; a casino resort that opened in November 2006 in French Lick, Indiana, approximately 100 miles west of Belterra; and two racetrack casinos that opened in mid-2008 in the Indianapolis metropolitan area, each with approximately 2,000 slot machines. One of the racetracks expects to open a permanent facility in early 2009, replacing a temporary facility. Another riverboat competitor plans to open a new, expanded casino in mid-2009. In addition, another competitor began heavily marketing its refurbished and rebranded facility during the year.

Our Boomtown Bossier City property in Bossier City, Louisiana, features a regional hotel adjoining a dockside riverboat casino. The property opened in October 1996 and is located on a site directly adjacent to, and easily visible from, Interstate 20. The Bossier City/Shreveport region is a three-hour drive from the Dallas/Fort Worth metropolitan area along Interstate 20. The property includes 1,048 slot machines and 30 table games, 188 guestrooms, including four master suites and 88 junior suites, four restaurants and approximately 1,860 parking spaces.

Boomtown Bossier City competes with four dockside riverboat casino-hotels, a racetrack slot operation and large Native American casinos in southern Oklahoma. Such Native American facilities are approximately one hour north of Dallas.

Lumière Place is located in downtown St. Louis, Missouri. The Lumière Place complex includes the Lumière Place Casino with 2,000 slot machines and 62 table games, the 200-guestroom luxury Four Seasons Hotel St. Louis, the 294 all-suites HoteLumière, seven restaurants, banquet facilities, retail shops and more than 22,000 square feet of convention/meeting space, including a 7,300-square-foot ballroom. We own all of the facilities and have entered into a long-term agreement with Four Seasons Hotels Limited to manage our Four Seasons Hotel St. Louis. Lumière Place is located across from the Edward Jones Dome and America’s Center convention center and just north of the famous Gateway Arch. A pedestrian tunnel to the America’s Center convention center, the Edward Jones Dome and the city’s central business district opened in May 2008.

The Admiral Riverboat Casino offers 696 slot machines and 13 table games and is currently moored near the Lumière Place complex.

In November 2008, Missouri voters approved a referendum which eliminated certain betting restrictions and also limits the number of gaming licenses available in the state to 13 (including the Lumière Place Casino, The Admiral Riverboat Casino and River City), and increases the tax on casino revenue by one percentage point. The Lumière Place Casino and The Admiral Riverboat Casino compete with four other casinos in the St. Louis metropolitan area, two of which are in Illinois.

Boomtown Reno is a land-based casino-hotel located approximately nine miles west of downtown Reno, Nevada, near the California border along Interstate 80. This interstate is the primary east-west interstate highway serving northern California. Boomtown Reno has been operating for more than 40 years.

The property offers 673 slot machines and 12 table games, 318 guestrooms, 172 of which we refurbished during 2008. In addition, the property has two restaurants, a 30,000-square-foot amusement center and approximately 1,300 parking spaces. In addition to the main casino-hotel, the property has a gas station, a mini-mart and a 197-space recreational vehicle park.

Boomtown Reno has approximately 890 acres of land, approximately 60 of which are utilized by the casino, hotel and other amenities and another 490 acres of which most is developable. The remaining 340 acres are remote and difficult to develop. In 2006, we sold approximately 28 acres of land to Cabela’s Inc. In 2007, we closed the property’s truck stop to accommodate the construction of a Cabela’s Inc. branded outdoor sporting goods store, which opened in November 2007.

Historically, Reno has been a drive-in gaming market that attracted visitors from northern California. Our facility also caters to travelers along Interstate 80 and local customers. Over the past 10 years, new and expanded Native American casino facilities have opened in California which facilities compete for business with Reno gaming properties. In addition, northern California has been adversely impacted by the recent economic downturn. Consequently, the overall performance of the casino-hotel business in Reno, as well as Boomtown Reno, has been adversely affected.

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Casino Magic Argentina consists of a substantial casino-hotel facility in the city of Neuquén, Argentina and several smaller casinos elsewhere in the Patagonia region of Argentina. The principal Casino Magic Argentina property opened in July 2005 and replaced a leased facility that had operated for more than 20 years. Casino Magic Neuquén offers a casino with 1,014 slot machines and 54 table games, a 32-guestroom hotel, a restaurant, several bars and an entertainment venue on approximately 20 acres of land. We invested approximately $11.9 million in the hotel project, which was completed in June 2008 and funded through the property’s existing cash balances and operating cash flows.

We have certain exclusive rights to operate casinos in the principal cities of the Province of Neuquén. Under terms of our concession agreement with the Province of Neuquén, our exclusivity rights in the Province of Neuquén are to be extended from 2016 to 2021 with the completion of such luxury hotel. We are awaiting the formal government approval of such extension. In the neighboring Province of Río Negro, there is a casino approximately 10 miles from our principal Neuquén operations.

New Properties Under Construction and/or Development

We have a number of projects at various stages of development. In south St. Louis County, Missouri, we are continuing construction of our River City casino, which we expect to open in early 2010. In Lake Charles, Louisiana, we have begun site work for our Sugarcane Bay casino-hotel adjacent to L’Auberge du Lac. In East Baton Rouge Parish, Louisiana, we received voter approval in February 2008 permitting construction of a proposed casino-hotel complex.

We are building a casino called River City in south St. Louis County, Missouri, which we expect to open in early 2010, subject to approval of the Missouri Gaming Commission. River City is located just south of the confluence of the Mississippi River and the River des Peres in the community of Lemay, one of the most densely populated areas in the St. Louis region. The first phase of the River City project is planned to include a casino and several restaurants at an estimated cost of $380 million. River City is located on approximately 56 acres of land under a long-term lease from St. Louis County. We expect the property to have 2,300 slot machines and 60 table games. A second phase for the River City project is expected to include a hotel with a minimum of 100 guestrooms, as well as other amenities to be determined at a later time.

In June 2007, the Louisiana Gaming Control Board (the “LGCB”) approved the architectural plans for our proposed Sugarcane Bay casino resort to be built adjacent to our L’Auberge du Lac facility. Our plans for Sugarcane Bay include a floating, single-level dockside casino similar to that of L’Auberge du Lac, and is expected to include 1,500 slot machines and 50 table games, a 400-guestroom hotel and a large entertainment and multi-purpose convention center to be built on approximately 234 acres of land being leased from the Lake Charles Harbor and Terminal District. One of the conditions to our license requires a minimum project investment of $350 million. Including the multi-purpose entertainment venue, which will be shared with the adjoining L’Auberge du Lac property, the Company now estimates the project cost of Sugarcane Bay will be $407 million. During 2008, we began site work at Sugarcane Bay, and we intend to commence major construction if and when the capital markets can be accessed on more reasonable terms.

In October 2008, the LGCB approved our architectural plans for our planned $250 million Baton Rouge casino-hotel resort in Louisiana. The resort will be located on 575 acres of land that we own approximately eight miles southeast of downtown Baton Rouge, Louisiana, and is expected to have 1,500 slot machines and 50 table games. The project is subject to certain conditions and various other approvals. Baton Rouge is currently believed to rival New Orleans as the largest city in Louisiana and has experienced significant growth in recent years, both before and particularly after the effects of the 2005 Hurricane Katrina on the nearby New Orleans region. We are currently in the design phase of this project and intend to commence construction of this project if and when the capital markets can be accessed on more reasonable terms.

Potential Future Development Sites

In November 2006, we purchased entities that owned land and a former casino-hotel in Atlantic City, New Jersey. Since completing the acquisition in 2006, we have acquired an additional five acres. In the aggregate, the Atlantic City site comprises approximately 19 contiguous acres at the heart of Atlantic City, with extensive frontage along The Boardwalk, Pacific Avenue and Brighton Park.

We began site preparation work in 2007, including the demolition of the former casino-hotel and other structures on the site. In October 2008, we decided to continue and complete certain demolition activities, but to otherwise suspend substantially all other development indefinitely due to the current economic downturn, evolving competitive market and the tightening of the credit markets.

In August 2006, we purchased approximately one and one-half acres of gaming-zoned land in Central City, Colorado, which is approximately 40 miles from Denver, Colorado. We have an option to purchase an additional six acres of adjoining, non-gaming zoned land. We believe our Central City land is the most conveniently located gaming-zoned site for Denver customers. We do not intend to develop this property until market conditions improve.

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Asset Sales and Other

Casino Magic Biloxi and Related Insurance Matters: In November 2006, we completed the cash sale of our Casino Magic Biloxi site and certain related assets to Harrah’s concurrent with our cash purchase of the entities that owned and operated Harrah’s Lake Charles. The physical property we sold was severely damaged by Hurricane Katrina in August 2005 and the facility had not reopened. We have filed an insurance claim and a lawsuit related to such claim for our losses associated with the casino-hotel previously operated at the site, which claim was retained by us in the sale. We have received $192 million from several of our insurers through December 31, 2008 and our lawsuit against the one remaining carrier seeks recovery of substantial additional amounts under our claim.

Card Club Sales: In July 2006, we completed the sale of our leasehold interest and related receivables in the Hollywood Park Casino card club for net cash proceeds of approximately $24.2 million plus the cancellation of our lease obligation. In April 2006, we completed the sale of our Crystal Park Casino card club for net cash proceeds of approximately $16.5 million.

Merger Termination Proceeds: In March 2006, we entered into an agreement to acquire Aztar Corporation (“Aztar”) for $38.00 per share, subject to approval by Aztar’s shareholders. Pursuant to the agreement, Aztar’s board of directors was permitted to evaluate and recommend to its shareholders any unsolicited, superior proposals from qualified entities in accordance with its fiduciary duties. During April and May 2006, Aztar received several proposals that its board of directors deemed to be superior to our proposal. We matched or exceeded several of these proposals. Ultimately, we chose not to match a proposal to acquire Aztar for $54.00 per share. Aztar’s board of directors then terminated its merger agreement with us and made a merger termination fee payment of $78 million, of which we retained $44.7 million net of fees and expenses.

Competition

We face significant competition in each of the jurisdictions in which we operate. Such competition may intensify in some of these jurisdictions if new gaming operations open in these markets or existing competitors expand their operations. Our properties compete directly with other gaming properties in each state in which we operate, as well as in adjacent states. We also compete for customers with other casino operators in other markets, including casinos located on Native American reservations, and other forms of gaming, such as lotteries and internet gaming. Many of our competitors are larger and have substantially greater name recognition and marketing and financial resources. In some instances, particularly with Native American casinos, our competitors pay substantially lower taxes or no taxes at all. We believe that increased legalized gaming in other states, particularly in areas close to our existing gaming properties such as Texas, Ohio, Illinois, Indiana, Kentucky, Maryland, Oklahoma, California, Pennsylvania or New York, and the development or expansion of Native American gaming in or near the states in which we operate, could create additional competition for us and could adversely affect our operations or proposed development projects.

Government Regulation and Gaming Issues

The gaming industry is highly regulated, and we must maintain our licenses and pay gaming taxes to continue our operations. Each of our casinos is subject to extensive regulation under the laws, rules and regulations of the jurisdiction where it is located. These laws, rules and regulations generally concern the responsibility, financial stability and character of the owners, managers, and persons with financial interests in the gaming operations. Violations of laws in one jurisdiction could result in disciplinary action in other jurisdictions. For a more detailed description of the regulations to which we are subject, please see Exhibit 99.1 to this Annual Report on Form 10-K, “Government Regulation and Gaming Issues” which is incorporated herein by reference.

Our businesses are subject to various foreign, federal, state and local laws and regulations in addition to gaming regulations. These laws and regulations include, but are not limited to, restrictions and conditions concerning alcoholic beverages, environmental matters, employees, currency transactions, taxation, zoning and building codes, and marketing and advertising. Such laws and regulations could change or could be interpreted differently in the future, or new laws and regulations could be enacted. Material changes, new laws or regulations, or material differences in interpretations by courts or governmental authorities could adversely affect our operating results.

Compliance with federal, state and local provisions which have been enacted or adopted regulating the discharge of materials into the environment or otherwise relating to the protection of the environment have not had a material effect upon our capital expenditures, earnings or the competitive positions of our properties. From time to time, certain of our development projects may require substantial costs for environmental remediation due to prior use of our development sites. Our River City project site, for example, was heavily used for industrial purposes and we have remediated the site as part of the project. Our Central City site was once used to dump tailings from gold-mining operations and is believed to have subterranean mining tunnels. In Reno, we have remediated the site where our former truck stop was located. Our project budgets typically include amounts expected to cover the remediation work required.

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Employees

The following is a summary of our work force by segment at December 31, 2008, some of which are part-time employees:

	Approximate
	Number of
Property	Employees
L’Auberge du Lac		2,193
Lumière Place		1,255
Belterra Casino Resort		1,071
Boomtown New Orleans		804
Boomtown Bossier City		793
Casino Magic Argentina		729
Boomtown Reno		468
The Admiral Riverboat Casino		277
Corporate and other (a)		235
Total		7,825

(a) Corporate and other includes certain development project employees.

Executive Officers of the Registrant

The persons serving as our executive officers as of March 9, 2009, and their positions with us are as follows:

NAME	POSITION WITH THE COMPANY
Daniel R. Lee	Chairman of the Board of Directors and Chief Executive Officer
Stephen H. Capp	Executive Vice President and Chief Financial Officer
John A. Godfrey	Executive Vice President, Secretary and General Counsel
Carlos Ruisanchez	Executive Vice President of Strategic Planning and Development
Alain Uboldi	Chief Operating Officer

Directors of the Registrant

The following table lists our directors, their principal occupations and principal employers as of March 9, 2009:

NAME	PRINCIPAL OCCUPATION & EMPLOYER
Daniel R. Lee	Chairman of the Board of Directors and Chief Executive Officer of Pinnacle
Stephen C. Comer	Retired Accounting Firm Managing Partner
John V. Giovenco	Retired Gaming Executive
Richard J. Goeglein	Owner, Evening Star Holdings, LLC (Hotel Development, Ownership & Management), Former Gaming Executive
Ellis Landau	Retired Gaming Executive
Bruce A. Leslie	Partner, Armstrong Teasdale LLP (law firm)
James L. Martineau	Private Investor
Michael Ornest	Private Investor
Lynn P. Reitnouer	Partner, Crowell, Weedon & Co. (Stock Brokerage Firm)

Available Information and CEO and CFO Certifications

Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports are available free of charge as soon as reasonably practicable after they are filed with or furnished to the Securities and Exchange Commission (“SEC”) through our internet website, www.pnkinc.com. Our filings are also available through a database maintained by the SEC at www.sec.gov. We filed with the SEC as exhibits to our Annual Report on Form 10-K for the fiscal year ended December 31, 2007 the certifications of our Chief Executive Officer and Chief Financial Officer required under Section 302 of the Sarbanes-Oxley Act and Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended. In addition, on June 4, 2008, we submitted to the New York Stock Exchange (the “NYSE”) the annual certification of the Company’s Chief Executive Officer required under Section 303A.12(a) of the NYSE Listed Company Manual.

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Other

Pinnacle Entertainment, Inc., a Delaware corporation, is the successor to the Hollywood Park Turf Club, which was organized in 1938. It was incorporated in 1981 under the name Hollywood Park Realty Enterprises, Inc. In 1992, we changed our name to Hollywood Park, Inc. and in February 2000, we became Pinnacle Entertainment, Inc.

Financial information about segments and geographic areas is incorporated by reference from Note 14 to the audited Consolidated Financial Statements included in this Annual Report on Form 10-K.

Item 1A. Risk Factors

An investment in our securities is subject to risks inherent to our business. We have described below what we currently believe to be the material risks and uncertainties in our business.

Before making an investment decision, you should carefully consider the risks and uncertainties described below, together with all of the other information included or incorporated by reference in this Annual Report on Form 10-K. We also face other risks and uncertainties beyond what is described below. This Annual Report on Form 10-K is qualified in its entirety by these risk factors. If any of the following risks actually occur, our business, financial condition and results of operations could be materially and adversely affected. If this were to happen, the value of securities, including our common stock, could decline significantly. You could lose all or part of your investment.

Our substantial funding needs in connection with our development projects, our current expansion projects and other capital-intensive projects, to the extent such projects are undertaken, will require us to raise substantial amounts of funding from outside sources. Currently, the availability of financing is extremely constrained by current disruptions in the credit markets.

We are currently engaged in and have planned expansions and development projects that require substantial amounts of capital. We are currently constructing River City, we have begun site work at Sugarcane Bay and we are in the design phase of our Baton Rouge project. These projects have an expected aggregate investment of approximately $1 billion, of which we have invested approximately $183 million through December 31, 2008. While we endeavor to stage development and construction of these projects over several years and we try not to commence major construction without having a reasonable expectation that we will have access to funds to complete it, our proposed projects could strain our financial resources and there is no certainty that such projects will be completed.

Under our most restrictive indenture, we are currently permitted to incur up to $350 million in senior indebtedness under a certain debt basket, of which approximately $172 million remains available to be borrowed under our Credit Facility as of March 6, 2009. We expect to supplement borrowings under our Credit Facility with existing cash and cash generated from operations through early 2010 to fund the completion of River City. While we believe we have sufficient funds to complete River City, there is no certainty that this will be the case if there is failure to comply with our debt covenants, or if actual results fall short of our forecasts, among other things.

In order to fund most of our projects, we will need to access the capital markets since the capital required for these projects exceeds our available financial resources. As a result of the continued turmoil in the capital markets, the availability of debt financing is extremely constrained, expensive and potentially unavailable. We cannot accurately predict when or if the capital markets will return to more normalized conditions. If the current debt market environment does not improve, we may not be able to raise additional funds in a timely manner, or on acceptable terms, or at all. Inability to access the capital markets, or the necessity to access the capital markets on less-than-favorable terms, may force us to delay, reduce or cancel planned development and expansion projects, sell assets or obtain additional financing on unfavorable terms. For instance, in October 2008, we decided to suspend substantially all development activities in Atlantic City, New Jersey indefinitely due to the current economic downturn, evolving competitive market and the tightening of the credit markets. Our current stock price, along with the stock prices of many public gaming companies, has declined sharply from recent historical levels. We may choose to cancel or delay projects rather than issue equity at these levels. This may impair our growth and materially and adversely affect our financial condition, results of operations and cash flow and the returns of investing in our securities.

Our ability to obtain bank financing or to access the capital markets for future debt or equity offerings may also be limited by our financial condition, results of operations or other factors, such as our credit rating or outlook at the time of any such financing or offering and the covenants in our existing debt agreements, as well as by general economic conditions and contingencies and uncertainties that are beyond our control. As we seek financing for our development projects, we will be subject to the risks of rising interest rates and other factors affecting the financial markets. Moreover, if we obtain additional funds by issuing equity securities or securities convertible into equity securities, dilution to stockholders may occur. In addition, preferred stock could be issued in the future without stockholder approval and the terms of the preferred stock could include dividend, liquidation, conversion, voting and other rights that are more favorable than the rights of the holders of our common stock.

6

If we continue with the construction of our current development projects, we may need to amend certain covenants in our Credit Facility or obtain waivers from our lenders.

The covenants in our Credit Facility require that we comply with a consolidated leverage ratio, a consolidated interest coverage ratio, and a consolidated senior debt ratio, in each case as defined in our Credit Facility. As of December 31, 2008, we believe we were in compliance with all of the financial covenants in our Credit Facility. Such covenants envisioned completion of River City at an earlier date than such completion is currently expected. As a result, the covenant ratios are scheduled to tighten, even as borrowings grow in order to fund completion. We are required to maintain a rolling four quarter consolidated leverage ratio no greater than 6.50x and 6.00x for the quarterly periods ending March 31, 2009 and June 30, 2009, respectively, and 5.50x for each of the quarterly periods ended September 30, 2009 and December 31, 2009. Our consolidated leverage ratio for the four quarters ended December 31, 2008 was 5.63x. With continued construction of our current development projects resulting in increased borrowing under our Credit Facility and depending upon generation of cash flow from operations, we may need to or choose to amend these covenants. Our lenders in the Credit Facility, some of whom have been reported in the press as having their own liquidity concerns, may use our potential need for an amendment as a means to seek increased pricing and/or reduced commitments under the Credit Facility. Such amendments may not be available, and if available, could significantly increase the costs of the Credit Facility and may adversely affect our financial results.

In the event that we are not able to amend our Credit Facility and we are not in compliance with the financial covenants in future periods, we would be restricted from borrowing funds under the Credit Facility and would need to seek a waiver of all covenant defaults under our Credit Facility. We may not be able to obtain a waiver on acceptable terms, on a timely basis or at all. In addition, any waiver may require us to pay a fee and higher interest rates to our lenders, which could increase our cost of credit and related expenses and adversely affect our financial results. If we fail to obtain a waiver of any violation, the lenders under the Credit Facility could require us to immediately repay all amounts outstanding under the Credit Facility, which would have a material adverse effect on our liquidity, business, financial condition and results of operations. In addition, if there is a payment acceleration under our Credit Facility, then we would be in default under our senior subordinated notes, which could result in an acceleration of such notes. We do not have adequate liquidity to repay all such indebtedness if there is a payment acceleration under such indebtedness. If the current debt market environment does not improve and we are not able to amend our Credit Facility or obtain a waiver from our lenders, we may have to delay, reduce or cancel our current development projects (such as River City, Sugarcane Bay and Baton Rouge) or sell assets. In addition, we may be forced to use available cash to pay down existing indebtedness. Nonetheless, even if we are forced to cancel our development projects and use available cash to pay down existing indebtedness, there can be no assurance that we will be able to comply with the covenants in our Credit Facility because it is not certain what our cash flow from operations will be in the future.

We may not be able to renew or extend our Credit Facility or enter into a new credit facility in today’s difficult markets. In addition, our ability to renew or extend our Credit Facility or to enter into a new credit facility may be impaired further if current market conditions continue or worsen. If we are able to renew or extend our Credit Facility, it may be on terms substantially less favorable than the current Credit Facility. We may face similar risks with respect to our outstanding bonds.

Recent disruptions in the global markets have lead to a scarcity of credit, tighter lending standards and higher interest rates on consumer and business loans. As of December 31, 2008, we had a $625 million Credit Facility that matures in December 2010. Our ability to renew or extend our existing Credit Facility or to enter into a new credit facility to replace the existing credit facility could be impaired if current market conditions continue or worsen. In the current environment, lenders may seek more restrictive lending provisions and higher interest rates that may reduce our borrowing capacity and increase our costs. We can make no assurances that we will be able to enter into a new credit facility or renew or extend our existing Credit Facility, or whether any such credit facility will be available under acceptable terms. Failure to obtain sufficient financing may constrain our ability to operate our business and to continue our development and expansion projects; to the extent such projects are undertaken. Any of these circumstances could have a material adverse effect on our business, financial condition and results of operation.

In addition, even though our existing Credit Facility matures in December 2010, if we have not made arrangements to extend the maturity of our Credit Facility or enter into a new credit facility by the end of December 2009, generally accepted accounting principles would require that amounts outstanding under the Credit Facility, which amounts may be substantial, be treated as a current liability at that time, which may lead to a “going concern” or like qualification or exception from our auditors with respect to our 2009 audited financial statements. We are discussing with certain of our lenders, among other things, an extension of the maturity of our Credit Facility, but we cannot assure you that we will be able to obtain any such extension, and if we are able to do so, the terms may be materially less favorable than the existing Credit Facility.

The bond market, and particularly the market for casino bonds, has deteriorated significantly over the past year. Quotes from reputable banks for our outstanding bond issues are significantly below par, meaning that such bonds, if purchased at such quotes, would offer yields to maturity that are significantly higher than the yields offered at issuance. Our bond issues mature in 2012, 2013 and 2015. If the bond market does not recover prior to the maturity of these bonds, the Company may be forced to refinance some or all of its debt at significantly worse terms than the Company has currently. Although it is several years before these unsecured bonds mature, the Company’s cash flow from operations is unlikely to be sufficient to retire all of such bonds at or prior to their maturity. Failure to obtain new debt on favorable or reasonable terms to replace existing debt could affect the Company’s liquidity and the value of its other securities, including its equity.

7

Our business may be sensitive to reductions in consumers’ discretionary spending as a result of recent downturns in the economy as well as other factors that are difficult to predict and beyond our control.

It is logical that the demand for entertainment and leisure activities would tend to be sensitive to consumers’ disposable incomes, and thus can be affected by changes in the economy and consumer tastes, both of which are difficult to predict and beyond our control. Unfavorable changes in general economic conditions including recession, economic slowdown, the current housing crisis and the credit crisis, the potential for bank failures, or higher fuel or other transportation costs, may reduce disposable income of our customers or result in fewer patrons visiting our casinos. As a result, we cannot ensure that demand for entertainment and leisure activities will remain constant. Continued adverse developments affecting economies throughout the world, including a general tightening of the availability of credit, increasing interest rates, increasing energy costs, acts of war or terrorism, natural disasters, declining consumer confidence or significant declines in the stock market could lead to a further reduction in discretionary spending on entertainment and leisure activities adversely affecting our business, financial and results of operations. A deterioration in operating results could affect our ability to comply with financial covenant ratios in our Credit Facility and to fund our construction projects.

The global financial crisis and recession may have an effect on our business and financial condition in ways that we currently cannot accurately predict.

The continued credit crisis, recession and related turmoil in the global financial system have had and may continue to have an effect on our business and financial condition. In October 2008, Lehman Commercial Paper, Inc. (“LCPI”), which is one of the lenders under our Credit Facility, filed for bankruptcy. LCPI had committed $48 million towards our $625 million Credit Facility. We paid appropriate fees for such commitment. LCPI funded its portion of the Credit Facility through September 30, 2008, or approximately $9.6 million of the then outstanding balance of $125 million. Since the beginning of October 2008, when the Company has increased its borrowing under the Credit Facility, LCPI has failed to fund its proportionate share. Management believes that it is unlikely that LCPI will provide its proportionate share if the Company were to draw additional sums under its Credit Facility. Hence, the $625 million Credit Facility is effectively a $586 million Credit Facility. As of December 31, 2008, the Company’s actual borrowings were $152 million with LCPI having defaulted on $2.2 million of its obligations. The Company continues to evaluate what remedies it may have, if any, regarding LCPI’s default. As noted elsewhere, the Company’s most restrictive indenture limits our ability to incur senior indebtedness under our Credit Facility to $350 million. As a result, we do not believe that LCPI’s inability to fund future borrowing requests will impact our liquidity.

The credit crisis has affected other lenders under our Credit Facility, although none have filed for bankruptcy and all, except for LCPI, have to date continued to fund their obligations. If a large percentage of our lenders file for bankruptcy or otherwise default on their obligations to us, we may not have the liquidity to fund our current projects, to the extent such projects are undertaken. There is no certainty that our lenders will continue to remain solvent or fund their respective obligations under our Credit Facility.

The significant distress recently experienced by financial institutions has had and may continue to have far reaching adverse consequences across many industries, including the gaming industry. The ongoing credit and liquidity crisis has greatly restricted the availability of capital and has caused the cost of capital (if available) to be much higher than it has traditionally been. Accessing the capital markets in this environment could increase the costs of our projects, which could have an impact on our flexibility to react to changing economic and business conditions and our ability or willingness to fund our development projects. All of these effects could have a material adverse effect on our business, financial condition and results of operations.

Our present indebtedness and projected future borrowings could have adverse consequences to us; future cash flows may not be sufficient to meet our obligations and we might have difficulty obtaining additional financing; we may experience adverse effects of interest-rate and exchange-rate fluctuations.

In June 2007, we issued $385 million aggregate principal amount of 7.50% senior subordinated notes due 2015, using a portion of the proceeds to retire our $275 million term loan within our Credit Facility and a portion to purchase $25 million in principal amount of our outstanding 8.25% senior subordinated notes due 2012. As of December 31, 2008, we had indebtedness of approximately $943 million, including $152 million drawn on the revolving credit facility, $275 million in aggregate principal amount of our 8.25% senior subordinated notes due 2012, $135 million in aggregate principal amount of our 8.75% senior subordinated notes due 2013, and $385 million in aggregate principal amount of our 7.50% senior subordinated notes due 2015. Our Credit Facility is comprised of a $625 million revolving credit facility, of which we are limited to $350 million under the terms of the indenture governing our 8.75% senior subordinated notes due 2013. As of March 6, 2009, we have drawn $166 million. Another $12.6 million was utilized under various letters of credit. Our substantial development plans for capital-intensive projects will require us to borrow significant amounts under our Credit Facility and, depending on which projects are pursued to completion, may cause us to incur substantial additional indebtedness.

8

While we believe that we have sufficient cash and cash-generating resources to meet our debt service obligations during the next 12 months, it is uncertain in the future whether we will generate sufficient cash flow from operations or through asset sales to meet our long-term debt service obligations. Our present indebtedness and projected future borrowings could have important adverse consequences to us, such as:

• limiting our ability to obtain additional financing without restructuring the covenants in our existing indebtedness to permit the incurrence of such financing;

• requiring a substantial portion of our cash flow to be used for payments on the debt and related interest, thereby reducing our ability to use cash flow to fund working capital, capital expenditures and general corporate requirements;

• limiting our ability to respond to changing business, industry and economic conditions and to withstand competitive pressures, which may affect our financial condition;

• incurring higher interest expense in the event of increases in interest rates on our borrowings that have variable interest rates or in the event of refinancing existing debt at higher interest rates;

• limiting our ability to make investments, dispose of assets, pay cash dividends or repurchase stock;

• heightening our vulnerability to downturns in our business or our industry or the general economy and restricting us from making improvements or acquisitions or exploring business opportunities;

• restricting our activities compared to those of competitors with less debt or greater resources; and

• subjecting us to financial and other restrictive covenants in our indebtedness, which a failure to comply with could result in an event of default.

If we fail to generate sufficient cash flow from future operations to meet our debt service obligations, we may need to refinance all or a portion of our debt on or before maturity. In such circumstances, it is uncertain that we will be able to refinance any of our debt. Our future operating performance and our ability to service or refinance our debt will be subject to future economic conditions and to financial, business and other factors, many of which are beyond our control.

Our borrowings under our revolving credit facility are at variable rates of interest, and to the extent not protected with interest rate hedges, could expose us to market risk from adverse changes in interest rates. We currently have no such interest rate hedges. If interest rates increase, our debt service obligations on the variable-rate indebtedness could increase significantly even though the amount borrowed would remain the same. This may only be partially offset by earning higher rates of interest on our surplus cash balances. Additionally, our operation of Casino Magic Argentina exposes us to foreign exchange rate risk from adverse changes in the exchange rate of the dollar to the Argentine peso.

The terms of our credit facility and the indentures governing our subordinated indebtedness impose operating and financial restrictions on us.

Our Credit Facility and the indentures governing our 7.50%, 8.25% and 8.75% senior subordinated notes impose various customary covenants on us and our subsidiaries, including, among others, reporting covenants, incurrence covenants, covenants restricting our ability to make certain investments or other restricted payments, covenants to maintain insurance and comply with laws, covenants to maintain properties and other covenants customary in senior credit financings and indentures. In addition, our Credit Facility requires that we comply with various financial covenants and capital spending limits, such as receiving an opinion regarding our financial statements without a qualification or exception from our auditors. Our ability to comply with these provisions may be affected by general economic conditions, industry conditions and other events beyond our control, including delays in the completion of new projects under construction. As a result, we cannot assure you that we will be able to comply with these covenants. Our failure to comply with the covenants contained in the instruments governing our indebtedness could result in an event of default, which could materially and adversely affect our operating results and our financial condition.

Insufficient or lower-than-expected results generated from our new developments and acquired properties may negatively affect the market for our securities.

We cannot assure you that, if and once completed, the revenues generated from our new developments and acquired properties will be sufficient to pay related expenses; or, even if revenues are sufficient to pay expenses, the new developments and acquired properties will yield an adequate or expected return on our significant investments. Our projects, if completed, may take significantly longer than we expect to generate returns, if any. Moreover, lower-than-expected results from the opening of a new facility may negatively affect us and the market for our securities and may make it more difficult to raise capital, even as the shortfall increases the need to raise capital. In addition, there is no guarantee that the design of any of our projects, to the extent undertaken, will meet with customers’ approval. It might simply be unappealing, and this could affect our results of operations, our liquidity and the returns on the investment in our securities.

9

Many factors could prevent us from completing our construction and development projects as planned, including the escalation of construction costs beyond increments anticipated in our construction budgets.

Construction of major buildings has certain inherent risks, including the risks of fire, structural collapse, human error and electrical, mechanical and plumbing malfunction. Several of the buildings being built by us entail additional risks related to heights and cranes. Our development and expansion projects also entail significant risks, including:

• shortages of materials;

• shortages of skilled labor or work stoppages;

• unforeseen construction scheduling, engineering, excavation, environmental or geological problems;

• natural disasters, hurricanes, weather interference, floods, fires, earthquakes or other casualty losses or delays;

• unanticipated cost increases or delays in completing the projects;

• delays in obtaining or inability to obtain or maintain necessary licenses or permits;

• changes to plans or specifications;

• disputes with contractors;

• construction at our existing properties, which could disrupt our operations;

• remediation of environmental contamination at some of our proposed construction sites, which may prove more difficult or expensive than anticipated in our construction budgets;

• failure to obtain necessary gaming regulatory approvals and licenses, or failure to obtain such approvals and licenses on a timely basis; and

• requirements or government-established “goals” concerning union labor or requiring that a portion of the project expenditures be through companies controlled by specific ethnic or gender groups, goals that may not be obtainable, or may only be obtainable at additional project cost.

Increases in the cost of raw materials for construction, driven by worldwide demand, higher labor and construction costs and other factors, may cause price increases beyond those anticipated in the budgets for our development projects. Escalating construction costs may cause us to modify the design and scope of projects from those initially contemplated or cause the budgets for those projects to be increased. We generally carry insurance to cover certain liabilities related to construction, but not all risks are covered and it is uncertain whether such insurance will provide sufficient payment in a timely fashion even for those risks that are insured.

It is uncertain whether any project will be completed on time or within established budgets. Significant delays or cost overruns related to our construction projects could significantly reduce any return on our investment in these projects and adversely affect our earnings and financial resources. There are also certain tax incentives for construction in hurricane-damaged areas that require completion of new facilities by certain dates. There is no certainty that such dates will be met. Construction of our development projects exposes us to risks of cost overruns due to typical construction uncertainties associated with any project or changes in the designs, plans or concepts of such projects. For these and other reasons, construction costs may exceed the estimated cost of completion notwithstanding the existence of any guaranteed maximum price construction contracts.

In November 2007, we entered into a construction contract for our Sugarcane Bay project. Pursuant to the terms of the contract, the general contractor was required to submit a proposal to us for the guaranteed maximum price. In accordance with the contract, in the event that we and the general contractor are unable to agree upon the guaranteed maximum price, then we can either change the scope and scale of the work or terminate the contract. We are currently in discussions with the contractor regarding such proposed guaranteed maximum price. We may seek to terminate such contract and seek a new general contractor through competitive bidding. In August 2008, we entered into a guaranteed maximum price agreement for the first phase of our River City project, including the casino facility. We have not yet entered into a guaranteed maximum price agreement for our Baton Rouge project.

10

If we determine to proceed with our Atlantic City project, it will have many risks, and we may not realize the financial and strategic goals that are contemplated from its development.

In November 2006, we completed the purchase of the entities that own the Atlantic City site. Our plans to construct a major facility along Atlantic City’s Boardwalk are on indefinite hold in light of the current economic downturn, evolving competitive market and the tightening of the credit markets. To the extent we proceed with developing the site, the risks we may face in the development of our Atlantic City site include:

• We will face significant competition in the Atlantic City market. There are numerous casinos already in Atlantic City and casinos are now operating in Pennsylvania, Delaware and New York. Legalization or expansion of gaming in other nearby jurisdictions could provide additional competition for casinos in Atlantic City, including the recent approval by Maryland voters of 15,000 slot machines at each of five locations in Maryland. In addition, the city of Atlantic City has issued a request for proposals for development of one or more casinos on Bader Field, a municipally owned, defunct airport that is located alongside the major feeder routes into Atlantic City. Development of casinos on Bader Field may materially reduce visitation to Atlantic City’s Boardwalk area;

• It will be subject to significant risks and contingencies, including those relating to construction and financing. We may not complete the development on time, within budget, or at all, which could exacerbate the risks associated with such development;

• Completion of the Atlantic City project would likely involve the incurrence of substantial amounts of additional indebtedness, which will increase the risks associated with our current level of indebtedness. Until the development is complete, a process that is estimated to take several years, we will not have any revenue relative to this investment. Accordingly, during construction, we will incur substantial amounts of indebtedness for the development without additional revenue to contribute to the servicing of such indebtedness until the new facility opens;

• If we complete the development, the results of operations at our new Atlantic City casino may not meet our expectations or those of investors in our securities; and

• We must obtain approvals (including a license) from the New Jersey Casino Control Commission and other governmental authorities in order to operate the casino and it is uncertain whether such approvals will be obtained.

The gaming industry is very competitive and increased competition, including by Native American gaming facilities, could adversely affect our profitability.

We face significant competition in all of the markets in which we operate. This competition will intensify if new gaming operations enter our markets or existing competitors expand their operations.

Further, several of our properties are located in jurisdictions that restrict gaming to certain areas and/or are adjacent to states that currently prohibit or restrict gaming operations. Economic difficulties faced by state governments could lead to intensified political pressures for the legalization of gaming in jurisdictions where it is currently prohibited. The legalization of gaming in such jurisdictions could be an expansion opportunity for us or a significant threat to us, depending on where the legalization occurs and our ability to capitalize on it. In particular, our ability to attract customers to our existing casinos would be significantly affected by the legalization or expansion of gaming in Texas, Ohio, Illinois, Kentucky, Oklahoma, and California and the development or expansion of Native American casinos in our markets. The value of our site or potential casinos in Atlantic City has been affected and would be affected by the legislation or expansion of casino gaming in Delaware, Maryland, Pennsylvania, West Virginia, New York, northern New Jersey or Connecticut.

In the past, legislation to legalize or expand gaming has been introduced in some of these jurisdictions and federal law favors the expansion of Native American gaming. In 2006, legislation to add more than 30,000 slot machines at seven racetracks in Ohio was rejected by the voters of Ohio. In 2007, voters in West Virginia approved table games at racetracks in the Ohio, Hancock and Kanawha counties, but rejected a similar proposal in Jefferson County. In 2007, Indiana approved casinos with 2,000 slot machines at each of two racetracks in the Indianapolis area, both of which are now open. In 2008, New York approved a significant reduction in its gaming tax rate as a specific inducement for a large casino hotel in the Catskills region. In 2008, Maryland voters approved a state constitutional amendment allowing 15,000 slot machines total in five locations. We expect similar proposals to legalize or expand gaming will be made in the future in various states and it is uncertain whether such proposals will be successful.

Even in gaming markets where the state governments do not choose to increase the maximum number of gaming licenses available, we face the risk that existing casino licensees will expand their operations and the risk that Native American gaming will continue to grow. Furthermore, Native American gaming facilities frequently operate under regulatory requirements and tax environments that are less stringent than those imposed on state-licensed casinos, which could provide them with a competitive advantage.

Many of our competitors are larger and have substantially greater name recognition and marketing resources than we do. Moreover, consolidation of companies in the gaming industry could increase the concentration of large gaming companies in the markets in which we operate. This may result in our competitors having even greater resources and name recognition than such competitors currently enjoy.

We face competition from racetracks that offer slot machines. We also compete with other forms of legalized gaming and entertainment such as bingo, pull-tab games, card parlors, sports books, pari-mutuel or telephonic betting on horse and dog racing, state-sponsored lotteries, video lottery terminals, video poker terminals and, in the future, may compete with gaming at other venues. Furthermore, competition from internet lotteries and other internet wagering gaming services, which allow their customers to wager on a wide variety of sporting events and play Las Vegas-style casino games from home, could divert customers from our properties and thus adversely affect our business. Such internet wagering services are often illegal under federal law but operate from overseas locations, and are nevertheless sometimes accessible to domestic gamblers. There are also proposals that would specifically legalize internet gaming under federal law.

11

Our stock price has been and may remain volatile, and the value of our common stock may decline as a result of this volatility.

The market price of our common stock has been, and may be in the future, subject to wide fluctuations in response to factors such as:

• general conditions in the economy, including the recent economic slowdown, the current housing crisis and the credit crisis, the potential for bank failures, or higher fuel or other transportation costs;

• the tightening of the credit markets and our ability to enter into new credit facilities;

• the receptiveness of the capital markets to any future financings;

• variations in quarterly operating results;

• lower-than-expected results from the openings of our new facilities;

• announcements, by us or our competitors, of acquisitions, strategic partnerships, joint ventures or capital commitments;

• speculation about takeover or acquisition activity;

• the public’s reaction to our press releases, our other public announcements and our filings with the SEC;

• changes in recommendations or financial estimates by securities analysts and changes in accounting principles by the accounting industry;

• loss or threat of loss of material gaming licenses or failure to obtain new approvals and licenses required for our projects;

• the granting of new gaming licenses to our competitors, whether in our markets or in adjacent gaming markets;

• conditions and trends in the gaming industry, including new state regulation or taxes enacted by state legislatures; and

• the other risk factors described in or referred to in this “Risk Factors” section as well as the “Private Securities Litigation Reform Act” section of this Annual Report on Form 10-K.

In addition, in recent years, the stock market has experienced significant price and volume fluctuations, which are often unrelated to the performance or condition of particular companies. Such broad market fluctuations could adversely affect the market price of our common stock. Following periods of volatility in the market price of a particular company’s securities, securities class action litigation has often been brought against a company. If we become subject to this kind of litigation in the future, it could result in substantial litigation costs, damage awards against us, and the diversion of our management’s attention and resources.

Damage and closures caused by hurricanes in the Gulf Region make our results less predictable.

The damage caused by the hurricanes in the Gulf Coast, including damage to roads, utilities and residential and commercial buildings, has affected the local gaming markets. Some of our competitors have chosen to exit the hurricane-damaged areas following hurricanes and some have chosen to reenter such markets on a grander scale and rebuild their facilities with significant capital investments. In 2008, hurricanes caused closures, impairment of operations and some damage on two key weekends. As a result, operating results at casinos in the region have been less predictable. In addition, the Company’s ability to secure adequate insurance coverage may present additional risks.

Issues with respect to our insurance policies could affect our recovery of further insurance proceeds associated with the 2005 hurricane damage and related business interruption.

We are currently in litigation with one remaining insurance carrier, RSUI Indemnity Company (which has two insurance policies), regarding our right to recover further insurance proceeds from the damage to Casino Magic Biloxi, which was closed as a result of Hurricane Katrina and subsequently sold. In April 2006, we filed a claim for property damage and business interruption incurred at the Casino Magic Biloxi site as a result of Hurricane Katrina. In August 2006, we filed suit in the United States District Court for the District of Nevada against three of our insurance carriers, Allianz Global Risks US Insurance Company, Arch Specialty Insurance Company and RSUI Indemnity Company, related to such losses. We have received $192 million to date on the claim. We continue to litigate with the one remaining defendant insurance carrier, RSUI Indemnity Company, regarding our right to recover further insurance proceeds with respect to our claim. It is uncertain whether our damage claim will be sustained or whether we will be fully compensated for all losses sustained due to the closure of the Biloxi facility or whether we will be paid on a timely basis. We have preserved all of our rights to pursue our full claim, plus interest, bad-faith and punitive damages against the remaining insurance carrier that has withheld payment.

12

Natural disasters have made it more challenging for us to obtain similar levels of Weather Catastrophe Occurrence/Named Windstorm, Flood and Earthquake insurance coverage for our properties compared to the levels before the 2005 hurricane.

Because of significant loss experience caused by hurricanes and other natural disasters over the last several years, a number of insurance companies have stopped writing insurance in Class 1 hurricane areas, including Louisiana and Mississippi. Others have significantly limited the amount of coverage they will write in these markets and have dramatically increased the premiums charged for this coverage. As a result, our policy limits for Weather Catastrophe Occurrences/Named Windstorms as well as other losses are significantly less than the policy limits we had during the 2005 hurricane season. During that period, our aggregate Weather Catastrophe Occurrence coverage was $400 million per occurrence. Our coverage for a Named Windstorm today is $200 million per occurrence, with a deductible of 5% of stated values. Above this $200 million limit, we have an additional $200 million of coverage per occurrence, but excluding Named Windstorms. If any of our properties suffer a Named Windstorm, any damages in excess of the coverage limits will likely be borne by us. In addition, as a result of the worldwide economic conditions, there has been uncertainty as to the viability of certain insurance companies. While the Company believes that its remaining insurance companies will remain solvent, there is no certainty that this will be the case.

We operate in a highly taxed industry and may be subject to higher taxes in the future.

In gaming jurisdictions in which we operate, state and local governments raise considerable revenues from taxes based on casino revenues and operations. We also pay property taxes, admission taxes, sales and use taxes, payroll taxes, franchise taxes and income taxes.

Our profitability depends on generating enough revenues to pay gaming taxes and other largely variable expenses, such as payroll and marketing, as well as largely fixed expenses, such as our property taxes and interest expense. From time to time, state and local governments have increased gaming taxes and such increases can significantly impact the profitability of gaming operations.

We cannot assure you that governments in jurisdictions in which we operate, or the federal government, will not enact legislation that increases gaming tax rates.

We may not meet the conditions for the maintenance of the licenses that we plan to utilize for our Sugarcane Bay and Baton Rouge projects.

In 2006, we completed the acquisition from Harrah’s of two entities that own certain Lake Charles, Louisiana gaming assets, including two licensed riverboat casinos, each with an associated gaming license. One of these licenses is planned to be used in connection with our planned Sugarcane Bay facility and the other license is anticipated to be used in connection with our planned Baton Rouge facility. The Louisiana Gaming Control Board (the “LGCB”) has established numerous conditions for use of each of these licenses, which, if not satisfied, could result in forfeiture of such licenses. While we intend to fulfill all conditions set by the LGCB, it is uncertain whether we will be able to do so or that the LGCB would agree to make any amendments that might be necessary. Forfeiture of one or both licenses could adversely affect our expansion plans for the Louisiana gaming market. The LGCB recently granted two extensions related to our Sugarcane Bay and Baton Rouge projects, but there can be no assurance that additional extensions, if required, will be granted.

We could lose the right to open our River City project if we fail to meet the conditions imposed by the Missouri Gaming Commission.

One of our subsidiaries was selected by the Missouri Gaming Commission (the “MGC”) to proceed for licensing for the operation of the River City casino. The issuance of the operating license is in the discretion of the MGC. Although our subsidiary was selected by the MGC to proceed for licensing, it is uncertain whether the license will ultimately be granted. We have invested a significant amount of capital in this project, which may be lost or difficult to recoup in the event that the license is not ultimately granted to us by the MGC.

In connection with respect to the River City casino, we have entered into a lease and development agreement with the St. Louis County Port Authority (the “SLCPA”). The SLCPA may terminate the lease and development agreement under certain instances. For example, if we fail to complete the River City project in accordance with its terms, we will owe monetary penalties and liquidated damages and could lose the right to open such project, irrespective of the substantial investment made to date.

13

Our industry is highly regulated, which makes us dependent on obtaining and maintaining gaming licenses and subjects us to potentially significant fines and penalties.

The ownership, management and operation of gaming facilities are subject to extensive state and local regulation. The statutes, rules and regulations of the states and local jurisdictions in which we and our subsidiaries conduct gaming operations require us to hold various licenses, registrations, permits and approvals and to obtain findings of suitability. The various regulatory authorities, including the Indiana Gaming Commission, the Louisiana Gaming Control Board, the Missouri Gaming Commission, the Nevada State Gaming Control Board, the Nevada Gaming Commission, the New Jersey Casino Control Commission, and the Government of the Province of Neuquén, Argentina may, among other things, limit, condition, suspend, revoke or fail to renew a license to conduct gaming operations or prevent us from owning the securities of any of our gaming subsidiaries for any cause deemed reasonable by such licensing authorities. Substantial fines or forfeitures of assets for violations of gaming laws or regulations may be levied against us, our subsidiaries and the persons involved.

To date, we have obtained all governmental licenses, findings of suitability, registrations, permits and approvals necessary for the operation of our gaming facilities. However, it is uncertain whether we will be able to obtain any new licenses, registrations, permits, approvals and findings of suitability that may be required in the future or that existing ones will be renewed or will not be suspended or revoked. Any expansion of our gaming operations in our existing jurisdictions or into new jurisdictions may require various additional licenses, findings of suitability, registrations, permits and approvals of the gaming authorities. The approval process can be time consuming and costly and has no assurance of success.

Potential changes in the regulatory environment could harm our business.

From time to time, legislators and special-interest groups have proposed legislation that would restrict or prevent gaming operations. Changes in regulations affecting the casino business can affect our existing or proposed operations. For example, various jurisdictions such as Illinois, Delaware and Neuquén, Argentina have restricted smoking on the casino floor. Such restrictions resulted in decreases in gaming revenues. Other restrictions or prohibitions on our current or future gaming operations could curtail our operations and could result in decreases in income.

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

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

In recent years, slot machine manufacturers have frequently refused to sell slot machines featuring the most popular games, instead requiring participating lease arrangements. Generally, a participating lease is substantially more expensive over the long-term than the cost to purchase a new machine.

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

Adverse weather conditions, highway construction, gasoline shortages and other factors affecting our facilities and the areas in which we operate could make it more difficult for potential customers to travel to our properties and deter customers from visiting our properties.

Our continued success depends upon our ability to draw customers from each of the geographic markets in which we operate. Adverse weather conditions or highway construction can deter our customers from traveling to our facilities or make it difficult for them to frequent our properties. In addition, gasoline shortages or fuel price increases in regions that constitute a significant source of customers for our properties could make it more difficult for potential customers to travel to our properties and deter customers from visiting our properties. We believe that the vast majority of our customers drive to our properties.

Our dockside gaming facilities in Indiana, Louisiana and Missouri, as well as any additional riverboat or dockside casino properties that might be developed or acquired, are also subject to risks, in addition to those associated with land-based casinos, which could disrupt our operations. Although none of our vessels leave their moorings in normal operations, there are risks associated with the movement or mooring of vessels on waterways, including risks of casualty due to river turbulence, flooding, collisions with other vessels and severe weather conditions. We have been notified that The Admiral Riverboat Casino shall not be used to carry passengers beyond July 19, 2010 without replacement, dry-docking, or specific approval. As a result, we cannot assure you we will be able to re-certify The Admiral Riverboat Casino. We own a jet airplane, two seaplanes and numerous limousines and other vehicles that are used to transport customers to our casinos and for other corporate purposes. There are liabilities and other risks included in such transportation operations.

14

Our results of operations and financial condition could be materially adversely affected by the occurrence of natural disasters, such as hurricanes, or other catastrophic events, including war and terrorism.

Natural disasters such as major hurricanes, floods, fires and earthquakes could adversely affect our business and operating results. Hurricanes are common to the areas in which our Louisiana properties are located and the severity of such natural disasters is unpredictable. Atlantic City is on a barrier island and could also be susceptible to hurricanes and storm surges. River City is located in an area along the Mississippi that has historically experienced flooding. Although its foundation is built up to be above historical flooding levels, there is no certainty that this will be sufficient in future floods. In 2005, Hurricanes Katrina and Rita caused significant damage in the Gulf Coast region. Our Biloxi facility was destroyed by Hurricane Katrina. Our Boomtown New Orleans casino was forced to close for 34 days as a result of Hurricane Katrina. Hurricane Rita caused significant damage in the Lake Charles, Louisiana area and forced our L’Auberge du Lac resort to close for 16 days in addition to causing physical damage. In the third quarter of 2008, Hurricanes Gustav and Ike, which struck during two key weekends, affected our Louisiana operations and our Texas customer base. Hurricane Ike also caused flooding in St. Louis, necessitating the temporary closure of The Admiral Riverboat Casino, and caused a power outage over the course of two days at our Belterra Casino Resort. We cannot accurately predict the long-term effect that the recent hurricanes or any future natural disasters will have on our ability to maintain our customer base or to sustain our business activities.

Catastrophic events such as terrorist and war activities in the United States and elsewhere have had a negative effect on travel and leisure expenditures, including lodging, gaming (in some jurisdictions) and tourism. We cannot accurately predict the extent to which such events may affect us, directly or indirectly, in the future. We also cannot assure you that we will be able to obtain or choose to purchase any insurance coverage with respect to occurrences of terrorist acts and any losses that could result from these acts. If there is a prolonged disruption at our properties due to natural disasters, terrorist attacks or other catastrophic events, or if several of our properties simultaneously experience such events, our results of operations and financial condition could be materially adversely affected.

The loss of management and other key personnel could significantly harm our business.

Our continued success and our ability to maintain our competitive position is largely dependent upon, among other things, the efforts and skills of our senior executives and management team, including Daniel R. Lee, our Chairman of the Board and Chief Executive Officer. Although we have entered into an employment agreement with Mr. Lee and certain of our other senior executives and managers, we cannot guarantee that these individuals will remain with us. If we lose the services of any members of our management team or other key personnel, our business may be significantly impaired. We cannot assure you that we will be able to retain our existing senior executive and management personnel or attract additional qualified senior executive and management personnel.

In addition, our officers, directors and key employees also are required to file applications with the gaming authorities in each of the jurisdictions in which we operate and are required to be licensed or found suitable by these gaming authorities. If the gaming authorities were to find an officer, director or key employee unsuitable for licensing or unsuitable to continue having a relationship with us, we would have to sever all relationships with that person. Furthermore, the gaming authorities may require us to terminate the employment of any person who refuses to file appropriate applications. Either result could significantly impair our gaming operations.

We are subject to litigation which, if adversely determined, could cause us to incur substantial losses.

From time to time during the normal course of operating our businesses, we are subject to various litigation claims and legal disputes. Some of the litigation claims may not be covered under our insurance policies, or our insurance carriers may seek to deny coverage. As a result, we might also be required to incur significant legal fees, which may have a material adverse effect on our financial position. In addition, because we cannot predict the outcome of any action, it is possible that, as a result of current and/or future litigation, we will be subject to adverse judgments or settlements that could significantly reduce our earnings or result in losses.

We face environmental and archaeological regulation of our real estate.

Our business is subject to a variety of federal, state and local governmental statutes and regulations relating to the use, storage, discharge, emission and disposal of hazardous materials. Failure to comply with such laws could result in the imposition of severe penalties or restrictions on our operations by government agencies or courts of law or the incurrence of significant costs of remediation of hazardous materials. A material fine or penalty, severe operational or development restriction, or imposition of material remediation costs could adversely affect our business. In addition, the locations of our current or future developments may coincide with sites containing archaeologically significant artifacts, such as Native American remains and artifacts. Federal, state and local governmental regulations relating to the protection of such sites may require us to modify, delay or cancel construction projects at significant cost to us.

We face risks associated with growth and acquisitions.

We regularly evaluate opportunities for growth through development of gaming operations in existing or new markets, through acquiring other gaming entertainment facilities or through redeveloping our existing facilities. For example, we acquired the Atlantic City site and entities that hold two riverboats and gaming operations to be used in our Sugarcane Bay and Baton Rouge projects. The expansion of our operations, whether through acquisitions, development or internal growth, could divert management’s attention and could also cause us to incur substantial costs, including legal, professional and consulting fees. It is uncertain that we will be able to identify, acquire, develop or profitably manage additional companies or operations or successfully integrate such companies or operations into our existing operations without substantial costs, delays or other problems. Additionally, it is uncertain that we will receive gaming or other necessary licenses or governmental approvals for our new projects or that gaming will be approved in jurisdictions where it is not currently approved. Further, we may not have adequate financing for such opportunities on acceptable terms.

15

Private Securities Litigation Reform Act

The Private Securities Litigation Reform Act of 1995 (the “Act”) provides certain “safe harbor” provisions for forward-looking statements. Except for the historical information contained herein, the matters addressed in this Annual Report on Form 10-K, as well as in other reports filed with or furnished to the SEC or statements made by us, may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. From time to time, we may provide oral or written forward-looking statements in our other periodic reports on Form 10-Q, Form 8-K, press releases and other materials released to the public. All forward-looking statements made in this Annual Report on Form 10-K and any documents we incorporate by reference are made pursuant to the Act. Words such as, but not limited to, “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “could,” “may,” “will,” “should,” “is fairly confident” and similar expressions are intended to identify forward-looking statements. Such forward-looking statements, which may include, without limitation, adequacy of resources to fund development and expansion projects, liquidity, financing options, including the state of the capital markets and our ability to access the capital markets, the state of the credit markets and our ability to amend the terms of our credit facility, the state of the economy, anticipated completion and opening schedules of various projects, expansion plans, construction schedules, cash needs, cash reserves, operating and capital expenses, expense reductions, expected receipts of insurance proceeds including the amount of any such recovery and sufficiency of such coverage, anticipated marketing costs at various projects, the future outlook of Pinnacle and the gaming industry, the ability to meet the Consolidated Coverage Ratio required by the indentures of our senior subordinated indebtedness, our continuing exclusivity rights to operate casinos in Neuquén, Argentina after 2016, operating results and pending regulatory and legal matters, are all subject to a variety of risks and uncertainties that could cause actual results to differ materially from those anticipated by us. This can occur as a result of inaccurate assumptions or as a consequence of known or unknown risks and uncertainties. Factors that may cause our actual performance to differ materially from that contemplated by such forward-looking statements include, among others, the various risk factors discussed above, in addition to general domestic and international economic and political conditions as well as market conditions in our industry. For more information on the potential factors that could affect our operating results and financial condition in addition to the risk factors described above, review our other filings (other than any portion of such filings that are furnished under applicable SEC Rules rather than filed) with the SEC.

All forward-looking statements included in this Annual Report on Form 10-K are made only as of the date of this Form 10-K. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

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Item 1B. Unresolved Staff Comments

Not applicable.

Item 2. Properties

The following table provides a brief description of our properties as of December 31, 2008:

			Approximate Number of
			Slot		Table
Locations	Type of Casino	Principal Markets	Machines		Games		Guestrooms
Operating Properties (a):
L’Auberge du Lac, LA (b)	Dockside	Houston, Beaumont, San Antonio, Austin, Southwest Louisiana and local patrons		1,601		62		995
Boomtown New Orleans, LA	Dockside	Local patrons		1,553		35		—
Belterra Casino Resort, IN	Dockside	Cincinnati, Louisville and local patrons		1,604		54		608
Boomtown Bossier City, LA	Dockside	Dallas/Ft. Worth and local patrons		1,048		30		188
Lumière Place Casino and Hotels (c)	Dockside	Kansas City, Chicago and local patrons		2,000		62		494
The Admiral Riverboat Casino	Dockside	Local patrons and regional tourists		696		13		—
Boomtown Reno, NV	Land-based	Northern California, I-80 travelers and local patrons		673		12		318
Casino Magic Argentina (d)	Land-based	Local patrons and regional tourists		1,014		54		32
Operating Properties Total				10,189		322		2,635
New Properties Under Construction and/or Development:
River City, St. Louis, MO (e)	Dockside	Local patrons and regional tourists		2,300		60		—
Sugarcane Bay, Lake Charles, LA (f)	Dockside	Houston, Beaumont, San Antonio, Austin, Southwest Louisiana and local patrons		1,500		50		400
Baton Rouge, LA (g)	Dockside	Local patrons and regional tourists		1,500		50		100
Potential Future Development Sites:
Atlantic City, NJ (h)	Land-based	New York City, Philadelphia, New Jersey, Baltimore, Washington, D.C. and Boston	Not Yet Determined
Central City, CO (i)	Land-based	Denver	Not Yet Determined

(a)	We closed The Casino at Emerald Bay in The Bahamas on January 2, 2009 and have therefore excluded it from the overview.
(b)	We completed the opening of all 252 new guestrooms at L’Auberge du Lac in early 2008, bringing the total number of guestrooms to 995.
(c)	We opened the Lumière Place Casino in December 2007. We opened the 200-guestroom Four Seasons Hotel St. Louis and the 294 all-suites HoteLumière in early 2008.
(d)	The data in the table represent the combined operations of the several casinos we operate in Argentina. In June 2008, we completed a 32-guestroom hotel that adjoins our casino in the city of Neuquén. Under the terms of our concession agreement with the Province of Neuquén, our exclusivity rights in the Province of Neuquén are to be extended from 2016 to 2021 with the completion of such luxury hotel. For the year ended December 31, 2008, the Neuquén casino comprised approximately 85% of revenues of our Argentine operations.
(e)	We expect to open the first phase of River City in early 2010, subject to various regulatory approvals.
(f)	We are underway with site preparations for our Sugarcane Bay casino-hotel. The project is subject to certain conditions and various approvals.
(g)	In February 2008, the voters of East Baton Rouge Parish approved our proposed casino-resort. The project is subject to certain conditions and various approvals.
(h)	In Atlantic City, New Jersey, we own a casino site at the heart of the Boardwalk. During 2008, we pursued various development activities, including demolishing some remaining structures on the site. In October 2008, we determined that it was in the best interests of the Company to complete certain demolition activities, but to otherwise suspend substantially all such development activities indefinitely due to the current economic downturn, evolving competitive market and the tightening of the credit markets.
(i)	We own land and have an option to purchase additional land in Central City, Colorado.

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The following describes the real estate and leases associated with our properties:

L’Auberge du Lac: We lease 227 acres from the Lake Charles Harbor and Terminal District upon which our L’Auberge du Lac casino-hotel resort is located. The lease has an initial term of 10 years, which commenced in May 2005, with six renewal options of 10 years each. The annual base rent for the lease is approximately $939,500 per year, which amount adjusts annually for changes in the Consumer Price Index. We own the facilities and associated improvements at the property, including the casino facility.

Sugarcane Bay: Adjoining L’Auberge du Lac, we lease approximately 234 acres of land from the Lake Charles Harbor and Terminal District upon which we anticipate building our Sugarcane Bay casino-hotel resort. The Sugarcane Bay casino-hotel will occupy only a portion of this land. The balance would allow the eventual development of an additional 18-hole golf course at the L’Auberge du Lac/Sugarcane Bay complex and the possible sale of residential home sites along that golf course to subsidize the cost of construction of the golf course. The lease has an initial term of 10 years, commencing on the opening of Sugarcane Bay with six renewal options of 10 years each, similar to the L’Auberge du Lac lease. The annual rent on the 234-acre lease is $1.2 million for the first five years commencing with the opening of Sugarcane Bay and thereafter the amount adjusts annually for changes in the Consumer Price Index, not to exceed 5% in any given year. Prior to the opening of Sugarcane Bay, we are obligated to pay one-half of the annual rent on the date that certain conditions have been meet, such as obtaining all the required permits, licenses or approvals. Within the leased land, we purchased 50 acres for $5.0 million, which purchase did not change the base rent amount, and is intended to be used for eventual home sites around the planned golf course, the location of which we will designate prior to the opening of Sugarcane Bay. In addition, we purchased approximately 56 acres of land adjacent to the Sugarcane Bay and L’Auberge du Lac properties, potentially for additional home sites, which land has a carrying value of $5.2 million.

Boomtown New Orleans: We own approximately 54 acres in Harvey, Louisiana that are utilized by Boomtown New Orleans. We also own the facilities and associated improvements at the property, including the dockside riverboat casino.

Belterra Casino Resort: We lease approximately 148 acres of the 315 acres that our Belterra Casino Resort occupies in southern Indiana. The current lease term is through September 2010 and has eight remaining consecutive five-year automatic renewal periods. The lease currently provides for minimum annual rental payments of approximately $1.2 million, plus 1.5% of gross gaming win (as defined in the lease agreement) in excess of $100 million. The lease obligation included in rent expense was $2.2 million for 2008 and $2.3 million for each of the years ended December 31, 2007 and 2006. We also have the option to purchase the property on or after October 2020 for $30 million, subject to adjustments as defined in the lease agreement. In addition, we own the facilities and associated improvements at the property, including the dockside riverboat casino. We also own a 54-guestroom Best Western-branded hotel on 6 acres approximately 10 miles from Belterra.

Boomtown Bossier City: We own 23 acres on the banks of the Red River in Bossier City, Louisiana. We also own the facilities and associated improvements at the property, including the dockside riverboat casino. We lease approximately one acre of water bottoms from the State of Louisiana. The current lease term expires in September 2011. We have options to extend the lease for seven additional five-year periods.

Boomtown Reno: We own approximately 890 acres in Reno, Nevada, approximately 60 acres of which are utilized by the casino, hotel and other amenities and another 490 acres most of which is developable. The remaining 340 acres is remote and difficult to develop. We own all of the improvements and facilities at the property, including the casino, hotel, recreational vehicle park and service station, along with substantial related water and development rights.

Lumière Place: We own approximately 16 acres of contiguous land in St. Louis for the Lumière Place complex. We own all of the improvements and facilities at the property, including the casino, hotels and various amenities.

The Admiral Riverboat. We own approximately two acres of contiguous land in St. Louis for The Admiral Riverboat Casino. We own all of the improvements and facilities at the property, including the casino.

River City: We lease 56 acres in south St. Louis County located approximately 10 miles south of downtown St. Louis, where we are building our River City casino. We are building an approximately one-mile-long, four-lane public road to connect River City to the nearby interstate highway.

Casino Magic Argentina: We operate one substantial and several small casinos in southern Argentina under an exclusive concession agreement with the Province of Neuquén. This includes the principal facility in the City of Neuquén and a smaller facility in San Martín de los Andes. In Neuquén, we own the 20 acre site, the casino, and a 32-guestroom hotel and other amenities. In San Martín de los Andes, we lease the building in which we operate the casino. Such lease expires in January 2010, and is expected to be renewed in accordance with past renewals.

Great Exuma, Bahamas: As of December 31, 2008, we sub-subleased a 5,000-square-foot facility where we operated our casino adjacent to Four Seasons Resort Great Exuma at Emerald Bay in The Bahamas. We closed the casino on January 2, 2009 and vacated the premises on February 28, 2009.

Baton Rouge: We own approximately 575 acres of land approximately 10 miles south of downtown Baton Rouge, Louisiana, where we intend to build a casino-hotel.

Atlantic City, New Jersey: We own approximately 19 contiguous acres of land at the heart of Atlantic City along the Boardwalk. We have demolished the former casino as well as certain other structures on the site. We are continuing certain demolition activities but as of October 2008, we have otherwise suspended substantially all development activities indefinitely.

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Central City, Colorado: We own approximately one and one-half acres of gaming-zoned land in Central City, Colorado. In addition, we have an option to purchase an additional six acres of adjoining non-casino-zoned land.

Lake Charles, Louisiana: In connection with the purchase of the two entities from Harrah’s in 2006, we acquired two dockside riverboat casinos, neither of which are in service. In addition, we acquired approximately nine acres of land containing a non-operating hotel and parking structure. We also acquired two water bottom leases with the State of Louisiana at the former casino site, which expire in 2010. We plan to use the two licenses for our Sugarcane Bay and Baton Rouge projects.

Virtually all of our real property interests collateralize our obligations under our Credit Facility, except for the real estate owned in Atlantic City and Argentina. For a description of the segments that use the properties described above, please see the table above.

Item 3. Legal Proceedings

Insurance Litigation: On August 1, 2006, we filed a lawsuit in the United States District Court for the District of Nevada against three of our excess insurance carriers, Allianz Global Risks US Insurance Company, Arch Specialty Insurance Company and RSUI Indemnity Company. The suit relates to the loss incurred by us as a result of Hurricane Katrina at our Casino Magic property in Biloxi, Mississippi.

The lawsuit seeks damages equal to the outstanding amount of our claim (totaling $346.5 million, less the approximately $192 million received to date). It also seeks declarations that our River City Project constitutes a permissible replacement property under the applicable policies and that we are entitled to receive the full amount of our Casino Magic Biloxi business interruption loss arising out of Hurricane Katrina, even though we sold certain Casino Magic Biloxi assets. Our insurance policies permit a “replacement” facility to be built anywhere in the United States. Finally, the suit seeks unspecified punitive damages for the improper actions of the defendants in connection with our claim.

On February 22, 2008, we settled with Arch Specialty Insurance Company, which provided $50 million of coverage, in exchange for its agreement to pay us approximately $36.8 million, which we received in March 2008. On May 9, 2008, we settled with Allianz Global Risks US Insurance Company, in exchange for its agreement to pay us approximately $48 million, which we received in June 2008. Allianz Global Risks US Insurance Company had previously paid us $5 million, which brought Allianz Global Risks US Insurance Company’s total payment on the claim to $53 million. RSUI Indemnity Company provides $50 million of coverage at the same layer and pari passu with the coverage provided by Arch Specialty Insurance Company and an additional $150 million of coverage between $250 million and $400 million of total coverage. To date, RSUI Indemnity Company has paid us approximately $2.0 million as a prepayment on the undisputed amount of the claim. We continue to pursue our claims against RSUI Indemnity Company for its respective share of our total hurricane-related damage and consequential loss in Biloxi. On October 20, 2008, we filed a motion for partial summary judgment on certain outstanding legal issues relating to the calculation of our business interruption loss for the claim. A hearing date has not yet been set on that motion.

Jebaco Litigation: On August 9, 2006, Jebaco, Inc. (“Jebaco”) filed suit in the U.S. District Court for the Eastern District of Louisiana against Harrah’s Operating Co., Inc., Harrah’s Lake Charles, LLC, Harrah’s Star Partnership, Players LC, LLC, Players Riverboat Management, LLC, Players Riverboat II, LLC, and Pinnacle Entertainment, Inc. The lawsuit arises out of an agreement between Jebaco and Harrah’s (as successor in interest to the various Players defendants) whereby Harrah’s was obligated to pay Jebaco a fee based on the number of patrons entering Harrah’s two Lake Charles, Louisiana riverboat casinos. In November 2006, we acquired the Harrah’s Lake Charles subsidiaries, including the two riverboats. The lawsuit filed by Jebaco asserts that Harrah’s, in ceasing gaming operations in Lake Charles and ceasing payments to Jebaco, breached its contractual obligations to Jebaco and asserts damages of approximately $34.0 million. Jebaco also asserts that our agreement with Harrah’s violates state and federal antitrust laws. The lawsuit seeks antitrust damages jointly and severally against both us and Harrah’s and seeks a trebling of the $34.0 million in damages Jebaco alleges it has suffered. The defendants answered the complaint, denying all claims and asserting that the lawsuit is barred, among other reasons, because of the approval of our transaction with Harrah’s by the Louisiana Gaming Control Board and the lack of antitrust injury to Jebaco. In January 2007, all of the defendants moved to dismiss all of the claims of the complaint, which motions were heard on July 18, 2007. The motions to dismiss were granted with prejudice as to the federal antitrust claims and the state-law claims were dismissed without prejudice. Judgment of dismissal was entered on March 5, 2008. Jebaco has appealed the dismissal of the federal antitrust claims to the U.S. Court of Appeals for the Fifth Circuit. Further, on March 13, 2008, Jebaco filed a new lawsuit against the same parties in the Louisiana district civil court for Orleans Parish. This lawsuit seeks unspecified damages arising out of the same circumstances as the federal lawsuit based on claims for breach of the duty of good faith, negligent breach of contract, breach of contract, unfair trade practices, unjust enrichment, and subrogation to Harrah’s insurance proceeds. On January 6, 2009, the Louisiana district civil court extended the time for the defendants to respond to the state-court lawsuit until after the Fifth Circuit rules on Jebaco’s appeal. The Louisiana district civil court provided that Jebaco could request a deadline for a response from defendants if the Fifth Circuit had not ruled by February 12, 2009. On March 2, 2009, the Fifth Circuit heard oral arguments on the appeal. In light of this development, the defendants intend to seek an additional extension of time to respond to the state-court complaint. While we cannot predict the outcome of this litigation, management intends to vigorously defend this litigation.

Other: We are a party to a number of other pending legal proceedings. Management does not expect that the outcome of such proceedings, either individually or in the aggregate, will have a material effect on our financial position, cash flows or results of operations.

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

None.

PART II

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

Our common stock is quoted on the New York Stock Exchange under the symbol “PNK”. The table below sets forth the high and low sales prices of our common stock as reported on the New York Stock Exchange:

	Price Range
	High		Low
2008
Fourth Quarter	$	7.91	$	2.58
Third Quarter		13.36		6.57
Second Quarter		17.86		10.32
First Quarter		23.74		12.12
2007
Fourth Quarter	$	29.75	$	22.78
Third Quarter		31.00		24.36
Second Quarter		31.34		27.07
First Quarter		36.17		27.85

As of March 5, 2009, there were 2,408 stockholders of record of our common stock.

Dividends: We did not pay any dividends in 2008 or 2007. Our indentures governing our 7.50% senior subordinated notes due 2015, 8.25% senior subordinated notes due 2012 and 8.75% senior subordinated notes due 2013 and existing Credit Facility limit the amount of dividends that we are permitted to pay. The Board of Directors does not anticipate paying any cash dividends on our common stock in the foreseeable future, as our financial resources are being reinvested into the expansion of our business.

Share Repurchase: During the fourth quarter ended December 31, 2008, we did not make any purchases of the Company’s equity securities.

Sales of Unregistered Equity Securities: During the fiscal year ended December 31, 2008, we did not issue or sell any unregistered equity securities.

Stock Performance Graph

The stock performance graph and related information presented below is not deemed to be “soliciting material” or to be “filed” with the Securities and Exchange Commission or subject to Regulation 14A or 14C under the Securities Exchange Act of 1934 or to the liabilities of Section 18 of the Securities Exchange Act of 1934, and will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent we specifically incorporate it by reference into such a filing.

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Set forth below is a graph comparing the cumulative total stockholder return for Pinnacle’s common stock with the cumulative total returns for the New York Stock Exchange Composite Index (the “NYSE Composite Index”) and the Dow Jones US Gambling Index. The total cumulative return calculations are for the period commencing December 31, 2003 and ending December 31, 2008, and include the reinvestment of dividends. The stock price performance shown in this graph is neither necessarily indicative of, nor intended to suggest, future stock price performance.

	12/31/03		12/31/04		12/31/05		12/31/06		12/31/07		12/31/08
Pinnacle Entertainment, Inc.	$	100.00	$	212.23	$	265.13	$	355.58	$	252.79	$	82.40
NYSE Composite Index	$	100.00	$	114.97	$	125.73	$	151.46	$	164.89	$	100.16
Dow Jones US Gambling Index	$	100.00	$	133.09	$	135.01	$	196.72	$	225.84	$	60.74

* Assumes $100 invested on December 31, 2003 in Pinnacle’s common stock, the NYSE Composite Index and the Dow Jones US Gambling Index. Total return assumes reinvestment of dividends. Values are as of December 31 of each year.

Item 6. Selected Financial Data

The following selected financial information for the years 2004 through 2008 was derived from our audited Consolidated Financial Statements. The information set forth below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the audited Consolidated Financial Statements and related notes thereto.

	For the year ended December 31,
	2008(a)			2007(b)			2006(c)			2005(d)			2004(e)
	(in millions, except per share data)
Results of Operations :
Revenues	$	1,044.7		$	921.8		$	911.5		$	668.5		$	466.5
Operating (loss) income		(345.3	)		16.8			98.3			32.3			69.2
Income (loss) from continuing operations, net of income taxes		(370.2	)		—			63.3			(0.1	)		2.2
Income (loss) from discontinued operations, net of income taxes		47.6			(1.4	)		13.6			6.2			6.9
Income (loss) from continuing operations per common share:
Basic	$	(6.17	)	$	0.00		$	1.33		$	0.00		$	0.06
Diluted	$	(6.17	)	$	0.00		$	1.28		$	0.00		$	0.06
Other Data:
Capital expenditures	$	306.0		$	545.6		$	186.5		$	193.9		$	209.6
Ratio of Earnings to Fixed Charges (f)		—			—			2.57			—			1.02
Cash flows provided by (used in):
Operating activities	$	129.3		$	153.4		$	206.5		$	61.7		$	30.4
Investing activities		(306.0	)		(566.2	)		(459.3	)		(138.6	)		(109.1	)
Financing activities		101.9			414.6			294.1			23.2			181.4
Balance Sheet Data—December 31:
Cash, restricted cash and equivalents	$	125.0		$	197.3		$	216.7		$	156.5		$	287.8
Total assets		1,919.2			2,193.5			1,737.8			1,244.9			1,208.8
Long-term debt		943.2			841.3			774.3			657.7			640.5
Stockholders’ equity		739.3			1,052.4			694.6			427.8			415.2

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(a)	The financial results for 2008 included a full year of operations at Lumière Place. The Lumière Place Casino opened in mid-December 2007 and the two related hotels opened in early 2008. The guestroom and amenity expansion at L’Auberge du Lac was completed in stages in December 2007 and early in 2008. The 2008 results also reflect several impairment charges totaling $318 million related to goodwill, indefinite-lived intangible assets, undeveloped real estate and previously capitalized costs associated with certain development projects. Also, in 2008, we decided to sell or otherwise discontinue operations of The Casino at Emerald Bay, which closed on January 2, 2009. In accordance with generally accepted accounting principles (“GAAP”), the financial results reflect The Casino at Emerald Bay as discontinued operations for all periods presented. This had no effect on previously reported net income (loss). Income from discontinued operations also reflects a gain of $54.9 million, net of income taxes, related to insurance proceeds received related to our former Casino Magic Biloxi operations.
(b)	The financial results for 2007 include the opening of the casino at Lumière Place in mid-December 2007 and a majority of L’Auberge du Lac’s new 252 guestrooms in late December 2007.
(c)	In 2006, we completed the sale of our two card club casinos and our Casino Magic Biloxi site and certain related assets. In accordance with GAAP, these assets and related liabilities were reclassified to “assets held for sale” as of December 31, 2005 and the financial results reflect the Casino Magic Biloxi and card club operations as discontinued operations for all periods presented. This had no effect on previously reported net income (loss). The financial results for 2006 reflect the May 2006 opening of The Casino at Emerald Bay, The Admiral Riverboat Casino acquisition in December 2006 and net proceeds of approximately $44.7 million related to our terminated merger agreement with Aztar Corporation.
(d)	The financial results for 2005 reflect the May 2005 opening of L’Auberge du Lac, the July 2005 opening of a replacement casino in Neuquén, Argentina, and the former Embassy Suites Hotel, recently refurbished and renamed HoteLumière.
(e)	The financial results for 2004 reflect the May 2004 opening of a 300-guestroom and amenity expansion at Belterra Casino Resort.
(f)	In computing the ratio of earnings to fixed charges: (x) earnings were the income from continuing operations before income taxes and fixed charges and excluding capitalized interest; and (y) fixed charges were the sum of interest expense, amortization of debt issuance costs, capitalized interest and the estimated interest component included in rental expense. Due principally to our large non-cash charges deducted to compute such earnings, earnings so calculated were less than fixed charges by $449.9 million, $48.5 million, and $24.5 million for the fiscal years ended December 31, 2008, 2007 and 2005, respectively.

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

The following discussion and analysis of financial condition, results of operations, liquidity and capital resources should be read in conjunction with, and is qualified in its entirety by, our audited Consolidated Financial Statements and the notes thereto, and other filings with the Securities and Exchange Commission.

EXECUTIVE OVERVIEW

Pinnacle Entertainment, Inc. is a developer, owner and operator of casinos and related hospitality and entertainment facilities. We currently operate six significant domestic casinos, including L’Auberge du Lac in Lake Charles, Louisiana; Boomtown New Orleans in New Orleans, Louisiana; Belterra Casino Resort in Vevay, Indiana; Boomtown Bossier City in Bossier City, Louisiana; Lumière Place in St. Louis, Missouri; and Boomtown Reno in Reno, Nevada. We also operate the small Admiral Riverboat Casino in St. Louis, Missouri. Internationally, we operate one substantial and several small casinos in Argentina. We previously operated a small casino in the Bahamas, which we closed on January 2, 2009.

We have a number of projects at various stages of development. In south St. Louis County, Missouri, we are building our River City casino, which we expect to open in early 2010. In Lake Charles, Louisiana, we have begun site preparation of our planned Sugarcane Bay casino-hotel adjacent to L’Auberge du Lac. In East Baton Rouge Parish, Louisiana, we received voter approval in February 2008 permitting construction of a proposed casino-hotel complex. We also own well-located casino sites in Atlantic City, New Jersey and Central City, Colorado.

We operate casino properties, which include gaming, hotel, dining, retail and other amenities. Our operating results are highly dependent on the volume of customers at our properties, which in turn affects the price we can charge for our hotel rooms and other amenities. While we do provide casino credit in several gaming jurisdictions, most of our revenue is cash-based with customers wagering with cash or paying for non-gaming services with cash or credit cards. Our properties generate significant operating cash flow. Our industry is capital intensive and we rely on the ability of our resorts to generate operating cash flow to repay debt financing and fund maintenance capital expenditures.

Our long-term strategy is to build or acquire new resorts that are expected to produce favorable returns above our cost of capital; to maintain and improve each of our existing casinos; and to develop the systems to tie all of our casinos together into a national gaming network. Hence, we are developing new, high-quality gaming properties in attractive gaming markets; we are maintaining and improving our existing properties with disciplined capital expenditures; we are developing a customer-loyalty program designed to motivate customers to continue to patronize our casinos; and we may make strategic acquisitions at reasonable valuations, when and if available. We continue to make progress toward achieving our long-term strategy.

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RESULTS OF OPERATIONS

The following table highlights our results of operations for the three years ended December 31, 2008, 2007 and 2006. As discussed in Note 14 to our audited Consolidated Financial Statements, we report segment operating results based on revenues and Adjusted EBITDA. Such segment reporting is on a basis consistent with how we measure our business and allocate resources internally. See Note 14 to our audited Consolidated Financial Statements for more information regarding our segment information and a reconciliation of this financial information to income from continuing operations in accordance with GAAP.

	For the year ended December 31,
	2008			2007			2006
	(in millions)
Revenues:
L’Auberge du Lac	$	342.6		$	321.2		$	312.3
Boomtown New Orleans		158.4			162.0			201.5
Belterra Casino Resort		168.6			177.9			172.7
Boomtown Bossier City		88.9			89.7			96.3
Lumière Place		174.2			8.0			11.6
The Admiral Riverboat Casino		25.8			58.1			2.2
Boomtown Reno		46.0			67.2			87.1
Casino Magic Argentina		40.0			37.3			27.7
Other		0.2			0.4			0.1
Total revenues	$	1,044.7		$	921.8		$	911.5
Operating income (loss)	$	(345.3	)	$	16.8		$	98.3
Income (loss) from continuing operations	$	(370.2	)	$	0.1		$	63.3
Adjusted EBITDA (a):
L’Auberge du Lac	$	84.3		$	75.2		$	72.4
Boomtown New Orleans		54.2			54.2			81.0
Belterra Casino Resort		29.7			39.3			37.3
Boomtown Bossier City		17.1			17.9			23.0
Lumière Place		10.1			(1.0	)		1.7
The Admiral Riverboat Casino		(5.0	)		7.1			0.4
Boomtown Reno		(4.4	)		3.5			6.8
Casino Magic Argentina		11.8			14.3			10.6

(a) We define Adjusted EBITDA for each segment as earnings before interest income and expense, income taxes, depreciation, amortization, pre-opening and development costs, non-cash share-based compensation, merger termination proceeds, asset impairment costs, write-downs, reserves, recoveries, corporate level litigation settlement costs, gain (loss) on sale of certain assets, gain (loss) on sale of equity security investments, minority interest, gain (loss) on early extinguishment of debt and discontinued operations. We use Adjusted EBITDA to compare operating results among our properties and between accounting periods.

Comparison of the year ended December 31, 2008 to December 31, 2007 and December 31, 2006

Significant events that affected our 2008 results as compared to 2007 are described below:

• The impact of slowing economic conditions and its effect on consumer discretionary spending may have negatively affected our gross revenues at some of our properties during the latter part of 2008.

• The opening of Lumière Place Casino on December 19, 2007 and the opening of Four Seasons Hotel St. Louis and HoteLumière in February 2008.

• The completion of the 252-guestroom and amenity expansion project at L’Auberge du Lac in January 2008.

• Hurricane Gustav in late August 2008 caused the temporary closure of L’Auberge du Lac and Boomtown New Orleans during the historically profitable Labor Day weekend.

• Hurricane Ike in mid-September 2008 caused the temporary closure of L’Auberge du Lac during a key weekend, affected our Indiana and Missouri operations, and caused extensive damage in southeastern Texas.

• The worldwide capital crunch and the decline in values ascribed to casino companies and casinos have caused us to reevaluate the carrying costs of certain development land, capitalized development costs, goodwill, indefinite-lived intangible assets and certain other assets. This resulted in non-cash impairment charges to such assets and equity shares totaling $347 million in 2008.

23

Significant events that affected our 2007 results as compared to 2006 are described below:

• Moderation of 2007 revenues at Boomtown New Orleans after operating with less competition in 2006 as a result of Hurricane Katrina.

• The June 2007 closure of Boomtown Reno’s truck stop.

• The January 2007 public equity offering resulting in net proceeds to us of approximately $353 million.

• The June 2007 issuance of $385 million in aggregate principal of 7.50% senior subordinated notes, resulting in net proceeds to us of approximately $379 million.

• The December 2006 acquisition of The Admiral Riverboat Casino.

• The November 2006 acquisition of our Atlantic City site.

• The November 2006 sale of the Casino Magic site and concurrent purchase of the assets from Harrah’s.

• The ongoing effects of Hurricane Katrina and the rebuilding efforts in the affected areas throughout 2006.

• In 2006, we received net proceeds of approximately $44.7 million related to our termination merger agreement with Aztar Corporation.

Segment comparison of the year ended December 31, 2008 to December 31, 2007 and December 31, 2006

Each segment’s contribution to the operating results was as follows:

L’Auberge du Lac

							Percentage
	For the year ended December 31,						Increase/(Decrease)
	2008		2007		2006		2008 vs. 2007			2007 vs. 2006
			(in millions)
Gaming revenues	$	300.7	$	288.5	$	279.7		4.2	%		3.1	%
Total revenues		342.6		321.2		312.3		6.7	%		2.8	%
Operating income		49.1		48.2		46.7		1.9	%		3.2	%
Adjusted EBITDA		84.3		75.2		72.4		12.1	%		3.9	%

L’Auberge du Lac, our largest property, achieved record results in 2008 with increased revenues and Adjusted EBITDA reflecting the benefits of the completion of the $72 million guestroom and amenity expansion in January 2008. The guestroom expansion increased available hotel rooms to 995 from 743, an increase of 34%, resulting in increased lodging, gaming and food and beverage revenues. Hotel occupancy for 2008 was 85% compared to 92% in 2007. Improvement over prior-year results was achieved despite closures caused by Hurricane Gustav over the Labor Day weekend and Hurricane Ike over a historically profitable mid-September Asian holiday weekend. The casino was closed for nine days during the third quarter, which we estimate affected net revenues by approximately $9 million. In addition, the property incurred approximately $1.5 million of physical damage, which is below the deductible limits of our insurance policy and has been expensed in 2008.

Revenues increased from 2006 to 2007 primarily due to maturation of this property, which opened in May 2005. The increase in revenues contributed to an increase in Adjusted EBITDA. In late December 2007, L’Auberge du Lac opened 208 guestrooms of its new 252-guestoom expansion. Hotel occupancy, inclusive of the additional guestrooms that opened in late December 2007, was 92% for 2007, versus 92% in 2006.

Boomtown New Orleans

							Percentage
	For the year ended December 31,						Increase/(Decrease)
	2008		2007		2006		2008 vs. 2007			2007 vs. 2006
			(in millions)
Gaming revenues	$	151.7	$	154.8	$	192.5		(2.0	)%		(19.6	)%
Total revenues		158.4		162.0		201.5		(2.2	)%		(19.6	)%
Operating income		45.1		45.7		72.6		(1.3	)%		(37.1	)%
Adjusted EBITDA		54.2		54.2		81.0		—			(33.1	)%

Boomtown New Orleans achieved Adjusted EBITDA in 2008 that equaled 2007 results despite the temporary closure and other hurricane disruptions in the third quarter of 2008. Management estimates that Hurricanes Gustav and Ike affected Boomtown New Orleans’ net revenues by approximately $2.7 million during the year.

In 2006, Boomtown New Orleans benefited from limited competition in both the New Orleans and Gulf Coast regions for a majority of the year due to the closure of competing properties due to Hurricane Katrina. Business levels moderated at the end of the year, once significant competition had reopened.

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Belterra Casino Resort

							Percentage
	For the year ended December 31,						Increase/(Decrease)
	2008		2007		2006		2008 vs. 2007			2007 vs. 2006
			(in millions)
Gaming revenues	$	144.0	$	153.6	$	150.1		(6.3	)%		2.3	%
Total revenues		168.6		177.9		172.7		(5.2	)%		3.0	%
Operating income		15.3		23.1		22.6		(33.8	)%		2.2	%
Adjusted EBITDA		29.7		39.3		37.3		(24.4	)%		5.4	%

Results in 2008 at Belterra reflect the mid-year opening of two racetrack casinos in the Indianapolis metropolitan area, each of which operate approximately 2,000 slot machines. One of the racetracks expects to open a permanent facility, replacing a temporary facility in early 2009. Another competitor plans to open a new, expanded casino in mid-2009. In addition, another competitor began heavily marketing its refurbished and rebranded facility during 2008. Finally, overall economic conditions in the region may have adversely affected the consumer’s spending habits. Belterra has responded through revamping its marketing efforts.

In 2007, gaming revenues increased as casino admissions increased 4.3% from 2006 and hotel revenues increased as hotel occupancy increased 5.2% from 2006. In August 2007, five new retail shops opened and, in December 2007, the refurbishment of 11 of the 51 high-end suites was completed resulting in higher retail and lodging revenues for the year ended December 31, 2007 as compared to the year ended December 31, 2006.

Boomtown Bossier City

							Percentage
	For the year ended December 31,						Increase/(Decrease)
	2008		2007		2006		2008 vs. 2007			2007 vs. 2006
			(in millions)
Gaming revenues	$	83.4	$	84.6	$	91.1		(1.4	)%		(7.1	)%
Total revenues		88.9		89.7		96.3		(0.9	)%		(6.9	)%
Operating income		2.1		9.9		14.7		(78.8	)%		(32.7	)%
Adjusted EBITDA		17.1		17.9		23.0		(4.5	)%		(22.2	)%

The Bossier City/Shreveport gaming market is competitive, with four dockside riverboat casino-hotels and a racetrack operation. In addition, the Bossier City/Shreveport gaming market, which is approximately 188 miles east of Dallas/Fort Worth, competes with Native American gaming in southern Oklahoma located approximately 60 miles north of Dallas/Fort Worth. In October 2008, a large Native American casino on the Oklahoma/Texas border began the phased opening of its casino expansion. Despite this competition and regional disruption due to Hurricanes Gustav and Ike, we were able to achieve relatively consistent results as compared to 2007. As part of our annual assessment of indefinite-life intangible assets, the fair value of this property’s gaming licenses was below its carrying value due to decreased valuations of casinos and casino companies. The gaming license was the result of our 1998 acquisition of Casino Magic Corp. We recorded a non-cash impairment charge of $5.7 million, which affected operating income. In addition, we recorded a $2.1 million impairment of project costs related to the arrival facility conversion, which affected operating income. In 2006, we acquired a barge that we intend to convert to an arrival facility for guests of our riverboat casino. The arrival facility will adjoin our casino and offer escalators, making it easier for customers to travel among the three levels of our riverboat casino. This project is currently on hold given the current state of the capital markets.

Our operating results for 2007 decreased from 2006 due to the normalization of revenues after the temporary increase in 2006 in the local population due to the 2005 hurricanes in southern Louisiana, as well as reduced regional competition.

Lumière Place

										Percentage
	For the year ended December 31,									Increase/(Decrease)
	2008			2007			2006(a)			2008 vs. 2007			2007 vs. 2006
				(in millions)
Gaming revenues	$	140.6		$	4.7		$	—			2,891.5	%	NM
Total revenues		174.2			8.0			11.6			2,077.5	%		(31.0	)%
Operating loss		(38.5	)		(29.4	)		(0.2	)		31.0	%	NM
Adjusted EBITDA		10.1			(1.0	)		1.7		NM				(158.8	)%

(a)	The results for 2006 include HoteLumière, which was closed and refurbished in 2007.
NM — Not meaningful

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Lumière Place includes the Lumière Place Casino, which opened mid-December 2007, HoteLumière and Four Seasons Hotel St. Louis, which opened in early 2008 and other amenities, comprising the Lumière Place complex. Consistent with the ramp-up of operations at almost all new casino-hotels, Lumière Place has incurred higher marketing costs and payroll during 2008 than is anticipated in future periods. The Lumière Place Casino itself has been consistently profitable on a property-level Adjusted EBITDA basis since January 2008, with profits increasing sequentially in most months since opening.

On November 4, 2008, Missouri voters approved Proposition A, a ballot referendum designed to protect economic benefits and thousands of jobs created by Missouri casinos, as well as to increase funding for Missouri schools. Proposition A allows for the removal of certain betting restrictions related to per customer loss limits, places a limit on the number of gaming licenses available in the state and increases the tax on casino revenues to 21 percent from 20 percent. The approval will allow Lumière Place to expand its marketing from local customers towards becoming a regional entertainment destination. Proposition A became effective on November 7, 2008.

For the year ended December 31, 2007, revenues consist of the first 12 days of operations at Lumière Place Casino. The results for December 31, 2006 include HoteLumière, which was acquired in September 2005, and was closed for most of 2007 for renovation.

The Admiral Riverboat Casino

								Percentage
	For the year ended December 31,							Increase/(Decrease)
	2008			2007		2006		2008 vs. 2007			2007 vs. 2006
				(in millions)
Gaming revenues	$	23.6		$	53.6	$	2.0		(56.0	)%		2,580.0	%
Total revenues		25.8			58.1		2.2		(55.6	)%		2,540.9	%
Operating income (loss)		(38.1	)		0.1		0.2	NM				(50.0	)%
Adjusted EBITDA		(5.0	)		7.1		0.4		(170.4	)%		1,675.0	%

NM — Not meaningful

Growing losses at The Admiral Riverboat Casino have been caused by periodic closures due to flooding and augmented competition. We are evaluating the feasibility, subject to the MGC and other approvals, of relocating The Admiral Riverboat Casino to another location, in part due to the limitation of licenses in the state due to the recently passed Proposition A. We have an option to purchase 30 acres of land near the Chain of Rocks Bridge for this potential move, which option expires March 31, 2009. In addition, we recorded non-cash impairment charges of $18.6 million and $6.6 million related to the impairment of goodwill, and the riverboats and equipment, respectively, associated with The Admiral Riverboat Casino.

For the year ended December 31, 2007, revenues consist of a full year of operation of The Admiral Riverboat Casino, which was purchased in December 2006. The results for December 31, 2006 include one month of operation for The Admiral Riverboat Casino.

Boomtown Reno

									Percentage
	For the year ended December 31,								Increase/(Decrease)
	2008			2007			2006		2008 vs. 2007			2007 vs. 2006
				(in millions)
Gaming revenues	$	23.8		$	35.3		$	41.0		(32.6	)%		(13.9	)%
Total revenues		46.0			67.2			87.1		(31.5	)%		(22.8	)%
Operating income (loss)		(23.6	)		(3.9	)		0.1		(505.1	)%		(4,000.0	)%
Adjusted EBITDA		(4.4	)		3.5			6.8		(225.7	)%		(48.5	)%

Revenues and Adjusted EBITDA declined in 2008 as a result of the highly competitive operating environment attributed to Native American gaming in northern California, as well as the overall poor economic conditions in both the region and northern California. This resulted in decreased traffic on the major interstate alongside Boomtown Reno that connects northern California with northern Nevada. Average traffic counts declined 9% in 2008 from 2007 according to the Nevada Department of Transportation. Operating income in 2008 includes non-cash impairment charges of $9.9 million in connection with the impairment of goodwill associated with our 1997 acquisition of Boomtown, Inc. and $6.4 million in connection with the impairment of buildings and equipment.

Revenues and Adjusted EBITDA declined in 2007 primarily due to the June 2007 closure of the Boomtown truck stop. We closed the truck stop to facilitate construction of the neighboring Cabela Inc.’s branded sporting goods store, which opened in November 2007. The parking for Cabela’s utilizes the former truck stop location. The Cabela’s store has resulted in few incremental casino customers. We have entitlements for a new satellite casino and travel plaza that could be built at a different location on our 490 acres of available land.

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Casino Magic Argentina

							Percentage
	For the year ended December 31,						Increase/(Decrease)
	2008		2007		2006		2008 vs. 2007			2007 vs. 2006
			(in millions)
Gaming revenues	$	35.9	$	34.5	$	25.1		4.1	%		37.5	%
Total revenues		40.0		37.3		27.7		7.2	%		34.7	%
Operating income		6.8		11.6		8.2		(41.4	)%		41.5	%
Adjusted EBITDA		11.8		14.3		10.6		(17.5	)%		34.9	%

Casino Magic Argentina includes a sizable casino-hotel facility in Neuquén and several smaller casinos in other parts of the Province of Neuquén. Revenues for 2008 increased despite a smoking ban imposed within the city of Neuquén, Argentina effective November 2007. Our principal competitor in this market is in a neighboring province, where a similar smoking ban was imposed effective November 2008. Adjusted EBITDA reflects inflation of certain costs, principally payroll costs.

In June 2008, all 32 guestrooms of the hotel that adjoins the principal casino in Neuquén, Argentina were opened. Under terms of our concession agreement with the Province of Neuquén, our exclusivity rights in the Province of Neuquén are to be extended from 2016 to 2021 with the completion of such luxury hotel. We are awaiting the formal government approval of such extension.

Other factors affecting income from continuing operations

										Percentage
	For the year ended December 31,									Increase/(Decrease)
	2008			2007			2006			2008 vs. 2007			2007 vs. 2006
Other benefits (costs):
Corporate expenses	$	(38.2	)	$	(39.8	)	$	(29.2	)		(4.0	)%		36.6	%
Depreciation and amortization expense		(117.8	)		(80.3	)		(68.7	)		46.7	%		16.9	%
Pre-opening and development costs		(55.4	)		(60.8	)		(29.3	)		(8.9	)%		107.7	%
Litigation settlement		—			—			(2.2	)		—			—
Non-cash share-based compensation		(9.2	)		(8.4	)		(5.5	)		9.5	%		52.7	%
Merger termination proceeds, net of expenses		—			—			44.7			—			—
Impairment of goodwill		(28.5	)		—			—			—			—
Impairment of indefinite-lived intangible assets		(41.4	)		—			—			—			—
Impairment of land and development costs		(228.0	)		—			—			—			—
Impairment of buildings, riverboats and equipment		(20.3	)		(4.9	)		—			314.3	%		—
Write-downs, reserves and recoveries, net		(4.3	)		0.5			—			(960.0	)%		—
Impairment of investment in equity securities		(29.1	)		—			—			—			—
Loss on early extinguishment of debt		—			(6.1	)		—			—			—
Other non-operating income		2.7			15.5			16.0			(82.6	)%		(3.1	)%
Interest expense, net of capitalized interest		(53.0	)		(25.7	)		(53.7	)		106.2	%		(52.1	)%
Minority Interest		—			—			0.1			—			—
Income tax benefit (expense)		54.5			(0.5	)		(42.1	)	NM				(98.8	)%

Corporate expenses represent unallocated payroll, professional fees, rent, travel expenses and other general and administrative expenses not directly related to our casino and hotel operations. Such expenses were approximately flat in 2008 versus 2007, despite our expanding operations. The increase in corporate expenses from 2007 to 2006 is due to the hiring of additional corporate staff in support of our expanding operations.

Depreciation and amortization expense increased in 2008 primarily due to the opening of Lumière Place and the expansion at L’Auberge du Lac. The increase in depreciation expense in 2007 is primarily due to a full year of depreciation for The Admiral Riverboat Casino, which we acquired in December 2006.

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Pre-opening and development costs for the fiscal years ended December 31, 2008, 2007 and 2006 consist of the following:

	For the year ended December 31,
	2008		2007		2006
	(in millions)
Pre-opening and development costs:
Atlantic City (a)	$	17.3	$	18.7	$	7.2
Missouri Proposition A Initiative (b)		7.9		—		—
Lumière Place (c)		7.8		22.9		5.6
Baton Rouge (d)		7.5		9.5		1.4
River City (e)		6.1		4.8		8.2
Kansas City		4.6		2.2		—
Sugarcane Bay		3.2		1.8		2.6
Other		1.0		0.9		4.3
Total pre-opening and development costs	$	55.4	$	60.8	$	29.3

(a)	Atlantic City costs include $7.0 million and $2.6 million for design fees and various miscellaneous expenses for the years ended December 31, 2008 and 2007, respectively. In October 2008, management decided to complete certain demolition activities but to otherwise suspend substantially all development activities indefinitely due to the current economic downturn, evolving competitive market and the tightening of the credit markets.
(b)	Development costs in 2008 are for the support of the referendum, which was approved in November 2008.
(c)	The spending in 2008 reflects the staged opening of the hotels and other amenities at Lumière Place.
(d)	Pre-opening costs in 2008 for our Baton Rouge project include public referendum costs of $4.1 million related to the approval of our site. The majority of costs were incurred during the first quarter of 2008.
(e)	Pre-opening costs at the River City project, expected to open in early 2010, includes $11.6 million for non-cash straight-lined rent accruals under a lease agreement.

Litigation settlement In the fourth quarter of 2006, we recorded a $2.2 million litigation settlement reserve involving our former chairman. The suit was settled in the first quarter of 2007 for an amount approximating the litigation reserve.

Non-cash share-based compensation was $9.2 million, $8.4 million, and $5.5 million for the year ended December 31, 2008, 2007 and 2006, respectively. Such compensation expense relates to the theoretical value of options on the date of issuance and is not related to actual stock price performance. The number of options granted under our equity incentive compensation plan was 2,070,500 options in 2008, versus 552,500 and 734,000 options in 2007 and 2006, respectively.

Merger termination proceeds The 2006 results reflect net proceeds of approximately $44.7 million related to our terminated merger agreement with Aztar Corporation. The gross breakup fee from the merger agreement was $78.0 million. The difference reflects legal, financing fees and other costs related to the terminated merger agreement.

Impairment of goodwill In accordance with Statement of Financial Accounting Standard (“SFAS”) No. 142, “Goodwill and Other Intangible Assets”, the Company reviews goodwill for impairment annually during the fourth quarter or more frequently if events or circumstances indicate that the carrying value may not be recoverable. Goodwill was recently tested as of the fourth quarter of 2008 by estimating the fair value of each reporting unit in accordance with SFAS No. 142. Reference to fair value in this document refers to the definition of fair value in accordance with SFAS No. 157 “Fair Value Measurements”, which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment and therefore those estimated values do not necessarily represent the amounts that may be ultimately realized due to the occurrence of future circumstances that cannot be reasonably determined. Because of the inherent uncertainty of valuation, those estimated values may be materially higher or lower than the values that would have been used had a ready market existed for the item being valued.

The estimated fair value of each reporting unit was then compared with the carrying value to determine if any impairment exists. In connection with the preparation of the audited Financial Statements for 2008, we concluded that as of the fourth quarter of 2008 the carrying amounts of goodwill associated with Boomtown Reno and The Admiral Riverboat Casino were impaired by $9.9 million and $18.6 million, respectively. These impairment charges are reflected in income from continuing operations for the year ended December 31, 2008.

Impairment of indefinite-lived intangible assets include gaming licenses and are reviewed for impairment annually during the fourth quarter, or more frequently if events or circumstances indicate that the carrying value may not be recoverable. As a result of our annual impairment testing, we determined the fair value of our gaming licenses, computed according to SFAS No. 142, related to Sugarcane Bay, Baton Rouge and Boomtown Bossier City were less than the carrying value, and as a result, for the year ended December 31, 2008, we recorded an impairment charges of $20.3 million, $15.4 million, and $5.7 million, respectively.

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Impairment of land and development costs During the fourth quarter of 2008, the continuing economic downturn and constrained capital markets contributed to a severe decline in value of gaming stocks and gaming assets. As a result, management determined that a triggering event in accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” occurred in the fourth quarter of 2008. Given the continuing deterioration in commercial real estate values, uncertainties surrounding the Company’s access to sufficient resources to adequately finance the majority of its development pipeline we tested all development project land holdings and related capitalized costs for recoverability in connection with the preparation of the audited Consolidated Financial Statements for 2008. As a result of these tests, we determined that certain land holdings and related capitalized costs were impaired and recorded the following impairment charges:

	For the year ended December 31,
	2008		2007		2006
	(in millions)
Boomtown Reno	$	0.5	$	—	$	—
Boomtown Bossier City		2.2		—		—
The Admiral Riverboat Casino		3.6		—		—
Corporate and other projects (a)		221.7		—		—
Impairment of land and development costs	$	228.0	$	—	$	—

(a) Included in this balance is $196.7 million related to our Atlantic City project, $4.9 million related to our undeveloped land in Central City, Colorado, $9.2 million related to land held for Phase Two of our Sugarcane Bay project, $4.9 million related to Phase Two of our Baton Rouge project and $4.6 million related to undeveloped land held in St. Louis, Missouri.

Impairment of buildings, riverboats and equipment consist of the following:

	For the year ended December 31,
	2008		2007		2006
	(in millions)
Boomtown Reno (a)	$	7.7	$	—	$	—
The Admiral Riverboat Casino (a)		6.6		—		—
Boomtown Bossier City (b)		0.2		—		—
L’Auberge du Lac (b)		0.3		—		—
Belterra Casino Resort (c)		—		1.0		—
Casino Magic Argentina		1.0		—		—
Corporate and other projects (d)		4.5		3.9
Impairment of buildings, riverboats and equipment	$	20.3	$	4.9	$	—

(a)	Due to poor operating performance over the past 12 months, and a poor prospective financial performance outlook for Boomtown Reno and The Admiral Riverboat Casino, we determined a triggering event under SFAS No. 144 occurred during the fourth quarter of 2008. As a result, we tested all long-lived assets at Boomtown Reno and The Admiral Riverboat Casino for recoverability. As a result of these tests, we determined that certain buildings, riverboats and equipment were impaired and as of December 31, 2008, we recorded impairment charges of $7.7 million and $6.6 million, respectively.
(b)	Relates to impairment of slot machines that were adjusted to their respective net realizable values prior to being sold during 2008.
(c)	In the prior year, Belterra Casino Resort recorded an impairment of $1.0 million related to a postponed guestroom addition.
(d)	During the second quarter of 2008, we incurred impairment charges of $4.5 million related to two riverboats acquired in 2006, which are intended to be replaced by the Sugarcane Bay and Baton Rouge facilities. During 2007, we recorded a loss of $1.0 million related to a cancelled condominium project in St. Louis, Missouri.

Write-downs, reserves and recoveries, net consist of the following:

	For the year ended December 31,
	2008			2007			2006
	(in millions)
(Gain)/Loss on sale of assets (a)	$	3.0		$	(0.5	)	$	—
Customer loyalty program related expenses (b)		1.4			—			—
Insurance proceeds		(0.2	)		—			—
Other		0.1			—			—
Write-downs, reserves and recoveries, net	$	4.3		$	(0.5	)	$	—

(a)

During 2008, we sold slot machines at our properties for a loss of $3.0 million. During 2007, we recorded a $0.5 million gain on the sale of a corporate aircraft.

(b)

During the year ended December 31, 2008, we expanded our mychoice rewards program at our L’Auberge du Lac and Belterra properties. In doing so, we disclosed to our customers their reward account based on prior play. We had historically maintained such records to facilitate the provision of complimentary goods and services, but had not previously disclosed the point balances to customers at these facilities. The disclosure of point balances to our customers resulted in a non-cash charge to establish a theoretical liability for such initial amounts.

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We also incurred asset impairment charges of $4.3 million related to the discontinued operation at The Casino at Emerald Bay in The Bahamas, which has been recorded in loss from discontinued operations as of December 31, 2008.

Impairment of Investment in Equity Securities We own 1.2 million shares of common stock in Ameristar Casinos, Inc., a competitor. We had purchased such shares with the intent of proposing a combination of the two companies. However, with the changes in the financial markets, we determined that such combination was no longer in the best interests of our stockholders. In accordance with SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities”, at June 30, 2008 we determined that the fair value of these shares was “other-than-temporarily” impaired and recorded an initial impairment charge of $22.6 million based on the June 30, 2008 fair market value of such securities. Given further deterioration in the fair market value of these securities during the fourth quarter of 2008, we recorded an additional $6.4 million impairment charge based on the December 31, 2008 fair market value. As of December 31, 2008, we have a basis of $10.8 million, or $8.64 per share, in our investment, which investment is included in “Other assets, net” on the audited Consolidated Balance Sheets.

Loss on early extinguishment of debt During the 2007 second quarter, we issued fixed-rate eight-year 7.50% senior subordinated notes due 2015 at an effective yield of 7.75% to maturity. A majority of the proceeds were used to retire $275 million of floating rate secured term debt and to purchase $25.0 million in principal amount of our 8.25% senior subordinated notes due 2012. These transactions resulted in a write-off of $6.1 million of debt issuance costs in 2007. There were no debt issuance costs written off in 2008 or 2006.

Other non-operating income consists primarily of the following:

	For the year ended December 31,
	2008		2007		2006
			(in millions)
Other non-operating income:
Interest income (a)	$	2.0	$	15.2	$	13.4
Dividend income		0.7		0.3		0.8
Gain on sale of common stock (b)		—		—		1.8
Total other non-operating income	$	2.7	$	15.5	$	16.0

(a)	Interest income represents earnings on cash and cash equivalents and has decreased in 2008 from 2007 due to reduced cash balances and interest rates.
(b)	Included in the year ended December 31, 2006 is a $1.8 million gain related to the sale of Aztar Corporation common stock sold in the third quarter of 2006.

Interest expense, net of capitalized interest was as follows:

	For the year ended December 31,
	2008			2007			2006
				(in millions)
Interest expense before capitalization of interest	$	78.1		$	68.6		$	59.5
Less capitalized interest		(25.1	)		(42.9	)		(5.8	)
Interest expense, net of capitalized interest	$	53.0		$	25.7		$	53.7

The increase in interest expense before capitalized interest for the year ended December 31, 2008 from the same 2007 period was principally the result of additional borrowings under the Credit Facility. The decrease in capitalized interest was principally due to the completion of both Lumière Place and the expansion at L’Auberge du Lac in late 2007 and early 2008 and the discontinuance of capitalization of interest in relation to our Atlantic City project. Given our recent decision to indefinitely place our Atlantic City project on hold, we stopped capitalizing interest in connection with eligible project costs effective October 1, 2008.

Income tax Our 2008 effective income tax rate for continuing operations was (12.8)%, or a benefit of approximately $54.5 million, as compared to 91.4%, or an expense of $0.4 million in 2007. Our 2008 effective rate differs from the statutory rate primarily due to the effects of the recording of a valuation allowance reserve against substantially all of our domestic deferred tax assets, as well as non-deductible expenses associated with certain lobbying activities, the impairment of goodwill related to our Boomtown Reno property and the gaming tax add-back for Indiana income tax purposes. During 2008, we established additional non-cash deferred tax asset valuation allowances totaling $98.3 million following an assessment of the recoverability of our deferred tax assets. Our deferred tax asset valuation allowance for the year included $11.6 million related to the book impairment of our Ameristar common stock holdings of which $2.7 million was recorded in the fourth quarter, $42.0 million associated with the impairment of certain real estate holdings and approximately $44.7 million attributable to other deferred tax assets under accounting principle SFAS No. 109 “Accounting for Income Taxes”, which requires a valuation allowance for deferred tax assets in a tax jurisdiction when a company has cumulative financial accounting losses over several years. We have incurred three-year cumulative accounting losses as of December 31, 2008.

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Discontinued operations consist of our former Casino Magic Biloxi operations and our operations at The Casino at Emerald Bay in The Bahamas. During 2008, we recorded a gain of $54.9 million, net of income taxes, related to insurance proceeds received related to our former Casino Magic Biloxi operations. In July 2008, we decided to sell or otherwise discontinue operations of The Casino at Emerald Bay. This small casino is distant from our other operations and its success was heavily reliant on the neighboring unaffiliated Four Seasons hotel. The owner of such hotel is currently in receivership. Consequently, since the beginning of the third quarter of 2008, we have reflected the business as a discontinued operation and as of December 31, 2008 have recorded $4.3 million in asset impairment charges for the gaming operation’s related assets. On January 2, 2009, we closed the casino as a suitable buyer has not yet been located. We completed the sale of our Crystal Park Casino card club in April 2006, our leasehold interest and related receivables in the Hollywood Park Casino card club in July 2006 and our Casino Magic Biloxi site and certain related assets in November 2006.

Discontinued Development Opportunity In September 2007, we submitted a proposal for a new gaming entertainment complex to be located in Kansas City, Kansas. In September 2008, we withdrew such application in light of deteriorating capital markets. In connection with our application, we deposited $25 million with the Kansas Lottery Commission in June 2008, which was later returned to us in September 2008.

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 2008, we had $116 million of cash and cash equivalents and approximately $186 million of availability under our Credit Facility. We generally produce significant positive cash flows from operations, though this is not always reflected in our reported net income due to large non-cash charges such as depreciation and other non-cash costs. We estimate that approximately $70.0 million was needed to fund our casino cages, slot machines and day-to-day operating and corporate accounts as of December 31, 2008.

We have reduced excess cash throughout operations, and have used cash for, among other things, the construction of River City, completion of Lumière Place and the acquisition of additional real estate for our Atlantic City project. Our ongoing liquidity will depend on a number of factors, including available cash resources, cash flow from operations, our compliance with covenants contained in the Credit Facility and indentures, and our ability to access the credit and capital markets.

										Percentage
	For the year ended December 31,									Increase/(Decrease)
	2008			2007			2006			2008 vs. 2007			2007 vs. 2006
				(in millions)
Net cash provided by operating activities	$	129.3		$	153.4		$	206.5			(15.7	)%		(25.7	)%
Net cash used in investing activities	$	(306.0	)	$	(566.2	)	$	(459.3	)		46.0	%		23.3	%
Net cash providing by financing activities	$	101.9		$	414.6		$	294.1			(75.4	)%		41.0	%

Operating Cash Flow

Our decrease in cash provided by operating activities in 2008 from 2007 is primarily due to a slight deterioration in operating results and cash payments for previously accrued accounts payable, offset by the collection of insurance proceeds in the year.

Our decrease in cash provided by operating activities in 2007 from 2006 is the result of large cash payments totaling $44.7 million received in 2006 related to our terminated merger agreement with Aztar Corporation.

Investing Cash Flow

Cash used in investing activities has decreased in 2008 from 2007 due to the substantial completion of our Lumière Place and expanded L’Auberge du Lac projects in December 2007. During 2008, we finalized these two projects, purchased land in Atlantic City for our future Atlantic City project, and continued construction of River City. The results for 2006 include the various acquisitions completed in November and December of that year. The following is a summary of our capital expenditures for the years ended December 31, 2008, 2007 and 2006:

	For the year ended December 31,
	2008		2007		2006
			(in millions)
Capital expenditures by property or development included:
Lumière Place	$	83.5	$	322.8	$	104.3
Sugarcane Bay		11.2		3.1		—
Atlantic City (a)		99.4		37.2		—
River City		51.7		18.3		18.1
Baton Rouge		1.0		21.4		—
L’Auberge du Lac		23.4		69.8		14.4
Boomtown New Orleans		7.6		4.7		12.0
Belterra Casino Resort		5.7		13.9		6.7
Boomtown Bossier City		3.1		2.3		4.6
Boomtown Reno		7.0		2.5		3.1
Casino Magic Argentina		4.5		10.5		6.9
Other		7.9		39.1		16.4
Total capital expenditures	$	306.0	$	545.6	$	186.5

(a) The 2008 capital expenditures for Atlantic City include approximately $76.7 million for the purchase of land adjoining the original land purchase. In October 2008, management determined that it is in the best interests of the Company to complete certain demolition activities, but otherwise suspend substantially all such development activities indefinitely due to the current economic downturn, evolving competitive market and the tightening of the credit markets.

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The principal construction in progress as of December 31, 2008 is the River City casino in south St. Louis County. The total estimated budget of Phase One of River City is $380 million, which includes $22.7 million in capitalized interest. This is an increase from the previous budget of $375 million, reflecting an increase in the anticipated amount of capitalized interest. Such increase reflects a higher average interest rate used in the capitalized interest calculation and a longer period of time for construction than was originally anticipated. Such project costs do not include start-up cage cash or the non-cash accrual for rent during the construction period. We have incurred costs of $126 million as of December 31, 2008. Provided continued compliance with the financial covenants and other borrowing conditions, management anticipates that the $172 million in currently available liquidity under the Credit Facility as of March 6, 2009, as well as our surplus cash and anticipated cash flows from operations, will provide the funding required for completion. There is no certainty that this will be the case.

Generally, development of our projects, including River City, Sugarcane Bay and Baton Rouge, are contingent upon regulatory or other approvals that may or may not be achieved. We have purchased land in Atlantic City, New Jersey and Central City, Colorado for development of casino-hotels. We frequently evaluate other potential projects as well. Some of our development projects, including River City, Sugarcane Bay and Baton Rouge, are being developed pursuant to agreements and conditions with relevant government entities that require minimum investment levels and completion time schedules. Failure to meet such schedules may result in monetary damages in the case of River City and/or the revocation of the gaming licenses with respect to all three projects.

In 2009 and for the next several years, our anticipated capital needs include the following:

• In connection with our River City project, we have entered into a lease and development agreement with the St. Louis County Port Authority. Pursuant to the terms of the lease and development agreement, the project is to be developed in two phases. We are required to invest $375 million in the first phase and $75 million in the second phase, which must be completed three years from the opening of phase one. The maximum that we would have to pay is $20 million if the second phase is never completed. The gaming facilities of phase one are scheduled to be completed and expect to be open to the public by early 2010;

• In June 2007, the Louisiana Gaming Control Board (the “LGCB”) approved our architectural plans for the proposed $350 million Sugarcane Bay project to be built adjacent to our L’Auberge du Lac facility in Lake Charles, Louisiana. We are required to complete specific milestones within certain timeframes and complete construction within 18 months of commencing excavating and grading work for the foundations, subject to certain approvals by the LGCB. We have cumulatively invested approximately $25.6 million in capital expenditures and pre-opening costs as of December 31, 2008 on such project. On February 17, 2009, the LGCB granted our petition to modify the Statement of Conditions to Riverboat Gaming License for Sugarcane Bay (the “Sugarcane Bay Conditions”) relating to the completion of construction of the Sugarcane Bay project by extending the deadline for completion of construction by ninety (90) days. Construction must now be completed by July 30, 2010, absent further extension or modification by the LGCB. During the hearing at which the petition was approved, we also indicated to the LGCB that depending on the condition of the capital markets, we may need to seek additional extensions of time to complete construction. There is no certainty that the LGCB will grant any additional extension of time to complete construction, or that it will otherwise modify the Sugarcane Bay Conditions upon request made. In the event that the LGCB determines that we are in violation of the Sugarcane Bay Conditions, it could take disciplinary action, including, but not limited to, revocation of the license for Sugarcane Bay. Construction of Sugarcane Bay will require additional financing by us which is not currently available on reasonable terms in the constrained capital markets;

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• In February 2008, voters in the East Baton Rouge Parish approved the site for our proposed casino-hotel entertainment complex in Baton Rouge, Louisiana. We had previously received approval from the LGCB for this project. Construction will still require zoning and other local approvals. Construction is expected to cost approximately $250 million and includes a casino, a 100-guestroom hotel and several entertainment and dining options. Similar to Sugarcane Bay, we are required to complete specific milestones within certain timeframes and complete construction of the first phase within 18 months of commencing excavating and grading work for the foundations, subject to certain approvals by the LGCB. We have cumulatively invested approximately $31.0 million in capital expenditures and pre-opening costs as of December 31, 2008 on such project, of which $24.5 million was for the purchase of the approximately 575 acre site. On February 17, 2009, the LGCB granted our petition to modify the Statement of Conditions to Riverboat Gaming License for the Baton Rouge project (the “Baton Rouge Conditions”) relating to entering into and submitting to the LGCB all necessary contracts for construction of the project by extending the deadline for such execution and submission by ninety (90) days. Such contracts must now be entered into by May 19, 2009 absent further extension or modification by the LGCB. During the hearing at which the petition was approved, we also indicated to the LGCB that depending on the condition of the capital markets, we may need to seek additional extensions of time to enter into such contracts. There is no certainty that the LGCB will grant any additional extension of time to enter into contracts, or that it will otherwise modify the Baton Rouge Conditions upon request made. In the event that the LGCB determines that we are in violation of the Baton Rouge Conditions, it could take disciplinary action, including, but not limited to, revocation of the license for the Baton Rouge project;

• We intend to oversee the development at a future date of at least $50 million of real estate projects in downtown St. Louis, Missouri, which we are required to complete by December 2012. The total cost of such projects must be at least $50 million; however, our investment in such projects can be substantially less, as such projects may be developed in partnership with others. If we and our development partners collectively fail to invest $50 million in real estate projects by December 2012, we would be obligated to pay a fee of $1.0 million in January 2013, $2.0 million in January 2014 and $2.0 million annually thereafter, adjusted by the change in the consumer price index; and

• We intend to continue to maintain our current properties in good condition and estimate that this will require maintenance capital spending of approximately $30 million per year.

Management’s intention is to use existing cash resources, cash flows from operations and funds available under the Credit Facility to fund operations, maintain existing properties, make necessary debt service payments and fund the development of some of our capital projects. As discussed in more detail in the Risk Factors above, the continued credit crisis, recession and related turmoil in the global financial system has had and may continue to have an effect on our liquidity. The significant distress recently experienced by financial institutions has had and may continue to have far-reaching adverse consequences across many industries, including the gaming industry. The ongoing credit and liquidity crisis has greatly restricted the availability of capital and has caused the cost of capital (if available) to be much higher than it has traditionally been. Under our most restrictive indenture, we are currently permitted to incur up to $350 million in senior indebtedness under a certain debt basket, of which approximately $172 million could be additionally borrowed under our Credit Facility, subject to covenant compliance, utilizing such debt basket as of March 6, 2009.

Given that indenture borrowing limit, we expect to supplement borrowings under our Credit Facility with existing cash and cash generated from operations through early 2010 to fund the completion of River City. However, the financial covenants within our Credit Facility are scheduled to tighten during 2009 and beyond, and as a result, we could experience difficulty in meeting such covenants as we increase our revolver borrowings to complete River City. Failure to meet such covenants, or failure to have such covenants amended, could prevent further borrowings under the Credit Facility. While we currently believe we will have sufficient funds to complete River City, there is no certainty that this will be the case. In particular, if our operating results are adversely affected because of a reduction in consumer spending, or for any other reason, this may affect our ability to complete River City unless we sell assets, enter into leasing facilities, or take other measures to find additional resources. There is no certainty that we will be able to do so on terms that are favorable to the Company or at all, particularly in the absence of considerable improvements in the capital markets or covenant relief under our Credit Facility.

Our substantial funding needs in connection with our development projects, if pursued, would require us to raise substantial amounts of capital from outside sources. As a result of the continued turmoil in the capital markets, the availability of financing is extremely constrained, expensive and potentially unavailable. We cannot accurately predict when or if the capital markets will return to more normalized conditions. If the current capital market environment does not improve, we may not be able to raise additional funds in a timely manner, or on acceptable terms, or at all. Inability to access the capital markets, or the necessity to access the capital markets on less than favorable terms, may force us to delay, reduce or cancel planned development and expansion projects, sell assets or obtain additional financing on potentially unfavorable terms. Management intends to proceed with construction of its various projects only when it believes that financing can be arranged on terms favorable to the Company.

In addition to the effect that the global financial crisis has already had on us, we may face significant challenges if conditions in the financial markets do not improve or continue to worsen. For example, an extension of the credit crisis to other industries could adversely affect overall demand, particularly leisure travel and discretionary expenditures, which could have a negative effect on our revenues. Furthermore, the effects of the recent disruption to the overall economy could adversely affect consumer confidence and the willingness of consumers to spend money on leisure activities. Because of the current economic environment, certain of our customers may curtail the frequency of their visits to our casinos and may reduce the amounts they wager and spend during those visits below what they would normally wager and spend in better economic times. All of these effects could have a material adverse effect on our liquidity.

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Financing Cash Flow

Financing cash flow is the net result of borrowings and repayments under our Credit Facility and the result of other capital-raising efforts. During 2006, we borrowed $135 million and repaid $20 million under the Credit Facility and consummated a public offering resulting in net proceeds of $179 million. During 2007, we borrowed $50 million under our Credit Facility. We also consummated a public offering resulting in net proceeds of approximately $353 million and issued senior subordinated notes resulting in proceeds of $379 million. These proceeds were used to repay debt of $362 million, including a $275 million term loan facility, $25 million to purchase some of our 8.25% senior subordinated notes due 2012, and a $60 million repayment of the Credit Facility. During 2008, we borrowed $242 million and repaid $140 million under the Credit Facility.

Second Amended and Restated Credit Facility

In December 2005, we entered into a $750 million amended and restated credit facility (the “Credit Facility”). In November 2006, we amended the Credit Facility to, among other things, increase the overall size of the facility to $1 billion, including a $625 million revolving credit facility, a $275 million funded term loan facility and a $100 million delayed-draw term loan facility.

In June 2007, we repaid the $275 million term loan facility and elected to allow the $100 million delayed-draw term loan to expire undrawn on July 2, 2007. Consequently, our Credit Facility currently consists of a $625 million revolving credit facility that matures in December 2010. Utilization of our Credit Facility is currently limited to $350 million by the indenture governing our 8.75% senior subordinated notes due 2013, which notes became callable in October 2008.

As of December 31, 2008, our indebtedness of $943 million consists of $152 million drawn on our Credit Facility, $385 million aggregate principal amount of 7.50% senior subordinated notes due 2015, $275 million aggregate principal amount of 8.25% senior subordinated notes due 2012, $135 million aggregate principal amount of 8.75% senior subordinated notes due 2013 and certain other debt.

At December 31, 2008, we had issued approximately $12.6 million of irrevocable letters of credit, which includes $3.0 million associated with our River City project and $9.6 million for various self-insurance programs.

In January and February 2009, we borrowed a total of approximately $13.8 million under our Credit Facility. As noted below, Lehman Commercial Paper, Inc. (“LCPI”), a lender under the Credit Facility, filed for bankruptcy in early October 2008 and since that time has failed to fund its proportionate share of its commitment under the Credit Facility, including approximately $1.2 million of funding requests in January and February 2009. In each case, the borrowings were initially base rate borrowings, which accrue interest at a Base Rate plus a margin, which margin is 0.5%. However, over the course of the two months of January and February 2009, a majority of such borrowings were converted into LIBOR loans, such that as of March 6, 2009, all but approximately $611,000 of the borrowings under the Credit Facility are LIBOR loans. LIBOR loans accrue interest at a LIBOR rate plus a margin, which margin is currently 2.0%. As of March 6, 2009, we have drawn $166 million and $12.6 million was utilized under various letters of credit.

On October 5, 2008, LCPI, which is one of the lenders under our Credit Facility, filed for bankruptcy. LCPI had committed $48 million towards our $625 million Credit Facility. LCPI funded its portion of the Credit Facility through September 30, 2008, or approximately $9.6 million of the then outstanding balance of $125 million. In the fourth quarter of 2008 and the first quarter of 2009, when the Company attempted to increase its borrowing under the Credit Facility, LCPI failed to fund its proportionate share. We believe that it is unlikely that LCPI would provide its proportionate share if the Company drew additional sums under its Credit Facility. Hence, the $625 million Credit Facility is effectively a $586 million Credit Facility. As noted below, the indenture governing our 8.75% senior subordinated notes due 2013 restricts the amount that we can borrow under our Credit Facility to $350 million and therefore any de facto reduction in the total size of our Credit Facility resulting from LCPI’s inability to fund does not currently affect our liquidity.

We are obligated to make mandatory prepayments of indebtedness under the Credit Facility from the net proceeds of certain debt offerings and certain asset sales and dispositions. No such payments have been made or are required at this time. In addition, we are required to prepay borrowings under the Credit Facility with a percentage of our “Excess Cash Flow” as defined in the Credit Facility. No such payments have been made, nor does management believe such payments will be required in the foreseeable future, as such definition of Excess Cash Flow incorporates capital spending activities in a given year and our capital expenditure plans are substantial. We have the option to prepay all or any portion of the indebtedness under the Credit Facility at any time without premium or penalty.

For borrowings under the Credit Facility, the interest rate is computed as a margin over LIBOR plus 2.0% or prime plus 0.5% based on our “Consolidated Leverage Ratio” as defined in the Credit Facility. As of December 31, 2008, LIBOR was 0.43% and prime was 3.75%. The Credit Facility also bears commitment fees, which are based on our Consolidated Leverage Ratio. Under the Credit Facility, at least 40% of our total funded debt obligations must be subject to fixed interest rates or hedge agreements or other interest rate protection agreements. As of December 31, 2008, approximately 83.8% of our debt was at fixed versus floating interest rates.

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The Credit Facility has, among other things, restrictive financial covenants and capital spending limits and other affirmative and negative covenants. The Credit Facility provides for permitted capital expenditures for our River City project, maintaining our existing casinos and hotels and for various new projects, all up to certain limits. In certain circumstances, our Credit Facility permits those limits to be increased through asset sales or equity transactions.

As of December 31, 2008, we believe we were in compliance with all of the financial covenants in our Credit Facility. Such covenants envisioned completion of River City at an earlier date than such completion is currently expected. As a result, the covenant ratios are scheduled to tighten, even as borrowings grow in order to fund completion. A deterioration in operating results could affect our ability to comply with financial covenant ratios in our Credit Facility and to fund River City and our other construction projects. Given the uncertain outlook in the economy, we may choose to modify such covenants, even if we are unsure that such modification is necessary. Such amendments may not be available, and if available, could be at significantly increased costs and may adversely affect our financial results. If the current capital market environment does not improve and we are unable to amend our Credit Facility or obtain a waiver from our lenders, we may have to delay, reduce or cancel some of our current development projects.

The obligations under the Credit Facility are secured by most of our assets and those of our domestic restricted subsidiaries, including a pledge of the equity interests in our domestic restricted subsidiaries. Our obligations under the Credit Facility are also guaranteed by our domestic restricted subsidiaries. Our subsidiaries that own the Atlantic City site and related parcels of land, our Argentine operations, our airplane, approximately $59.1 million in cash, cash equivalents and marketable securities as of December 31, 2008, and certain other assets are unrestricted subsidiaries under the Credit Facility. We believe we were in compliance with all such covenants as of December 31, 2008.

Senior Subordinated Indebtedness

In 2003, we issued $135 million in aggregate principal amount of 8.75% of senior subordinated notes due 2013 (the “8.75% Notes”), which notes were issued at 98.369% of par, thereby yielding 9.00% to first call and maturity. In 2004, we issued $300 million in aggregate principal amount of 8.25% senior subordinated notes due 2012 (the “8.25% Notes”), $200 million of which were issued at a price of 99.282% of par, thereby yielding 8.375% to first call and maturity, and $100 million of which were issued later at a price of 105.00% of par, thereby yielding 7.10% to the first call date (7.35% to maturity). Net proceeds of these offerings were used to refinance our then-existing higher coupon senior subordinated notes with maturity dates in 2007.

In June 2007, we issued $385 million in aggregate principal amount of 7.50% senior subordinated notes due 2015 (the “7.50% Notes”). The 7.50% Notes were issued at 98.525% of par to yield 7.75% to maturity, with interest payable on June 15 and December 15, beginning December 2007. Net of the original issue discount, initial purchasers’ fees and various costs and expenses, proceeds from the offering were approximately $379 million. We retired our then-outstanding $275 million term loan, discussed above, and we used a portion of the proceeds to purchase $25.0 million in aggregate principal amount of our 8.25% Notes.

Under the indentures governing the 7.50% Notes, 8.25% Notes and 8.75% Notes, we are permitted to incur up to $1.5 billion, $475 million and $350 million in senior indebtedness, respectively, among other debt incurrence baskets. Under our indentures, we may also incur additional indebtedness if, after giving effect to the indebtedness proposed to be incurred, our Consolidated Coverage Ratio (essentially, a ratio of adjusted EBITDA to interest) for a trailing four-quarter period on a pro forma basis (as defined in the indentures) would be at least 2:1. As of December 31, 2008, our Consolidated Coverage Ratio was below 2:1.

The 7.50% Notes, 8.25% Notes and 8.75% Notes are unsecured obligations, guaranteed by all of our domestic material restricted subsidiaries, as defined in the indentures. The indentures governing these notes contain certain covenants limiting our ability and the ability of our restricted subsidiaries to incur additional indebtedness, issue preferred stock, pay dividends or make certain distributions, repurchase equity interests or subordinated indebtedness, create certain liens, enter into certain transactions with affiliates, sell assets, issue or sell equity interests in our subsidiaries, or enter into certain mergers and consolidations.

The 7.50% Notes become callable at a premium over their face amount on June 15, 2011, and the 8.25% Notes and 8.75% Notes became callable at a premium over their face amount in March 2008 and October 2008, respectively. Such premiums decline periodically as the bonds near their respective maturities. The 7.50% Notes are redeemable prior to such time at a price that reflects a yield to first call equivalent to the applicable Treasury bond yield plus 0.5 percentage points.

While we are proceeding with our development projects in Missouri and Louisiana, construction and completion of our various projects may require amending the terms of some of our debt and Credit Facility and accessing the capital markets, which would be difficult or expensive under current market conditions. If the capital markets do not improve, we may be forced to adopt one or more alternatives, such as incurring debt on less-than-favorable terms, delaying or reducing planned development and expansion projects, selling assets, restructuring or modifying debt, or obtaining additional equity financing. Our current stock price, along with the stock prices of many public gaming companies, has declined sharply from historical levels. We may choose to cancel or delay projects rather than issue equity at these levels. This may impair our growth and materially and adversely affect our financial condition, results of operations and cash flow and the returns of investing in our securities. The inability to access the capital markets when needed, or the incurrence of debt on less than favorable terms, may impair our growth and materially and adversely affect our returns from new projects and expansions and our financial condition, results of operations and cash flow and the per share trading price of our common stock. For further discussion of the impact of the current disruption in the credit markets on our development plans, see Part I, Item 1A—Risk Factors.

35

CONTRACTUAL OBLIGATIONS AND OTHER COMMITMENTS

The following table summarizes our contractual obligations and other commitments as of December 31, 2008:

			Less than						More than
Contractual Obligations	Total		1 year		1-3 years		3-5 years		5 years		Other
	(in millions)
Long-Term Debt Obligations (a)	$	1,274.4	$	63.7	$	278.8	$	503.0	$	428.9	$	—
Operating Lease Obligations (b)		588.1		8.6		21.6		22.2		535.7		—
Purchase Obligations: (c)
Construction contractual obligations (d)		147.5		6.0		141.5		—		—		—
Other (e)		55.2		39.4		13.5		2.3		—		—
Other Long-Term Liabilities Reflected on the Registrant’s Balance sheet under GAAP (f)		24.7		10.7		—		—		—		14.0
Total	$	2,089.9	$	128.4	$	455.4	$	527.5	$	964.6	$	14.0

(a)	Includes interest obligations associated with the debt obligations outstanding as of December 31, 2008, and through the debt maturity date.
(b)	For those lease obligations in which annual rent includes both a minimum lease payment and a percentage of future revenue, the table reflects only the known minimum lease obligation. In addition, the table reflects all renewal options for those lease obligations that have multiple renewal periods.
(c)	Purchase obligations represent agreements to purchase goods or services that are enforceable and legally binding on us.
(d)	Includes contracts executed as of December 31, 2008 for completion of our River City project, which contracts are included in the project budgets. Such contracts could be cancelled and Pinnacle would be obligated primarily for goods and services provided through the date of cancellation, plus certain other fees and expenses.
(e)	Includes open purchase orders, employment agreements, deferred bonus obligations and the estimated withdrawal liability associated with a union-sponsored multi-employer pension benefit plan.
(f)	Includes executive deferred compensation, director’s post-retirement plan and FIN 48 reserves. The amount included in the “Other” column includes FIN 48 liabilities for which we are unable to make a reliable estimate of the period of cash settlement with the taxing authority.

The table above excludes certain commitments as of December 31, 2008, for which the timing of expenditures associated with such commitments is unknown, or contractual agreements have not been executed, or the guaranteed maximum price for such contractual agreements has not been agreed upon. Such commitments include: (i) the remaining $50 million commitment for residential housing, retail, or mixed-use development stipulated by our City of St. Louis redevelopment agreement, which must be completed by December 19, 2012; (ii) the remaining project costs for phase one and phase two under our lease and development agreement with the St. Louis County Port Authority, which excludes the amounts covered by our guaranteed maximum price agreement regarding River City; (iii) expenditures associated with our proposed expansion and development projects at Sugarcane Bay, River City, Baton Rouge and Atlantic City; (iv) the funding, in certain circumstances, of an additional $5.0 million into an indemnification trust we created in 2005; (v) the $4.0 million to $10.0 million of industrial revenue bonds at Boomtown Reno that we have agreed to purchase under certain circumstances, if necessary.

CRITICAL ACCOUNTING ESTIMATES

The audited Consolidated Financial Statements were prepared in conformity with accounting principles generally accepted in the United States. Certain of the accounting policies require management to apply significant judgment in defining the estimates and assumptions for calculating financial estimates. These judgments are subject to an inherent degree of uncertainty. Management’s judgments are based on our historical experience, terms of various past and present agreements and contracts, industry trends, and information available from other sources, as appropriate. There can be no assurance that actual results will not differ from those estimates. Changes in these estimates could adversely affect our financial position or our results of operations.

We have determined that the following accounting policies and related estimates are critical to the preparation of our audited Consolidated Financial Statements:

Land, buildings, riverboats and equipment: We have a significant investment in long-lived property and equipment, which represents approximately 85% of our total assets. Judgments are made in determining the estimated useful lives of assets, the salvage values to be assigned to assets and if or when an asset has been impaired. The accuracy of these estimates affects the amount of depreciation expense recognized in the financial results and whether to record a gain or loss on disposition of an asset. We review the carrying value of our property and equipment used in operation whenever events or circumstances indicate that the carrying value of an asset may not be recoverable from estimated future undiscounted cash flows expected to result from its use and eventual disposition.

36

During the fourth quarter of 2008, the continuing economic downturn and constrained capital markets contributed to a severe decline in value of gaming stocks and gaming assets. As a result, management determined that a triggering event in accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” occurred in the fourth quarter of 2008. Given the continuing deterioration in commercial real estate values, uncertainties surrounding the Company’s access to sufficient resources to adequately finance the majority of its development pipeline and poor operating performance at Boomtown Reno and The Admiral Riverboat Casino for the past 12 months, we tested all development project land holdings and related capitalized costs and long-lived assets at Boomtown Reno and The Admiral Riverboat Casino for recoverability in connection with the preparation of the audited Consolidated Financial Statements for 2008. As a result of these tests, we determined that certain land holdings and related capitalized costs and buildings, riverboats and equipment were. The determination of fair value uses accounting judgments and estimates, including market conditions. Changes in estimates or application of alternative assumptions could produce significantly different results.

Self-insurance Reserves: We are self-insured up to certain limits for costs associated with general liability, workers’ compensation and employee medical coverage. Insurance claims and reserves include accruals of estimated settlements for claims. In estimating these accruals, we consider historical loss experience and make judgments about the expected levels of cost per claim.

Income Tax Assets and Liabilities: We utilize estimates related to cash flow projections for the application of Statement of Financial Accounting Standards (“SFAS”) No. 109, “Accounting for Income Taxes,” to the realization of deferred income tax assets. The estimates are based upon recent operating results and budgets for future operating results. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in this assessment.

In accordance with SFAS No. 5, “Accounting for Contingencies,” we record tax contingencies when the exposure item becomes probable and reasonably estimable. We assess the tax uncertainties on a quarterly basis and maintain the required tax reserves until the underlying issue is resolved or upon the expiration of the statute of limitations. Our estimate of the potential outcome of any uncertain tax issue is highly judgmental and we believe we have adequately provided for any reasonable and foreseeable outcomes related to uncertain tax matters.

Effective January 1, 2007, we adopted Financial Accounting Standards Board Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — an Interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48 requires that tax positions be assessed using a two-step process. A tax position is recognized if it meets a “more likely than not” threshold, and is measured at the largest amount of benefit that is greater than 50 percent likely of being realized. As required by the standard, we review uncertain tax positions at each balance sheet date. Liabilities we record as a result of this analysis are recorded separately from any current or deferred income tax accounts, and are classified as current (“Other accrued liabilities”) or long-term (“Other long-term liabilities”) based on the time until expected payment.

Goodwill and Other Intangible Assets: We account for goodwill and indefinite-lived intangible assets in accordance with SFAS No. 142, “Goodwill and Other Intangible Assets,” which requires an annual review of goodwill and indefinite-lived intangible assets for impairment, or more frequently if events or circumstances indicate that the carrying value may not be recoverable. During the fourth quarter of 2008, goodwill and indefinite-lived intangible assets were tested for recoverability. The fair value of each reporting unit was then compared with the carrying value to determine if any impairment exists. During the fourth quarter of 2008, we determined that the carrying amounts of goodwill associated with Boomtown Reno and The Admiral Riverboat Casino properties were impaired by $9.9 million and $18.6 million, respectively. The required two-step approach uses accounting judgments and estimates, including forecasts of future operating results, revenue growth, EBITDA margin, tax rates, capital expenditures, depreciation, working capital, weighted average cost of capital, long-term growth rates, risk premiums and terminal values. Changes in estimates or the application of alternative assumptions could produce significantly different results. Impairment testing is done at a reporting unit level.

Indefinite-lived intangible assets were tested for recoverability using the Greenfield/Build Up approach from a market participant viewpoint. This approach uses accounting judgments and estimates, including future operating results, revenue growth, EBITDA margin, tax rates, capital expenditures, depreciation, working capital, weighted average cost of capital, long-term growth rates, risk premiums and terminal values. Changes in estimates or the application of alternative assumptions could produce significantly different results. As a result of this test, we determined that the carrying amount of indefinite-lived intangible assets associated with our gaming licenses at Boomtown Bossier City, Sugarcane Bay and Baton Rouge were impaired by $5.7 million, $20.3 million and $15.4 million, respectively.

Insurance Receivables: We have significant receivables from an insurance company related to our former Biloxi property, which was destroyed by Hurricane Katrina. We record receivables to the extent of our net book value for physical property damage and for actual costs incurred under the business-interruption coverage. Until such claims are resolved, no gains for coverage in excess of net book value and no potential insurance recoveries for lost profits are recorded. Significant estimates are required in determining the amount of our insurance claims.

Share-based Compensation: Effective January 1, 2006, we adopted the provisions of SFAS No. 123R, “Share-Based Payment,” requiring that compensation cost relating to share-based payment transactions be recognized in our audited Consolidated Financial Statements. The cost is measured at grant date, based on the estimated fair value of the award and is recognized as expense over the vesting period of the equity award. We measure the fair value of the award using the Black-Scholes option pricing model. There are several management assumptions required to determine the inputs into the Black-Scholes model, such as stock price volatility and expected term assumptions which can significantly impact the fair value of share-based payments and the associated compensation cost.

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RECENTLY ISSUED AND ADOPTED ACCOUNTING STANDARDS

SFAS No. 141(R) In December 2007, the FASB issued SFAS No. 141 (revised), “Business Combinations”, which is intended to improve reporting by creating greater consistency in the accounting and financial reporting of business combinations. SFAS No. 141(R) requires that the acquiring entity in a business combination recognize all (and only) the assets and liabilities assumed in the transaction, establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed, and requires the acquirer to disclose to investors and other users all of the information that they need to evaluate and understand the nature and financial effect of the business combination. In addition, SFAS No. 141(R) modifies the accounting for transaction and restructuring costs. SFAS 141(R) is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. We currently do not have any pending business combinations, thus SFAS No. 141(R) is not expected to have an effect on our audited Consolidated Financial Statements upon adoption.

SFAS No. 160 In December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in Consolidated Financial Statements.” The statement is an amendment of Accounting Research Bulletin No. 51, “Consolidated Financial Statements.” The objective of this statement is to improve the relevance, comparability, and transparency of the financial information that a reporting entity provides in its consolidated financial statements by establishing accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS No. 160 will become effective for us on January 1, 2009 (our first fiscal year beginning after December 15, 2008). We currently do not have subsidiaries in which we have a non-controlling interest; thus, SFAS No. 160 is not expected to have an effect on our audited Consolidated Financial Statements upon adoption.

SFAS No. 161 In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities—an Amendment of FASB Statement No. 133,” which enhances required disclosures regarding derivatives and hedging activities. SFAS No. 161 will become effective for us on January 1, 2009 (our first fiscal year beginning after November 15, 2008). We currently do not utilize derivatives and hedging activities; thus, SFAS No. 161 is not expected to have an effect on our audited Consolidated Financial Statements.

FSP No. EITF 03-6-1 In June 2008, the FASB issued FASB Staff Position (“FSP”) No. EITF 03-6-1, “Determining Whether Instruments Granted In Share-Based Payment Transactions Are Participating Securities.” This FSP concludes that those unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid, are participating securities and must be included in the computation of both basic and diluted earnings per share (the two-class method). This FSP is effective during the three months ending March 31, 2009 and is to be applied on a retrospective basis to all periods presented. The issue is effective for financial statements issued for fiscal years and interim periods within those fiscal years beginning January 1, 2009. We believe that the adoption of FSP No. EITF 03-6-1 will not have an effect on our audited Consolidated Financial Statements, as our current share-based awards do not include dividend rights.

SFAS No. 162 In May 2008, the FASB issued SFAS No.162, “Hierarchy of Generally Accepted Accounting Principles”. This statement is intended to improve financial reporting by identifying a consistent framework, or hierarchy, for selecting accounting principles to be used in preparing financial statements of non-governmental entities that are presented in conformity with GAAP. This statement was effective November 15, 2008. We currently adhere to the hierarchy of GAAP as presented in SFAS No. 162, and the adoption did not have a material effect on our audited Consolidated Financial Statements.

FSP No. FAS 142-3 In April 2008, the FASB issued FSP No. FAS 142-3, “Determination of the Useful Life of Intangible Assets". FSP 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, “Goodwill and Other Intangible Assets", and requires enhanced related disclosures. FSP 142-3 must be applied prospectively to all intangible assets acquired as of and subsequent to fiscal years beginning after December 15, 2008. We believe that the adoption of FSP 142-3 will not have a material effect on our audited Consolidated Financial Statements.

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FSP No. FAS 157-2 In February 2008, the FASB issued FSP No. FAS 157-2, “Effective Date of FASB Statement No. 157”, which defers the effective date of SFAS No. 157, “Fair Value Measurements” to fiscal years beginning after November 15, 2008 for non-financial assets and non-financial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis. Early adoption of SFAS No. 157 is permitted. We have applied SFAS No. 157 in the fair value calculations for our testing of land and development costs, buildings, riverboats and equipment, goodwill, and indefinite-lived intangible assets as of December 31, 2008.

A variety of proposed or otherwise potential accounting standards are currently under study by standard-setting organizations and certain regulatory agencies. Because of the tentative and preliminary nature of such proposed standards, we have not yet determined the effect, if any, that the implementation of such proposed standards would have on our audited Consolidated Financial Statements.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

At times, we are exposed to market risk from adverse changes in interest rates with respect to the short-term floating interest rate on borrowings under our Credit Facility. Our Credit Facility is comprised of a $625 million revolving credit facility that matures in 2010. As of December 31, 2008, there was $152 million outstanding under this revolving credit facility and $12.6 million utilized under various letters of credit. Our borrowings under our Credit Facility accrue interest at LIBOR plus a margin determined by our current coverage ratio, which margin is currently 2.0%. If LIBOR rates were to increase or decrease by one percentage point, our interest expense would increase or decrease by approximately $1.5 million per year, assuming constant debt levels.

We are also exposed to market risk from adverse changes in the exchange rate of the dollar to the Argentine peso. The total assets of Casino Magic Argentina at December 31, 2008 were $31.4 million, or approximately 1.6% of our consolidated assets.

The table below provides the principal cash flows and related weighted average interest rates by contractual maturity dates for our debt obligations at December 31, 2008. At December 31, 2008, we did not hold any material investments in market-risk-sensitive instruments of the type described in Item 305 of Regulation S-K.

																						Fair
Liabilities	2009			2010			2011			2012			2013			Thereafter			Total			Value
										(in thousands)
Revolver Loan Facility(a)		—		$	151,766			—			—			—			—		$	151,766		$	113,824
Rate		3.48	%		3.48	%		3.48	%		3.48	%		3.48	%		3.48	%		3.48	%
7.50% Notes		—			—			—			—			—		$	385,000		$	385,000		$	221,760
Fixed rate		7.50	%		7.50	%		7.50	%		7.50	%		7.50	%		7.50	%		7.50	%
8.25% Notes		—			—			—		$	275,000			—			—		$	275,000		$	207,900
Fixed rate		8.25	%		8.25	%		8.25	%		8.25	%		8.25	%		8.25	%		8.25	%
8.75% Notes		—			—			—			—		$	135,000			—		$	135,000		$	106,110
Fixed rate		8.75	%		8.75	%		8.75	%		8.75	%		8.75	%		8.75	%		8.75	%
All Other	$	90		$	97		$	98		$	102		$	110		$	443		$	940		$	940
Avg. Interest rate		7.33	%		7.33	%		7.33	%		7.25	%		7.25	%		7.25	%		7.25	%

(a) The revolving credit facility has a floating interest rate per annum, determined quarterly, based on our “Consolidated Leverage Ratio”, as defined in the Credit Facility, which is currently LIBOR plus a margin of 2.0%.

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Item 8. Financial Statements and Supplementary Data

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Pinnacle Entertainment, Inc.
Las Vegas, Nevada

We have audited the accompanying consolidated balance sheets of Pinnacle Entertainment, Inc. and subsidiaries (the “Company”) as of December 31, 2008 and 2007, and the related consolidated income statements, changes in stockholders’ 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 the financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on the 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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Pinnacle Entertainment, Inc. and subsidiaries as of December 31, 2008 and 2007, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2008, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

As discussed in Note 1 to the consolidated financial statements, on January 1, 2007, the Company adopted the provisions of Financial Accounting Standards Board Interpretation No. 48 “Uncertainty in Income Taxes.”

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2008, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 9, 2009 expressed an unqualified opinion on the Company’s internal control over financial reporting.

/s/ DELOITTE & TOUCHE LLP
Las Vegas, Nevada
March 9, 2009

40

PINNACLE ENTERTAINMENT, INC.

CONSOLIDATED INCOME STATEMENTS

	For the year ended December 31,
	2008			2007			2006
	(in thousands, except per share data)
Revenues:
Gaming	$	903,780		$	809,380		$	782,120
Food and beverage		63,248			46,299			45,464
Lodging		37,101			23,431			30,346
Truck stop and service station		12,920			18,429			29,890
Other		27,635			24,275			23,640
		1,044,684			921,814			911,460
Expenses and other costs:
Gaming		542,309			471,426			443,444
Food and beverage		65,469			46,680			43,813
Lodging		24,613			11,698			14,724
Truck stop and service station		12,657			17,502			28,246
Other		13,574			11,481			11,494
General and administrative		235,658			200,730			173,519
Depreciation and amortization		117,846			80,334			68,702
Pre-opening and development costs		55,371			60,783			29,270
Impairment of goodwill		28,543			—			—
Impairment of indefinite-lived intangible assets		41,387			—			—
Impairment of land and development costs		227,954			—			—
Impairment of buildings, riverboats and equipment		20,330			4,852			—
Write-downs, reserves and recoveries, net		4,292			(488	)		—
		1,390,003			904,998			813,212
Operating Income (Loss)		(345,319	)		16,816			98,248
Other non-operating income		2,715			15,510			16,009
Interest expense, net of capitalized interest		(53,049	)		(25,715	)		(53,678	)
Impairment of investment in equity securities		(29,088	)		—			—
Merger termination proceeds, net of related expenses		—			—			44,731
Loss on early extinguishment of debt		—			(6,124	)		—
Income (loss) from continuing operations before income taxes		(424,741	)		487			105,310
Income tax benefit (expense)		54,545			(443	)		(42,088	)
Minority interest		—			—			100
Income (loss) from continuing operations		(370,196	)		44			63,322
Income (loss) from discontinued operations, net of income taxes		47,599			(1,450	)		13,564
Net income (loss)	$	(322,597	)	$	(1,406	)	$	76,886
Net income per common share—basic
Income (loss) from continuing operations	$	(6.17	)	$	0.00		$	1.33
Income (loss) from discontinued operations, net of income taxes		0.79			(0.02	)		0.28
Net income (loss) per common share—basic	$	(5.38	)	$	(0.02	)	$	1.61
Net income per common share—diluted
Income (loss) from continuing operations	$	(6.17	)	$	0.00		$	1.28
Income (loss) from discontinued operations, net of income taxes		0.79			(0.02	)		0.28
Net income (loss) per common share—diluted	$	(5.38	)	$	(0.02	)	$	1.56
Number of shares—basic		59,966			59,221			47,629
Number of shares—diluted		59,966			59,221			49,272

See accompanying notes to the consolidated financial statements.

41

PINNACLE ENTERTAINMENT, INC.

CONSOLIDATED BALANCE SHEETS

	December 31,
	2008			2007
	(in thousands, except
	share data)
ASSETS
Current Assets:
Cash and cash equivalents	$	115,712		$	191,124
Accounts receivable, net of allowance for doubtful accounts of $11,848 and $11,321		26,348			20,562
Inventories		6,425			6,688
Prepaid expenses and other assets		18,845			54,092
Deferred income taxes (Note 4)		—			9,213
Total current assets		167,330			281,679
Restricted cash		9,318			6,163
Land, buildings, riverboats and equipment: (Note 2)
Land and land improvements		407,169			470,568
Buildings, riverboats and improvements		1,099,204			1,002,402
Furniture, fixtures and equipment		436,887			437,120
Construction in progress		127,407			150,657
		2,070,667			2,060,747
Less: accumulated depreciation		(440,630	)		(346,405	)
		1,630,037			1,714,342
Assets held for sale		2,687			1,940
Goodwill (Note 8)		16,742			45,286
Intangible assets, net (Note 1)		32,607			74,487
Other assets, net		60,503			69,647
	$	1,919,224		$	2,193,544
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	45,755		$	86,736
Accrued interest		11,010			11,136
Accrued compensation		41,574			41,533
Accrued taxes		17,089			20,718
Other accrued liabilities		55,060			51,945
Deferred income taxes		4,029			—
Current portion of long-term debt (Note 3)		89			87
Total current liabilities		174,606			212,155
Long-term debt less current portion (Note 3)		943,243			841,214
Other long-term liabilities		59,831			70,272
Deferred income taxes (Note 4)		2,198			17,544
Commitments and contingencies (Note 12)
Stockholders’ Equity
Preferred stock—$1.00 par value, 250,000 shares authorized, none issued or outstanding		—			—
Common—$0.10 par value, 59,981,181 and 59,887,181 shares outstanding, net of treasury shares		6,199			6,190
Additional paid in capital		999,419			989,589
Retained earnings		(230,077	)		92,520
Accumulated other comprehensive loss		(16,105	)		(15,850	)
Treasury stock, at cost, for both periods 2,008,986 of treasury shares		(20,090	)		(20,090	)
Total stockholders’ equity		739,346			1,052,359
	$	1,919,224		$	2,193,544

See accompanying notes to the consolidated financial statements.

42

PINNACLE ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

For the years ended December 31, 2008, 2007 and 2006

									Accumulated
			Additional						Other						Total
	Common		Paid In			Retained			Comprehensive			Treasury			Stockholders’
	Stock		Capital			Earnings			Loss			Stock			Equity
						(in thousands)
Balance as of January 1, 2006	$	4,298	$	435,512		$	19,203		$	(11,109	)	$	(20,090	)	$	427,814
Net income		—		—			76,886			—			—			76,886
Foreign currency translation loss		—		—			—			(651	)		—			(651	)
Total comprehensive income																76,235
Share-based compensation		—		6,146			—			—			—			6,146
Common stock option exercises		31		3,246			—			—			—			3,277
Equity offerings		690		178,172			—			—			—			178,862
Tax benefit from stock option exercises		—		2,249			—			—			—			2,249
Balance as of December 31, 2006	$	5,019	$	625,325		$	96,089		$	(11,760	)	$	(20,090	)	$	694,583
Net loss		—		—			(1,406	)		—			—			(1,406	)
Foreign currency translation loss		—		—			—			(652	)		—			(652	)
Post-retirement benefit obligations		—		—			—			(80	)		—			(80	)
Unrealized loss on marketable securities available for sale, net of income tax		—		—			—			(3,358	)		—			(3,358	)
Total comprehensive loss																(5,496	)
FIN 48 adoption adjustment		—		—			(2,163	)		—			—			(2,163	)
Share-based compensation		—		8,432			—			—			—			8,432
Common stock option exercises		21		2,330			—			—			—			2,351
Equity offerings		1,150		352,188			—			—			—			353,338
Tax benefit from stock option exercises		—		1,314			—			—			—			1,314
Balance as of December 31, 2007	$	6,190	$	989,589			92,520		$	(15,850	)	$	(20,090	)	$	1,052,359
Net loss		—		—			(322,597	)		—			—			(322,597	)
Foreign currency translation loss		—		—			—			(2,393	)		—			(2,393	)
Post-retirement benefit obligations		—		72			—			(1,203	)		—			(1,131	)
Total comprehensive loss																(326,121	)
Share-based compensation		—		9,162			—			—			—			9,162
Common stock option exercises		9		697			—			—			—			706
Realized loss on marketable securities available for sale		—		—			—			3,341			—			3,341
Tax benefit from stock option exercises		—		(101	)		—			—			—			(101	)
Balance as of December 31, 2008	$	6,199	$	999,419		$	(230,077	)	$	(16,105	)	$	(20,090	)	$	739,346

See accompanying notes to the consolidated financial statements.

43

PINNACLE ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the year ended December 31
	2008			2007			2006
	(in thousands)
Cash flows from operating activities:
Net income (loss)	$	(322,597	)	$	(1,406	)	$	76,886
Depreciation and amortization		118,262			81,037			69,120
Impairment of goodwill		28,543			—			—
Impairment of indefinite-lived intangible assets		41,387			—			—
Impairment of land and development costs		227,954			—			—
Impairment of buildings, riverboats and equipment		24,598			—			—
Loss (gain) on sale of assets		3,155			(488	)		(27,165	)
Write-downs, reserves and recoveries, net		1,513			4,852			4,939
Impairment of investment in equity securities		29,088			—			—
Provision for bad debts		3,392			3,949			3,211
Amortization of debt issuance costs		4,888			4,289			3,716
Share-based compensation expense		9,162			8,427			5,638
Tax benefit from stock option exercises		(101	)		1,314			2,249
Advances of insurance claims in excess of book value		2,018			5,000			—
Change in income taxes		(23,068	)		(1,464	)		40,425
Loss on extinguishment of debt		—			6,124			—
Excess tax benefit from stock equity plans		—			(1,136	)		(1,853	)
Net change in insurance receivable		—			—			16,734
Excess insurance proceeds		—			—			16,688
Changes in operating assets and liabilities:
Receivables		(3,492	)		4,740			(6,251	)
Prepaid expenses and other		(250	)		(189	)		(2,671	)
Other long-term assets		(3,220	)		—			—
Accounts payable		(11,364	)		21,950			(4,417	)
Other accrued liabilities		150			3,185			(2,962	)
Accrued interest		(126	)		459			(89	)
Other long-term liabilities		(547	)		—			—
Change in long-term accounts, net		—			12,778			12,329
Net cash provided by operating activities		129,345			153,421			206,527
Cash flows from investing activities:
Capital expenditures and land additions		(306,044	)		(545,644	)		(186,533	)
Kansas City application deposit		(25,000	)		—			—
Kansas City application refund		25,000			—			—
Change in restricted cash		(582	)		21,914			(18,387	)
Proceeds from sale of property and equipment		561			7,505			88,330
Payments for asset acquisitions, net of cash acquired		—			—			(334,224	)
Payments for businesses acquired, net of cash acquired		—			—			(41,322	)
Investment in available for sale securities		—			(39,849	)		—
Additional funding for 2006 asset acquisitions		—			(10,087	)		—
Insurance proceeds for hurricane damages		—			—			32,813
Net cash used in investing activities		(306,065	)		(566,161	)		(459,323	)
Cash flows from financing activities:
Proceeds from credit facility		241,766			50,000			135,000
Repayments under credit facility		(140,000	)		(335,000	)		(20,000	)
Proceeds from other secured and unsecured notes payable		20			—			—
Payment on other secured and unsecured notes payable		(87	)		(2,075	)		(1,390	)
Proceeds from common stock options exercised		706			2,351			3,277
Debt issuance and other financing costs		(510	)		(9,418	)		(3,477	)
Payment on 8.25% senior subordinated notes		—			(25,000	)		—
Proceeds from 7.50% senior subordinated notes		—			379,321			—
Proceeds from common stock equity offerings, net of offering costs		—			353,338			178,862
Other financing activities, net		—			(17	)		3
Excess tax benefits from stock equity plans		—			1,136			1,853
Net cash provided by financing activities		101,895			414,636			294,128
Effect of exchange rate changes on cash and cash equivalents		(587	)		652			(88	)
Increase (decrease) in cash and cash equivalents		(75,412	)		2,548			41,244
Cash and cash equivalents at the beginning of the year		191,124			188,576			147,332
Cash and cash equivalents at the end of the year	$	115,712		$	191,124		$	188,576
Supplemental Cash Flow Information:
Cash paid for interest, net of amounts capitalized	$	47,596		$	20,552		$	50,562
Cash received (paid) for income taxes, net		4,281			1,158			20,077
Increase (decrease) in construction related deposits and liabilities		(15,147	)		19,102			6,152

See accompanying notes to the consolidated financial statements.

44

PINNACLE ENTERTAINMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1—Summary of Significant Accounting Policies

Basis of Presentation and Organization Pinnacle Entertainment, Inc. (“Pinnacle”) is a developer, owner and operator of casinos and related hospitality and entertainment facilities. As of December 31, 2008, we operated seven domestic casinos located in southeastern Indiana (“Belterra Casino Resort”); Lake Charles, New Orleans and Bossier City, Louisiana (“L’Auberge du Lac,” “Boomtown New Orleans” and “Boomtown Bossier City”, respectively); Reno, Nevada (“Boomtown Reno”) and St. Louis, Missouri (“Lumière Place Casino” and “The Admiral Riverboat Casino”). Internationally, we operate one significant casino and several small casinos in Argentina (“Casino Magic Argentina”). We view each property as an operating segment and aggregate our Argentine casinos into the “Casino Magic Argentina” reporting segment. In these footnotes, the words “Company”, “Pinnacle”, “we”, “our” and “us” refer to Pinnacle Entertainment, Inc., a Delaware corporation, and its wholly-owned subsidiaries, unless otherwise stated or the context requires otherwise.

In July 2008, we announced plans to sell or otherwise discontinue operations of The Casino at Emerald Bay and closed the casino on January 2, 2009, as a suitable buyer had not yet been located. We have classified the related assets as held for sale in our audited Consolidated Balance Sheets and have included its results in discontinued operations. For a more detailed description, see Note 7.

Within our construction and development pipeline, we have a number of projects at various stages of development. In south St. Louis County, we are constructing a casino named River City. In Lake Charles, Louisiana, we are developing a second casino resort to be called Sugarcane Bay. We are also developing a casino-hotel in Baton Rouge, Louisiana. Each of these projects is subject to various regulatory approvals. In Atlantic City, New Jersey, we own a casino site at the heart of the famed Boardwalk and have pursued development activities. In October 2008, management determined that it is in the best interests of the Company to complete certain demolition projects but to otherwise suspend substantially all such development activities indefinitely due to the current economic downturn, evolving competitive market and the tightening of the credit markets.

Principles of Consolidation The accompanying audited Consolidated Financial Statements include the accounts of Pinnacle Entertainment, Inc. and its subsidiaries and have been prepared by management in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and with the rules and regulations of the Securities and Exchange Commission (“SEC”). All inter-company accounts and transactions have been eliminated.

Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles used in the United States requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and (iii) the reported amounts of revenues and expenses during the reporting period. Estimates used by us include, among other things, the evaluation of the future realization of deferred tax assets, determining the adequacy of reserves, and estimates of the forfeiture rate, expected life of options and stock price volatility when computing share-based compensation expense. Actual results may differ from those estimates.

Cash and Cash Equivalents Cash and cash equivalents totaled approximately $115.7 million and $191.1 million at December 31, 2008 and 2007, respectively. Cash equivalents are highly liquid investments with an original maturity of less than three months and are stated at the lower of cost or market value.

Restricted Cash Current restricted cash consists of cash and highly liquid instruments with original maturities of 90 days or less, which carrying amounts approximate fair value. Long-term restricted cash at December 31, 2008 and 2007 consists primarily of an indemnification trust deposit of approximately $5.7 million and $5.5 million, respectively.

Accounts Receivable Accounts receivable consist primarily of casino, hotel and other receivables, net of an allowance for doubtful accounts of $11.8 million and $11.3 million as of December 31, 2008 and 2007, respectively. The allowance for doubtful accounts is estimated based upon, among other things, collection experience, customer credit evaluations and the age of the receivables. We extend casino credit to approved customers in states where it is permitted following background checks and investigations of creditworthiness.

Inventories Inventories, which consist primarily of food, beverage and operating supplies, are stated at the lower of cost or market value. Costs are determined using the first-in, first-out method and the weighted average methods.

45

Fair Value Effective January 1, 2008, we adopted the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value Measurements” and SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities—including an amendment to FASB Statement No. 115.” SFAS No. 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It also establishes a framework for measuring fair value and expands disclosures about fair value measurements. The fair value framework requires the categorization of assets and liabilities into three levels based upon assumptions (inputs) used to price the assets and liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:

• Level 1: Quoted market pries in active markets for identical assets or liabilities.

• Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.

• Level 3: Unobservable inputs that are not corroborated by market data.

SFAS No. 159 permits an entity to measure certain financial assets and financial liabilities at fair value with changes in fair value recognized in earnings each period. During the year ended December 31, 2008, we elected not to use the fair value option permitted under SFAS No. 159 for any of our financial assets and financial liabilities that are not already recorded at fair value.

As of December 31, 2008, our assets and liabilities that are measured at fair value on a recurring basis are as follows:

	Balance		Level 1		Level 2		Level 3
	(in millions)
Assets:
Available-for-Sale Securities	$	10.8	$	10.8	$	—	$	—
Total assets at fair value	$	10.8	$	10.8	$	—	$	—
Liabilities:
Board of directors phantom stock units	$	0.6	$	0.6	$	—	$	—
Total liabilities at fair value	$	0.6	$	0.6	$	—	$	—

For each major category of assets and liabilities measured at fair value on a nonrecurring basis during the period, SFAS No. 157 requires disclosures about the fair value measurements. As of December 31, 2008, our assets that are measured at fair value on a non-recurring basis are as follows:

	Balance		Level 1		Level 2		Level 3
	(in millions)
Long-lived assets held and used	$	281.6	$	—	$	—	$	281.6
Long-lived assets held for sale		2.7		—		—		2.7
Non-amortizing intangible assets		30.0		—		—		30.0
Total assets at fair value	$	314.3	$	—	$	—	$	314.3

Available-for-Sale Securities: We classify all equity securities that we hold as current available-for-sale securities. Available-for-sale securities are recorded at fair value measured entirely using “Level 1” inputs under SFAS No. 157, which are observable inputs for identical assets such as quoted market values for the securities, and temporary unrealized holding gains and losses are recorded, net of tax, as a separate component of “Accumulated other comprehensive loss” on the audited Consolidated Balance Sheets. Unrealized losses are charged against net earnings when a decline in fair value is determined to be “other-than-temporary.” In accordance with the Financial Accounting Standards Board’s (the “FASB”) Staff Position FAS Nos. 115-1 and 124-1, “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments”, we review several factors to determine if a loss is “other-than-temporary.” These factors include but are not limited to: (i) the length of time a security is in an unrealized loss position; (ii) the extent to which fair value is less than cost; (iii) the financial condition and near-term prospects of the issuer; and (iv) our intent and ability to hold the security for a period of time sufficient to allow for any anticipated recovery in fair value. Realized gains and losses are accounted for on the specific identification method.

We own 1.2 million shares of common stock in Ameristar Casinos, Inc., a competitor. We had purchased such shares with the intent of proposing a combination of the two companies. However, with the changes in the financial markets, management determined that such combination was no longer in the best interests of our stockholders. As of June 30, 2008, we determined that the fair value of these shares was “other-than-temporarily” impaired and recorded an initial impairment charge of $22.6 million based on the June 30, 2008 fair market value of such securities and during the fourth quarter, due to the severity and duration of the decline in fair value, we determined the shares were again “other-than-temporarily” impaired and we recorded an additional $6.4 million impairment charged based on the December 31, 2008 fair market value. This impairment adjustment established a new basis of $10.8 million, or $8.64 per share, for our investment, which investment is included in “Other assets, net” on the audited Consolidated Balance Sheets.

Land, Buildings, Riverboats and Equipment Land, buildings, riverboats and equipment are stated at cost. Land includes land not currently being used in our operations, which totaled $245 million and $330 million at December 31, 2008 and 2007, respectively. We capitalize the costs of improvements that extend the life of the asset. Construction in progress at December 31, 2008 relates primarily to our River City project, while construction in progress at December 31, 2007 related primarily to our Lumière Place, River City and Atlantic City projects. Depreciation expense for the years ended December 31, 2008, 2007 and 2006 was $117.8 million, $80.5 million and $68.7 million, respectively. Interest expense is capitalized on internally constructed assets at our overall weighted average cost of borrowing. Capitalized interest amounted to $25.2 million, $42.9 million and $5.8 million in 2008, 2007 and 2006, respectively.

46

We expense maintenance and repairs cost as incurred. Gains or losses on the dispositions of land, buildings, riverboats or equipment are included in the determination of income.

We depreciate our land improvements, buildings, riverboats and equipment using the straight-line method over the shorter of the estimated useful life of the asset or the related lease term, as follows:

	Years
Land improvements		5 to 35
Buildings and improvements		15 to 35
Vessels		10 to 25
Equipment		3 to 20

Pursuant to SFAS No. 144, “Accounting for the Impairment or Disposal of Long-lived Assets”, we review the carrying value of land, buildings, riverboats and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from estimated future undiscounted cash flows expected to result from its use and eventual disposition. In cases where undiscounted cash flows are less than the carrying value, an impairment charge is recognized equal to an amount by which the carrying value exceeds the fair value of the asset. The factors considered by management in performing this assessment include current operating results, trends and prospects, as well as the effect of obsolescence, demand, competition and other economic factors. In estimating expected future cash flows for determining whether an asset is impaired, assets are grouped at the reporting unit level, which for most of our assets is the individual casino. If a long-lived asset is to be sold, the asset is reported at the lower of carrying value or fair value. See Note 2, Note 9 and Note 10 for further explanation.

Goodwill and Other Intangible Assets Pursuant to SFAS No. 142, “Goodwill and Other Intangible Assets,” goodwill and other indefinite-lived intangible assets are subject to an annual assessment for impairment during the fourth quarter, or more frequently if there are indications of possible impairment, by applying a fair-value-based test.

Goodwill: Goodwill consists of the excess of the acquisition cost over the fair value of the net assets acquired in business combinations. Based on assessments performed, we recorded impairments to goodwill of $28.5 million for year ended December 31, 2008. There were no impairments to goodwill in 2007 or 2006. For a more detailed description of the impairments to goodwill, see Note 8.

Non-amortizing Intangible Asset: Non-amortizing intangible assets consist primarily of gaming licenses and are subject to an annual assessment for impairment by applying a fair-value-based test in accordance with SFAS No. 142. Indefinite-lived intangible assets were tested for recoverability using the Greenfield/Build Up approach from a market participant viewpoint. Based on assessments performed, we recorded impairment charges of $5.7 million, $20.3 million, and $15.4 million in connection with the gaming licenses of Boomtown Bossier City, Sugarcane Bay and Baton Rouge, respectively. There were no impairments in 2007 or 2006. Non-amortizing intangible assets, after impairments, have a remaining carrying value of $31.8 million and $73.3 million at December 31, 2008 and 2007, respectively.

Amortizing Intangible Asset: Amortizing intangible assets consist of the following:

	For the year ended December 31,
	2008		2007
	(in millions)
Concession agreement	$	1.0	$	1.0
Vendor licenses		0.2		0.2
Trade name		0.7		0.7
Total intangible assets		1.9		1.9
Less accumulated amortization:
Concession agreement		0.2		0.1
Vendor licenses		0.2		0.2
Trade name		0.7	$	0.4
Intangible assets, net	$	0.8	$	1.2

47

Our concession agreement in Argentina provides us with certain exclusive rights to operate casinos in major cities of the Province of Neuquén. In June 2008, all of the 32 guestrooms of the hotel that adjoins the principal casino in Neuquén were opened under the terms of our concession agreement. Our exclusivity rights are to be extended from 2016 to 2021 with the completion of such luxury hotel. We are awaiting formal government approval of such extension. Based on satisfaction of the conditions in the concession agreement, we are amortizing the concession agreement through 2021. The unamortized costs as of December 31, 2008 and 2007 were $753,000 and $893,000, respectively. Estimated future amortization expense for each of the next five years, applying the average peso-to-dollar exchange rate for the year ended December 31, 2008 to each such period, is approximately $67,000. Total amortization expense for intangible assets was $415,000, $404,000 and $377,000 for the years ended December 31, 2008, 2007 and 2006, respectively.

Unamortized Debt Issuance Cost Debt issuance costs include debt discounts or premiums and other costs incurred in connection with the issuance of debt and are capitalized and amortized to interest expense using the effective interest method. Debt issuance costs are amortized to interest expense based on the terms of the related debt agreements using the straight-line method, which approximates the effective interest method. Such amortization periods range from five years for our revolving credit facility to ten years for the 8.75% senior subordinated notes due in 2013 (see Note 3). Unamortized debt issuance costs were $15.6 million and $19.7 million at December 31, 2008 and 2007, respectively, and are included in “Other assets, net” on our audited Consolidated Balance Sheets. Amortization of debt issuance costs included in interest expense was $4.9 million, $4.3 million and $3.7 million for the years ended December 31, 2008, 2007 and 2006, respectively.

CRDA Investments New Jersey state law provides, among other things, for an assessment of licensees equal to 1.25% of their gross gaming revenues in lieu of an investment alternative tax equal to 2.5% of gross gaming revenues. Generally, a licensee may satisfy this investment obligation by investing in qualified eligible direct investments, by making qualified contributions or by depositing funds with the New Jersey Casino Reinvestment Development Authority (“CRDA”). Funds deposited with the CRDA may be used to purchase bonds designated by the CRDA or, under certain circumstances, may be donated to the CRDA in exchange for credits against future CRDA investment obligations. CRDA bonds have terms up to 50 years and bear interest at below market rates. While we do not currently hold a New Jersey casino license, in 2006, we purchased entities that owned a former casino site, which casino was subject to these investment obligations. Our net deposits with the CRDA eligible to be used to fund qualified investments were $16.3 million and $17.6 million as of December 31, 2008 and 2007, respectively.

Self-Insurance Accruals We are self-insured up to certain limits for costs associated with general liability, workers’ compensation and employee health coverage. Insurance claims and reserves include accruals of estimated settlements for known claims, as well as accruals of actuarial estimates of incurred but not reported claims. At December 31, 2008 and 2007, we had total self-insurance accruals of $17.0 million and $14.7 million, respectively, which are included in “Other accrued liabilities” in our audited Consolidated Balance Sheets. In estimating those costs, we consider historical loss experience and make judgments about the expected levels of costs per claim. These claims are accounted for based on actuarial estimates of the undiscounted claims, including those claims incurred but not reported. We believe the use of actuarial methods to account for these liabilities provides a consistent and effective way to measure these highly judgmental accruals; however, changes in health care costs, accident frequency and severity and other factors can materially affect the estimate for these liabilities. We continually monitor the potential for changes in estimates, evaluate our insurance accruals and adjust our recorded provisions.

The mychoice Customer Loyalty Program The mychoice customer loyalty program offers incentives to customers who gamble at our casinos throughout the United States. Under the program, customers are able to accumulate reward points over time that they may redeem at their discretion under the terms of the program. The customer’s reward points balance will be forfeited if the customer does not earn a reward point over the prior 12-month period. As a result of the ability of the customer to accumulate reward points, we accrue the expense of reward points, after consideration of estimated breakage, as they are earned. The estimated cost to provide products and services upon redemption of reward points is expensed as the reward points are earned and is included in “Gaming” expense on our audited Consolidated Income Statements. To arrive at the estimated cost associated with reward points, estimates and assumptions are made regarding incremental marginal costs of the benefits, breakage rates and the mix of goods and services for which reward points will be redeemed. We use historical data to assist in the determination of estimated accruals. At December 31, 2008 and 2007, $6.4 million and $5.1 million, respectively, was accrued for the cost of anticipated mychoice reward point redemptions.

In addition to reward points, customers at certain of our properties can earn points based on play that are redeemable in cash (“cash-back points”). In 2008, certain of our properties introduced a modification to the cash-back program whereby points are redeemable in playable credits at slot machines where, after one play-through, the credits can be cashed out. We accrue the cost of cash-back points, after consideration of estimated breakage, as they are earned. The cost is recorded as contra-revenue and included in “Gaming” revenues on our audited Consolidated Income Statements. At December 31, 2008 and 2007, the liability related to outstanding cash-back points, which is based on historical redemption activity, was $3.7 million and $1.1 million, respectively.

48

Income Taxes We account for income taxes under SFAS No. 109, “Accounting for Income Taxes,” whereby deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under SFAS No. 109, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are provided against deferred tax assets when it is deemed more likely than not that some portion or all of the deferred tax asset will not be realized within a reasonable time period. Loss contingencies resulting from tax audits or certain tax positions are accrued when the potential loss can be reasonably estimated and where occurrence is probable. In July 2006, the Financial Accounting Standards Board (“FASB”) released Interpretation No. 48 (“FIN 48”), “Uncertainty in Income Taxes,” which defines accounting for uncertain tax positions and includes amendments to SFAS No. 109. We adopted FIN 48 on January 1, 2007. See Note 4 for additional information.

Revenue Recognition Gaming revenues consist of the net win from gaming activities, which is the difference between amounts wagered and amounts paid to winning patrons. Food and beverage, lodging, truck stop, service station, and other operating revenues are recognized as products are delivered or services are performed. Other operating revenues are comprised primarily of retail, spa, arcade and showroom revenue.

We reward certain customers with cash based upon their level of play on certain casino games (primarily slot machines), including the cash value of mychoice “points” and coin coupon offerings. The cash values are recorded as a reduction in revenues.

Revenues in the accompanying audited Consolidated Income Statements are net of the retail value of hotel rooms, food and beverage and other items provided to patrons on a complimentary basis. Complimentary revenues that have been excluded from the accompanying audited Consolidated Income Statements are $99.0 million, $91.3 million and $81.0 million for 2008, 2007 and 2006, respectively. The estimated cost of providing these promotional allowances (which is included in gaming expenses) was $70.4 million, $66.2 million and $64.9 million for the years ended December 31, 2008, 2007 and 2006, respectively.

Advertising Costs Advertising costs are expensed as incurred, consistent with the American Institute of Certified Public Accountants Statement of Position (“SOP”) 93-7 “Reporting on Advertising Costs.” Such costs (excluding expenses included in pre-opening and development costs of $2.2 million, $4.8 million and $448,000 in 2008, 2007 and 2006, respectively) were $26.6 million, $20.6 million and $19.6 million for the years ended December 31, 2008, 2007 and 2006, respectively, and are included in “Gaming” expenses on the accompanying audited Consolidated Income Statements.

Pre-opening and Development Costs Pre-opening costs consist primarily of payroll costs to hire, employ and train the workforce prior to opening an operating facility; marketing campaigns prior to and commensurate with opening; legal and professional fees related to the project but not otherwise attributable to depreciable assets; lease payments; real-estate taxes and similar costs prior to opening. Development costs include master planning, conceptual design fees and general and administrative costs related to our projects. Pre-opening and development costs are expensed as incurred, consistent with SOP 98-5 “Reporting on the Costs of Start-up Activities” and for the fiscal years ended December 31, 2008, 2007 and 2006 consist of the following:

	For the year ended December 31,
	2008		2007		2006
	(in millions)
Pre-opening and development costs:
Atlantic City (a)	$	17.3	$	18.7	$	7.2
Missouri Proposition A Initiative (b)		7.9		—		—
Lumière Place (c)		7.8		22.9		5.6
Baton Rouge (d)		7.5		9.5		1.4
River City (e)		6.1		4.8		8.2
Kansas City		4.6		2.2		—
Sugarcane Bay		3.2		1.8		2.6
Other		1.0		0.9		4.3
Total pre-opening and development costs	$	55.4	$	60.8	$	29.3

(a)	Atlantic City costs include $7.0 million and $2.6 million for design fees and various miscellaneous expenses for the twelve months ended December 31, 2008 and 2007, respectively. In October 2008, management decided to complete certain demolition activities but to otherwise suspend substantially all development activities indefinitely due to the current economic downturn, evolving competitive market and the tightening of the credit markets.
(b)	Development costs in 2008 are for the support of the referendum, which was approved in November 2008.
(c)	The spending in 2008 reflects the staged opening of the hotels and other amenities at Lumière Place.
(d)	Pre-opening costs in 2008 for our Baton Rouge project include public referendum costs of $4.1 million related to the approval of our site in East Baton Rouge Parish. The majority of costs were incurred during the first quarter of 2008.
(e)	Pre-opening costs at the River City project, expected to open in early 2010, includes $11.6 million for non-cash straight-lined rent accruals under a lease agreement.

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Other Non-operating Income For the years ended December 31, 2008, 2007 and 2006, respectively; other non-operating income includes the following:

	For the year ended December 31,
	2008		2007		2006
	(in millions)
Other non-operating income:
Interest income (a)	$	2.0	$	15.3	$	13.4
Dividend income		0.7		0.2		0.8
Gain on sale of common stock (b)		—		—		1.8
Total other non-operating income	$	2.7	$	15.5	$	16.0

(a)	Interest income represents earnings on cash and cash equivalents and has decreased in 2008 from 2007 due to reduced cash balances and interest rates.
(b)	Included in the year ended December 31, 2006 is a $1.8 million gain related to the sale of Aztar Corporation common stock sold in the third quarter of 2006.

Minority Interest In 2007 and 2006, we consolidated the accounts and activity of a joint-venture condominium project we were developing in the City of St. Louis. In 2007, we absorbed 100% of the losses incurred by the project. In 2006, we absorbed all but $100,000 of the project costs, which amount the joint venture partner absorbed and is reflected as minority interest on the audited Consolidated Income Statements.

Due to rising construction costs and weakening markets for residential real estate, we ended our relationship with the joint venture partner in early 2008. This resulted in a write-off of $1.0 million in project-related costs as of December 31, 2007, which is recorded in “Write-downs, reserves and recoveries, net” on the audited Consolidated Income Statements.

Construction Period Lease Costs Construction period lease costs are expensed pursuant to FASB Staff Position (“FSP”) No. FAS 13-1, “Accounting for Rental Costs Incurred During a Construction Period.” Such costs primarily occur when we enter into a lease arrangement whereby rent is not scheduled to be paid until the opening of a new facility. Pursuant to FSP No. FAS 13-1, we expense construction-period lease costs once possession and control of the leased asset has passed to us regardless of the timing of cash rent obligations and the construction-period lease cost can be reasonably estimated. Simultaneous with the recording of the lease cost, we record a deferred rent obligation until cash rent obligations commence. At such time, the liability will be amortized as a reduction in rent expense for the remainder of the lease term.

In September 2005, in connection with the commencement of site development activities at our River City project site, we began expensing lease costs associated with the 99-year lease obligation for the land underlying the planned project. Under such lease, rent begins on the earlier of August 11, 2009 or the date the project opens. Based on the minimum future cash lease obligation of $4.0 million per annum, and the assumption of a four-year construction period, we recorded a charge of approximately $3.9 million, $3.8 million and $4.0 million for the years ended December 31, 2008, 2007 and 2006, respectively. Such charge is non-cash prior to August 11, 2009 or the date the project opens and is included in pre-opening and development costs on the audited Consolidated Income Statements.

Currency Translation We account for currency translation in accordance with SFAS No. 52, “Foreign Currency Translation.” Balance sheet accounts are translated at the exchange rate in effect at each balance sheet date. Income statement accounts are translated at the average rate of exchange prevailing during the period. Translation adjustments resulting from this process are charged or credited to other comprehensive income (loss).

Share-based Compensation Effective January 1, 2006, we adopted the provisions of SFAS No. 123R, “Share-Based Payment,” requiring that compensation cost relating to share-based payment transactions be recognized in our audited Consolidated Financial Statements. The cost is measured at grant date, based on the estimated fair value of the award and is recognized as expense over the vesting period of the equity award. The Company adopted SFAS No. 123R using the modified prospective method.

Comprehensive Income SFAS No. 130, “Reporting Comprehensive Income,” requires that a company disclose other comprehensive income (loss) and the components of such income (loss). The objective of SFAS No. 130 is to report a measure of all changes in equity other than transactions with stockholders, such as the issuance or repurchase of shares. “Comprehensive income (loss)” is the sum of net income (loss) and other comprehensive income (loss), which includes translation adjustments, unrealized gain (loss) on marketable securities available for sale and post-retirement plan benefit obligations.

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	For the years ended December 31,
	2008			2007			2006
	(in millions)
Net income (loss)	$	(322.6	)	$	(1.4	)	$	76.9
Other comprehensive income (loss)
Foreign currency translation loss		(2.4	)		(0.6	)		(0.7	)
Post-retirement plan benefit obligation, net of income taxes (a)		(1.1	)		(0.1	)		—
Unrealized loss on securities, net of income taxes (b)		—			(3.4	)		—
Comprehensive income (loss)	$	(326.1	)	$	(5.5	)	$	76.2

(a)

Included in the balance are benefit obligations related to both the executive deferred compensation plan and directors’ health and medical plan, both of which are discussed in Note 6.

(b)

Available-for-sale securities are recorded at fair value, and temporary unrealized holding gains and losses are recorded, net of tax, as a component of other comprehensive income. Unrealized losses are charged against net earnings when a decline in fair value is determined to be “other-than-temporary”. The equity securities we hold in Ameristar Casinos Inc. were deemed “other-than-temporarily” impaired as of December 31, 2008, and the unrealized losses were charged against net earnings for the year ended December 31, 2008.

Earnings per Share Diluted earnings per share assume exercise of in-the-money stock options (those options with exercise prices at or below the weighted average market price for the periods presented) outstanding at the beginning of the period or at the date of the issuance. We calculate the effect of dilutive securities using the treasury stock method. As of December 31, 2008 and 2007, our share-based awards issued under our Stock Option Plans (defined below) consisted only of common stock option grants. For the year ended December 31, 2006, our share-based awards issued under our Stock Option Plans (defined below) consisted of common stock option grants and restricted stock awards. Dilutive stock options of 547,900 and 1,331,600 for the years ended December 31, 2008 and 2007, respectively, have not been included in the computation of diluted earnings per share as their effect would be anti-dilutive.

Recently Issued Accounting Pronouncements

SFAS No. 141(R) In December 2007, the FASB issued SFAS No. 141 (revised), “Business Combinations”, which is intended to improve reporting by creating greater consistency in the accounting and financial reporting of business combinations. SFAS No. 141(R) requires that the acquiring entity in a business combination recognize all (and only) the assets and liabilities assumed in the transaction, establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed, and requires the acquirer to disclose to investors and other users all of the information that they need to evaluate and understand the nature and financial effect of the business combination. In addition, SFAS No. 141(R) modifies the accounting for transaction and restructuring costs. SFAS 141(R) is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. We currently do not have any pending business combinations, thus SFAS No. 141(R) is not expected to have an effect on our audited Consolidated Financial Statements upon adoption.

SFAS No. 160 In December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in Consolidated Financial Statements.” The statement is an amendment of Accounting Research Bulletin No. 51, “Consolidated Financial Statements.” The objective of this statement is to improve the relevance, comparability, and transparency of the financial information that a reporting entity provides in its consolidated financial statements by establishing accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS No. 160 will become effective for us on January 1, 2009 (our first fiscal year beginning after December 15, 2008). We currently do not have subsidiaries in which we have a non-controlling interest; thus, SFAS No. 160 is not expected to have an effect on our audited Consolidated Financial Statements upon adoption.

SFAS No. 161 In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities—an Amendment of FASB Statement No. 133,” which enhances required disclosures regarding derivatives and hedging activities. SFAS No. 161 will become effective for us on January 1, 2009 (our first fiscal year beginning after November 15, 2008). We currently do not utilize derivatives and hedging activities; thus, SFAS No. 161 is not expected to have an effect on our audited Consolidated Financial Statements.

FSP No. EITF 03-6-1 In June 2008, the FASB issued FASB Staff Position (“FSP”) No. EITF 03-6-1, “Determining Whether Instruments Granted In Share-Based Payment Transactions Are Participating Securities.” This FSP concludes that those unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid, are participating securities and must be included in the computation of both basic and diluted earnings per share (the two-class method). This FSP is effective during the three months ending March 31, 2009 and is to be applied on a retrospective basis to all periods presented. The issue is effective for financial statements issued for fiscal years and interim periods within those fiscal years beginning January 1, 2009. We believe that the adoption of FSP No. EITF 03-6-1 will not have an effect on our audited Consolidated Financial Statements, as our current share-based awards do not include dividend rights.

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SFAS No. 162 In May 2008, the FASB issued SFAS No. 162, “Hierarchy of Generally Accepted Accounting Principles”. This statement is intended to improve financial reporting by identifying a consistent framework, or hierarchy, for selecting accounting principles to be used in preparing financial statements of non-governmental entities that are presented in conformity with GAAP. This statement was effective November 15, 2008. We currently adhere to the hierarchy of GAAP as presented in SFAS No. 162, and the adoption did not have a material effect on our audited Consolidated Financial Statements.

FSP No. FAS 142-3 In April 2008, the FASB issued FSP No. FAS 142-3, “Determination of the Useful Life of Intangible Assets”. FSP 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, “Goodwill and Other Intangible Assets”, and requires enhanced related disclosures. FSP 142-3 must be applied prospectively to all intangible assets acquired as of and subsequent to fiscal years beginning after December 15, 2008. We believe that the adoption of FSP 142-3 will not have a material effect on our audited Consolidated Financial Statements.

FSP No. FAS 157-2 In February 2008, the FASB issued FSP No. FAS 157-2, “Effective Date of FASB Statement No. 157”, which defers the effective date of SFAS No. 157, “Fair Value Measurements” to fiscal years beginning after November 15, 2008 for non-financial assets and non-financial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis. Early adoption of SFAS 157 is permitted. We have applied SFAS No. 157 in the fair value calculations for our testing of land and development costs, buildings, riverboats and equipment, goodwill, and indefinite-lived intangible assets as of December 31, 2008.

A variety of proposed or otherwise potential accounting standards are currently under study by standard-setting organizations and certain regulatory agencies. Because of the tentative and preliminary nature of such proposed standards, we have not yet determined the effect, if any, that the implementation of such proposed standards would have on our audited Consolidated Financial Statements.

Note 2—Land, Buildings, Riverboats and Equipment

On October 1, 2008, management determined that it is in the best interests of the Company to complete certain demolition activities but to otherwise suspend substantially all development activities of the Atlantic City project indefinitely due to the current economic downturn, evolving competitive market and the tightening of the credit markets. As a result, we ceased capitalizing interest in connection with eligible project costs effective October 1, 2008.

During the fourth quarter of 2008, the continuing economic downturn and constrained capital markets contributed to a severe decline in value of gaming stocks and gaming assets. As a result, management determined that a triggering event in accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” occurred in the fourth quarter of 2008. Given the continuing deterioration in commercial real estate values, uncertainties surrounding the Company’s access to sufficient resources to adequately finance the majority of its development pipeline and poor operating performance at Boomtown Reno and The Admiral Riverboat Casino for the past 12 months, we tested all development project land holdings and related capitalized costs and long-lived assets at Boomtown Reno and The Admiral Riverboat for recoverability in connection with the preparation of the audited Consolidated Financial Statements for 2008. As a result of these tests, we determined that certain land holdings and related capitalized costs and buildings, riverboats and equipment were. The determination of fair value uses accounting judgments and estimates, including market conditions. Changes in estimates or application of alternative assumptions could produce significantly different results.

In August 2005, Casino Magic Biloxi casino was destroyed, and the hotel and other improvements were severely damaged, all as a result of Hurricane Katrina. In 2006, we sold the Casino Magic Biloxi assets, at which time we recorded a loss of approximately $4.9 million. Such loss is included in 2006 discontinued operations. The sales price reflected the destruction of the property, as the insurance claims related to such destruction were retained by us.

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In July 2006, we closed on the sale of approximately 28 acres of land at our Boomtown Reno property to Cabela’s Retail, Inc. for approximately $5.1 million, which land had a book value of $2.6 million. In November 2007, Cabela’s opened a branded sporting goods store. We also entered into an agreement under which we may sell or lease to Cabela’s, upon its election to purchase or lease, an additional parcel of approximately two acres. Although Cabela’s opened its retail store in November 2007, it has not yet elected whether to purchase or lease the two additional acres. Pursuant to current accounting guidelines, our continuing involvement in the two-acre parcel (contiguous to the larger parcel and an integral part of the transaction with Cabela’s) precludes us from recognizing a gain of approximately $3 million on the sale of the larger parcel at this time. In the event we execute a long-term lease for the smaller parcel, the gain on the larger parcel will be deferred and amortized over the lease term, with such gain offset by the costs, if any, of our continued involvement with the smaller parcel. In the event Cabela’s completes a purchase of the smaller parcel, the gain on the larger parcel will be recognized at such time. It is expected that a portion of the construction cost of the Cabela’s retail store and certain road access improvements will be financed through the issuance of industrial revenue bonds through local or state governmental authorities. The bonds are expected to be serviced by a portion of the sales taxes generated by the new retail facilities. We have agreed to purchase, if necessary and under certain conditions, some of these bonds. We estimate that we may be required to purchase between $4 million and $10 million of these bonds and believe such bonds could be resold to other investors.

Note 3—Long-Term Debt

Long-term debt at December 31, 2008 and 2007 consisted of the following:

	December 31,
	2008			2007
	(in millions)
Secured Credit Facility	$	151.8		$	50.0
Unsecured 8.25% Notes due 2012		276.7			277.2
Unsecured 8.75% Notes due 2013		133.7			133.5
Unsecured 7.50% Notes due 2015		380.2			379.6
Other secured and unsecured notes payable		0.9			1.0
		943.3			841.3
Less current maturities		(0.1	)		(0.1	)
	$	943.2		$	841.2

Senior Secured Credit Facility: As of December 31, 2008, our senior secured credit facility (the “Credit Facility”) consisted of a $625 million revolver facility that matures in December 2010, of which $152 million was outstanding and $12.6 million was utilized under various letters of credit. Utilization of our Credit Facility is currently limited to $350 million by the indenture governing our 8.75% senior subordinated notes due 2013.

The Credit Facility was executed in December 2005 and has been amended on three occasions. The first amendment (executed in December 2005) increased the permitted letters of credit sub-limit to $75 million. The second amendment became effective in November 2006 and, among other things, modified certain covenants, increased the maximum permitted consolidated leverage ratio and consolidated senior debt ratio during certain time periods, permitted certain additional capital expenditures and increased the maximum permitted capital expenditures for Lumière Place and River City. The third amendment, also effective November 2006, increased the Credit Facility by $250 million to $1.0 billion. The increase consisted of a $175 million increase to the revolving credit facility and a $75 million increase to the term loan.

In June 2007, we retired all of the $275 million of then-outstanding term loan under our $1.0 billion Credit Facility with most of the proceeds from the issuance of our 7.50% senior subordinated notes due 2015. In late June 2007, we decided to allow the $100 million delayed-draw term loan facility to expire undrawn on July 2, 2007.

We are obligated to make mandatory prepayments of indebtedness under the Credit Facility from the net proceeds of certain debt offerings and certain asset sales and dispositions. No such payments have been made or are required at this time. In addition, we are required to prepay borrowings under the Credit Facility with a percentage of our “Excess Cash Flow” as defined in the Credit Facility. No such payments have been made, nor does management believe such payments will be required in the foreseeable future, as the definition of Excess Cash Flow incorporates capital spending activities in a given year and our capital expenditure plans are substantial. We have the option to prepay all or any portion of the indebtedness under the Credit Facility at any time without premium or penalty.

Interest on the Credit Facility is subject to change based on the floating rate index selected. For borrowings under the Credit Facility, the interest rate is computed as a margin over either LIBOR plus 2.0% or prime plus 0.5% based on our “Consolidated Leverage Ratio” as defined in the Credit Facility. As of December 31, 2008, LIBOR was 0.43% and prime was 3.75%. The letters of credit bear facility fees of 2.0% per annum, while the revolving credit facility bears a commitment fee of 0.45% per annum, both of which are also based on our Consolidated Leverage Ratio. We may also, at our option, borrow at a base rate, as defined in the Credit Facility. Under the Credit Facility, at least 40% of our total funded debt obligations must be subject to fixed interest rates or hedge agreements or other interest rate protection agreements. As of December 31, 2008, approximately 83.8% of our debt was at fixed rates versus floating interest rates.

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The Credit Facility has, among other things, restrictive financial covenants and capital spending limits and other affirmative and negative covenants. The obligations under the Credit Facility are secured by most of our assets and those of our domestic restricted subsidiaries, including a pledge of the equity interests in our domestic restricted subsidiaries. Our obligations under the Credit Facility are also guaranteed by our domestic restricted subsidiaries. Our subsidiaries that own the Atlantic City site and related parcels of land, our Argentine operations, our airplane, approximately $59.1 million in cash, cash equivalents and marketable securities as of December 31, 2008 and certain other assets, are unrestricted subsidiaries under the Credit Facility. We believe we have been in compliance with all such covenants as of December 31, 2008 and 2007.

As discussed above in this Note 3, we are currently limited to borrowing $350 million under our Credit Facility, pursuant to our most restrictive indenture. Given that indenture borrowing limit, we expect to supplement borrowings under our Credit Facility with existing cash and cash generated from operations through early 2010 to fund the completion of River City. However, the financial covenants within our Credit Facility are scheduled to tighten during 2009 and beyond, and as a result, we could experience difficulty in meeting such covenants as we increase our revolver borrowings to complete River City. We are required to maintain a rolling four quarter consolidated leverage ratio no greater than 6.50x and 6.00x for the quarterly periods ending March 31, 2009 and June 30, 2009, respectively, and 5.50x for each of the quarterly periods ended September 30, 2009 and December 31, 2009. Our consolidated leverage ratio for the four quarters ended December 31, 2008 was 5.63x. Failure to meet such covenants, or failure to have such covenants amended, could prevent further borrowings under the Credit Facility. While we currently believe we will have sufficient funds to complete River City, there is no certainty that this will be the case. In particular, if our operating results are adversely affected because of a reduction in consumer spending, or for any other reason, this may affect our ability to complete River City unless we sell assets, enter into leasing facilities, or take other measures to find additional resources. There is no certainty that we will be able to do so on terms that are favorable to the Company or at all, particularly in the absence of considerable improvements in the capital markets or covenant relief under our Credit Facility.

Our substantial funding needs in connection with our development projects, if pursued, would require us to raise substantial amounts of capital from outside sources. As a result of the continued turmoil in the capital markets, the availability of financing is extremely constrained, expensive and potentially unavailable. We cannot accurately predict when or if the capital markets will return to more normalized conditions. If the current capital market environment does not improve, we may not be able to raise additional funds in a timely manner, or on acceptable terms, or at all. Inability to access the capital markets, or the necessity to access the capital markets on less than favorable terms, may force us to delay, reduce or cancel planned development and expansion projects, sell assets or obtain additional financing on potentially unfavorable terms. Management intends to proceed with construction of its various projects only when it believes that financing can be arranged on terms favorable to the Company.

At December 31, 2008, we had issued approximately $12.6 million of irrevocable letters of credit, which includes $3.0 million associated with our River City project and $9.6 million for various self-insurance programs.

On September 15, 2008, Lehman Brothers Holding Inc. (“Lehman”) filed for bankruptcy, and on October 5, 2008, Lehman Commercial Paper, Inc. (“LCPI”), a wholly-owned subsidiary of Lehman and one of the lenders under our Credit Facility, also filed for bankruptcy. As of December 31, 2008, LCPI was a 7.7% participant in the $625 million revolver credit facility and had funded its pro rata portion of borrowings through September 30, 2008 (approximately $9.6 million of the $125 million of borrowings outstanding as of such date). Since September 30, 2008, LCPI has not participated in any additional borrowings. The indenture governing our 8.75% senior subordinated notes due 2013 restricts the amount that we can borrow under our Credit Facility to $350 million and therefore any de facto reduction in the total size of our Credit Facility resulting from LCPI’s inability to fund does not currently affect our liquidity.

In early 2009, we borrowed an additional $13.8 million under the Credit Facility and therefore, as of March 6, 2009, we had borrowings of $165.6 million and outstanding letters of credit of $12.6 million under the Credit Facility.

Unsecured 7.50%, 8.25% and 8.75% Notes: In June 2007, we issued $385 million in aggregate principal amount of 7.50% of senior subordinated notes due 2015 (the “7.50% Notes”). The 7.50% Notes were issued at 98.525% of par to yield 7.75% to maturity, with interest payable on June 15 and December 15, beginning December 2007. Net of the original issue discount, initial purchasers’ fees and various costs and expenses, proceeds from the offering were approximately $379 million. We retired our then-outstanding $275 million term loan discussed above and used a portion of the proceeds to purchase $25.0 million in principal amount of our 8.25% Notes.

In March 2004, we issued $200 million in aggregate principal amount of 8.25% of senior subordinated notes due 2012 (the “8.25% Notes”), which were issued at a price of 99.282% of par, thereby yielding 8.375% to first call and maturity. In December 2004, we issued an additional $100 million in aggregate principal amount of 8.25% Notes, which additional notes were issued at a price of 105.00% of par, thereby yielding 7.10% to the first call date (7.35% to maturity). Net proceeds of these offerings were used to refinance our then-existing higher coupon senior subordinated notes. Interest is payable on such notes on March 15 and September 15.

In September 2003, we issued $135 million in aggregate principal amount of 8.75% of senior subordinated notes due 2013 (the “8.75% Notes”), which notes were issued at 98.369% of par, thereby yielding 9.00% to first call and maturity. The net proceeds of the offering were also used to retire then-existing higher coupon senior subordinated notes. Interest is payable on such notes on April 1 and October 1.

Under the indentures governing the 7.50% Notes, 8.25% Notes and 8.75% Notes, we are permitted to incur up to $1.5 billion, $475 million and $350 million in senior indebtedness, respectively, among other debt incurrence baskets. Our indentures permit us to incur additional indebtedness (senior or otherwise) for debt refinancing. Our indentures also permit us to incur additional indebtedness if, after giving effect to the indebtedness proposed to be incurred, our Consolidated Coverage Ratio (essentially, a ratio of adjusted EBITDA to interest) for a trailing four-quarter period on a pro forma basis (as defined in the indentures) would be at least 2:1. As of December 31, 2008, our Consolidated Coverage Ratio was below 2:1.

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The 7.50% Notes, 8.25% Notes and 8.75% Notes are unsecured obligations, guaranteed by all of our domestic material restricted subsidiaries, as defined in the indentures. The indentures governing these notes contain certain covenants limiting our ability and the ability of our restricted subsidiaries to incur additional indebtedness, issue preferred stock, pay dividends or make certain distributions, repurchase equity interests or subordinated indebtedness, create certain liens, enter into certain transactions with affiliates, sell assets, issue or sell equity interests in its subsidiaries, or enter into certain mergers and consolidations.

The 7.50% Notes, 8.25% Notes and 8.75% Notes are redeemable, at our option, in whole or in part, on the following dates, at the following redemption prices (expressed as percentages of par value):

8.25% Notes Redeemable				8.75% Notes Redeemable					7.50% Notes Redeemable
	At a					At a					At a
	Percentage					Percentage					Percentage
On or after	of par			On or after		of par			On or after		of par
March 15,	equal to			October 1,		equal to			June 15,		equal to
2008		104.125	%		2008		104.375	%		2011		103.750	%
2009		102.063	%		2009		102.917	%		2012		101.875	%
2010 and thereafter		100.000	%		2010		101.458	%	2013 and thereafter			100.000	%
				2011 and thereafter			100.000	%

In addition, the 7.50% Notes are redeemable prior to June 15, 2011 at a price that reflects a yield to first call equivalent to the applicable Treasury bond yield plus 0.5 percentage points.

Original issue premium and discount incurred in connection with debt financings are capitalized to the related long-term debt issued, and amortized to interest expense over the expected term of the related debt agreement using the effective interest method.

Transactional costs of $511,000 and $8.1 million were capitalized to “Debt Issuance Costs” in 2008 and 2007, respectively, in connection with the notes and credit facilities.

In 2007, we incurred charges of $6.1 million for the early extinguishment of debt. As discussed above, we retired $275 million of floating rate secured term debt, which had a current yield of 7.32% and the transaction resulted in a write-off of $4.6 million in unamortized debt issuance costs. We also utilized a portion of the proceeds of the new debt to purchase $25.0 million in principal amount of the 8.25% Notes. Such purchase involved paying a $1.1 million premium for these notes and also resulted in a write-off of $379,000 of debt issuance costs. There were no charges reflecting the early extinguishment of debt in 2008.

The estimated fair value of our long-term debt at December 31, 2008 and 2007, based on quoted market prices, when available, and estimated fair values of comparable debt instruments, was $651 million and $873 million, respectively, versus the book values of $943 million and $841 million, respectively.

Annual Maturities: As of December 31, 2008, annual maturities of secured and unsecured notes payable, and capital lease obligations are as follows (in millions):

Year ending December 31:
2009	$	0.1
2010 (a)		151.9
2011		0.1
2012		275.1
2013		135.1
Thereafter		385.4
		947.7
Plus the difference between principal at maturity and unamortized net debt issuance premium		(4.5	)
Long-term debt	$	943.2

(a) Includes the $151.9 million of borrowings under our revolving credit facility due in 2010.

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Note 4—Income Taxes

The composition of our income tax expense (benefit) from continuing operations for the years ended December 31, 2008, 2007 and 2006 was as follows:

	Current			Deferred			Total
	(in millions)
Year ended December 31, 2008:
U.S. Federal	$	(6.6	)	$	(34.3	)	$	(40.9	)
State		(0.6	)		(15.2	)		(15.8	)
Foreign		2.6			(0.4	)		2.2
	$	(4.6	)	$	(49.9	)	$	(54.5	)
Year ended December 31, 2007:
U.S. Federal	$	(0.1	)	$	(9.0	)	$	(9.1	)
State		0.9			3.3			4.2
Foreign		4.5			0.8			5.3
	$	5.3		$	(4.9	)	$	0.4
Year ended December 31, 2006:
U.S. Federal	$	11.1		$	17.5		$	28.6
State		0.1			10.9			11.0
Foreign		1.7			0.7			2.4
	$	12.9		$	29.1		$	42.0

The following table reconciles our effective income tax rate from continuing operations to the federal statutory tax rate of 35%:

	2008						2007						2006
	Percent			Amount			Percent			Amount			Percent			Amount
	(dollars in millions)
Federal income tax (benefit) expense at the statutory rate		(35.0	)%	$	(148.6	)		35.0	%	$	0.2			35.0	%	$	36.9
State income taxes, net of federal tax benefits		(3.6	)%		(15.4	)		812.8	%		3.9			7.6	%		7.9
Non-deductible expenses and other		3.0	%		12.8			694.9	%		3.4			0.1	%		0.1
Reversal of reserves for unrecognized tax benefits (FIN 48)		(0.0	)%		(0.1	)		(1,377.9	)%		(6.7	)		0.0	%		0.0
Credits		(0.4	)%		(1.5	)		(469.4	)%		(2.3	)		(1.5	)%		(1.6	)
Change in valuation allowance/reserve of deferred tax assets		23.2	%		98.3			396.0	%		1.9			(1.3	)%		(1.3	)
Income tax (benefit) expense from continuing operations before change in accounting principle		(12.8	)%	$	(54.5	)		91.4	%	$	0.4			39.9	%	$	42.0

Our 2008 tax rate differs from the statutory rate due to the effects of permanent items, certain state tax add-backs, such as the $151.6 million of gaming taxes in Indiana, and the recording of a valuation allowance against a significant portion of our deferred tax assets as of the end of the year. Indiana is the only state whose tax laws do not allow the deduction of state gaming taxes when computing taxable income for the state’s income tax.

The following table shows the allocation of income tax expense between continuing operations, discontinued operations and equity:

	For the years ended December 31,
Net Loss and Tax Benefit (Expense)	2008			2007			2006
	(in millions)
Income (loss) from continuing operations before income taxes	$	(424.7	)	$	0.5		$	105.3
Income tax benefit (expense) allocated to continuing operations		54.5			(0.4	)		(42.1	)
Minority interest		—			—			0.1
Income (loss) from continuing operations		(370.2	)		0.1			63.3
Income (loss) from discontinued operations before income taxes		79.7			(4.5	)		22.8
Income tax benefit (expense) allocated to discontinued operations		(32.1	)		3.0			(9.2	)
Income from discontinued operations		47.6			(1.5	)		13.6
Net income (loss)	$	(322.6	)	$	(1.4	)	$	76.9
Income tax benefit allocated to additional paid in capital	$	0.0		$	1.3		$	2.2
Income tax benefit (expense) allocated to other comprehensive income	$	(1.4	)	$	2.2		$	—

56

At December 31, 2008 and 2007, the tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities were:

	For the years ended December 31,
	2008			2007
	(in millions)
Deferred tax assets—current:
Workers’ compensation insurance reserve	$	3.3		$	2.3
Bad debt allowance		3.2			2.8
Legal and merger costs		2.0			2.9
Other		7.9			7.5
Less valuation allowance		(15.7	)		(1.6	)
Current deferred tax assets	$	0.7		$	13.9
Deferred tax liabilities—current:
Prepaid expenses	$	(2.2	)	$	(4.2	)
Other		(2.5	)		(0.5	)
Current deferred tax liabilities	$	(4.7	)	$	(4.7	)
Net current deferred tax assets (liabilities)	$	(4.0	)	$	9.2
Deferred tax assets—non-current:
Federal tax credit carry-forwards	$	6.8		$	0.8
State net operating loss carry-forwards		2.5			3.0
Los Angeles Revitalization Zone tax credits		6.5			10.0
Deferred compensation		5.4			3.5
Pre-opening expenses capitalized for tax purposes		31.1			31.2
Stock options expense—book cost		8.9			5.5
Unrealized loss on stocks		11.6			2.2
Deferred tax assets resulting from unrecognized tax benefits		4.9			3.6
Fixed assets		11.6			—
Other		2.3			3.6
Less valuation allowance		(89.1	)		(10.2	)
Deferred tax assets—non-current		2.5			53.2
Deferred tax liabilities—non-current:
Intangible assets		(4.0	)		(20.8	)
Other		(0.7	)		(49.9	)
Net non-current deferred tax liabilities	$	(2.2	)	$	(17.5	)

The following table summarizes the total deferred tax assets and total deferred tax liabilities provided in the previous table:

	For the years ended December 31,
	2008			2007
	(in millions)
Total deferred tax assets	$	108.0		$	78.9
Less valuation allowances		(104.8	)		(11.8	)
Less total deferred tax liabilities		(9.4	)		(75.4	)
Net deferred tax liabilities	$	(6.2	)	$	(8.3	)

During the year ended December 31, 2008, the Company established additional non-cash deferred tax asset valuation allowances totaling $98.3 million following an assessment of the recoverability of its deferred tax assets. The deferred tax asset valuation allowance for the year included $11.6 million related to the book impairment of the Company’s Ameristar common stock holdings, $42.0 million associated with the impairment of certain real estate holdings and approximately $44.7 million attributable to other deferred tax assets due to accounting principle SFAS No. 109, which requires a valuation allowance for deferred tax assets in a tax jurisdiction when a company has cumulative financial accounting losses over a three year period.

SFAS No. 109, requires the recording of a valuation allowance in a tax jurisdiction when it is “more likely than not” that some portion or all of the deferred tax assets will not be realized. SFAS No. 109 further states “forming a conclusion that a valuation allowance is not needed is difficult when there is negative evidence such as cumulative losses in recent years,” and places considerably more weight on historical results and less weight on future projections. SFAS No. 109 requires the consideration of all sources of taxable income available to realize the deferred tax asset, including the future reversal of existing temporary differences, future taxable income exclusive of reversing temporary differences and carry-forwards, taxable income in carry back years and tax planning strategies.

57

The Company has had cumulative U.S. pretax accounting losses for the years 2006 through 2008, with the 2008 loss resulting primarily from the fourth quarter impairment charges. Based on the application of SFAS No. 109, management reached the determination that a valuation allowance was appropriate. However, the Company did not record a valuation allowance against federal and state deferred tax assets which are of the same character and will reverse in the same period as deferred tax liabilities in the future, as well as assets which can be recovered in the carry-back period. Management assesses the realizability of the deferred tax assets based on the criteria of SFAS No. 109 each reporting period. If future events differ from management’s estimates, the valuation allowance may be changed in future years. No valuation allowances were placed on any deferred tax assets of our Argentine subsidiary, as all of the deferred tax assets on its balance sheet as of December 31, 2008, were believed to be more likely than not to be fully realized.

As of December 31, 2008, the Company’s tax filings reflected available Alternative Minimum Tax (“AMT”) credit carry-forwards of $3.1 million, General Business Credit (“GBC”) carry-forwards of $4.8 million and Foreign Tax Credit carry-forwards of $1.7 million. The Foreign Tax Credit and GBC carry-forwards will expire from 2011 to 2028, while the AMT credits can be carried forward indefinitely to reduce future regular tax liabilities. As of December 31, 2008, the Company has $40.4 million of federal net operating losses which can be carried back two years or forward 20 years and will expire in 2029. The Company also has $36.6 million of state net operating loss carry-forwards, predominantly in Louisiana and New Jersey, which expire on various dates beginning in 2012. The credits and net operating losses described above have been reported net of the effect of uncertain tax benefits on our balance sheet.

As of December 31, 2008, we had approximately $6.5 million of Los Angeles Revitalization Zone (“LARZ”) tax credits. A valuation allowance had been recorded for the entire amount in previous years. The LARZ credits will expire from 2009 to 2012.

Pursuant to APB No. 23, “Accounting for Income Taxes—Special Areas,” companies may elect to permanently reinvest earnings of foreign subsidiaries offshore which delays the recognition of U.S. tax on these earnings. The Company has elected to treat all but approximately $3.4 million associated with Casino Magic Argentina as permanently reinvested. In the event some or all of the earnings are distributed to the United States, some portion of the distribution could be subject to both U.S. income taxes and foreign withholding taxes. However, foreign tax credits may become available to reduce or eliminate the U.S. income tax liability.

The Company files income tax returns in federal, state and foreign jurisdictions and is no longer subject to federal income tax examinations for tax years prior to 2003, state income tax examinations for tax years prior to 2000, and Argentine income tax examinations for tax years prior to 2004. In 2008, the Company finalized the Argentine income tax examination for the periods 2001- 2003, with no material effect to the financial statements. In October 2008, the Company was notified that Indiana would begin an examination of its open tax years. While the Company cannot predict the outcome of the examination, the results of the audit are not expected to materially affect our financial statements.

As of December 31, 2008, the Company had $5.2 million of uncertain tax benefits that, if recognized, would impact the effective tax rate. FIN 48 requires companies to accrue interest and related penalties, if applicable, on all tax positions for which reserves have been established consistent with jurisdictional tax laws. The Company recognizes accrued interest and penalties related to uncertain tax benefits as a component of income tax expense. During 2008, the Company accrued approximately $0.7 million of interest related to unrecognized tax benefits and had $2.8 million of cumulative interest accrued as of the end of the year. No penalties were accrued in any years. It is reasonably possible that the Company’s FIN 48 liabilities will decrease by approximately $4 million to $6 million during the next twelve months.

The following table summarizes the activity related to uncertain tax benefits for 2007 and 2008, excluding any interest or penalties:

	2007			2008
	(in millions)			(in millions)
Balance at January 1	$	41.0		$	21.5
Gross Increases—Tax Positions in Current Period		0.0			0.0
Gross Decreases—Tax Positions in Current Period		0.0			0.0
Gross Increases—Tax Positions in Prior Periods		0.5			7.3
Gross Decreases—Tax Positions in Prior Periods		(19.7	)		(6.5	)
Settlements During Period		(0.3	)		0.0
Lapse of Statute of Limitations		0.0			0.0
Balance as of December 31	$	21.5		$	22.3

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Note 5—Lease Obligations

We have certain long-term operating lease obligations, including corporate office space, land at various locations, water bottoms leases in Louisiana, a hotel in Atlantic City, office equipment and gaming equipment. Minimum lease payments required under operating leases that have initial terms in excess of one year as of December 31, 2008 are as follows:

	Total
	(in millions)
Period:
2009	$	8.6
2010		10.0
2011		11.6
2012		12.2
2012		10.0
Thereafter		535.7
	$	588.1

Total rent expense for these long-term lease obligations for the years ended December 31, 2008, 2007 and 2006 was $16.2 million, $15.4 million and $5.9 million, respectively.

We lease approximately 148 of the 315 acres that our Belterra Casino Resort occupies in southern Indiana. The lease period is 50 years total, including an initial five-year lease term with nine consecutive five-year automatic renewal periods. The current lease term is through September 2010 and has eight remaining consecutive five-year automatic renewal periods. The lease currently provides for minimum annual rental payments of approximately $1.2 million, plus 1.5% of gross gaming win (as defined in the lease agreement) in excess of $100 million. The lease obligation included in rent expense was $2.2 million for 2008 and $2.3 million for 2007 and 2006. We also have the option to purchase the property on or after October 2020 for $30 million, subject to adjustments as defined in the lease agreement.

We lease the 242 acres underlying our L’Auberge du Lac and its related golf course. The lease has an initial term of 10 years, which commenced in May 2005, with six renewal options of 10 years each. The annual base rent for the lease is approximately $932,500 per year, which amount adjusts annually for changes in the Consumer Price Index.

We lease approximately 234 acres of land from the Lake Charles Harbor and Terminal District upon which we anticipate building our Sugarcane Bay casino-hotel resort. The Sugarcane Bay casino-hotel will occupy only a portion of this land. The balance would allow the eventual development of an additional 18-hole golf course at the L’Auberge du Lac/Sugarcane Bay complex and the possible sale of residential home sites to subsidize the cost of construction of the golf course. The lease has an initial term of 10 years, commencing on the opening of Sugarcane Bay with six renewal options of 10 years each, similar to the L’Auberge du Lac lease. The annual rent on the 234-acre lease is $1.2 million for the first five years commencing with the opening of Sugarcane Bay and thereafter the amount adjusts annually for changes in the Consumer Price Index, not to exceed 5% in any given year. Prior to the opening of Sugarcane Bay, we are obligated to pay one-half of the annual rent on the date that certain conditions have been meet, including obtaining all the required permits, licenses or approvals. Within the leased land, we purchased 50 acres for $5.0 million, which purchase did not change the base rent amount. These 50 acres are intended to be used for eventual home sites around the planned golf course, and the location of which we will designate in connection with the opening of Sugarcane Bay. In addition, we purchased approximately 56 acres of land adjacent to the Sugarcane Bay and L’Auberge du Lac properties for future development opportunities.

We lease 56 acres constituting a site in south St. Louis County located approximately 10 miles south of downtown St. Louis, Missouri, where we are building our River City casino-hotel. The lease has a term of 99 years and payments begin in August 2009.

In connection with the purchase of the Atlantic City site in November 2006, we assumed the remaining six years of a 12-year lease for a hotel, which lease provides for two extension periods at our option through December 2030. Annual rent is $2.0 million with escalating payments of 11% every five years.

We lease approximately 41,000 square feet of office space for certain corporate services in Las Vegas, Nevada at a base rent of approximately $993,000 per year. The lease is for 10 years beginning October 2006, subject to one renewal term of 60 additional months. The annual rent increases 3% a year based on increases in the Consumer Price Index, not to exceed 5% a year.

Additionally, we also lease approximately 28,900 square feet of office space for certain corporate services in Las Vegas, Nevada at a base rent of approximately $1.1 million a year. The lease is for 5 years beginning June 2004. The annual rent increases 3% a year based on increases in the Consumer Price Index, not to exceed 5% a year. We expect to terminate the lease on approximately 19,000 square feet of this office space during early 2009.

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We are a party to a number of cancellable slot participation and some table game participation arrangements at our various casinos that are customary for casino operations. The slot arrangements generally consist of either a fixed-rent agreement on a per-day basis or a percentage of each slot machine’s gaming revenue, generally payable at month-end. Slot and table game participation expense was $22.1 million, $15.9 million and $14.5 million for the years ended December 31, 2008, 2007 and 2006, respectively.

Note 6—Employee Benefit Plans

Share-based Compensation: Our 2005 Equity and Performance Incentive Plan (the “2005 Plan”) provides for the granting of stock options, stock appreciation rights, restricted stock and other performance awards to officers, key employees and consultants. The objectives of the 2005 Plan include, among other things, attracting and retaining the most capable personnel and providing for appropriate performance incentives. The 2005 Plan permits the issuance of up to an aggregate of 4.75 million shares of the Company’s common stock, plus any shares subject to awards granted under the Prior Plans and Individual Arrangements (both defined below) which are forfeited, expire or otherwise do not result in the issuance of shares of common stock, or are settled for cash or otherwise do not result in the issuance of shares on or after the effective date of the 2005 Plan (collectively, the 2005 Plan, the Prior Plans and the Individual Arrangements are referred to as the “Stock Option Plans”). Shares that are subject to awards of options or stock appreciation rights are counted against the 4.75 million share limit as one share for every one share granted. Shares that are subject to awards other than options or stock appreciation rights are counted against such limit as 1.4 shares for every one share granted.

In addition to the 2005 Plan, we have four stock option plans (the “Prior Plans”) which provided for the issuance of up to approximately 4.4 million shares of the Company’s common stock. In addition, in 2002, 2003 and 2008, in order to recruit our executive officers, we granted options outside of the Prior Plans for the purchase of 1,052,540 common shares, all of which remained outstanding as of December 31, 2008 (the “Individual Arrangements”).

As of December 31, 2008, we have approximately 7.4 million share-based awards issued, 26,000 of which are restricted stock and other awards and the rest of which are common stock options. There were approximately 696,000 share-based awards available for grant under the various plans as of December 31, 2008.

In October 2006, we granted 45,000 shares of restricted stock pursuant to the 2005 Plan, which vest in five equal annual installments on January 31, 2007, 2008, 2009, 2010 and 2011. Of the 45,000 shares of restricted stock granted, 10,000 shares of restricted stock were granted to a former executive officer and pursuant to a separation agreement between the Company and the former executive officer, 6,000 shares of restricted stock vested and 4,000 shares of restricted stock were cancelled. As the restricted stock grants are service based awards, the compensation charge was based on the grant date closing price of our common stock multiplied by the number of awards, or approximately $321,000 and $323,000 for the years ended December 31, 2008 and 2007, respectively.

On January 1, 2006, we adopted SFAS No. 123R, “Share-Based Payment,” using the modified prospective method. Pursuant to SFAS No. 123R, for all share-based awards granted after the adoption of SFAS No. 123R and for the unvested portion of previously granted share-based awards that were outstanding on the date of adoption, compensation costs related to our share-based payment transactions are to be measured at fair value on the grant date and recognized in the financial statements over the vesting period during which the employee provides service in exchange for the award.

Pursuant to SFAS No. 123R, we recorded the following:

	For the year ended December 31,
	2008			2007			2006
	(in millions)
Pre-tax share-based compensation expense	$	9.2		$	8.4		$	5.5
Tax benefit		(1.3	)		(3.4	)		(2.2	)
Reduction in net income	$	7.9		$	5.0		$	3.3
Reduction of diluted earnings per share	$	0.13		$	0.09		$	0.07

Theoretical compensation costs not yet amortized related to stock options granted totaled approximately $23.4 million, $20.0 million and $20.7 million at December 31, 2008, 2007 and 2006, respectively, and the weighted average period over which the costs are expected to be recognized is approximately three years. The economic benefit to the employee may vary from the expense calculated under SFAS No. 123R, dependent on movement of the stock price.

The aggregate amount of cash we received from the exercise of stock options was $706,000, $2.4 million and $3.2 million for the years ended December 31, 2008, 2007 and 2006, respectively, which shares, consistent with prior periods, were newly issued common stock. In accordance with SFAS No. 123R, we present a portion of such tax benefits as financing cash flows and outflows. There was no such tax benefit for the year ended December 31, 2008. Excess tax benefits were $1.1 million and $1.9 million for the years ended December 31, 2007 and 2006, respectively.

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The following table summarizes information related to our common stock options under the Stock Option Plans:

	Number of			Weighted Average
	Stock Options			Exercise Price
Options outstanding at January 1, 2006		5,504,227		$	11.48
Granted		734,000		$	27.16
Exercised		(303,958	)	$	10.78
Cancelled		(151,604	)	$	12.66
Options outstanding at December 31, 2006		5,782,665		$	13.48
Granted		552,500		$	30.36
Exercised		(207,600	)	$	11.39
Cancelled		(398,700	)	$	14.68
Options outstanding at December 31, 2007		5,728,865		$	15.10
Granted		2,070,500		$	14.34
Exercised		(74,000	)	$	9.21
Cancelled		(346,825	)	$	19.62
Options outstanding at December 31, 2008		7,378,540		$	14.73
Vested or expected to vest at December 31, 2008		7,091,699
Options exercisable at December 31, 2008		4,003,940		$	12.08
Options exercisable at December 31, 2007		3,347,517		$	10.81
Options exercisable at December 31, 2006		2,945,969		$	9.64
Weighted-average value per granted option calculated using the Black-Scholes option-pricing model for options granted during the years ended:
December 31, 2008	$	14.34
December 31, 2007	$	14.92
December 31, 2006	$	13.76

Substantially all options granted have exercise prices equal to the market value on the date of grant.

Stock options outstanding as of December 31, 2008, were as follows:

							Number of
	Number of		Weighted Average		Weighted Average		Exercisable		Weighted Average
Exercise Price Ranges	Stock Options		Remaining Life		Exercise Price		Stock Options		Exercise Price
$5.00–$8.00		915,739		3.62	$	6.39		915,739	$	6.39
$8.01–$9.00		986,501		2.98	$	8.41		986,501	$	8.41
$9.01–$13.00		936,900		5.07	$	10.48		566,400	$	10.06
$13.01–$15.00		2,237,388		7.88	$	14.61		580,388	$	14.55
$15.01–$20.00		1,215,512		6.56	$	17.14		620,612	$	17.11
$20.01–$30.00		756,500		7.92	$	27.43		241,500	$	27.06
$30.01–$38.00		330,000		8.01	$	31.75		92,800	$	31.43
		7,378,540		6.13	$	14.73		4,003,940	$	12.08

The “intrinsic value” is the number of exercisable options multiplied by the excess of the current share price over the weighted average exercise price of such options. The total intrinsic value of options as of December 31, 2008 and 2007 is as follows:

	For the year ended December 31,
	2008		2007
	(in millions)
Intrinsic value of:
Options outstanding and exercisable	$	1.2	$	42.7
Options vested or expected to be vested	$	4.3	$	45.0
Options exercised	$	0.7	$	3.6

As permitted under SFAS No. 123R, we continue to use a Black-Scholes option-pricing model in order to calculate the compensation costs of employee share-based compensation. Such model requires the use of subjective assumptions, including the expected life of the option, the expected volatility of the underlying stock, and the expected dividend on the stock.

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In computing the share-based compensation, the following is a weighted average of the assumptions used:

	Risk-Free			Expected Life	Expected			Expected
	Interest Rate			at Issuance	Volatility			Dividends
Options granted in the following periods:
2008		3.6	%	6.6 years		40.4	%	None
2007		4.7	%	6.3 years		41.9	%	None
2006		4.7	%	6.6 years		42.6	%	None

The expected volatility was derived from an analysis of both the historic actual volatility of our common stock and the implied volatilities of traded options in our common stock. Future volatility may be substantially less or greater than the expected volatility. We do not currently pay dividends and we do not anticipate that dividends will be paid within the average expected life of existing options. U.S. Treasury rates with similar maturities are used as the proxy for the risk-free rate. Market disruptions over the past year have caused U.S. Treasuries to trade at historically low rates, augmenting the values calculated using the Black-Scholes model. The expected life at issuance is based on our experience as to the average historical term of option grants that were exercised, cancelled or forfeited.

Prior to adopting SFAS No. 123R, we accounted for our employee stock-based compensation in accordance with APB No. 25, “Accounting for Stock Issued to Employees” and related interpretations. Pursuant to APB No. 25, we did not record share-based compensation, but followed the disclosure requirements of SFAS No. 123, “Accounting for Stock-Based Compensation.”

401(k) Plan: We maintain the Pinnacle Entertainment, Inc. 401(k) Investment Plan (the “401(k) Plan”). The 401(k) Plan is an employee benefit plan subject to the provisions of the Employee Retirement Income Security Act of 1974, and is intended to be a qualified plan under Section 401(a) of the Internal Revenue Code of 1986 (the “Code”). Participants of the 401(k) Plan may contribute up to 100% of pretax income, subject to the legal limitation of $15,500 for 2008. In addition, effective January 1, 2003, participants who are age 50 or older may make an additional contribution to the 401(k) Plan, commonly referred to as a “catch-up” contribution, equal to $5,000 for 2008. We offer discretionary matching contributions under the 401(k) Plan, which vest ratably over five years. Historically, a 25% match is made, up to 5% of eligible compensation at the end of the Plan year, if an employee has completed 1,000 hours and is an active employee at the end of the year. For the years ended December 31, 2008, 2007 and 2006, matching contributions to the 401(k) Plan totaled $1.4 million, $2.3 million and $2.0 million, respectively.

Other benefit plans: We maintain an Executive Deferred Compensation Plan (the “Executive Plan”), which allows certain highly compensated employees to defer, on a pre-tax basis, among other things, a portion of their annual base salary and bonus. Participation in the plan is limited. A participant is at all times fully vested in his or her contributions, as well as any attributable appreciation or depreciation. We do not make matching contributions to the Executive Plan for the benefit of participating employees and the payment of benefits under the plan is an unsecured obligation. In December 2005, the Executive Plan was amended to comply with the provisions of the American Jobs Creation Act of 2004, and to make certain changes in the Executive Plan. In December 2007, the Board of Directors adopted a Second Amendment and Restatement of the Executive Plan, which offers certain executives the opportunity to defer income in return for a life annuity type investment, to change the crediting rate on deferrals made into the Executive Plan, and to make certain other changes to the Executive Plan. Pursuant to SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans-An Amendment of FASB Statements No. 87, 88, 106 and 132R,” the benefit obligation is $2.8 million as of December 31, 2008.

In February 2007, the Board of Directors approved a directors’ health and medical plan designed to provide health and medical insurance benefits comparable to those provided to corporate executives (the “Directors’ Medical Plan”). To the extent that a covered individual has other insurance or Medicare coverage, the benefits under the Company’s coverage would be supplemental to those otherwise provided. The Directors’ Medical Plan covers directors and their dependents while the director is in office and provides benefits for those directors who leave the board after age 70 and their dependents and for directors in office at the time of a change in control and their dependents for a period of five years. At present, three members of the Board of Directors are over age 70. Pursuant to SFAS No. 158, the benefit obligation is $205,500 and $176,900 as of December 31, 2008 and 2007, respectively.

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Note 7—Dispositions, Discontinued Operations and Discontinued Development Opportunities

Revenue, expense and net income for Crystal Park Casino card club, Hollywood Park Casino card club, Casino Magic Biloxi and The Casino at Emerald Bay included in discontinued operations are summarized as follows:

	For the year ended December 31,
	2008			2007			2006
	(in millions)
Revenues	$	0.9		$	1.9		$	4.6
Operating income (loss)	$	76.6		$	(4.5	)	$	23.1
Interest income (expense)		3.0			—			(0.3	)
Income (loss) before income taxes		79.6			(4.5	)		22.8
Income tax benefit (expense)		(32.0	)		3.1			(9.3	)
Income from discontinued operations	$	47.6		$	(1.4	)	$	13.5

Net assets for Casino Magic Biloxi and The Casino at Emerald Bay are summarized as follows:

	For the year ended December 31,
	2008			2007
	(in millions)
ASSETS
Property and equipment, net	$	—		$	5.7
Other assets, net		1.3			1.3
	$	1.3		$	7.0
LIABILITIES
Total liabilities	$	20.8		$	24.5
Net assets	$	(19.5	)	$	(17.5	)

In April 2006, we completed the sale of the Crystal Park Casino card club for net cash proceeds of approximately $16.5 million, generating a pre-tax book gain of approximately $10.7 million in the 2006 second quarter, which is included in discontinued operations in the audited Consolidated Income Statements for the year ended December 31, 2006. Our tax basis in the sold assets was above the sale price and therefore the sale generated an approximate $2.8 million in tax loss, which we are using to offset other income.

In July 2006, we completed the sale of our leasehold interest and related receivables in the Hollywood Park Casino card club for net cash proceeds of approximately $24.2 million plus the cancellation of our lease obligation, resulting in a pre-tax book gain of approximately $16.5 million, which is included in discontinued operations in the audited Consolidated Income Statements for the year ended December 31, 2006.

In November 2006, we completed the sale of our Casino Magic Biloxi site and certain related assets for $45 million. The net book value of the assets sold was approximately $45 million, comprised entirely of property and equipment, which amount is net of the $4.9 million asset impairment charge we recorded in March 2006 in connection with the transaction. Such impairment charge is included in discontinued operations on the audited Consolidated Income Statement for the year ended December 31, 2006. In 2008, we received insurance proceeds of $86 million in litigation settlements in connection with our insurance claim for our former Casino Magic Biloxi property, which income has been recorded in discontinued operations on the audited Consolidated Income Statement for the year ended December 31, 2008. To the extent insurance advances exceed the book value of destroyed assets and certain insured expenses, the difference, $18.4 million as of December 31, 2008, is recorded as a deferred gain on the audited Consolidated Balance Sheet.

Under Sections 1031 and 1033 of the Internal Revenue Code of 1986, as amended, we completed exchanges with our purchase of land in Atlantic City and the acquisition of certain licenses and real estate interests from Harrah’s, deferring much of the tax gain on the sale of land and the anticipated insurance proceeds related to the Biloxi assets.

On July 30, 2008, we decided to sell or otherwise discontinue operations of The Casino at Emerald Bay in The Bahamas. This small casino is distant from our other operations and its success is heavily reliant on the neighboring unaffiliated Four Seasons hotel. The owner of such hotel is currently in receivership. Consequently, since the beginning of the third quarter of 2008, we have reflected the business as a discontinued operation. During the year ended December 31, 2008, we recorded a $4.3 million impairment charge for the fixed assets associated with our operation in The Bahamas, which assets are now included as assets held for sale at December 31, 2008. Such impairment charge is included in discontinued operations on the audited Consolidated Income Statement for the year ended December 31, 2008. The casino was closed on January 2, 2009 as a suitable buyer has not yet been located.

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Merger Termination Proceeds: In March 2006, we entered into an agreement to acquire Aztar Corporation (“Aztar”) for $38 per share, subject to approval by Aztar’s shareholders. During April and May 2006, Aztar received several proposals that its board of directors deemed to be superior to our proposal. We matched or exceeded several of these proposals. Ultimately, we chose not to match a proposal to acquire Aztar for $54 per share. Aztar’s board of directors then terminated its merger agreement with us and made a merger termination fee payment of $78 million to us. Net of fees and expenses, the merger termination payment received by us was approximately $44.7 million, which is included in income from continuing operations for the year ended December 31, 2006. We have not received any similar merger termination fees in recent years and do not anticipate receiving similar fees in future years.

Chile: In August 2005, we submitted bids for two of the 17 licenses the Chilean government declared available in early 2005—one in Antofagasta and one in Rancagua, Chile. In 2006, the Chilean government announced that it had chosen competing proposals for the casino licenses in both locations. In connection with filing the applications we posted letters of credit totaling approximately $2.1 million, which letters of credit were returned to us and cancelled in 2007.

Kansas City, Kansas: In September 2007, we submitted a proposal for a new gaming entertainment complex to be located in Kansas City, Kansas. In September 2008, we withdrew such application. In June 2008, we deposited $25 million with the Kansas Lottery Commission, pursuant to such application, which was later returned to us in September 2008.

Note 8—Impairment of Goodwill

In accordance with SFAS No. 142, “Goodwill and Other Intangible Assets”, we review goodwill for impairment annually during the fourth quarter, or more frequently if events or circumstances indicate that the carrying value may not be recoverable. As required by SFAS No. 142, we utilize the two-step impairment test to identify any potential goodwill impairment and measure the amount of goodwill impairment charge to be recognized, if any. We recently performed the first step of the two-step impairment test as of the fourth quarter of 2008 and compared the fair value of the reporting units to their carrying values. In assessing the fair value of the reporting units, we considered both the income approach, using the Discounted Cash Flow Method, and the market approach, using the Guideline Company Method. For two reporting units, we determined that the fair value of the reporting unit pursuant to these methods was less than the carrying value of the net assets of the reporting unit, and we performed step two of the impairment test.

In Step Two of the impairment test, we determined the implied fair value of the goodwill and compared it to the carrying value of the goodwill. We allocated the fair value of the reporting unit to all of its assets and liabilities as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the price paid to acquire the reporting unit. The excess of the fair value of the reporting unit over the relative fair value amounts assigned to its assets and liabilities is the implied fair value of goodwill. Our analysis included factors such as future operating results, revenue and EBITDA projections, and weighted average cost of capital. As a result, our Step Two analysis resulted in an impairment charge of $28.5 million for the year ended December 31, 2008.

The following table reflects the change in the carrying amount of goodwill:

						The Admiral
	Boomtown		Boomtown			Riverboat
	New Orleans		Reno			Casino			Total
	(in millions)
Balance at December 31, 2007	$	16.8	$	9.9		$	18.6		$	45.3
Impairment charge		—		(9.9	)		(18.6	)		(28.5	)
Balance at December 31, 2008	$	16.8	$	—		$	—		$	16.8

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Note 9—Impairment of land and development costs

During the fourth quarter of 2008, the continuing economic downturn and constrained capital markets contributed to a severe decline in value of gaming stocks and gaming assets. As a result, management determined that a triggering event in accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” occurred in the fourth quarter of 2008. Given the continuing deterioration in commercial real estate values and uncertainties surrounding the Company’s access to sufficient resources to adequately finance the majority of its development pipeline, we tested all development project land holdings and related capitalized costs for recoverability in connection with the preparation of the audited Consolidated Financial Statements for 2008. As a result of these tests, we determined that certain land holdings and related capitalized costs were impaired and recorded the following impairment charges:

	For the year ended December 31,
	2008		2007		2006
	(in millions)
Boomtown Reno	$	0.5	$	—	$	—
Boomtown Bossier City		2.2		—		—
The Admiral Riverboat Casino		3.6		—		—
Corporate and other projects (a)		221.7		—		—
Impairment of land and development costs	$	228.0	$	—	$	—

(a) Included in this balance is $196.7 million related to our Atlantic City project, $4.9 million related to our undeveloped land in Central City, Colorado, $9.2 million related to land held for Phase Two of our Sugarcane Bay project, $4.9 million related to Phase Two of our Baton Rouge project and $4.6 million related to undeveloped land held in St. Louis, Missouri.

Note 10—Impairment of buildings, riverboats and equipment

Impairment of buildings, riverboats and equipment consist of the following:

	For the year ended December 31,
	2008		2007		2006
	(in millions)
Boomtown Reno (a)	$	7.7	$	—	$	—
The Admiral Riverboat Casino (a)		6.6		—		—
Boomtown Bossier City (b)		0.2		—		—
L’Auberge du Lac (b)		0.3		—		—
Belterra Casino Resort (c)		—		1.0		—
Casino Magic Argentina		1.0		—		—
Corporate and other projects (d)		4.5		3.9
Impairment of buildings, riverboats and equipment	$	20.3	$	4.9	$	—

(a)	Due to poor operating performance over the past 12 months, and a poor prospective financial performance outlook for Boomtown Reno and The Admiral Riverboat Casino, we determined a triggering event under SFAS No. 144 occurred during the fourth quarter of 2008 As a result, we tested all long-lived assets at Boomtown Reno and The Admiral Riverboat Casino for recoverability in connection with the preparation of the audited Consolidated Financial Statements for 2008. As a result of these tests, we determined that certain buildings, riverboats and equipment were impaired and for the year ended December 31, 2008, we recorded impairment charges of $7.7 million and $6.6 million, respectively.
(b)	Relates to impairment of slot machines that were adjusted to their respective net realizable values prior to being sold during 2008.
(c)	In the prior year, Belterra Casino Resort recorded an impairment of $1.0 million related to a postponed guestroom addition.
(d)	During the second quarter of 2008, we incurred impairment charges of $4.5 million related to two riverboats acquired in 2006, which are intended to be replaced by the Sugarcane Bay and Baton Rouge facilities. During 2007, we recorded a loss of $1.0 million related to a cancelled condominium project in St. Louis, Missouri.

Note 11—Write-downs, reserves and recoveries, net

Write-downs, reserves and recoveries, consist of the following:

	For the year ended December 31,
	2008			2007			2006
	(in millions)
(Gain)/Loss on sale of assets (a)	$	3.0		$	(0.5	)	$	—
Customer loyalty program related expenses (b)		1.4			—			—
Insurance proceeds		(0.2	)		—			—
Other		0.1			—			—
Write-downs, reserves and recoveries, net	$	4.3		$	(0.5	)	$	—

(a) During 2008, we sold slot machines at our properties for a loss of $3.0 million. During 2007, we recorded a gain on the sale of a corporate aircraft.

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(b) During the year ended December 31, 2008, we expanded our mychoice rewards program at our L’Auberge du Lac and Belterra properties. In doing so, we disclosed to our customers their reward account based on prior play. We had historically maintained such records to facilitate the provision of complimentary goods and services, but had not previously disclosed the point balances to customers at these facilities. This disclosure resulted in a non-cash charge to establish a theoretical liability for such initial amounts.

We also incurred asset impairment charges of $4.3 million related to the discontinued operation at The Casino at Emerald Bay in The Bahamas, which has been recorded in loss from discontinued operations as of December 31, 2008.

Note 12—Commitments and Contingencies

Guaranteed Maximum Price Agreement for Lumière Place: In the second quarter of 2007, we signed a Guaranteed Maximum Price Agreement (the “GMP Agreement”) with a general contractor for our Lumière Place project. Pursuant to the GMP Agreement, the contractor agreed to complete the construction of the casino-hotel for a maximum price of approximately $345 million. The guaranteed maximum price set by the GMP Agreement was a portion of the total budget of $507 million for the Lumière Place project. The budget includes items separate from those covered in the GMP Agreement, such as pre-opening and development costs; furniture, fixtures and other equipment; gaming equipment; consulting fees and information technology. As of December 31, 2008, we had paid approximately $335 million of the approximate $345 million maximum price and we expect to pay a portion of the remaining $10 million, which has been accrued.

Redevelopment Agreement: In connection with our Lumière Place project, we have a redevelopment agreement which, among other things, commits us to oversee the investment of $50.0 million in residential housing, retail or mixed-use developments in the City of St. Louis within five years of the opening of the casino and hotel. Such investment can be made with partners and partner contributions and project debt financing, all of which count toward the $50.0 million investment commitment. We are also obligated to pay an annual fee of $1.0 million to the City of St. Louis beginning after our River City project opens. The redevelopment agreement also contains certain contingent payments in the event of certain defaults. If we and our development partners collectively fail to invest $50.0 million in residential housing, retail, or mixed-use developments within five years of the opening of the casino and hotel, we would be obligated to pay an additional annual service fee of $1.0 million in Year Six, $2.0 million in Years Seven and Eight, and $2.0 million annually thereafter, adjusted by the change in the consumer price index.

Guaranteed Maximum Price Agreement for River City: On August 8, 2008, we entered into a Guaranteed Maximum Price Agreement (the “Agreement”) with a general contractor for the construction of our River City project. Among other things, the Agreement establishes that the contractor will complete the construction of the casino for a maximum price of approximately $149 million and that the project will be substantially complete by January 31, 2010. The guaranteed maximum price set by the Agreement is a portion of the total budget of $380 million for the River City project. The budget includes items separate from those covered in the Agreement, such as construction work prior to entering into the GMP Agreement, pre-opening and development costs; furniture, fixtures and other equipment; gaming equipment; consulting fees and information technology; capitalized interest and excludes start-up cage cash and the non-cash accrual for rent during the construction period.

Lease and Development Agreement: In connection with our River City project, we have a lease and development agreement with the St. Louis County Port Authority which, among other things, commits us to lease 56 acres for 99 years (not including certain termination provisions) for annual rent of the greater of $4.0 million or 2.5% of adjusted gross receipts (as defined in the lease and development agreement) commencing on the earlier of August 11, 2009 or the date the project opens. We are required to invest a minimum of $375 million to: (a) construct a gaming and multi-use facility; (b) perform environmental remediation on the site of the project, which remediation has been completed; (c) contribute $5.1 million for the construction of community and recreational facilities, which amount has been paid; (d) develop and construct a hatch shell on the park property; and (e) construct a roadway into the project. We are also required to pay certain fees, potentially aggregating $20 million unless we invest at least an additional $75 million to construct a hotel with a minimum of 100 guestrooms and other amenities, such amenities to be mutually agreed upon by us and St. Louis County. The lease and development agreement provides that we must proceed with reasonable diligence to complete the gaming facilities by May 1, 2009, subject to delays beyond our control, including governmental approvals. We currently anticipate that the property will be completed in early 2010 due to several factors which were beyond our control, including delays in receiving governmental approvals and delays caused by unfavorable weather conditions. The second phase must be opened within three years from August 11, 2009, or we are required to pay fees over five years beginning on the January 2 immediately following the expiration of three years. In each of the five subsequent years that the second phase is not opened, the amount of fees begins at $2.0 million for the first year and increases by $1.0 million each subsequent year: hence, $3.0 million in Year Two, $4.0 million in Year Three, $5.0 million in Year Four and $6.0 million in Year Five. As a result, the maximum amount of such fees that we would have to pay if the second phase is not completed is $20.0 million.

Employment and Severance Agreements: We have entered into employment agreements with certain employees, including our executive officers. The employment agreements require severance payments in the case of certain triggering events, including a change in control. As of December 31, 2008, the maximum aggregate amount that would be paid to this group of 35 employees if a triggering event occurs in every case following a change in control, where applicable, is approximately $43.9 million.

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In connection with Wade Hundley’s resignation as President of the Company, we entered into a separation agreement with him, dated as of June 5, 2008. Mr. Hundley is entitled to cash severance payments equal to approximately $1.4 million, payable in various installments over an 18-month period, of which approximately $459,000 remains to be paid. Mr. Hundley received accrued salary through the date of resignation and a pro rata bonus of approximately $215,000 for 2008, which was paid in January 2009. Mr. Hundley will also be entitled to receive health benefits coverage and disability insurance coverage for a maximum period of eighteen (18) months. Mr. Hundley was also paid his remaining portions of his 2006 and 2007 deferred bonuses of $205,000 in December 2008, and is entitled to approximately $373,000 representing amounts he had previously elected to defer plus earnings thereon, of which approximately $43,300 was paid in December 2008. Vesting of Mr. Hundley’s stock options and restricted stock which would have vested over the next 18 months following the date of the separation agreement was accelerated to June 5, 2008. The compensation expense associated with the terms of the separation agreement relating to his stock options and restricted stock awards was $727,000, computed in accordance with SFAS 123R. As provided in the separation agreement, Mr. Hundley is entitled to exercise certain stock options, which survive the separation. For those stock options granted prior to the date of his employment agreement, Mr. Hundley had until March 5, 2009 to exercise those stock options. For those stock options granted on or after the date of his employment agreement, Mr. Hundley has until June 5, 2009 to exercise those stock options.

Deferred Bonus Plan: We have a deferred bonus plan in which a portion of an employee’s bonus is deferred and paid in three equal annual installments contingent on the individual remaining employed by us. Payments are accelerated under certain circumstances, including death, disability and a change in control. We are expensing the deferred portion over the period of time leading up to the vesting date. As of December 31, 2008, the deferred bonus commitment, which, for example, would have to be paid commensurate with a change in control, was approximately $3.6 million, of which $2.8 million is included in the $43.9 million change-in-control amount mentioned above.

Self-Insurance: We self-insure various levels of general liability, property, workers’ compensation and medical coverage. Insurance reserves include accruals for estimated settlements for known claims, as well as accruals for estimates of claims not yet made, which are included in “Accrued compensation” and “Other accrued liabilities” on the audited Consolidated Balance Sheets.

Collective Bargaining Agreements: As of December 31, 2008, we continue to negotiate a collective bargaining agreement with approximately 109 of our employees at The Admiral Riverboat Casino. The prior agreement expired on September 30, 2007.

On May 17, 2006, the Company entered into a Memorandum of Agreement (the “Agreement”) that, among other things, provided UNITE HERE! Local 74 in St. Louis, Missouri (the “Union”) access to certain employees employed at the Company’s Lumière Place facility, as well as access to the premises, should the Union manifest its intent to organize those certain employees. Additionally, the Agreement provided that in the event the Union requested recognition as the exclusive bargaining agent for those certain employees, the Company agreed to an arbitrator-led card check.

On November 20, 2008, an arbitrator conducted a review of the authorization cards submitted by the Union. A majority of the employees in the applicable bargaining unit authorized the Union to act as their exclusive bargaining agent. Consistent with the Agreement, the Company recognized the Union as the exclusive bargaining agent for the applicable bargaining unit. On December 19, 2008, the Union and the Company held the initial bargaining session in St. Louis.

Legal

Insurance Litigation: In April 2006, we filed a $347 million insurance claim for our losses related to our former Casino Magic Biloxi property caused by Hurricane Katrina. In August 2006, we filed suit in the United States District Court for the District of Nevada against three of our insurance carriers, Allianz Global Risks US Insurance Company, Arch Specialty Insurance Company and RSUI Indemnity Company, related to such losses. On February 22, 2008, we settled with Arch Specialty Insurance Company, which provided $50 million of coverage, in exchange for its agreement to pay us approximately $36.8 million, which we received in March 2008. On May 9, 2008, we settled with Allianz Global Risks US Insurance Company, in exchange for its agreement to pay us approximately $48 million, which we received in June 2008. Allianz Global Risks US Insurance Company had previously paid Pinnacle $5 million, which brought Allianz Global Risks US Insurance Company’s total payment on the claim to $53 million. RSUI Indemnity Company provides $50 million of coverage at the same layer and pari passu with the coverage provided by Arch Specialty Insurance Company and an additional $150 million of coverage between $250 million and $400 million of total coverage. To date, RSUI Indemnity Company has paid us approximately $2.0 million as a prepayment on the undisputed amount of the claim. We continue to pursue our claims against RSUI Indemnity Company for its respective share of our total hurricane-related damage and consequential loss in Biloxi. On October 20, 2008, we filed a motion for partial summary judgment on certain outstanding legal issues relating to the calculation of our business interruption loss for the claim. A hearing date has not yet been set on that motion.

As of December 31, 2008, the insurers have not designated the $192 million of advances toward our insurance claim as being specific to any particular part of the claim. Therefore, the advances have offset the book value of the destroyed assets and certain insured expenses. To the extent that the advances under the policy excluding settlements previously discussed exceed such expenses and book value, the difference (currently $18.4 million) is recorded as a deferred gain in “Other long-term liabilities” on our audited Consolidated Balance Sheets.

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Our ultimate insurance claim and recovery amounts are based on replacement costs rather than book value and are unrelated to, computed differently from, and are substantially larger than the asset write-offs. Management believes that the replacement cost of the assets that were destroyed is substantially in excess of their book value. We are also insured for lost profits as a result of the damage, but will not book such profits until the claim is resolved. The settlements of parts of the insurance claim resulted in gains of $54.4 million, net of tax, which is reflected in discontinued operating results in the fiscal year ended December 31, 2008. The deferred gain reflected on the audited Consolidated Balance Sheets primarily reflects the ongoing dispute with remaining insurance carrier.

Jebaco Litigation: On August 9, 2006, Jebaco, Inc. (“Jebaco”) filed suit in the U.S. District Court for the Eastern District of Louisiana against Harrah’s Operating Co., Inc., Harrah’s Lake Charles, LLC, Harrah’s Star Partnership, Players LC, LLC, Players Riverboat Management, LLC, Players Riverboat II, LLC, and Pinnacle Entertainment, Inc. The lawsuit arises out of an agreement between Jebaco and Harrah’s (as successor in interest to the various Players defendants) whereby Harrah’s was obligated to pay Jebaco a fee based on the number of patrons entering Harrah’s two Lake Charles, Louisiana riverboat casinos. In November 2006, we acquired the Harrah’s Lake Charles subsidiaries, including the two riverboats. The lawsuit filed by Jebaco asserts that Harrah’s, in ceasing gaming operations in Lake Charles and ceasing payments to Jebaco, breached its contractual obligations to Jebaco and asserts damages of approximately $34.0 million. Jebaco also asserts that our agreement with Harrah’s violates state and federal antitrust laws. The lawsuit seeks antitrust damages jointly and severally against both us and Harrah’s and seeks a trebling of the $34.0 million in damages Jebaco alleges it has suffered. The defendants answered the complaint, denying all claims and asserting that the lawsuit is barred, among other reasons, because of the approval of our transaction with Harrah’s by the Louisiana Gaming Control Board and the lack of antitrust injury to Jebaco. In January 2007, all of the defendants moved to dismiss all of the claims of the complaint, which motions were heard on July 18, 2007. The motions to dismiss were granted with prejudice as to the federal antitrust claims and the state-law claims were dismissed without prejudice. Judgment of dismissal was entered on March 5, 2008. Jebaco has appealed the dismissal of the federal antitrust claims to the U.S. Court of Appeals for the Fifth Circuit. Further, on March 13, 2008, Jebaco filed a new lawsuit against the same parties in the Louisiana district civil court for Orleans Parish. This lawsuit seeks unspecified damages arising out of the same circumstances as the federal lawsuit based on claims for breach of the duty of good faith, negligent breach of contract, breach of contract, unfair trade practices, unjust enrichment, and subrogation to Harrah’s insurance proceeds. On January 6, 2009, the Louisiana district civil court extended the time for the defendants to respond to the state-court lawsuit until after the Fifth Circuit rules on Jebaco’s appeal. The Louisiana district civil court provided that Jebaco could request a deadline for a response from defendants if the Fifth Circuit had not ruled by February 12, 2009. On March 2, 2009, the Fifth Circuit heard oral arguments on the appeal. In light of this development, the defendants intend to seek an additional extension of time to respond to the state-court complaint. While we cannot predict the outcome of this litigation, management intends to vigorously defend this litigation.

Other: We are a party to a number of other pending legal proceedings. Management does not expect that the outcome of such proceedings, either individually or in the aggregate, will have a material effect on our financial position, cash flows or results of operations.

Note 13—Consolidating Condensed Financial Information

Our subsidiaries (excluding our Argentine subsidiary; a subsidiary that owns an aircraft; a subsidiary with approximately $59.1 million in cash, cash equivalents and marketable securities as of December 31, 2008; and certain non-material subsidiaries) have fully and unconditionally and jointly and severally guaranteed the payment of all obligations under the 7.50% Notes, 8.25% Notes and 8.75% Notes. Separate financial statements and other disclosures regarding the subsidiary guarantors are not included herein because management has determined that such information is not material to investors. In lieu thereof, we include the following:

					100% Owned		Consolidating		Pinnacle
	Pinnacle		100% Owned		Non-		and		Entertainment,
	Entertainment,		Guarantor		Guarantor		Eliminating		Inc.
	Inc.		Subsidiaries(a)		Subsidiaries(b)		Entries		Consolidated
	(in millions)
For the year ended December 31, 2008
Income Statement
Revenues:
Gaming	$	—	$	844.2	$	59.6	$	—	$	903.8
Food and beverage		—		58.3		4.9		—		63.2
Other		0.2		76.2		1.3		—		77.7
		0.2		978.7		65.8		—		1,044.7
Expenses:
Gaming		—		508.2		34.1		—		542.3
Food and beverage		0.1		58.9		6.5		—		65.5
General and administrative and other		59.0		264.4		18.5		—		341.9
Write downs, reserves and recoveries, and impairments		9.8		285.4		27.3		—		322.5
Depreciation and amortization		5.2		100.4		12.2		—		117.8
		74.1		1,217.3		98.6		—		1,390.0

68

							100% Owned			Consolidating			Pinnacle
	Pinnacle			100% Owned			Non-			and			Entertainment,
	Entertainment,			Guarantor			Guarantor			Eliminating			Inc.
	Inc.			Subsidiaries(a)			Subsidiaries(b)			Entries			Consolidated
	(in millions)
Operating Income		(73.9	)		(238.6	)		(32.8	)		—			(345.3	)
Equity earnings of subsidiaries		(246.7	)		4.1			—			242.6			—
Loss on early extinguishment of debt		—			—			—			—			—
Merger termination proceeds, net of expenses		—			—			—			—			—
Interest (expense) and non-operating income, net		(76.2	)		24.8			1.0			—			(50.4	)
Impairment of investment in equity securities		(10.8	)		—			(18.2	)		—			(29.0	)
Income (loss) from continuing operations before inter-company activity, income taxes and minority interest		(407.6	)		(209.7	)		(50.0	)		242.6			(424.7	)
Management fee & inter-company interest income (expense)		28.3			(28.0	)		(0.3	)		—			—
Income tax (expense) benefit		56.7			—			(2.2	)		—			54.5
Minority Interest		—			—			—			—			—
Income (loss) from continuing operations		(322.6	)		(237.7	)		(52.5	)		242.6			(370.2	)
Income (loss) from discontinued operations, net of taxes		—			54.9			(7.3	)		—			47.6
Net income (loss)	$	(322.6	)	$	(182.8	)	$	(59.8	)	$	242.6		$	(322.6	)
For the year ended December 31, 2007
Income Statement
Revenues:
Gaming	$	—		$	721.3		$	88.1		$	—		$	809.4
Food and beverage		—			40.7			5.6			—			46.3
Other		0.2			64.0			1.9			—			66.1
		0.2			826.0			95.6			—			921.8
Expenses:
Gaming		—			426.0			45.4			—			471.4
Food and beverage		—			39.9			6.8			—			46.7
General and administrative and other		50.0			230.3			22.0			—			302.3
Write downs, reserves, recoveries and impairments		—			3.8			0.5			—			4.3
Depreciation and amortization		1.6			68.2			10.5			—			80.3
		51.6			768.2			85.2			—			905.0
Operating Income		(51.4	)		57.8			10.4			—			16.8
Equity in subsidiaries		53.0			6.2			—			(59.2	)		—
Loss on early extinguishment of debt		(6.1	)		—			—			—			(6.1	)
Merger termination proceeds, net of expenses		—			—			—			—			—
Interest (expense) and non-operating income, net		(56.6	)		43.9			2.5			—			(10.2	)
Income (loss) from continuing operations before inter-company activity, income taxes and minority interest		(61.1	)		107.9			12.9			(59.2	)		0.5
Management fee & inter-company interest income (expense)		55.0			(54.6	)		(0.4	)		—			—
Income tax (expense) benefit		4.7			—			(5.2	)		—			(0.5	)
Minority Interest		—			—			—			—			—
Income (loss) from continuing operations		(1.4	)		53.3			7.3			(59.2	)		—
Income (loss) from discontinued operations, net of taxes		—			—			(1.4	)		—			(1.4	)
Net income (loss)	$	(1.4	)	$	53.3		$	5.9		$	(59.2	)	$	(1.4	)

69

							100% Owned			Consolidating			Pinnacle
	Pinnacle			100% Owned			Non-			and			Entertainment,
	Entertainment,			Guarantor			Guarantor			Eliminating			Inc.
	Inc.			Subsidiaries(a)			Subsidiaries(b)			Entries			Consolidated
	(in millions)
For the year ended December 31, 2006
Income Statement
Revenues:
Gaming	$	—		$	755.0		$	27.1		$	—		$	782.1
Food and beverage		—			42.8			2.7			—			45.5
Other		0.1			83.6			0.2			—			83.9
		0.1			881.4			30.0			—			911.5
Expenses:
Gaming		—			434.2			9.3			—			443.5
Food and beverage		—			40.2			3.6			—			43.8
General and administrative and other		48.9			198.2			10.1			—			257.2
Write downs, reserves, recoveries and impairments		—			—			—			—			—
Depreciation and amortization		1.0			64.5			3.2			—			68.7
		49.9			737.1			26.2			—			813.2
Operating Income		(49.8	)		144.3			3.8			—			98.3
Equity in subsidiaries		108.5			2.6			—			(111.1	)		—
Merger termination proceeds, net of expenses		44.7			—			—			—			44.7
Interest (expense) and non-operating income, net		(46.0	)		8.2			0.1			—			(37.7	)
Income (loss) from continuing operations before inter-company activity, income taxes and minority interest		57.4			155.1			3.9			(111.1	)		105.3
Management fee & inter-company interest income (expense)		40.9			(40.5	)		(0.4	)		—			—
Income tax (expense) benefit		(39.7	)		(0.1	)		(2.3	)		—			(42.1	)
Minority Interest		0.1			—			—			—			0.1
Income (loss) from continuing operations		58.7			114.5			1.2			(111.1	)		63.3
Income (loss) from discontinued operations, net of taxes		18.2			(3.2	)		(1.4	)		—			13.6
Net income (loss)	$	76.9		$	111.3		$	(0.2	)	$	(111.1	)	$	76.9

					100% Owned			Consolidating			Pinnacle
	Pinnacle		100% Owned		Non-			and			Entertainment,
	Entertainment,		Guarantor		Guarantor			Eliminating			Inc.
	Inc.		Subsidiaries(a)		Subsidiaries(b)			Entries			Consolidated
	(in millions)
As of December 31, 2008
Balance Sheet
Current assets	$	17.9	$	85.3	$	64.1		$	—		$	167.3
Property and equipment, net		18.3		1,565.0		46.7			—			1,630.0
Other non-current assets		47.4		68.4		10.3			(4.2	)		121.9
Investment in subsidiaries		1,661.4		23.0		—			(1,684.4	)		—
Inter-company		1.2		0.2		—			(1.4	)		—
	$	1,746.2	$	1,741.9	$	121.1		$	(1,690.0	)	$	1,919.2
Current liabilities		38.6		129.4		6.5			0.1			174.6
Notes payable, long term		942.4		0.8		4.3			(4.3	)		943.2
Other non-current liabilities		25.9		36.0		0.2			—			62.1
Inter-company		—		—		1.4			(1.4	)		—
Equity		739.3		1,575.7		108.7			(1,684.4	)		739.3
	$	1,746.2	$	1,741.9	$	121.1		$	(1,690.0	)	$	1,919.2
As of December 31, 2007
Balance Sheet
Current assets	$	44.3	$	141.3	$	96.0		$	—		$	281.6
Property and equipment, net		28.7		1,617.8		69.8			—			1,716.3
Other non-current assets		54.7		123.7		17.2			—			195.6
Investment in subsidiaries		1,859.8		21.3		—			(1,881.1	)		—
Inter-company		1.3		3.5		(4.8	)		—			—
	$	1,988.8	$	1,907.6	$	178.2		$	(1,881.1	)	$	2,193.5
Current liabilities		35.7		165.1		11.3			—			212.1
Notes payable, long term		840.3		0.9		—			—			841.2
Other non-current liabilities		60.4		27.3		0.1			—			87.8
Inter-company		—		—		—			—			—
Equity		1,052.4		1,714.3		166.8			(1,881.1	)		1,052.4
	$	1,988.8	$	1,907.6	$	178.2		$	(1,881.1	)	$	2,193.5

70

							100% Owned			Consolidating		Pinnacle
	Pinnacle			100% Owned			Non-			and		Entertainment,
	Entertainment,			Guarantor			Guarantor			Eliminating		Inc.
	Inc.			Subsidiaries(a)			Subsidiaries(b)			Entries		Consolidated
For the year ended December 31, 2008
Statement of Cash Flows
Cash provided by (used in) operating activities	$	(102.3	)	$	236.6		$	(5.0	)	$	—	$	129.3
Cash used in investing activities
Capital expenditure and land additions		(9.1	)		(277.0	)		(4.8	)		—		(290.9	)
Change in construction related liability		0.7			(30.1	)		—			—		(29.4	)
Land deposit and other		0.2			14.1			—			—		14.3
Cash used in investing activities		(8.2	)		(293.0	)		(4.8	)		—		(306.0	)
Cash provided by (used in) financing activities Change in notes payable		101.9			—			—			—		101.9
Cash provided by (used in) financing activities		101.9			—			—			—		101.9
Effect of exchange rate changes on cash		—			—			(0.6	)		—		(0.6	)
Increase (decrease) in cash and cash equivalents		(8.6	)		(56.4	)		(10.4	)		—		(75.4	)
Cash and cash equivalents, beginning of period		15.3			106.0			69.8			—		191.1
Cash and cash equivalents, end of period	$	6.7		$	49.6		$	59.4		$	—	$	115.7
For the year ended December 31, 2007
Statement of Cash Flows
Cash provided by (used in) operating activities	$	(441.8	)	$	506.5		$	88.7		$	—	$	153.4
Cash used in investing activities
Capital expenditures and land additions		(16.7	)		(492.9	)		(36.0	)		—		(545.6	)
Investment in available for sale securities		(39.8	)		—			—			—		(39.8	)
Change in restricted cash and others		21.9			(7.6	)		5.0			—		19.3
Cash used in investing activities		(34.6	)		(500.5	)		(31.0	)		—		(566.1	)
Cash provided by (used in) financing activities
Common stock transactions		423.5			(8.8	)		—			—		414.7
Cash provided by (used in) financing activities		423.5			(8.8	)		—			—		414.7
Effect of exchange rate changes on cash		0.5			—			0.1			—		0.6
Increase (decrease) in cash and cash equivalents		(52.4	)		(2.8	)		57.8			—		2.6
Cash and cash equivalents, beginning of period		67.7			108.8			12.0			—		188.5
Cash and cash equivalents, end of period	$	15.3		$	106.0		$	69.8		$	—	$	191.1
For the year ended December 31, 2006
Statement of Cash Flows
Cash provided by (used in) operating activities	$	(263.4	)	$	254.5		$	215.4		$	—	$	206.5
Cash used in investing activities
Capital expenditures and land additions		(74.6	)		(284.2	)		(203.3	)		—		(562.1	)
Receipts from sale of assets		83.2			5.1			—			—		88.3
Insurance proceeds and other		(18.9	)		33.4			—			—		14.5
Cash used in investing activities		(10.3	)		(245.7	)		(203.3	)		—		(459.3	)
Cash provided by (used in) financing activities
Change in notes payable		113.6			—			—			—		113.6
Common stock transactions		182.1			—			—			—		182.1
Debt issuance costs and other		(1.6	)		—			—			—		(1.6	)
Cash provided by (used in) financing activities		294.1			—			—			—		294.1
Effect of exchange rate changes on cash		—			—			(0.1	)		—		(0.1	)
Increase (decrease) in cash and cash equivalents		20.4			8.8			12.0			—		41.2
Cash and cash equivalents, beginning of period		47.3			100.0			—			—		147.3
Cash and cash equivalents, end of period	$	67.7		$	108.8		$	12.0		$	—	$	188.5

(a)

The following material subsidiaries are identified as guarantors of the 7.50% Notes, 8.25% Notes and 8.75% Notes: Belterra Resort Indiana, LLC; Boomtown, LLC; PNK (RENO), LLC; Louisiana—I Gaming; PNK (LAKE CHARLES), L.L.C.; Casino Magic Corp.; Biloxi Casino Corp.; PNK (BOSSIER CITY), Inc.; Casino One Corporation; PNK (ES), LLC; PNK (ST. LOUIS RE), LLC; AREP Boardwalk Properties LLC; PNK (Baton Rouge) Partnership; PNK (SCB), L.L.C.; PNK Development 7, LLC; PNK Development 8, LLC; PNK Development 9, LLC; PNK Development 13, LLC and ACE Gaming, LLC. In addition, certain other immaterial subsidiaries are also guarantors of the 7.50% Notes, 8.25% Notes and 8.75% Notes. HP/Compton, Inc. and Crystal Park Hotel and Casino Development Company, LLC were guarantors of the 8.25% Notes and 8.75% Notes through March 2006.

(b)

Casino Magic Neuquén SA and PNK Development 11, LLC are our only material non-guarantors of the 7.50% Notes, 8.25% Notes and 8.75% Notes. Other non-guarantor subsidiaries include, but are not limited to, the subsidiary that owns our corporate airplane and the subsidiary that owns The Admiral Riverboat Casino.

71

Note 14—Segment Information

We use Adjusted EBITDA (as defined below) to compare operating results among our segments and allocate resources. The following table highlights our Adjusted EBITDA and reconciles Adjusted EBITDA to income (loss) from continuing operations for the years ended December 31, 2008, 2007 and 2006.

	For the year ended December 31,
	2008			2007			2006
	(in millions)
Revenues:
L’Auberge du Lac	$	342.6		$	321.2		$	312.3
Boomtown New Orleans		158.4			162.0			201.5
Belterra Casino Resort		168.6			177.9			172.7
Boomtown Bossier City		88.9			89.7			96.3
Lumière Place		174.2			8.0			11.6
The Admiral Riverboat Casino		25.8			58.1			2.2
Boomtown Reno		46.0			67.2			87.1
Casino Magic Argentina		40.0			37.3			27.7
Other		0.2			0.4			0.1
Total Revenue	$	1,044.7		$	921.8		$	911.5
Adjusted EBITDA: (a)
L’Auberge du Lac	$	84.3		$	75.2		$	72.4
Boomtown New Orleans		54.2			54.2			81.0
Belterra Casino Resort		29.7			39.3			37.3
Boomtown Bossier City		17.1			17.9			23.0
Lumière Place		10.1			(1.0	)		1.7
The Admiral Riverboat Casino		(5.0	)		7.1			0.4
Boomtown Reno		(4.4	)		3.5			6.8
Casino Magic Argentina		11.8			14.3			10.6
		197.8			210.5			233.2
Corporate expenses (b)		(38.2	)		(39.8	)		(29.2	)
		159.6			170.7			204.0
Other benefits (costs):
Depreciation and amortization		(117.8	)		(80.3	)		(68.7	)
Pre-opening and development costs		(55.4	)		(60.8	)		(29.3	)
Non-cash share-based compensation		(9.2	)		(8.4	)		(5.5	)
Corporate level litigation settlement		—			—			(2.2	)
Merger termination proceeds, net of expenses		—			—			44.7
Impairment of goodwill		(28.5	)		—			—
Impairment of indefinite-lived intangible assets		(41.4	)		—			—
Impairment of land and development costs		(228.0	)		—			—
Impairment of buildings, riverboats and equipment		(20.3	)		(4.9	)		—
Write-downs, reserves and recoveries, net		(4.3	)		0.5			—
Impairment of investment in equity securities		(29.1	)		—			—
Loss on early extinguishment of debt		—			(6.1	)		—
Other non-operating income		2.7			15.5			16.0
Interest expense, net of capitalized interest		(53.0	)		(25.7	)		(53.7	)
Minority interest		—			—			0.1
Income tax benefit (expense)		54.5			(0.5	)		(42.1	)
Income from continuing operations	$	(370.2	)	$	—		$	63.3
Capital expenditures
L’Auberge du Lac	$	23.4		$	69.8		$	14.4
Boomtown New Orleans		7.6			4.7			12.0
Belterra Casino Resort		5.7			13.9			6.7
Boomtown Bossier City		3.1			2.3			4.6
Lumière Place		83.5			321.6			103.8
The Admiral Riverboat Casino		0.3			1.2			—
Boomtown Reno		7.0			2.5			3.1
Casino Magic Argentina		4.5			10.5			6.9
Corporate and Other, including new properties (c)		170.9			119.1			35.0
	$	306.0		$	545.6		$	186.5
Assets:
L’Auberge du Lac	$	356.2		$	398.5		$	352.8
Boomtown New Orleans		75.3			87.6			91.3
Belterra Casino Resort		200.7			215.1			219.3
Boomtown Bossier City		91.8			109.5			120.5
Lumière Place		542.8			525.3			44.6
The Admiral Riverboat Casino		8.2			45.9			49.3
Boomtown Reno		54.6			71.9			78.3
Casino Magic Argentina		31.3			39.9			33.3
Corporate and other including new properties		558.3			699.8			748.4
	$	1,919.2		$	2,193.5		$	1,737.8

72

(a)	We define Adjusted EBITDA for each segment as earnings before interest income and expense, income taxes, depreciation, amortization, pre-opening and development costs, non-cash share-based compensation, merger termination proceeds, asset impairment costs, write-downs, reserves, recoveries, corporate level litigation settlement costs, gain (loss) on sale of certain assets, gain (loss) on sale of equity security investments, minority interest, gain (loss) on early extinguishment of debt and discontinued operations. We use Adjusted EBITDA to compare operating results among our properties and between accounting periods.
(b)	Corporate expenses represent unallocated payroll, professional fees, travel expenses and other general and administrative expenses not directly related to our casino and hotel operations.
(c)	Includes capital expenditures for our various development projects not yet reflected as operating segments, including $99.4 million for Atlantic City, $51.6 million for River City and $11.2 million for Sugarcane Bay.

Note 15—Quarterly Financial Information (Unaudited)

The following is a summary of unaudited quarterly financial data for the years ended December 31, 2008 and 2007:

	2008
	Dec. 31,			Sept. 30,			June 30,			Mar. 31,
	(in millions, except per share data)
Revenues	$	258.9		$	262.8		$	266.3		$	256.6
Operating income (loss)		(309.2	)		(7.4	)		(16.9	)		(11.8	)
Income (loss) from continuing operations		(297.8	)		(8.2	)		(48.4	)		(15.7	)
Income (loss) from discontinued operations, net of taxes		0.1			(3.6	)		30.3			20.8
Net income (loss)		(297.7	)		(11.8	)		(18.1	)		5.1
Per Share Data—Basic (a)
Income (loss) from continuing operations	$	(4.97	)	$	(0.14	)	$	(0.81	)	$	(0.26	)
Income (loss) from discontinued operations, net of taxes		(0.00	)		(0.06	)		0.51			0.34
Net income (loss)—basic	$	(4.97	)	$	(0.20	)	$	(0.30	)	$	0.08
Per Share Data—Diluted (a)
Income (loss) from continuing operations	$	(4.97	)	$	(0.14	)	$	(0.81	)	$	(0.26	)
Income (loss) from discontinued operations, net of taxes		(0.00	)		(0.06	)		0.51			0.34
Net income (loss)—diluted	$	(4.97	)	$	(0.20	)	$	(0.30	)	$	0.08

	2007
	Dec. 31,			Sept. 30,			June 30,		Mar. 31,
	(in millions, except per share data)
Revenues	$	219.3		$	237.6		$	232.5	$	232.4
Operating income		(15.5	)		11.5			10.6		10.2
Income (loss) from continuing operations		(18.0	)		5.8			8.6		3.7
Income (loss) from discontinued operations, net of taxes		(1.2	)		(0.8	)		1.3		(0.8	)
Net income (loss)		(19.2	)		5.0			9.9		2.9
Per Share Data—Basic (a)
Income (loss) from continuing operations	$	(0.30	)	$	0.10		$	0.14	$	0.06
Income (loss) from discontinued operations, net of taxes		(0.02	)		(0.02	)		0.03		(0.01	)
Net income (loss)—basic	$	(0.32	)	$	0.08		$	0.17	$	0.05
Per Share Data—Diluted (a)
Income (loss) from continuing operations	$	(0.30	)	$	0.10		$	0.14	$	0.06
Income (loss) from discontinued operations, net of taxes		(0.02	)		(0.02	)		0.03		(0.01	)
Net income (loss)—diluted	$	(0.32	)	$	0.08		$	0.17	$	0.05

(a) Net income (loss) per share calculations for each quarter are based on the weighted average number of shares outstanding during the respective periods; accordingly, the sum of the quarters may not equal the full-year income (loss) per share.

73

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

None.

Item 9A. Controls and Procedures

(a) Management’s Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

The Company’s management, with the participation of the Chief Executive Officer (the “CEO”) and Chief Financial Officer (the “CFO”), evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2008. Based on this evaluation, the Company’s management, including the CEO and the CFO, concluded that, as of December 31, 2008, the Company’s disclosure controls and procedures were effective, in that they provide a reasonable level of assurance that information required to be disclosed by the Company in the reports filed or submitted by it under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. The Company’s disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including the CEO and the CFO, as appropriate, to allow timely decisions regarding required disclosure.

Notwithstanding the foregoing, there can be no assurance that the Company’s disclosure controls and procedures will detect or uncover all failures of persons within the Company and its consolidated subsidiaries to disclose material information otherwise required to be set forth in the Company’s periodic reports. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable, not absolute, assurance of achieving their control objectives.

No change in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the fiscal quarter ended December 31, 2008 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

(b) Management’s Annual Report on Internal Control over Financial Reporting

Internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) refers to the process designed by, or under the supervision of, the Company’s CEO and CFO, and effected by the Company’s board of directors, management and other personnel, 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. Management is responsible for establishing and maintaining adequate internal control over the Company’s financial reporting.

The Company’s management, with the participation of the Company’s CEO and CFO, evaluated the effectiveness of the Company’s internal control over financial reporting as of December 31, 2008. This evaluation was performed using the internal control evaluation framework developed by the Committee of Sponsoring Organizations of the Treadway Commission. Based on such evaluation, management has concluded that, as of such date, the Company’s internal control over financial reporting was effective.

Deloitte & Touche LLP has issued an attestation report on the effectiveness of our internal control over financial reporting. This report follows in Item 9A(c).

(c) Attestation report of the independent registered public accounting firm.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Pinnacle Entertainment, Inc.
Las Vegas, Nevada

We have audited the internal control over financial reporting of Pinnacle Entertainment, Inc. and subsidiaries (the “Company”) as of December 31, 2008, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2008, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule as of and for the year ended December 31, 2008 of the Company and our report dated March 9, 2009 expressed an unqualified opinion, and includes an explanatory paragraph related to the adoption of Financial Accounting Standards Board Interpretation No. 48, on those consolidated financial statements and financial statement schedule.

/s/ DELOITTE & TOUCHE LLP
Las Vegas, Nevada
March 9, 2009

Item 9B. Other Information

Pinnacle has elected to include the following information in this Item 9B of Form 10-K in lieu of reporting it on a separately filed Form 8-K. Pinnacle does not believe that separately filed Form 8-Ks are necessarily required to report all these items, but the following disclosures are being made under this Item 9B out of an abundance of caution. If filed on Form 8-K, the following disclosures would otherwise be filed on Form 8-K under the heading listed below.

75

Item 5.02(e)—Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On December 22, 2008, the Company entered into amended and restated employment agreements (the “Amendments to the Employment Agreements”) with the following executive officers of the Company: Daniel R. Lee, Chief Executive Officer and Chairman of the Board of Directors; Stephen H. Capp, Executive Vice President and Chief Financial Officer; John A. Godfrey, Executive Vice President, General Counsel and Secretary; and Alain Uboldi, Chief Operating Officer. The principal purpose of the Amendments to the Employment Agreements was to amend the prior employment agreements to comply with Section 409A of the Internal Revenue Code of 1986, as amended, and related regulations and guidance (“Section 409A”). In general, the changes reflected in the Amendments to the Employment Agreements relate to the timing of payments to executives under their employment agreement following certain events. With respect to Mr. Lee’s employment agreement, the base salary amount was conformed to his actual base salary, which had been increased in 2007. The Amendments to the Employment Agreements do not materially affect the scope or amounts of compensation or benefits that such executives are entitled to receive under their employment agreements.

In addition, on December 9, 2008, the Board of Directors approved of amendments to the Pinnacle Entertainment, Inc. 2005 Equity and Performance Incentive Plan, As Amended (the “2005 Plan”) and the Amended and Restated Pinnacle Entertainment, Inc. Directors Deferred Compensation Plan (the “Directors Deferred Compensation Plan”). The amendments to the 2005 Plan and the Directors Deferred Compensation Plan were made to comply with the requirements of Section 409A.

Section 409A changed the income tax treatment of nonqualified deferred compensation and imposed new requirements on both the terms and operation of such compensation. Although the provisions of Section 409A have been in effect since 2005, and employers have been required to operate in good faith since that time, final regulations under Section 409A were not issued until 2007. Companies were required to amend affected nonqualified deferred compensation plans by December 31, 2008, to ensure that they comply with Section 409A and the Section 409A final regulations. Under the final Section 409A regulations, certain severance payments, reimbursement arrangements and other arrangements under the prior employment agreements could have constituted deferred compensation and, accordingly, needed to be brought into compliance with the foregoing regulations.

The Amendments to the Employment Agreements are filed as Exhibits 10.9, 10.10, 10.11, and 10.13 to this Annual Report on Form 10-K and are incorporated by reference herein. The amendments to the 2005 Plan and the Directors Deferred Compensation Plan are filed as Exhibits 4.12 and 10.48, respectively, to this Annual Report on Form 10-K and are incorporated by reference herein.

On December 24, 2008, the Company entered into the First Amendment (the “First Amendment”) to the Second Amendment and Restatement of the Pinnacle Entertainment, Inc. Executive Deferred Compensation Plan (the “Plan”). Pursuant to the First Amendment, the Company amended the Plan to permit a participant to elect, during 2008, that all or any portion of his annuity account (as well as all or any portion of his deferral contribution (i.e., non-annuity) account) shall be distributed on an interim distribution date of January 15, 2009 or January 15 of any later year, and has determined that such amendment does not decrease or restrict the balance of a participant’s combined account or any component thereof. The Plan already permitted the parities to make this deferral election for the deferral contribution account. The First Amendment is filed as Exhibit 10.49 to this Annual Report on Form 10-K and is incorporated by reference herein.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

The information required under this item will be contained in our definitive Proxy Statement for our 2009 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission within 120 days after December 31, 2008 under the captions “Election of Directors—General,” “Election of Directors—Information Regarding the Director Nominees,” “Election of Directors—Executive Officers,” “Election of Directors—Section 16(a) Beneficial Ownership Reporting Compliance,” “Election of Directors—Code of Ethical Business Conduct,” and the information regarding our audit committee and our audit committee financial expert in “Election of Directors—Board Meetings and Board Committees” and is incorporated herein by reference.

76

Item 11. Executive Compensation

The information required under this item will be contained in our definitive Proxy Statement for our 2009 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission within 120 days after December 31, 2008 under the captions “Election of Directors—Director Compensation”, “Election of Directors—Compensation Committee Interlocks and Insider Participation,” “Executive Compensation—Compensation Committee Report” and “Executive Compensation” and is incorporated herein by reference.

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

The information required under this item will be contained in our definitive Proxy Statement for our 2009 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission within 120 days after December 31, 2008 under the captions “Election of Directors—Security Ownership of Certain Beneficial Owners and Management” and “Executive Compensation—Equity Compensation Plan Information” and is incorporated herein by reference.

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

The information required under this item will be contained in our definitive Proxy Statement for our 2009 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission within 120 days after December 31, 2008 under the captions “Election of Directors—Transactions with Related Persons, Promoters and Certain Control Persons” and “Election of Directors—Director Independence” and is incorporated herein by reference.

Item 14. Principal Accountant Fees and Services

The information required under this item will be contained in our definitive Proxy Statement for our 2009 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission within 120 days after December 31, 2008 under the caption “Ratification of Appointment of Independent Auditors—Audit and Related Fees” and is incorporated herein by reference.

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a) Documents filed as a part of this report.

1. Consolidated Financial Statements and Supplementary Data: The following financial statements are included herein under Item 8 of Part II of this report, “Financial Statements and Supplementary Data”:

	Page
	Number
Report of Independent Registered Public Accounting Firm		40
Consolidated Income Statements for the years ended December 31, 2008, 2007 and 2006		41
Consolidated Balance Sheets at December 31, 2008 and 2007		42
Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2008, 2007 and 2006		43
Consolidated Statements of Cash Flows for the years ended December 31, 2008, 2007 and 2006		44
Notes to Consolidated Financial Statements		45
Quarterly Data		73

2. Financial Statement Schedules:

Schedule II — Valuation and Qualifying Accounts 85

All other schedules have been omitted for the reason that the required information is presented in the financial statements or notes thereto, the amounts involved are not significant or the schedules are not applicable.

77

3. Exhibits.

Exhibit
Number			Description of Exhibit
	3.1		Restated Certificate of Incorporation of Pinnacle Entertainment, Inc., as amended, is hereby incorporated by reference to Exhibit 3.3 to the Company’s Current Report on Form 8-K filed on May 9, 2005. (SEC File No. 001-13641).
	3.2		Restated Bylaws of Pinnacle Entertainment, Inc., as amended, are hereby incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on December 15, 2008. (SEC File No. 001-13641).
	4.1	†	Hollywood Park, Inc. 1996 Stock Option Plan is hereby incorporated by reference to Exhibit 10.24 to the Company’s Registration Statement on Form S-4 filed on September 18, 1996. (SEC File No. 333-12253).
	4.2	†	Form of Non-Qualified Stock Option Agreement for Hollywood Park, Inc. 1996 Stock Option Plan is hereby incorporated by reference to Exhibit 4.2 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004. (SEC File No. 001-13641).
	4.3	†	Hollywood Park, Inc. 1993 Stock Option Plan is hereby incorporated by reference to Exhibit 4.2 to the Company’s Amendment No. 1 to Registration Statement on Form S-4 filed on March 26, 1999. (SEC File No. 333-73235).
	4.4	†	Pinnacle Entertainment, Inc. 2001 Stock Option Plan is hereby incorporated by reference to Exhibit 4.3 to the Company’s Registration Statement on Form S-8 filed on June 6, 2001. (SEC File No. 333-62378).
	4.5	†	Form of First Amendment to Pinnacle Entertainment, Inc. 2001 Stock Option Plan is hereby incorporated by reference to Exhibit 4.4 to the Company’s Current Report on Form 8-K filed on January 30, 2004. (SEC File No. 001-13641).
	4.6	†	Form of Stock Option Agreement for Pinnacle Entertainment, Inc. 2001 Stock Option Plan is hereby incorporated by reference to Exhibit 4.5 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004. (SEC File No. 001-13641).
	4.7	†	Pinnacle Entertainment, Inc. 2002 Stock Option Plan is hereby incorporated by reference to Exhibit 4.4 to the Company’s Registration Statement on Form S-8 filed on July 16, 2003. (SEC File No. 333-107081).
	4.8	†	First Amendment to Pinnacle Entertainment, Inc. 2002 Stock Option Plan is hereby incorporated by reference to Exhibit 4.5 to the Company’s Registration Statement on Form S-8 filed on July 16, 2003. (SEC File No. 333-107081).
	4.9	†	Second Amendment to Pinnacle Entertainment, Inc. 2002 Stock Option Plan is hereby incorporated by reference to Exhibit 4.6 to the Company’s Registration Statement on Form S-8 filed on July 16, 2003. (SEC File No. 333-107081).
	4.10	†	Form of Stock Option Agreement for Pinnacle Entertainment, Inc. 2002 Stock Option Plan is hereby incorporated by reference to Exhibit 4.10 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004. (SEC File No. 001-13641).
	4.11	†	Pinnacle Entertainment, Inc. 2005 Equity and Performance Incentive Plan, As Amended is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 27, 2008. (SEC File No. 001-13641).
	4.12	*†	Amendment to Pinnacle Entertainment, Inc. 2005 Equity And Performance Incentive Plan, As Amended.
	4.13	†	Form of Restricted Stock Agreement and Form of Restricted Stock Grant Notice for 2005 Equity and Performance Incentive Plan of Pinnacle Entertainment, Inc. is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 6, 2006. (SEC File No. 001-13641).
	4.14	†	Form of Stock Option Grant Notice and Form of Stock Option Agreement for the Pinnacle Entertainment, Inc. 2005 Equity and Performance Incentive Plan, As Amended is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 15, 2008. (SEC File No. 001-13641).
	4.15	†	Form of Grant of Other Stock Unit Awards for the Pinnacle Entertainment, Inc. 2005 Equity and Performance Incentive Plan, As Amended is hereby incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on December 15, 2008. (SEC File No. 001-13641).
	4.16	†	Nonqualified Stock Option Agreement dated as of January 11, 2003 by and between Pinnacle Entertainment, Inc. and Stephen H. Capp is hereby incorporated by reference to Exhibit 4.7 to the Company’s Registration Statement on Form S-8 filed on July 16, 2003. (SEC File No. 333-107081).
	4.17	†	Nonqualified Stock Option Agreement dated as of April 10, 2002 by and between Pinnacle Entertainment, Inc. and Daniel R. Lee is hereby incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2002. (SEC File No. 001-13641).
	4.18	†	Nonqualified Stock Option Agreement dated as of April 10, 2002 by and between Pinnacle Entertainment, Inc. and Daniel R. Lee is hereby incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2002. (SEC File No. 001-13641).
	4.19	†	Nonqualified Stock Option Agreement dated as of August 1, 2008 by and between Pinnacle Entertainment, Inc. and Carlos Ruisanchez is hereby incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2008. (SEC File No. 001-13641).

78

Exhibit
Number		Description of Exhibit
	4.20	Indenture dated as of September 25, 2003 by and among Pinnacle Entertainment, Inc., the guarantors named therein and The Bank of New York Trust Company, as successor trustee to The Bank of New York, is hereby incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on October 7, 2003. (SEC File No. 001-13641).
	4.21	First Supplemental Indenture dated as of September 25, 2003, governing the 8.75% Senior Subordinated Notes due 2013, by and among Pinnacle Entertainment, Inc., the guarantors named therein and The Bank of New York Trust Company, as successor trustee to The Bank of New York, is hereby incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on October 7, 2003. (SEC File No. 001-13641).
	4.22	Form of 8.75% Senior Subordinated Note due 2013 is hereby incorporated by reference to Exhibit A contained in Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on October 7, 2003. (SEC File No. 001-13641).
	4.23	Indenture dated as of March 15, 2004, governing the 8.25% Senior Subordinated Notes due 2012, by and among Pinnacle Entertainment, Inc., the guarantors identified therein and The Bank of New York Trust Company, as successor trustee to The Bank of New York, is hereby incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on March 30, 2004. (SEC File No. 001-13641).
	4.24	First Supplemental Indenture, dated as of December 3, 2004, governing the 8.25% Senior Subordinated Notes due 2012, by and among Pinnacle Entertainment, Inc., the guarantors identified therein and The Bank of New York Trust Company, as successor trustee to The Bank of New York, is hereby incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on December 7, 2004. (SEC File No. 001-13641).
	4.25	Second Supplemental Indenture, dated as of October 19, 2005, governing the 8.25% Senior Subordinated Notes due 2012, by and among Pinnacle Entertainment, Inc., the guarantors identified therein and The Bank of New York Trust Company, as successor trustee to The Bank of New York is hereby incorporated by reference to Exhibit 4.23 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006. (SEC File No. 001-13641).
	4.26	Third Supplemental Indenture, dated as of November 17, 2006, governing the 8.25% Senior Subordinated Notes due 2012, by and among Pinnacle Entertainment, Inc., the guarantors identified therein and The Bank of New York Trust Company, as successor trustee to The Bank of New York is hereby incorporated by reference to Exhibit 4.24 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006. (SEC File No. 001-13641).
	4.27	Fourth Supplemental Indenture, dated as of January 30, 2007, governing the 8.25% Senior Subordinated Notes due 2012, by and among Pinnacle Entertainment, Inc., the guarantors identified therein and The Bank of New York Trust Company, as successor trustee to The Bank of New York is hereby incorporated by reference to Exhibit 4.25 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006. (SEC File No. 001-13641).
	4.28	Fifth Supplemental Indenture, dated as of May 29, 2007, governing the 8.25% Senior Subordinated Notes due 2012, by and among Pinnacle Entertainment, Inc., the guarantors identified therein and The Bank of New York Trust Company, as successor trustee to The Bank of New York is hereby incorporated by reference to Exhibit 4.25 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007. (SEC File No. 001-13641).
	4.29	Sixth Supplemental Indenture, dated as of June 7, 2007, governing the 8.25% Senior Subordinated Notes due 2012, by and among Pinnacle Entertainment, Inc., the guarantors identified therein and The Bank of New York Trust Company, as successor trustee to The Bank of New York, is hereby incorporated by reference to Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2007. (SEC File No. 001-13641).
	4.30	Form of 8.25% Senior Subordinated Note due 2012 is hereby incorporated by reference to Exhibit A contained in Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on March 30, 2004. (SEC File No. 001-13641).
	4.31	Indenture dated as of June 8, 2007, governing the 7.50% Senior Subordinated Notes due 2015, by and among Pinnacle Entertainment, Inc., the guarantors identified therein and The Bank of New York Trust Company is hereby incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on June 11, 2007. (SEC File No. 001-13641).
	4.32	Form of 7.50% Senior Subordinated Note due 2015 is hereby incorporated by reference to Exhibit A contained in Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on June 11, 2007. (SEC File No. 001-13641).
	4.33	Registration Rights Agreement, dated as of June 8, 2007, among Pinnacle Entertainment, Inc., the guarantors identified therein and Lehman Brothers Inc., Bear, Stearns & Co. Inc., Banc of America Securities LLC and Deutsche Bank Securities Inc., as representatives of the several Initial Purchasers named in Schedule 1 of the Purchase Agreement is hereby incorporated by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K filed on June 11, 2007. (SEC File No. 001-13641).

79

Exhibit
Number			Description of Exhibit
	10.1		Second Amended and Restated Credit Agreement, dated as of December 14, 2005, among Pinnacle Entertainment, Inc., the Lenders referred to therein, Lehman Brothers Inc., and Bear, Stearns & Co. Inc., as Joint Advisors, Joint Lead Arrangers and Joint Book Runners, Wells Fargo, N.A., as Lead Arranger, Société Générale, Deutsche Bank Securities Inc., and Wells Fargo Bank, N.A., as Joint Documentation Agents, Bear Stearns Corporate Lending Inc., as Syndication Agent, and Lehman Commercial Paper Inc., as Administrative Agent, is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 20, 2005. (SEC File No. 001-13641).
	10.2		First Amendment dated as of December 22, 2005, to the Second Amended and Restated Credit Agreement, dated as of December 14, 2005, among Pinnacle Entertainment, Inc., the Lenders referred to therein, Lehman Brothers Inc., and Bear, Stearns & Co. Inc., as Joint Advisors, Joint Lead Arrangers and Joint Book Runners, Wells Fargo, N.A., as Lead Arranger, Société Générale, Deutsche Bank Securities Inc., and Wells Fargo Bank, N.A., as Joint Documentation Agents, Bear Stearns Corporate Lending Inc., as Syndication Agent, and Lehman Commercial Paper Inc., as Administrative Agent, is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 23, 2005. (SEC File No. 001-13641).
	10.3		Second Amendment, dated as of October 11, 2006, to the Second Amended and Restated Credit Agreement dated as of December 14, 2005 (as amended by that First Amendment to the Second Amended and Restated Credit Agreement, dated December 22, 2005), among Pinnacle Entertainment, Inc., the Lenders referred to therein, Lehman Brothers Inc., and Bear, Stearns & Co. Inc., as Joint Advisors, Joint Lead Arrangers and Joint Book Runners, Wells Fargo Bank, N.A., as Lead Arranger, Société Générale, Deutsche Bank Securities Inc., and Wells Fargo Bank, N.A., as Joint Documentation Agents, Bear Stearns Corporate Lending Inc., as Syndication Agent, and Lehman Commercial Paper Inc., as Administrative Agent, is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 17, 2006. (SEC File No. 001-13641).
	10.4		Third Amendment, dated as of November 17, 2006, to the Second Amended and Restated Credit Agreement dated as of December 14, 2005 (as amended by that First Amendment to the Second Amended and Restated Credit Agreement, dated December 22, 2005 and that Second Amendment to the Second Amended and Restated Credit Agreement, dated as of October 11, 2006), among Pinnacle Entertainment, Inc., the Lenders referred to therein, Lehman Brothers Inc., and Bear, Stearns, & Co. Inc., as Joint Advisors, Joint Lead Arrangers and joint Book Runners, Wells Fargo Bank, N.A., as Lead Arranger, Société Générale, Deutsche Bank Securities Inc., and Wells Fargo Bank, N.A., as Joint Documentation Agents, Bear Stearns Corporate Lending Inc., as Syndication Agent, and Lehman Commercial Paper Inc., as Administrative Agent, is hereby incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on November 22, 2006. (SEC File No. 001-13641).
	10.5	†	Second Amendment and Restatement of the Pinnacle Entertainment, Inc. Executive Deferred Compensation Plan, effective December 31, 2007 is hereby incorporated by reference to Exhibit 10.6 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007. (SEC File No. 001-13641).
	10.6	†	Summary of 2006 Bonus Award Schedule is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on January 8, 2007. (SEC File No. 001-13641).
	10.7	†	Summary of 2006 Bonus Award Schedule is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on January 23, 2007. (SEC File No. 001-13641).
	10.8	†	Summary of 2007 Bonus Award Schedule is hereby incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on January 7, 2008. (SEC File No. 001-13641).
	10.9	*†	Third Amended and Restated Employment Agreement, dated December 22, 2008, between Pinnacle Entertainment, Inc. and Daniel R. Lee.
	10.10	*†	Amended and Restated Employment Agreement dated December 22, 2008 between Pinnacle Entertainment, Inc. and Stephen H. Capp.
	10.11	*†	Amended and Restated Employment Agreement dated December 22, 2008 between Pinnacle Entertainment, Inc. and John A. Godfrey.
	10.12	*†	Amended and Restated Employment Agreement dated December 22, 2008 between Pinnacle Entertainment, Inc. and Carlos Ruisanchez.
	10.13	*†	Amended and Restated Employment Agreement dated December 22, 2008 between Pinnacle Entertainment, Inc. and Alain Uboldi.
	10.14	†	Employment Agreement dated October 6, 2006 between Pinnacle Entertainment, Inc. and Wade W. Hundley is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 12, 2006. (SEC File No. 001-13641).

80

Exhibit
Number			Description of Exhibit
	10.15	†	Separation Agreement and General Release dated as of June 5, 2008 by and among Pinnacle Entertainment, Inc. and Wade W. Hundley is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 6, 2008. (SEC File No. 001-13641).
	10.16		Form of Lease by and between the Webster Family Limited Partnership and the Diuguid Family Limited Partnership and Pinnacle Gaming Development Corp. (executed by the parties on December 11, 1998 and subsequently assigned by Pinnacle Gaming Development Corp. to Belterra Resort Indiana, LLC), is hereby incorporated by reference to Exhibit B contained in Exhibit 10.47 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1998. (SEC File No. 001-13641).
	10.17		Form of Lease by and between Daniel Webster, Marsha S. Webster, William G. Diuguid, Sara T. Diuguid, J.R. Showers, III and Carol A. Showers, and Pinnacle Gaming Development Corp. (executed by the parties on December 11, 1998 and subsequently assigned by Pinnacle Gaming Corp. to Belterra Resort Indiana, LLC), is hereby incorporated by reference to Exhibit B contained in Exhibit 10.51 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 1998. (SEC File No. 001-13641).
	10.18		Commercial Lease dated September 9, 1996 by and between State of Louisiana, State Land Office and PNK (Bossier City), Inc. (f/k/a Casino Magic of Louisiana, Corp.), is hereby incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2003. (SEC File No. 001-13641).
	10.19		Ground Lease Agreement dated as of August 21, 2003 by and between PNK (LAKE CHARLES), L.L.C., and Lake Charles Harbor & Terminal District, is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 19, 2003. (SEC File No. 001-13641).
	10.20		Addendum Number One dated as of July 5, 2005 to Memorandum of Lease dated August 21, 2003, by and between PNK (LAKE CHARLES) L.L.C. and Lake Charles Harbor and Terminal District is hereby incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2005. (SEC File No. 001-013641).
	10.21		Ground Lease Agreement, effective as of August 1, 2007, by and between PNK (LAKE CHARLES), L.L.C. and Lake Charles Harbor & Terminal District is hereby incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on November 30, 2007. (SEC File No. 001-13641).
	10.22		Guaranty Agreement, effective as of August 1, 2007, by and between Pinnacle Entertainment, Inc. and Lake Charles Harbor & Terminal District is hereby incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on November 30, 2007. (SEC File No. 001-13641).
	10.23		Redevelopment Agreement dated as of April 22, 2004 by and between the Land Clearance for Redevelopment Authority of the City of St. Louis and Pinnacle Entertainment, Inc. is hereby incorporated by reference to Exhibit 10.43 to the Company’s Amendment No. 1 to Registration Statement on Form S-4 filed on June 7, 2004. (SEC File No. 333-115557).
	10.24		First Amendment to Redevelopment Agreement and First Amendment to Option For Ground Lease dated as of December 23, 2004 by and between the Land Clearance for Redevelopment Authority of the City of St. Louis and Pinnacle Entertainment, Inc. is hereby incorporated by reference to Exhibit 10.51 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005. (SEC File No. 001-13641).
	10.25		Second Amendment to Redevelopment Agreement dated as of July 21, 2005 by and between the Land Clearance for Redevelopment Authority of the City of St. Louis and Pinnacle Entertainment, Inc. is hereby incorporated by reference to Exhibit 10.52 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005. (SEC File No. 001-13641).
	10.26		Third Amendment to the Redevelopment Agreement dated August 21, 2006 by and between Land Clearance for Redevelopment Authority of the City of St. Louis and Pinnacle Entertainment, Inc. is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 24, 2006. (SEC File No. 001-13641).
	10.27		Lease and Development Agreement dated as of August 12, 2004 by and between the St. Louis County Port Authority and Pinnacle Entertainment, Inc. is hereby incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2004. (SEC File No. 001-13641).
	10.28		Letter Agreement dated as of August 12, 2004 by and between the St. Louis County Port Authority and Pinnacle Entertainment, Inc. is hereby incorporated by reference to Exhibit 10.54 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005. (SEC File No. 001-13641).

81

Exhibit
Number			Description of Exhibit
	10.29		Second Amendment to Lease and Development Agreement dated as of October 7, 2005 by and between St. Louis County Port Authority and Pinnacle Entertainment, Inc. is hereby incorporated by reference to Exhibit 10.55 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005. (SEC File No. 001-13641).
	10.30		Third Amendment to Lease and Development Agreement dated as of August 11, 2006 by and between the St. Louis County Port Authority and Pinnacle Entertainment, Inc. is hereby incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2006. (SEC File No. 001-13641).
	10.31		Fourth Amendment to Lease and Development Agreement dated as of January 18, 2007 by and between the St. Louis County Port Authority and Pinnacle Entertainment, Inc. is hereby incorporated by reference to Exhibit 10.38 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006. (SEC File No. 001-13641).
	10.32		Fifth Amendment to Lease and Development Agreement dated as of March 30, 2007 by and between St. Louis County Port Authority and Pinnacle Entertainment, Inc. is hereby incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2007. (SEC File No. 001-13641).
	10.33		Sixth Amendment to Lease and Development Agreement dated November 26, 2007 by and between the St. Louis County Port Authority and Pinnacle Entertainment, Inc. is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 30, 2007. (SEC File No. 001-13641).
	10.34		Indemnification Trust Agreement dated as of August 16, 2005 by and between Pinnacle Entertainment, Inc. and Wilmington Trust Company and, as an additional party, Bruce Leslie, as Beneficiaries’ Representative, is hereby incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2005. (SEC File No. 001-13641).
	10.35		Exercising of Option to Lease Additional Property situated in Calcasieu Parish, Louisiana and Exercise of Option to Lease Additional Property is hereby incorporated by reference to Exhibit 10.64 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006. (SEC File No. 001-13641).
	10.36		Development Agreement dated December 31, 2007, by and between Unified Government of Wyandotte County/Kansas City, Kansas and PNK (Kansas), LLC, is hereby incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on January 7, 2008. (SEC File No. 001-13641).
	10.37		Standard Form of Agreement, dated November 27, 2007, between PNK (SCB), L.L.C. and Manhattan Construction Company is hereby incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on November 30, 2007. (SEC File No. 001-13641).
	10.38		Purchase Agreement, dated as of June 5, 2007, by and among Pinnacle Entertainment, Inc., Lehman Brothers Inc., Bear, Stearns & Co. Inc., Banc of America Securities LLC and Deutsche Bank Securities Inc., as representatives of the several Initial Purchasers named in Schedule 1 of the Purchase Agreement is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 11, 2007. (SEC File No. 001-13641).
	10.39		Guaranteed Maximum Price Agreement, dated as of May 11, 2007, between Casino One Corporation and McCarthy Building Companies, Inc. is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 17, 2007. (SEC File No. 001-13641).
	10.40	†	Summary of 2007 Bonus Award Schedule is hereby incorporated by reference to Exhibit 10.64 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007. (SEC File No. 001-13641).
	10.41	†	Summary of 2008 Bonus Award Schedule is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 31, 2008. (SEC File No. 001-13641).
	10.42		Settlement Agreement, dated May 9, 2008, between Pinnacle Entertainment, Inc. and Allianz Global Risks US Insurance Company is hereby incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2008. (SEC File No. 001-13641).
	10.43		Settlement Agreement, dated February 22, 2008, between Pinnacle Entertainment, Inc. and Arch Specialty Insurance Company is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 26, 2008. (SEC File No. 001-13641).
	10.44		Agreement for Guaranteed Maximum Price Construction Services, dated August 8, 2008, between Casino One Corporation and Yates/Paric, a Joint Venture is hereby incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2008. (SEC File No. 001-13641).

82

Exhibit
Number			Description of Exhibit
	10.45	*†	Pinnacle Entertainment, Inc. Executive Health Expense Plan.
	10.46	*†	Pinnacle Entertainment, Inc. Deferred Bonus Plan.
	10.47	*†	Pinnacle Entertainment, Inc. Director Health and Medical Insurance Plan.
	10.48	*†	2008 Amended and Restated Pinnacle Entertainment, Inc. Directors Deferred Compensation Plan.
	10.49	*†	First Amendment to the Second Amendment and Restatement of the Pinnacle Entertainment, Inc. Executive Deferred Compensation Plan, effective December 24, 2008.
	11	*	Statement re: Computation of Per Share Earnings.
	12	*	Computation of Ratio of Earnings to Fixed Charges.
	21	*	Subsidiaries of Pinnacle Entertainment, Inc.
	23	*	Consent of Deloitte & Touche LLP.
	31.1	*	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.
	31.2	*	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.
	32	**	Section 1350 Certifications of Chief Executive Officer and Chief Financial Officer.
	99.1	*	Government Regulations and Gaming Issues.

*	Filed herewith.
**	Furnished herewith.
†	Management contract or compensatory plan or arrangement.

83

SIGNATURES

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

	PINNACLE ENTERTAINMENT, INC. (Registrant)
Dated: March 9, 2009	By:	/s/ Daniel R. Lee
		Daniel R. Lee
		Chairman of the Board and Chief Executive Officer

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

By:	/s/ Daniel R. Lee Daniel R. Lee	Dated: March 9, 2009
	Chairman of the Board, Chief Executive Officer and Director
	(Principal Executive Officer)
By:	/s/ Stephen H. Capp Stephen H. Capp	Dated: March 9, 2009
	Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)
By:	/s/ Stephen C. Comer Stephen C. Comer	Dated: March 9, 2009
	Director
By:	/s/ John V. Giovenco John V. Giovenco	Dated: March 9, 2009
	Director
By:	/s/ Richard J. Goeglein Richard J. Goeglein	Dated: March 9, 2009
	Director
By:	/s/ Ellis Landau Ellis Landau	Dated: March 9, 2009
	Director
By:	/s/ Bruce A. Leslie Bruce A. Leslie	Dated: March 9, 2009
	Director
By:	/s/ James L. Martineau James L. Martineau	Dated: March 9, 2009
	Director
By:	/s/ Michael Ornest Michael Ornest	Dated: March 9, 2009
	Director
By:	/s/ Lynn P. Reitnouer Lynn P. Reitnouer	Dated: March 9, 2009
	Director

PINNACLE ENTERTAINMENT, INC.

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS

For the years ended December 31, 2006, 2007 and 2008
(in thousands)

	As of		2006					As of		2007					As of		2008					As of
Reserve Description	1/1/06		Additions		Deductions			12/31/06		Additions		Deductions			12/31/07		Additions		Deductions			12/31/08
Allowance for doubtful accounts	$	3,349	$	8,851	$	(3,221	)	$	8,979	$	4,553	$	(2,067	)	$	11,465	$	4,074	$	(3,691	)	$	11,848

85

PINNACLE ENTERTAINMENT, INC.

EXHIBIT INDEX

Exhibit
Number			Description of Exhibit
	3.1		Restated Certificate of Incorporation of Pinnacle Entertainment, Inc., as amended, is hereby incorporated by reference to Exhibit 3.3 to the Company’s Current Report on Form 8-K filed on May 9, 2005. (SEC File No. 001-13641).
	3.2		Restated Bylaws of Pinnacle Entertainment, Inc., as amended, are hereby incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on December 15, 2008. (SEC File No. 001-13641).
	4.1	†	Hollywood Park, Inc. 1996 Stock Option Plan is hereby incorporated by reference to Exhibit 10.24 to the Company’s Registration Statement on Form S-4 filed on September 18, 1996. (SEC File No. 333-12253).
	4.2	†	Form of Non-Qualified Stock Option Agreement for Hollywood Park, Inc. 1996 Stock Option Plan is hereby incorporated by reference to Exhibit 4.2 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004. (SEC File No. 001-13641).
	4.3	†	Hollywood Park, Inc. 1993 Stock Option Plan is hereby incorporated by reference to Exhibit 4.2 to the Company’s Amendment No. 1 to Registration Statement on Form S-4 filed on March 26, 1999. (SEC File No. 333-73235).
	4.4	†	Pinnacle Entertainment, Inc. 2001 Stock Option Plan is hereby incorporated by reference to Exhibit 4.3 to the Company’s Registration Statement on Form S-8 filed on June 6, 2001. (SEC File No. 333-62378).
	4.5	†	Form of First Amendment to Pinnacle Entertainment, Inc. 2001 Stock Option Plan is hereby incorporated by reference to Exhibit 4.4 to the Company’s Current Report on Form 8-K filed on January 30, 2004. (SEC File No. 001-13641).
	4.6	†	Form of Stock Option Agreement for Pinnacle Entertainment, Inc. 2001 Stock Option Plan is hereby incorporated by reference to Exhibit 4.5 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004. (SEC File No. 001-13641).
	4.7	†	Pinnacle Entertainment, Inc. 2002 Stock Option Plan is hereby incorporated by reference to Exhibit 4.4 to the Company’s Registration Statement on Form S-8 filed on July 16, 2003. (SEC File No. 333-107081).
	4.8	†	First Amendment to Pinnacle Entertainment, Inc. 2002 Stock Option Plan is hereby incorporated by reference to Exhibit 4.5 to the Company’s Registration Statement on Form S-8 filed on July 16, 2003. (SEC File No. 333-107081).
	4.9	†	Second Amendment to Pinnacle Entertainment, Inc. 2002 Stock Option Plan is hereby incorporated by reference to Exhibit 4.6 to the Company’s Registration Statement on Form S-8 filed on July 16, 2003. (SEC File No. 333-107081).
	4.10	†	Form of Stock Option Agreement for Pinnacle Entertainment, Inc. 2002 Stock Option Plan is hereby incorporated by reference to Exhibit 4.10 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004. (SEC File No. 001-13641).
	4.11	†	Pinnacle Entertainment, Inc. 2005 Equity and Performance Incentive Plan, As Amended is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 27, 2008. (SEC File No. 001-13641).
	4.12	*†	Amendment to Pinnacle Entertainment, Inc. 2005 Equity And Performance Incentive Plan, As Amended.
	4.13	†	Form of Restricted Stock Agreement and Form of Restricted Stock Grant Notice for 2005 Equity and Performance Incentive Plan of Pinnacle Entertainment, Inc. is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 6, 2006. (SEC File No. 001-13641).
	4.14	†	Form of Stock Option Grant Notice and Form of Stock Option Agreement for the Pinnacle Entertainment, Inc. 2005 Equity and Performance Incentive Plan, As Amended is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 15, 2008. (SEC File No. 001-13641).
	4.15	†	Form of Grant of Other Stock Unit Awards for the Pinnacle Entertainment, Inc. 2005 Equity and Performance Incentive Plan, As Amended is hereby incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on December 15, 2008. (SEC File No. 001-13641).
	4.16	†	Nonqualified Stock Option Agreement dated as of January 11, 2003 by and between Pinnacle Entertainment, Inc. and Stephen H. Capp is hereby incorporated by reference to Exhibit 4.7 to the Company’s Registration Statement on Form S-8 filed on July 16, 2003. (SEC File No. 333-107081).
	4.17	†	Nonqualified Stock Option Agreement dated as of April 10, 2002 by and between Pinnacle Entertainment, Inc. and Daniel R. Lee is hereby incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2002. (SEC File No. 001-13641).

Exhibit
Number			Description of Exhibit
	4.18	†	Nonqualified Stock Option Agreement dated as of April 10, 2002 by and between Pinnacle Entertainment, Inc. and Daniel R. Lee is hereby incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2002. (SEC File No. 001-13641).
	4.19	†	Nonqualified Stock Option Agreement dated as of August 1, 2008 by and between Pinnacle Entertainment, Inc. and Carlos Ruisanchez is hereby incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2008. (SEC File No. 001-13641).
	4.20		Indenture dated as of September 25, 2003 by and among Pinnacle Entertainment, Inc., the guarantors named therein and The Bank of New York Trust Company, as successor trustee to The Bank of New York, is hereby incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on October 7, 2003. (SEC File No. 001-13641).
	4.21		First Supplemental Indenture dated as of September 25, 2003, governing the 8.75% Senior Subordinated Notes due 2013, by and among Pinnacle Entertainment, Inc., the guarantors named therein and The Bank of New York Trust Company, as successor trustee to The Bank of New York, is hereby incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on October 7, 2003. (SEC File No. 001-13641).
	4.22		Form of 8.75% Senior Subordinated Note due 2013 is hereby incorporated by reference to Exhibit A contained in Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on October 7, 2003. (SEC File No. 001-13641).
	4.23		Indenture dated as of March 15, 2004, governing the 8.25% Senior Subordinated Notes due 2012, by and among Pinnacle Entertainment, Inc., the guarantors identified therein and The Bank of New York Trust Company, as successor trustee to The Bank of New York, is hereby incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on March 30, 2004. (SEC File No. 001-13641).
	4.24		First Supplemental Indenture, dated as of December 3, 2004, governing the 8.25% Senior Subordinated Notes due 2012, by and among Pinnacle Entertainment, Inc., the guarantors identified therein and The Bank of New York Trust Company, as successor trustee to The Bank of New York, is hereby incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on December 7, 2004. (SEC File No. 001-13641).
	4.25		Second Supplemental Indenture, dated as of October 19, 2005, governing the 8.25% Senior Subordinated Notes due 2012, by and among Pinnacle Entertainment, Inc., the guarantors identified therein and The Bank of New York Trust Company, as successor trustee to The Bank of New York is hereby incorporated by reference to Exhibit 4.23 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006. (SEC File No. 001-13641).
	4.26		Third Supplemental Indenture, dated as of November 17, 2006, governing the 8.25% Senior Subordinated Notes due 2012, by and among Pinnacle Entertainment, Inc., the guarantors identified therein and The Bank of New York Trust Company, as successor trustee to The Bank of New York is hereby incorporated by reference to Exhibit 4.24 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006. (SEC File No. 001-13641).
	4.27		Fourth Supplemental Indenture, dated as of January 30, 2007, governing the 8.25% Senior Subordinated Notes due 2012, by and among Pinnacle Entertainment, Inc., the guarantors identified therein and The Bank of New York Trust Company, as successor trustee to The Bank of New York is hereby incorporated by reference to Exhibit 4.25 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006. (SEC File No. 001-13641).
	4.28		Fifth Supplemental Indenture, dated as of May 29, 2007, governing the 8.25% Senior Subordinated Notes due 2012, by and among Pinnacle Entertainment, Inc., the guarantors identified therein and The Bank of New York Trust Company, as successor trustee to The Bank of New York is hereby incorporated by reference to Exhibit 4.25 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007. (SEC File No. 001-13641).
	4.29		Sixth Supplemental Indenture, dated as of June 7, 2007, governing the 8.25% Senior Subordinated Notes due 2012, by and among Pinnacle Entertainment, Inc., the guarantors identified therein and The Bank of New York Trust Company, as successor trustee to The Bank of New York, is hereby incorporated by reference to Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2007. (SEC File No. 001-13641).
	4.30		Form of 8.25% Senior Subordinated Note due 2012 is hereby incorporated by reference to Exhibit A contained in Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on March 30, 2004. (SEC File No. 001-13641).
	4.31		Indenture dated as of June 8, 2007, governing the 7.50% Senior Subordinated Notes due 2015, by and among Pinnacle Entertainment, Inc., the guarantors identified therein and The Bank of New York Trust Company is hereby incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on June 11, 2007. (SEC File No. 001-13641).

Exhibit
Number			Description of Exhibit
	4.32		Form of 7.50% Senior Subordinated Note due 2015 is hereby incorporated by reference to Exhibit A contained in Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on June 11, 2007. (SEC File No. 001-13641).
	4.33		Registration Rights Agreement, dated as of June 8, 2007, among Pinnacle Entertainment, Inc., the guarantors identified therein and Lehman Brothers Inc., Bear, Stearns & Co. Inc., Banc of America Securities LLC and Deutsche Bank Securities Inc., as representatives of the several Initial Purchasers named in Schedule 1 of the Purchase Agreement is hereby incorporated by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K filed on June 11, 2007. (SEC File No. 001-13641).
	10.1		Second Amended and Restated Credit Agreement, dated as of December 14, 2005, among Pinnacle Entertainment, Inc., the Lenders referred to therein, Lehman Brothers Inc., and Bear, Stearns & Co. Inc., as Joint Advisors, Joint Lead Arrangers and Joint Book Runners, Wells Fargo, N.A., as Lead Arranger, Société Générale, Deutsche Bank Securities Inc., and Wells Fargo Bank, N.A., as Joint Documentation Agents, Bear Stearns Corporate Lending Inc., as Syndication Agent, and Lehman Commercial Paper Inc., as Administrative Agent, is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 20, 2005. (SEC File No. 001-13641).
	10.2		First Amendment dated as of December 22, 2005, to the Second Amended and Restated Credit Agreement, dated as of December 14, 2005, among Pinnacle Entertainment, Inc., the Lenders referred to therein, Lehman Brothers Inc., and Bear, Stearns & Co. Inc., as Joint Advisors, Joint Lead Arrangers and Joint Book Runners, Wells Fargo, N.A., as Lead Arranger, Société Générale, Deutsche Bank Securities Inc., and Wells Fargo Bank, N.A., as Joint Documentation Agents, Bear Stearns Corporate Lending Inc., as Syndication Agent, and Lehman Commercial Paper Inc., as Administrative Agent, is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 23, 2005. (SEC File No. 001-13641).
	10.3		Second Amendment, dated as of October 11, 2006, to the Second Amended and Restated Credit Agreement dated as of December 14, 2005 (as amended by that First Amendment to the Second Amended and Restated Credit Agreement, dated December 22, 2005), among Pinnacle Entertainment, Inc., the Lenders referred to therein, Lehman Brothers Inc., and Bear, Stearns & Co. Inc., as Joint Advisors, Joint Lead Arrangers and Joint Book Runners, Wells Fargo Bank, N.A., as Lead Arranger, Société Générale, Deutsche Bank Securities Inc., and Wells Fargo Bank, N.A., as Joint Documentation Agents, Bear Stearns Corporate Lending Inc., as Syndication Agent, and Lehman Commercial Paper Inc., as Administrative Agent, is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 17, 2006. (SEC File No. 001-13641).
	10.4		Third Amendment, dated as of November 17, 2006, to the Second Amended and Restated Credit Agreement dated as of December 14, 2005 (as amended by that First Amendment to the Second Amended and Restated Credit Agreement, dated December 22, 2005 and that Second Amendment to the Second Amended and Restated Credit Agreement, dated as of October 11, 2006), among Pinnacle Entertainment, Inc., the Lenders referred to therein, Lehman Brothers Inc., and Bear, Stearns, & Co. Inc., as Joint Advisors, Joint Lead Arrangers and joint Book Runners, Wells Fargo Bank, N.A., as Lead Arranger, Société Générale, Deutsche Bank Securities Inc., and Wells Fargo Bank, N.A., as Joint Documentation Agents, Bear Stearns Corporate Lending Inc., as Syndication Agent, and Lehman Commercial Paper Inc., as Administrative Agent, is hereby incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on November 22, 2006. (SEC File No. 001-13641).
	10.5	†	Second Amendment and Restatement of the Pinnacle Entertainment, Inc. Executive Deferred Compensation Plan, effective December 31, 2007 is hereby incorporated by reference to Exhibit 10.6 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007. (SEC File No. 001-13641).
	10.6	†	Summary of 2006 Bonus Award Schedule is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on January 8, 2007. (SEC File No. 001-13641).
	10.7	†	Summary of 2006 Bonus Award Schedule is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on January 23, 2007. (SEC File No. 001-13641).
	10.8	†	Summary of 2007 Bonus Award Schedule is hereby incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on January 7, 2008. (SEC File No. 001-13641).
	10.9	*†	Third Amended and Restated Employment Agreement, dated December 22, 2008, between Pinnacle Entertainment, Inc. and Daniel R. Lee.
	10.10	*†	Amended and Restated Employment Agreement dated December 22, 2008 between Pinnacle Entertainment, Inc. and Stephen H. Capp.
	10.11	*†	Amended and Restated Employment Agreement dated December 22, 2008 between Pinnacle Entertainment, Inc. and John A. Godfrey.

Exhibit
Number			Description of Exhibit
	10.12	*†	Amended and Restated Employment Agreement dated December 22, 2008 between Pinnacle Entertainment, Inc. and Carlos Ruisanchez.
	10.13	*†	Amended and Restated Employment Agreement dated December 22, 2008 between Pinnacle Entertainment, Inc. and Alain Uboldi.
	10.14	†	Employment Agreement dated October 6, 2006 between Pinnacle Entertainment, Inc. and Wade W. Hundley is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 12, 2006. (SEC File No. 001-13641).
	10.15	†	Separation Agreement and General Release dated as of June 5, 2008 by and among Pinnacle Entertainment, Inc. and Wade W. Hundley is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 6, 2008. (SEC File No. 001-13641).
	10.16		Form of Lease by and between the Webster Family Limited Partnership and the Diuguid Family Limited Partnership and Pinnacle Gaming Development Corp. (executed by the parties on December 11, 1998 and subsequently assigned by Pinnacle Gaming Development Corp. to Belterra Resort Indiana, LLC), is hereby incorporated by reference to Exhibit B contained in Exhibit 10.47 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1998. (SEC File No. 001-13641).
	10.17		Form of Lease by and between Daniel Webster, Marsha S. Webster, William G. Diuguid, Sara T. Diuguid, J.R. Showers, III and Carol A. Showers, and Pinnacle Gaming Development Corp. (executed by the parties on December 11, 1998 and subsequently assigned by Pinnacle Gaming Corp. to Belterra Resort Indiana, LLC), is hereby incorporated by reference to Exhibit B contained in Exhibit 10.51 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 1998. (SEC File No. 001-13641).
	10.18		Commercial Lease dated September 9, 1996 by and between State of Louisiana, State Land Office and PNK (Bossier City), Inc. (f/k/a Casino Magic of Louisiana, Corp.), is hereby incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2003. (SEC File No. 001-13641).
	10.19		Ground Lease Agreement dated as of August 21, 2003 by and between PNK (LAKE CHARLES), L.L.C., and Lake Charles Harbor & Terminal District, is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 19, 2003. (SEC File No. 001-13641).
	10.20		Addendum Number One dated as of July 5, 2005 to Memorandum of Lease dated August 21, 2003, by and between PNK (LAKE CHARLES) L.L.C. and Lake Charles Harbor and Terminal District is hereby incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2005. (SEC File No. 001-013641).
	10.21		Ground Lease Agreement, effective as of August 1, 2007, by and between PNK (LAKE CHARLES), L.L.C. and Lake Charles Harbor & Terminal District is hereby incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on November 30, 2007. (SEC File No. 001-13641).
	10.22		Guaranty Agreement, effective as of August 1, 2007, by and between Pinnacle Entertainment, Inc. and Lake Charles Harbor & Terminal District is hereby incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on November 30, 2007. (SEC File No. 001-13641).
	10.23		Redevelopment Agreement dated as of April 22, 2004 by and between the Land Clearance for Redevelopment Authority of the City of St. Louis and Pinnacle Entertainment, Inc. is hereby incorporated by reference to Exhibit 10.43 to the Company’s Amendment No. 1 to Registration Statement on Form S-4 filed on June 7, 2004. (SEC File No. 333-115557).
	10.24		First Amendment to Redevelopment Agreement and First Amendment to Option For Ground Lease dated as of December 23, 2004 by and between the Land Clearance for Redevelopment Authority of the City of St. Louis and Pinnacle Entertainment, Inc. is hereby incorporated by reference to Exhibit 10.51 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005. (SEC File No. 001-13641).
	10.25		Second Amendment to Redevelopment Agreement dated as of July 21, 2005 by and between the Land Clearance for Redevelopment Authority of the City of St. Louis and Pinnacle Entertainment, Inc. is hereby incorporated by reference to Exhibit 10.52 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005. (SEC File No. 001-13641).
	10.26		Third Amendment to the Redevelopment Agreement dated August 21, 2006 by and between Land Clearance for Redevelopment Authority of the City of St. Louis and Pinnacle Entertainment, Inc. is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 24, 2006. (SEC File No. 001-13641).

Exhibit
Number			Description of Exhibit
	10.27		Lease and Development Agreement dated as of August 12, 2004 by and between the St. Louis County Port Authority and Pinnacle Entertainment, Inc. is hereby incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2004. (SEC File No. 001-13641).
	10.28		Letter Agreement dated as of August 12, 2004 by and between the St. Louis County Port Authority and Pinnacle Entertainment, Inc. is hereby incorporated by reference to Exhibit 10.54 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005. (SEC File No. 001-13641).
	10.29		Second Amendment to Lease and Development Agreement dated as of October 7, 2005 by and between St. Louis County Port Authority and Pinnacle Entertainment, Inc. is hereby incorporated by reference to Exhibit 10.55 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005. (SEC File No. 001-13641).
	10.30		Third Amendment to Lease and Development Agreement dated as of August 11, 2006 by and between the St. Louis County Port Authority and Pinnacle Entertainment, Inc. is hereby incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2006. (SEC File No. 001-13641).
	10.31		Fourth Amendment to Lease and Development Agreement dated as of January 18, 2007 by and between the St. Louis County Port Authority and Pinnacle Entertainment, Inc. is hereby incorporated by reference to Exhibit 10.38 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006. (SEC File No. 001-13641).
	10.32		Fifth Amendment to Lease and Development Agreement dated as of March 30, 2007 by and between St. Louis County Port Authority and Pinnacle Entertainment, Inc. is hereby incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2007. (SEC File No. 001-13641).
	10.33		Sixth Amendment to Lease and Development Agreement dated November 26, 2007 by and between the St. Louis County Port Authority and Pinnacle Entertainment, Inc. is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 30, 2007. (SEC File No. 001-13641).
	10.34		Indemnification Trust Agreement dated as of August 16, 2005 by and between Pinnacle Entertainment, Inc. and Wilmington Trust Company and, as an additional party, Bruce Leslie, as Beneficiaries’ Representative, is hereby incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2005. (SEC File No. 001-13641).
	10.35		Exercising of Option to Lease Additional Property situated in Calcasieu Parish, Louisiana and Exercise of Option to Lease Additional Property is hereby incorporated by reference to Exhibit 10.64 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006. (SEC File No. 001-13641).
	10.36		Development Agreement dated December 31, 2007, by and between Unified Government of Wyandotte County/Kansas City, Kansas and PNK (Kansas), LLC, is hereby incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on January 7, 2008. (SEC File No. 001-13641).
	10.37		Standard Form of Agreement, dated November 27, 2007, between PNK (SCB), L.L.C. and Manhattan Construction Company is hereby incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on November 30, 2007. (SEC File No. 001-13641).
	10.38		Purchase Agreement, dated as of June 5, 2007, by and among Pinnacle Entertainment, Inc., Lehman Brothers Inc., Bear, Stearns & Co. Inc., Banc of America Securities LLC and Deutsche Bank Securities Inc., as representatives of the several Initial Purchasers named in Schedule 1 of the Purchase Agreement is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 11, 2007. (SEC File No. 001-13641).
	10.39		Guaranteed Maximum Price Agreement, dated as of May 11, 2007, between Casino One Corporation and McCarthy Building Companies, Inc. is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 17, 2007. (SEC File No. 001-13641).
	10.40	†	Summary of 2007 Bonus Award Schedule is hereby incorporated by reference to Exhibit 10.64 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007. (SEC File No. 001-13641).
	10.41	†	Summary of 2008 Bonus Award Schedule is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 31, 2008. (SEC File No. 001-13641).
	10.42		Settlement Agreement, dated May 9, 2008, between Pinnacle Entertainment, Inc. and Allianz Global Risks US Insurance Company is hereby incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2008. (SEC File No. 001-13641).

Exhibit
Number			Description of Exhibit
	10.43		Settlement Agreement, dated February 22, 2008, between Pinnacle Entertainment, Inc. and Arch Specialty Insurance Company is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 26, 2008. (SEC File No. 001-13641).
	10.44		Agreement for Guaranteed Maximum Price Construction Services, dated August 8, 2008, between Casino One Corporation and Yates/Paric, a Joint Venture is hereby incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2008. (SEC File No. 001-13641).
	10.45	*†	Pinnacle Entertainment, Inc. Executive Health Expense Plan.
	10.46	*†	Pinnacle Entertainment, Inc. Deferred Bonus Plan.
	10.47	*†	Pinnacle Entertainment, Inc. Director Health and Medical Insurance Plan.
	10.48	*†	2008 Amended and Restated Pinnacle Entertainment, Inc. Directors Deferred Compensation Plan.
	10.49	*†	First Amendment to the Second Amendment and Restatement of the Pinnacle Entertainment, Inc. Executive Deferred Compensation Plan, effective December 24, 2008.
	11	*	Statement re: Computation of Per Share Earnings.
	12	*	Computation of Ratio of Earnings to Fixed Charges.
	21	*	Subsidiaries of Pinnacle Entertainment, Inc.
	23	*	Consent of Deloitte & Touche LLP.
	31.1	*	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.
	31.2	*	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.
	32	**	Section 1350 Certifications of Chief Executive Officer and Chief Financial Officer.
	99.1	*	Government Regulations and Gaming Issues.

*	Filed herewith.
**	Furnished herewith.
†	Management contract or compensatory plan or arrangement.

EX-4.12

Exhibit 4.12

AMENDMENT TO THE
PINNACLE ENTERTAINMENT, INC. 2005 EQUITY AND PERFORMANCE
INCENTIVE PLAN, AS AMENDED

This Amendment is made by Pinnacle Entertainment, Inc., a Delaware corporation (the “Company”), to amend the Pinnacle Entertainment, Inc. 2005 Equity and Performance Incentive Plan, as Amended (the “Plan”), with reference to the following facts:

A. The Company maintains the Plan for the benefit of its employees, directors, and consultants.

B. Under Section 12.1 of the Plan, the Company’s Board of Directors has the power to amend the Plan as it shall deem advisable, provided that certain amendments shall require stockholder approval, and provided that no amendment shall in any way impair the rights of a Participant under any Award previously granted without such Participant’s consent.

C. The Company’s Board of Directors deems it advisable to amend the Plan as set forth below, and has determined that such amendments do not require stockholder approval and do not in any way impair the rights of a Participant under any Award previously granted. Capitalized terms not otherwise defined herein have the meanings ascribed to them in the Plan.

NOW, THEREFORE, the Plan is hereby amended, effective as of December 9, 2008, as follows:

1. Section 2.7 of the Plan is hereby amended to provide in its entirety as follows:

2.7 ‘Change of Control’ shall mean the occurrence of any of the following events:

(i) The direct or indirect acquisition by an unrelated “Person” or “Group” of “Beneficial Ownership” (as such terms are defined below) of more than 50% of the voting power of the Company’s issued and outstanding voting securities in a single transaction or a series of related transactions;

(ii) The direct or indirect sale or transfer by the Company of substantially all of its assets to one or more unrelated Persons or Groups in a single transaction or a series of related transactions;

(iii) The merger, consolidation or reorganization of the Company with or into another corporation or other entity in which the Beneficial Owners (as such term is defined below) of more than 50% of the voting power of the Company’s issued and outstanding voting securities immediately before such merger or consolidation do not own more than 50% of the voting power of the issued and outstanding voting securities of the surviving corporation or other entity immediately after such merger, consolidation or reorganization; or

(iv) During any consecutive 12-month period, individuals who at the beginning of such period constituted the Board of the Company (together with any new Directors whose election to such Board or whose nomination for election by the stockholders of the Company was approved by a vote of a majority of the Directors of the Company then still in office who were either Directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of the Company then in office.

None of the foregoing events, however, shall constitute a Change of Control if such event is not a ‘Change in Control Event’ under Treasury Regulations Section 1.409A-3(i)(5) or successor IRS guidance. For purposes of determining whether a Change of Control has occurred, the following Persons and Groups shall not be deemed to be ‘unrelated’: (A) such Person or Group directly or indirectly has Beneficial Ownership of more than 50% of the issued and outstanding voting power of the Company’s voting securities immediately before the transaction in question, (B) the Company has Beneficial Ownership of more than 50% of the voting power of the issued and outstanding voting securities of such Person or Group, or (C) more than 50% of the voting power of the issued and outstanding voting securities of such Person or Group are owned, directly or indirectly, by Beneficial Owners of more than 50% of the issued and outstanding voting power of the Company’s voting securities immediately before the transaction in question. The terms ‘Person,’ ‘Group,’ ‘Beneficial Owner,’ and ‘Beneficial Ownership’ shall have the meanings used in the Exchange Act, and the rules promulgated thereunder. Notwithstanding the foregoing, (I) Persons will not be considered to be acting as a ‘Group’ solely because they purchase or own stock of this Company at the same time, or as a result of the same public offering, (II) however, Persons will be considered to be acting as a ‘Group’ if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction, with the Company, and (III) if a Person, including an entity, owns stock both in the Company and in a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar transaction, with the Company, such stockholders shall be considered to be acting as a Group with other stockholders only with respect to the ownership in the corporation before the transaction.”

2. Section 5.9 of the Plan is hereby amended to provide in its entirety as follows:

“5.9 Disability of Participant. If a Participant holds exercisable Options on the date his or her Continuous Status as an Employee, Director or Consultant terminates because of Disability, the Participant may exercise the Options that were vested and exercisable as of the date of termination until the end of the original term or for a period of 36 months following such termination, whichever is earlier (or such other period as is set forth in the Award Agreement or determined by the Committee). If the Participant is not entitled to exercise his or her entire Option at the date of such termination, the Shares covered by the unexercisable portion of the Option will revert to the Plan, unless otherwise set forth in the Award Agreement or determined by the Committee. The Committee may determine in its sole discretion that such unexercisable portion of the Option will become exercisable at such times and on such terms as the Committee may determine in its sole discretion. If the Participant does not exercise an Option within the time specified above after termination, that Option will expire, and the Shares covered by it will revert to the Plan, except as otherwise determined by the Committee.”

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3. Section 5.10 of the Plan is hereby amended to provide in its entirety as follows:

“5.10 Death of Participant. If a Participant holds exercisable Options on the date his or her death, the Participant’s estate or a person who acquired the right to exercise the Option by bequest or inheritance or under Section 12.3 may exercise the Options that were vested and exercisable as of the date of death until the end of the original term or for a period of 36 months following the date of death, whichever is earlier (or such other period as is set forth in the Award Agreement or determined by the Committee). If the Participant is not entitled to exercise his or her entire Option at the date of death, the Shares covered by the unexercisable portion of the Option will revert to the Plan, unless otherwise set forth in the Award Agreement or determined by the Committee. The Committee may determine in its sole discretion that such unexercisable portion of the Option will become exercisable at such times and on such terms as the Committee may determine in its sole discretion. If the Participant’s estate or a person who acquired the right to exercise the Option by bequest or inheritance or under Section 12.3 does not exercise the Option within the time specified above after the date of death, the Option will expire, and the Shares covered by it will revert to the Plan, except as otherwise determined by the Committee.”

4. Section 6.4 of the Plan is hereby amended to provide in its entirety as follows:

“6.4 Disability of Participant. If a Participant holds exercisable Stock Appreciation Rights on the date his or her Continuous Status as an Employee, Director or Consultant terminates because of Disability, the Participant may exercise the Stock Appreciation Rights that were vested and exercisable as of the date of termination until the end of the original term or for a period of 36 months following such termination, whichever is earlier (or such other period as is set forth in the Award Agreement or determined by the Committee). If the Participant is not entitled to exercise his or her entire Stock Appreciation Right at the date of such termination, the Shares covered by the unexercisable portion of the Stock Appreciation Right will revert to the Plan, unless otherwise set forth in the Award Agreement or determined by the Committee. The Committee may determine in its sole discretion that such unexercisable portion of the Stock Appreciation Right will become exercisable at such times and on such terms as the Committee may determine in its sole discretion. If the Participant does not exercise a Stock Appreciation Right within the time specified above after termination, that Stock Appreciation Right will expire, and the Shares covered by it will revert to the Plan, except as otherwise determined by the Committee.”

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5. Section 6.5 of the Plan is hereby amended to provide in its entirety as follows:

“6.5 Death of Participant. If a Participant holds exercisable Stock Appreciation Rights on the date his or her death, the Participant’s estate or a person who acquired the right to exercise the Stock Appreciation Rights by bequest or inheritance or under Section 12.3 may exercise the Stock Appreciation Rights that were vested and exercisable as of the date of death until the end of the original term or for a period of 36 months following the date of death, whichever is earlier (or such other period as is set forth in the Award Agreement or determined by the Committee). If the Participant is not entitled to exercise his or her entire Stock Appreciation Right at the date of death, the Shares covered by the unexercisable portion of the Stock Appreciation Right will revert to the Plan, unless otherwise set forth in the Award Agreement or determined by the Committee. The Committee may determine in its sole discretion that such unexercisable portion of the Stock Appreciation Right will become exercisable at such times and on such terms as the Committee may determine in its sole discretion. If the Participant’s estate or a person who acquired the right to exercise the Stock Appreciation Right by bequest or inheritance or under Section 12.3 does not exercise the Stock Appreciation Right within the time specified above after the date of death, the Stock Appreciation Right will expire, and the Shares covered by it will revert to the Plan, except as otherwise determined by the Committee.”

6. Section 10.2 of the Plan is hereby amended to provide in its entirety as follows:

“10.2 Performance Criteria. If Restricted Stock, a Performance Award or an Other Stock Unit Award is subject to this Article 10, then the lapsing of restrictions thereon and the distribution of cash, Shares or other property pursuant thereto, as applicable, shall be subject to the achievement of one or more objective performance goals established by the Committee, which shall be based on the attainment of specified levels of or growth of one or any combination of the following factors, or an objective formula determined at the time of the Award that is based on modified or unmodified calculations of one or any combination of the following factors: net sales; pretax income before or after allocation of corporate overhead and bonus; earnings per share; net income; division, group or corporate financial goals; return on stockholders’ equity; return on assets; attainment of strategic and operational initiatives; appreciation in and/or maintenance of the price of the Shares or any other publicly-traded securities of the Company; market share; gross profits; earnings before taxes; earnings before interest and taxes; earnings before interest, taxes, depreciation and amortization (“EBITDA”); an adjusted formula of EBITDA determined by the Committee; economic value-added models; comparisons with various stock market indices;

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reductions in costs, and/or return on invested capital of the Company or any Affiliate, division or business unit of the Company for or within which the Participant is primarily employed. Such performance goals also may be based solely by reference to the Company’s performance or the performance of an Affiliate, division or business unit of the Company, or based upon the relative performance of other companies or upon comparisons of any of the indicators of performance relative to other companies. Unless the Committee specifies otherwise when it sets performance goals for an Award, objective adjustments shall be made to any of the foregoing measures for items that will not properly reflect the Company’s financial performance for these purposes, such as the write-off of debt issuance costs, pre-opening and development costs, gain or loss from asset dispositions, asset or other impairment charges, litigation settlement costs, and other non-routine items that may occur during the Performance Period. Also, unless the Committee determines otherwise in setting the performance goals for an Award, such performance goals shall be applied by excluding the impact of (a) restructurings, discontinued operations and charges for extraordinary items, (b) an event either not directly related to the operations of the Company or not within the reasonable control of the Company’s management, or (c) a change in accounting standards required by generally accepted accounting principles. Such performance goals shall be set by the Committee within the time period prescribed by, and shall otherwise comply with the requirements of, Section 162(m) of the Code, or any successor provision thereto, and the regulations thereunder.”

7. In all other respects, the terms and provisions of the Plan are hereby ratified and declared to be in full force and effect.

IN WITNESS WHEREOF, the Company has executed this Amendment this 9^th day of December, 2008.

PINNACLE ENTERTAINMENT, INC.
By:	/s/ John A. Godfrey
	John A. Godfrey, Executive Vice President,
	General Counsel and Secretary

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EX-10.9

Exhibit 10.9

THIRD
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT

THIS THIRD AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) is made effective as of December 22, 2008 (the “Effective Date”) by and between PINNACLE ENTERTAINMENT, INC., a Delaware corporation (the “Company”), and DANIEL R. LEE, an individual (“Executive”), with respect to the following facts and circumstances:

RECITALS

The Company and Executive entered into an Employment Agreement effective as of April 10, 2002 (the “Original Agreement”) pursuant to which Executive serves as Chief Executive Officer of the Company and as a member and Chairman of the Company’s Board of Directors. The Original Agreement was amended and restated pursuant to an Amended and Restated Employment Agreement effective as of May 1, 2005, and further amended and restated pursuant to a Second Amended and Restated Employment Agreement dated as of October 31, 2006 (the “2006 Agreement”). The Company and Executive desire to further amend and restate the 2006 Agreement to comply with the provisions of Internal Revenue Code Section 409A and to address certain technical matters, on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements set forth herein, the parties hereto agree as follows:

ARTICLE 1.

EMPLOYMENT AND TERM

1.1 Employment. The Company agrees to engage Executive in the capacity as Chief Executive Officer of the Company, and Executive hereby accepts such engagement by the Company upon the terms and conditions specified below. The Company further agrees to cause Executive to be elected as a Director and, subject to the provisions of Section 6.3 hereof, Chairman of the Board of Directors, and Executive agrees to serve in such capacities without additional compensation.

1.2 Term. The term of this Agreement shall commence on the Effective Date, and, unless earlier terminated under Article 6 below, shall continue in force until April 30, 2009, provided that commencing on May 1, 2009 and as of May 1 of each year thereafter (a “Renewal Date”), this Agreement shall automatically renew for additional one-year periods (each, a “Renewal Period”), unless either party gives notice of non-renewal at least ninety (90) days prior to the next Renewal Date. The term of this Agreement, including any Renewal Periods, is referred to as the “Term.”

ARTICLE 2.

DUTIES OF EXECUTIVE

2.1 Duties. Executive shall perform all the duties and obligations generally associated with the positions of Chairman and Chief Executive Officer, subject to the control and supervision of the Board of Directors, and such other executive duties consistent with the foregoing as may be assigned to him from time to time by the Board of Directors of the Company. Executive shall perform the services contemplated herein faithfully, diligently, to the best of his ability and in the best interests of the Company. Executive shall devote all his business time and efforts to the rendition of such services. Executive shall, at all times perform such services in compliance with, and to the extent of his authority, shall to the best of his ability cause the Company to be in compliance with, any and all laws, rules and regulations applicable to the Company of which Executive is aware. Executive may rely on the Company’s inside counsel and outside lawyers in connection with such matters. Executive shall, at all times during the Term, in all material respects adhere to and obey any and all written internal rules and regulations governing the conduct of the Company’s employees, as established or modified from time to time; provided, however, in the event of any conflict between the provisions of this Agreement and any such rules or regulations, the provisions of this Agreement shall control.

2.2 Location of Services. Executive’s principal place of employment shall be at the Company’s headquarters at such location as Executive and the Board of Directors shall agree upon. Executive understands he will be required to travel to the Company’s various operations as part of his employment.

2.3 Exclusive Service. Except as otherwise expressly provided herein, Executive shall devote his entire business time, attention, energies, skills, learning and best efforts to the business of the Company. Executive may participate in social, civic, charitable, religious, business, educational or professional associations and serve on the boards of directors of companies, including Lynch Interactive, so long as such participation does not materially interfere with the duties and obligations of Executive hereunder. This Section 2.3, however, shall not be construed to prevent Executive from making passive outside investments so long as such investments do not require material time of Executive or otherwise interfere with the performance of Executive’s duties and obligations hereunder. Executive shall not make any investment in an enterprise that competes with the Company without the prior written approval of the Company after full disclosure of the facts and circumstances; provided, however, that this sentence shall not preclude Executive from owning up to one percent (1%) of the securities of a publicly traded entity (a “Permissible Investment”). During the Term, Executive shall not directly or indirectly work for or provide services to or, except as permitted above, own an equity interest in any person, firm or entity engaged in the casino gaming, card club or horse racing business. In this regard, and for purposes of this section only, Executive acknowledges that the gaming industry is national in scope and that accordingly this covenant shall apply throughout the United States.

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ARTICLE 3.

COMPENSATION

3.1 Salary. In consideration for Executive’s services hereunder, the Company shall pay Executive an annual salary, effective as of the Effective Date at the rate of not less than $1,000,000 per year during each of the years of the Term, payable in accordance with the Company’s regular payroll schedule from time to time (less any deductions required for Social Security, state, federal and local withholding taxes, and any other authorized or mandated similar withholdings). The annual salary shall be reviewed by the Compensation Committee of the Board (the “Committee”) no less frequently than annually and may be increased (but not decreased) at the discretion of the Board. If Executive’s annual salary is increased, the increased amount shall not be reduced for the remainder of the Term.

3.2 Bonus. Executive shall be entitled to earn bonuses with respect to each year of the Term during which Executive is employed under this Agreement up to one hundred fifty percent (150%) of Executive’s annual salary with a targeted bonus of seventy-five percent (75%) of Executive’s annual salary for such year based upon meeting performance targets with respect to the Company’s earnings before interest, taxes, depreciation and amortization that shall be established annually by the Committee in consultation with Executive. Any such bonus earned by Executive shall be paid annually within ninety (90) days after the conclusion of the Company’s fiscal year and certification by the Committee that the targets have been met, except for any portion of the bonus which is subject to required deferral by the Company and except for any portion of the bonus which Executive shall elect to defer. Bonuses relative to partial years shall be prorated based on Executive’s target bonus, except as otherwise provided herein. It is the contemplation of the parties that the setting of the targets and goals and the payment of bonuses will be done in such a manner as to qualify such bonuses as “performance based” compensation under § 162(m) of the Internal Revenue Code. Executive may also receive special bonuses in additional to his annual bonus eligibility at the discretion of the Board.

3.3 Stock Options. As an additional element of compensation to Executive, in consideration of the services to be rendered hereunder, on May 3, 2005 (the “Option Grant Date”) the Company granted to Executive an option to purchase 600,000 shares of the Company’s common stock which has an exercise price equal to the fair market value of such stock on the Option Grant Date and a term of ten (10) years. Such option was granted under the Company’s Stock Option Plans (the “Plans”) and shall constitute incentive stock options under the Internal Revenue Code of 1986, as amended (the “Code”) to the maximum extent possible. The remaining options shall be non-qualified options under the Code. The terms and conditions of such option shall be governed by a stock option agreement reflecting such grant. Such option shall vest in five (5) equal annual installments beginning on the first anniversary of the Option Grant Date and shall be subject to accelerated vesting as provided in Sections 6.5.2 and 6.5.3. In addition, before the 2008 Renewal Date and at appropriate times thereafter (no less frequently then within forty (40) months of the prior review), the Committee shall review Executive’s long-term compensation and, in consultation with Executive, shall consider granting additional stock options and/or other long term incentive compensation to Executive.

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ARTICLE 4.

EXECUTIVE BENEFITS

4.1 Vacation. In accordance with the general policies of the Company applicable generally to other senior executives of the Company pursuant to the Company’s personnel policies from time to time, Executive shall be entitled to not less than four (4) weeks vacation each calendar year, without reduction in compensation.

4.2 The Company Employee Benefits. Executive shall receive all group insurance and pension plan benefits and any other benefits on the same basis as they are available generally to other senior executives of the Company under the Company personnel policies in effect from time to time.

4.3 Benefits. Executive shall receive all other such fringe benefits as the Company may offer to other senior executives of the Company generally under the Company personnel policies in effect from time to time, such as health and disability insurance coverage and paid sick leave. In the event that the Company’s group health plan does not cover the annual physical examination of Executive and Executive’s wife, or any pregnancy of Executive’s wife, the Company shall bear the cost of such examinations or the medical costs of such pregnancy.

4.4 Indemnification. Executive shall have the benefit of indemnification to the fullest extent permitted by applicable law, which indemnification shall continue after the termination of this Agreement for such period as may be necessary to continue to indemnify Executive for his acts during the term hereof and shall be covered by the Company’s directors and officers indemnity trust. In addition, the Company shall cause Executive to be covered by the current policies of directors and officers liability insurance covering directors and officers of the Company, copies of which have been provided to Executive, in accordance with their terms, to the maximum extent of the coverage available for any director or officer of the Company. The Company shall use commercially reasonable efforts to cause the current policies of directors and officers liability insurance covering directors and officers of the Company to be maintained throughout the term of Executive’s employment with the Company and for such period thereafter as may be necessary to continue to cover acts of Executive during the term of his employment (provided that the Company may substitute therefor, or allow to be substituted therefor, policies of at least the same coverage and amounts containing terms and conditions which are, in the aggregate, no less advantageous to the insured in any material respect). In the event of any merger or other acquisition of the Company, the Company shall no later than immediately prior to consummation of such transaction purchase the longest applicable “tail” coverage available under the directors and officers liability insurance in effect at the time of such merger or acquisition.

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ARTICLE 5.

REIMBURSEMENT FOR EXPENSES

5.1 Executive shall be reimbursed by the Company for all ordinary and necessary expenses incurred by Executive in the performance of his duties or otherwise in furtherance of the business of the Company in accordance with the policies of the Company in effect from time to time. Executive shall keep accurate and complete records of all such expenses, including but not limited to, proof of payment and purpose. Executive shall account fully for all such expenses to the Company. No reimbursement will be made later than the close of the calendar year following the calendar year in which the expense was incurred. Expenses eligible for reimbursement in any one taxable year shall not affect the amount of expenses eligible for reimbursement in any other taxable year, and the right to expense reimbursement shall not be subject to liquidation or exchange for any other benefit.

ARTICLE 6.

TERMINATION

6.1 Termination for Cause. Without limiting the generality of Section 6.2, the Company shall have the right to terminate Executive’s employment, without further obligation or liability to Executive, upon the occurrence of any one or more of the following events, which events shall be deemed termination for cause (“Cause”).

6.1.1 Failure to Perform Duties. If Executive neglects to perform the material duties of his employment under this Agreement in a professional and businesslike manner, other than due to his disability (except due to substance or alcohol abuse), after having received written notice specifying such failure to perform and a reasonable opportunity to perform.

6.1.2 Willful Breach. If Executive willfully commits a material breach of this Agreement and fails to cure such breach within thirty (30) days of written notice thereof or a material willful breach of his fiduciary duty to the Company.

6.1.3 Wrongful Acts. If Executive is convicted of a felony involving acts of moral turpitude or commits fraud, misrepresentation, embezzlement or other acts of material misconduct against the Company (including violating or condoning the violation of any material rules or regulations of gaming authorities which could have a material adverse effect on the Company) that would make the continuance of his employment by the Company materially detrimental to the Company.

6.1.4 Failure To Be Licensed. If Executive fails to be licensed in all jurisdictions in which the Company or its subsidiaries has gaming facilities within the date required by any jurisdiction, or if any of such licenses shall be revoked or suspended at any time during the Term, then the Company may by written notice to Executive terminate the Agreement for Cause. Executive agrees to promptly submit to the licensing requirements of all jurisdictions in which the Company or its subsidiaries does business. The Company shall bear all expenses incurred in connection with such licenses.

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6.2 Termination Without Cause. Notwithstanding anything to the contrary herein, the Company shall have the right to terminate Executive’s employment under this Agreement at any time without Cause by giving notice of such termination to Executive. Failure by the Company to extend the Term for any Renewal Period shall not be a termination of this Agreement without cause.

6.3 Termination by Executive for Good Reason. Executive may terminate his employment under this Agreement on thirty (30) days prior notice to the Company for good reason (“Good Reason”). For purposes of this Agreement, “Good Reason” shall mean and be limited to (a) a material breach of this Agreement by the Company (including without limitation any material reduction in the authority or duties of Executive (other than cessation of his being Chairman of the Board due to the requirements of any state regulation or applicable rules or regulations of the SEC or any Exchange on which the Company’s stock is listed or admitted for trading), or any relocation of his or its principal place of business outside the greater Las Vegas metropolitan area (without Executive’s consent), or (b) a change of control with respect to the Company (a “Change of Control”). Except in the case set forth in clause (b) of the preceding sentence, however, “Good Reason” shall not exist unless Executive gives notice of proposed termination within thirty (30) days following the breach or condition giving rise to Good Reason, and there is a failure of the Company to remedy the breach or condition giving rise to Good Reason within thirty (30) days after such notice (or as soon thereafter as practicable so long as it commences effectuation of such remedy within such time period and diligently pursues such remedy to completion as soon as practicable). For purposes of this Agreement, a “Change of Control” shall mean the occurrence of any of the following:

(i) The direct or indirect acquisition by an unrelated “Person” or “Group” of “Beneficial Ownership” (as such terms are defined below) of more than 50% of the voting power of the Company’s issued and outstanding voting securities in a single transaction or a series of related transactions;

(ii) The direct or indirect sale or transfer by the Company of substantially all of its assets to one or more unrelated Persons or Groups in a single transaction or a series of related transactions;

(iii) The merger, consolidation or reorganization of the Company with or into another corporation or other entity in which the Beneficial Owners of more than 50% of the voting power of the Company’s issued and outstanding voting securities immediately before such merger or consolidation do not own more than 50% of the voting power of the issued and outstanding voting securities of the surviving corporation or other entity immediately after such merger, consolidation or reorganization; or

(iv) During any consecutive 12-month period, individuals who at the beginning of such period constituted the Board of the Company (together with any new Directors whose election to such Board or whose nomination for election by the stockholders of the Company was approved by a vote of a majority of the Directors of the Company then still in office who were either Directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of the Company then in office.

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None of the foregoing events, however, shall constitute a Change of Control if such event is not a “Change in Control Event” under Treasury Regulations Section 1.409A-3(i)(5) or successor IRS guidance. For purposes of determining whether a Change of Control has occurred, the following Persons and Groups shall not be deemed to be “unrelated”: (A) such Person or Group directly or indirectly has Beneficial Ownership of more than 50% of the issued and outstanding voting power of the Company’s voting securities immediately before the transaction in question, (B) the Company has Beneficial Ownership of more than 50% of the voting power of the issued and outstanding voting securities of such Person or Group, or (C) more than 50% of the voting power of the issued and outstanding voting securities of such Person or Group are owned, directly or indirectly, by Beneficial Owners of more than 50% of the issued and outstanding voting power of the Company’s voting securities immediately before the transaction in question. The terms “Person,” “Group,” “Beneficial Owner,” and “Beneficial Ownership” shall have the meanings used in the Securities Exchange Act of 1934, as amended. Notwithstanding the foregoing, (I) Persons will not be considered to be acting as a “Group” solely because they purchase or own stock of the Company at the same time, or as a result of the same public offering, (II) however, Persons will be considered to be acting as a “Group” if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction, with the Company, and (III) if a Person, including an entity, owns stock both in the Company and in a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar transaction, with the Company, such shareholders shall be considered to be acting as a Group with other shareholders only with respect to the ownership in the corporation before the transaction.

6.4 Death or Disability. This Agreement shall terminate on the death or “Disability” of Executive. Executive will be deemed to have a “Disability” when he is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or begins receiving income replacement benefits for a period of not less than three months under an accident and health plan of the Company or an affiliate by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months. If there should be a dispute between the Company and Executive as to Executive’s physical or mental Disability for purposes of this Agreement, the question shall be settled by the opinion of an impartial reputable physician or psychiatrist agreed upon by the parties or their representatives, or if the parties cannot agree within ten (10) days after a request for designation of such party, then a physician or psychiatrist designed by the Clark County Medical Association or a similar body. The certification of such physician or psychiatrist as to the questioned dispute shall be final and binding upon the parties hereto.

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6.5 Effect of Termination.

6.5.1 Payment of Salary and Expenses Upon Termination. Any termination under this Section 6 shall be effective upon receipt of notice by Executive or the Company, as the case may be, of such termination or upon such other later date as may be provided herein or specified by the Company or Executive in the notice (the “Termination Date”), except as otherwise provided in this Section 6. If this Agreement is terminated, all benefits provided to Executive by the Company hereunder shall thereupon cease and the Company shall pay or cause to be paid to Executive all accrued but unpaid salary and vacation benefits, and any compensation previously voluntarily deferred by Executive, payable in accordance with the provisions of the applicable deferred compensation plan and in accordance with Executive’s elections under such deferred compensation plan In addition, promptly upon submission by Executive of his unpaid expenses incurred prior to the Termination Date and owing to Executive pursuant to Article 5, reimbursement for such expenses shall be made. If the Agreement is terminated by the Company for “Cause,” or by Executive without “Good Reason,” Executive shall not be entitled to receive any payments other than as specified in this Section 6.5.1 and other any benefit plan or policy of the Company, and provided that Executive may exercise any vested options.

6.5.2 Termination Due to Death or Disability. If this Agreement is terminated due to death or Disability, the following shall apply:

(a) Executive shall be entitled to receive a lump sum amount equal to a sum of not less than (i) Executive’s annual salary as in effect on the date of termination; plus (ii) the greater of the amount of Executive’s bonus (including all deferred amounts) in the year prior to such termination or the average of the annual bonuses (including all deferred amounts) paid to Executive in the three consecutive years prior to the year of termination (the “Bonus Amount”); times (iii) the balance of the Term but in no event less than 150% of the sum of (i) and (ii) above (the “Death or Disability Severance Benefit”); provided that in the event of death, the amount of such Death Severance Benefit shall be reduced by the amount of any life insurance provided by the Company; and, provided further, that the amount of such Disability Severance Benefit shall be reduced under the circumstances specified in this Section 6.5.2. In addition, Executive shall be entitled to receive any amounts payable under Section 6.5.1 above, a pro rata annual bonus for the year of death or Disability (which bonus shall be calculated by taking the Bonus Amount and multiplying it by a fraction, the numerator of which is the number of days in the year in which Executive was employed before his death or Disability and the denominator of which is 365) and a continuation of health and disability insurance coverage as specified in Section 6.5.2(c). The Disability Severance Benefit and the pro rata annual bonus for the year of death or Disability shall be payable to Executive in a lump sum within thirty (30) days after Executive’s death or Disability.

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(b) Executive shall be entitled to accelerated vesting of his outstanding stock options, based on the following schedule: (i) if his death or Disability shall occur on or before the first anniversary of the date of grant of such options, one-third (1/3) of such options shall be vested and exercisable as of the date of death or Disability, (ii) if his death or Disability shall occur after the first anniversary and on or before the second anniversary of the date of grant of such options, two-thirds (2/3) of such options shall be vested and exercisable as of the date of death or Disability, and (iii) if his death or Disability shall occur after the second anniversary of the date of grant of such options, all of such options shall be vested and exercisable as of the date of death or Disability.

(c) Executive shall also be entitled to receive health benefits coverage for Executive and his dependents, and disability insurance coverage for Executive, under the same plan(s) or arrangement(s) under which Executive was were covered immediately before his death or Disability or plan(s) established or arrangement(s) provided by the Company or any of its Subsidiaries thereafter for the benefit of senior executives (“Health and Disability Coverage Continuation”). Such health benefits and disability coverage shall be paid for by the Company to the same extent as if Executive were still employed by the Company, and Executive, or his Dependents in the event of his death, will be required to make such payments as Executive would be required to make if Executive were still employed by the Company. The benefits provided under this Section 6.5.2(c) shall continue until the earliest of (a) five (5) years; (b) the date on which Executive ceases to be Disabled during the five (5) year period; and (c) the date Executive becomes covered under any other group health plan or group disability plan (as the case may be) not maintained by the Company or any of its Subsidiaries; provided, however, that if such other group health plan excludes any pre-existing condition that Executive or Executive’s dependents may have when coverage under such group health plan would otherwise begin, coverage under this Section 6.5.2(c) shall continue (but not beyond the period described in clause (a) of this sentence) with respect to such pre-existing condition until such exclusion under such other group health plan lapses or expires. In the event Executive is required to make an election under Sections 601 through 607 of the Employee Retirement Income Security Act of 1974, as amended (commonly known as COBRA) to qualify for the benefits described in this Section 6.5.2(c), the obligations of the Company and its Subsidiaries under this Section 6.5.2(c) shall be conditioned upon Executive’s timely making such an election. Any payment or reimbursement of benefits under this Section 6.5.2(c) that is taxable to Executive or his dependents shall be made by December 31 of the calendar year following the calendar year in which Executive or his dependent incurred the expense. Expenses eligible for reimbursement in any one taxable year shall not affect the amount of expenses eligible for reimbursement in any other taxable year, and the right to expense reimbursement shall not be subject to liquidation or exchange for any other benefit.

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(d) The “Covenant Not to Compete” set forth in Section 7.4 below shall not apply in any respect to Executive and the term of the “No Hire Away Policy” in Section 7.5 shall be limited to six months from the date of Executive’s death or Disability.

6.5.3 Termination Without Cause or Termination by Executive for Good Reason Prior to or After Twenty-Four (24) Months Following a Change of Control. If the Company terminates Executive without Cause or Executive terminates for Good Reason prior to, or after twenty-four months following, a Change of Control, the following shall apply:

(a) Executive shall be entitled to receive an amount equal to a sum not less than (i) Executive’s annual salary as in effect on the date of termination; plus (ii) the greater of (A) the amount of Executive’s actual bonus for the year before the year of the termination (including all deferred amounts), but not to exceed Executive’s target bonus for the year of termination, or (B) the average of the actual annual bonuses paid to Executive in the three consecutive years prior to the year of termination (including all deferred amounts); times (iii) the number of years (including fractional years) of the balance of the Term but in no event less than 150% of the sum of (i) and (ii) above (the “Pre-Change of Control Severance Benefit”). The salary component of the Pre-Change of Control Severance Benefit shall be paid to Executive in equal installments over eighteen (18) months immediately following the date of termination in accordance with the Company’s regular salary payment schedule from time to time. Fifty percent (50%) of the bonus component of the Pre-Change of Control Severance Benefit shall be paid within thirty (30) days after termination of employment, and fifty percent (50%) of the bonus component of the Pre-Change of Control Severance Benefit shall be paid in three annual installments on the anniversaries of the termination of employment. In addition, Executive shall be entitled to receive any amounts payable under Section 6.5.1 above, a pro rata annual bonus for the year of termination calculated and payable as provided in Section 6.5.2(a), payable within thirty (30) days after termination of employment. The payments contemplated herein shall not be subject to any duty of mitigation by Executive nor to offset for any income earned by Executive following termination.

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(b) Executive shall be entitled to accelerated vesting of his outstanding stock options, as provided in Section 6.5.2(b).

(c) Executive shall also be entitled to receive health benefits coverage for Executive and his dependents, and disability insurance coverage for Executive, under the same plan(s) or arrangement(s) under which Executive was were covered immediately before his termination of employment or plan(s) established or arrangement(s) provided by the Company or any of its Subsidiaries thereafter for the benefit of senior executives. Such health benefits and disability coverage shall be paid for by the Company to the same extent as if Executive were still employed by the Company, and Executive will be required to make such payments as Executive would be required to make if Executive were still employed by the Company. The benefits provided under this Section 6.5.3(c) shall continue until the earlier of (a) the balance of the Term but in no event less than one and one-half (1-1/2) years following Executive’s termination of employment with the Company and all of its Subsidiaries; or (b) the date Executive becomes covered under any other group health plan or group disability plan (as the case may be) not maintained by the Company or any of its Subsidiaries; provided, however, that if such other group health plan excludes any pre-existing condition that Executive or Executive’s dependents may have when coverage under such group health plan would otherwise begin, coverage under this Section 6.5.3(c) shall continue (but not beyond the period described in clause (a) of this sentence) with respect to such pre-existing condition until such exclusion under such other group health plan lapses or expires. In the event Executive is required to make an election under Sections 601 through 607 of the Employee Retirement Income Security Act of 1974, as amended (commonly known as COBRA) to qualify for the benefits described in this Section 6.5.3(c), the obligations of the Company and its Subsidiaries under this Section 6.5.3(c) shall be conditioned upon Executive’s timely making such an election. Any payment or reimbursement of benefits under this Section 6.5.3(c) that is taxable to Executive or his dependents shall be made by December 31 of the calendar year following the calendar year in which Executive or his dependent incurred the expense. Expenses eligible for reimbursement in any one taxable year shall not affect the amount of expenses eligible for reimbursement in any other taxable year, and the right to expense reimbursement shall not be subject to liquidation or exchange for any other benefit.

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(d) The “Covenant Not to Compete” set forth in Section 7.4 below shall not apply in any respect to Executive and the term of the “No Hire Away Policy” in Section 7.5 shall be limited to six months from the date of termination.

6.5.4 Termination Without Cause or Termination by Executive for Good Reason Within the Twenty-Four (24) Months After a Change of Control. If the Company terminates Executive without Cause or Executive terminates for Good Reason within twenty-four (24) months after a Change of Control, the following shall apply:

(a) The Company shall pay to Executive in lieu of the Base Severance Benefit, in a lump sum as soon as practicable, but in no event later than thirty (30) days after the termination of Executive’s employment, (i) an amount (the “Change of Control Severance Benefit”) equal to two and one-half (2-1/2) times Executive’s annual base salary in effect on the date of termination, plus two and one-half (2-1/2) times the largest annual bonus (including all deferred amounts) that was paid to Executive during the three (3) years preceding the Change of Control; plus (ii) a pro rated bonus for the year of termination (which bonus shall be calculated by taking the Bonus Amount and multiplying it as provided in section 6.5.2(a), plus (iii) any amounts payable under Section 6.5.1. Executive shall also be entitled to receive a continuation of health and disability insurance coverage as specified in Section 6.5.2(c). In addition to those already vested, all unvested stock options held by Executive shall be immediately and fully vested and exercisable by Executive.

(b) The “Covenant Not to Compete” set forth in Section 7.4 below shall not apply in any respect to Executive and the term of the “No Hire Away Policy” in Section 7.5 shall be limited to six months from the date of termination.

6.5.5 Occurrence of a Change of Control With Six Months After Termination Without Cause or by Executive for Good Reason. If a Change of Control occurs within six months after the date of termination of Executive by the Company without Cause or the date of termination by Executive with Good Reason, the following shall apply:

(a) Executive shall receive (i) the Change of Control Severance Benefit set forth in Section 6.5.4(a)(i), less the amount of any Pre-Change of Control Severance Benefit payments Executive has already received under the first sentence of Section 6.5.3(a), and (ii) continuation of health and disability coverage as specified in Section 6.5.2(c).

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(b) The “Covenant Not to Compete” set forth in Section 7.4 below shall not apply in any respect to Executive (and Executive’s compliance therewith shall not be a condition to the Company’s obligations hereunder), and the term of the “No Hire Away Policy” in Section 7.5 shall be limited to six (6) months from the date of termination.

6.5.6 Additional Payments. In the event that any payments that Executive may receive under this Agreement or otherwise shall constitute a change in control payments under Section 280G of the Code which would subject Executive to an excise tax under Section 4999 of the Code, Executive shall be entitled to receive additional tax gross-up payments from the Company as set forth in Appendix A hereto. Notwithstanding the foregoing provisions of this Section 6.5.6, if it shall be determined that Executive is entitled to the Gross Up Payment, but that the Payments do not exceed 105% of the greatest amount that could be paid to Executive such that the receipt of the Payments would not give rise to any Excise Tax (the “Reduced Amount”), then no Gross Up Payment shall be made to Executive and the Payments, in the aggregate, shall be reduced to the Reduced Amount. If the Company elects to provide coverage under Section 6.5.2(c), 6.5.3(c), 6.5.4(a) or 6.5.5(a) under self-insured insurance plans rather than under insurance policies, the Company shall indemnify Executive for any tax liability he incurs on payment of claims under the insurance plans that he would not have incurred if the claims had been paid under insurance policies. Any such tax indemnification amounts shall be paid to or for the benefit the Executive by December 31 of the calendar year following the calendar year in which the additional tax is remitted, or, if no additional tax is remitted, by December 31 of the calendar year following the calendar year in which there is a final and non-appealable settlement or other resolution of an audit or litigation relating to such additional tax. The Company shall pay to Executive a payment (the “Gross Up Payment”) in an amount such that, after payment by Executive of all income taxes and the excise tax imposed by Internal Revenue Code Section 4999, or any similar provision of state or local tax law (the “Excise Tax”) imposed on benefits under this agreement, on all other payments from the Company to Executive in the nature of compensation, and on the Gross Up Payment itself, and any interest or penalties (other than interest and penalties imposed by reason of Executive’s failure to file timely tax returns or to pay taxes shown due on such returns and any tax liability, including interest and penalties, unrelated to the Excise Tax or the Gross Up Amount), Executive shall be placed in the same tax position with respect to benefits under this Agreement and all other payments from the Company to Executive in the nature of compensation as Executive would have been if the Excise Tax had never been enacted.

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6.5.7 I.R.C. Section 409A. In the event that any compensation with respect to Executive’s separation from service is “deferred compensation” within the meaning of Section 409A of the Code and the regulations thereunder (“Section 409A”), the stock of the Company or any affiliate is publicly traded on an established securities market or otherwise, and Executive is determined to be a “specified employee,” as defined in Section 409A(a)(2)(B)(i) of the Code, payment of such compensation shall be delayed as required by Section 409A. Such delay shall last six months from the date of Executive’s separation from service, except in the even of Executive’s death. Within thirty (30) days following the end of such six-month period, or, if earlier, Executive’s death, the Company will make a catch-up payment to Executive equal to the total amount of such payments that would have been made during the six-month period but for this Section 6.5.7. The catch-up payment amount shall accrue simple interest at the prime rate of interest as published by the Bank of America as of the beginning of the deferral period, which such interest shall be paid with the catch-up payment. The Company will place an amount in a “rabbi trust” with an independent trustee reasonably acceptable to Executive equal to the catch-up payment plus the interest that will accrue thereon. Wherever payments under this Agreement are to be made in installments, each such installment shall be deemed to be a separate payment for purposes of Section 409A. Payments of compensation or benefits on Executive’s termination of employment (other than accrued salary and vacation pay, other accrued amounts that must be paid under applicable law, and “welfare benefits” specified in Treasury Regulations Section 1.409A-1(a)(5)) shall be paid only if and when the termination of employment constitutes a “separation from service” under Treasury Regulation Section 1.409A-1(h).

6.5.8 Suspension. In lieu of terminating Executive’s employment hereunder for Cause under Section 6.1, the Company shall have the right, at its sole election, to suspend the performance of duties by Executive under this Agreement during the continuance of events or circumstances under Section 6.1 for an aggregate of not more than thirty (30) days during the Term (the “Default Period”) by giving Executive written notice of the Company’s election to do so at any time during the Default Period. The Company shall have the right to extend the Term beyond its normal expiration date by the period(s) of any suspension(s). The Company’s exercise of its right to suspend the operation of this Agreement shall not preclude the Company from subsequently terminating Executive’s employment hereunder. Executive shall not render services to any other person, firm or corporation in the casino business during any period of suspension. Executive shall be entitled to continued compensation and benefits pursuant to the provisions of this Agreement during the Default Period.

6.6 Exercisability of Options. Except with respect to options granted prior to the date hereof, all vested options will terminate on the earlier of (a) the expiration of the ten (10) year term of such options, or (b) one (1) year after the termination of Executive’s employment with the Company, regardless of the cause of such termination, except that, in the event of a termination for “Cause” or Executive’s termination without Good Reason, all vested options will terminate on the earlier of (I) the expiration of the ten (10) year term of such options, or (II) ninety (90) days after the termination. As provided in the stock option agreements, unvested options will terminate on the termination of Executive’s employment with the Company, except to the extent that such options become vested as a result of such termination under the terms of the governing stock option agreement or this Agreement. With respect to options granted prior to the date hereof, any option exercise extension shall be limited to the maximum amount permitted which would not trigger a modification under Section 409A.

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6.7 No-Exclusivity of Rights. Nothing in this Agreement shall prevent or limit Executive’s continuing or future participation in any plan, program, policy or practice provided by the Company or its subsidiaries and for which the Executive may quality, nor shall anything herein limit or otherwise affect such rights as Executive may have under any other contract or agreement with the Company or its subsidiaries at or subsequent to the Date of Termination (“Other Benefits”) shall be payable in accordance with such plan, policy, practice or program or contract or agreement, except as explicitly modified by this Agreement. Notwithstanding the foregoing, if Executive receives payments and benefits pursuant to Article VI of this Agreement, Executive shall not be entitled to any severance pay or benefits under any severance plan, program or policy of the Company and its subsidiaries, unless otherwise specifically provided therein in a specific reference in or to this Agreement.

6.8 Full Settlement. The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any setoff, counterclaim, recoupment, defense, or other claim, right or action that the Company may have against the Executive or others, except to the extent of the mitigation and setoff provisions provided for in this Agreement. Except as expressly provided for herein, in no event shall Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to Executive under any of the provisions of this Agreement and such amounts shall not be reduced whether or not Executive obtains other employment. The Company agrees to pay as incurred, to the full extent permitted by law, all legal fees and expenses that the Executive may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Company, Executive or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof (including as a result of any contest by Executive about the amount of any payment pursuant to this Agreement), plus, in each case, interest on any delayed payment at the applicable federal rate provided for in Section 7872(f)(2)(A) of the Code.

6.9 Release. It shall be a condition for Executive’s right to receive any severance benefits hereunder that he execute a general release in favor of the Company and its affiliates in the form attached hereto as Appendix B and covering such additional matters as may be reasonably requested by the Company, which release shall not encompass the payments contemplated hereby. The timing of payments under this Agreement upon the execution of the general release shall be governed by the following provisions:

(a) The Company must deliver the release to Executive for execution no later than fourteen (14) days after Executive’s termination of employment. If the Company fails to deliver the release to Executive within such 14 day period, Executive will be deemed to have satisfied the release requirement and will receive payments conditioned on execution of the release as though Executive had executed the release and all revocation rights had lapsed at the end of such fourteen (14) day period.

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(b) Executive must execute the release within forty-five (45) days from its delivery to him.

(c) If Executive has revocation rights, Executive shall exercise such rights, if at all, not later than seven (7) days after executing the release.

(d) In any case in which the release (and the expiration of any revocation rights) could only become effective in a particular tax year of Executive, payments conditioned on execution of the release shall begin within thirty (30) days after the release becomes effective and revocation rights have lapsed.

(e) In any case in which the release (and the expiration of any revocation rights) could become effective in one of two taxable years of Executive depending on when Executive executes the release, payments conditioned on execution of the release shall not begin before the first business day of the later of such tax years.

ARTICLE 7.

CONFIDENTIALITY

7.1 Nondisclosure of Confidential Material. In the performance of his duties, Executive may have access to confidential records, including, but not limited to, development, marketing, organizational, financial, managerial, administrative and sales information, data, specifications and processes presently owned or at any time hereafter developed or used by the Company or its agents or consultants that is not otherwise part of the public domain (collectively, the “Confidential Material”). All such Confidential Material is considered secret and is disclosed to Executive in confidence. Executive acknowledges that the Confidential Material constitutes proprietary information of the Company which draws independent economic value, actual or potential, from not being generally known to the public or to other persons who could obtain economic value from its disclosure or use, and that the Company has taken efforts reasonable under the circumstances, of which this Section 7.1 is an example, to maintain its secrecy. Except in the performance of his duties to the Company or as required by a court order or any gaming regulator or as required for his personal tax or legal advisors to advise him, Executive shall not, directly or indirectly for any reason whatsoever, disclose, divulge, communicate, use or otherwise disclose any such Confidential Material, unless such Confidential Material ceases to be confidential because it has become part of the public domain (not due to a breach by Executive of his obligations hereunder). Executive shall also take all reasonable actions appropriate to maintain the secrecy of all Confidential Information. All records, lists, memoranda, correspondence, reports, manuals, files, drawings, documents, equipment, and other tangible items (including computer software), wherever located, incorporating the Confidential Material, which Executive shall prepare, use or encounter, shall be and remain the Company’s sole and exclusive property and shall be included in the Confidential Material. Upon termination of this Agreement, or whenever requested by the Company, Executive shall promptly deliver to the Company any and all of the Confidential Material, not previously delivered to the Company, that is in the possession or under the control of Executive.

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7.2 Assignment of Intellectual Property Rights. Any ideas, processes, know-how, copyrightable works, maskworks, trade or service marks, trade secrets, inventions, developments, discoveries, improvements and other matters that may be protected by intellectual property rights, that relate to the Company’s business and are the results of Executive’s efforts during the Term (collectively, the “Executive Work Product”), whether conceived or developed alone or with others, and whether or not conceived during the regular working hours of the Company, shall be deemed works made for hire and are the property of the Company. In the event that for whatever reason such Executive Work Product shall not be deemed a work made for hire, Executive agrees that such Executive Work Product shall become the sole and exclusive property of the Company, and Executive hereby assigns to the Company his entire right, title and interest in and to each and every patent, copyright, trade or service mark (including any attendant goodwill), trade secret or other intellectual property right embodied in Executive Work Product. The Company shall also have the right, in its sole discretion to keep any and all of Executive Work Product as the Company’s Confidential Material. The foregoing work made for hire and assignment provisions are and shall be in consideration of this agreement of employment by the Company, and no further consideration is or shall be provided to Executive by the Company with respect to these provisions. Executive agrees to execute any assignment documents the Company may require confirming the Company’s ownership of any Executive Work Product. Executive also waives any and all moral rights with respect to any such works, including without limitation any and all rights of identification of authorship and/or rights of approval, restriction or limitation on use or subsequent modifications. Executive promptly will disclose to the Company any Executive Work Product.

7.3 No Unfair Competition After Termination of Agreement. Executive hereby acknowledges that the sale or unauthorized use or disclosure of any of the Company’s Confidential Material obtained by Executive by any means whatsoever, at any time before, during or after the Term shall constitute unfair competition. Executive shall not engage in any unfair competition with the Company either during the Term or at any time thereafter.

7.4 Covenant Not to Compete. In the event this Agreement is terminated by the Company for “Cause” under Section 6.1 above, or by Executive, for a reason other than one specified in Section 6.3 above, then for a period of one year after the effective date of such termination, Executive shall not, directly or indirectly, work for or provide services to or own an equity interest (except for a Permissible Investment) in any person, firm or entity engaged in the casino gaming, card club or horseracing business which competes against the Company in any “market” in which the Company owns or operates a casino, card club or horseracing facility. For purposes of this Agreement, “market” shall be defined as the area within a 100 mile radius of any casino, card club or horseracing facility owned or operated by the Company.

7.5 No Hire Away Policy. In the event this Agreement is terminated prior to the normal expiration of the Term, either by the Company for cause under Section 6.1 above, or by Executive, for a reason other than one specified in Section 6.3 above, then for a period of one year after the effective date of such termination, Executive shall not, directly or indirectly, for himself or on behalf of any entity with which he is affiliated or employed, hire any person known to Executive to be an employee of the Company or any of its subsidiaries (or any person known to Executive to have been such an employee within six months prior to such occurrence). Executive shall not be deemed to hire any such person so long as he did not directly or indirectly engage in or encourage such hiring.

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7.6 No Solicitation. During the Term and for a period of one year thereafter, or for a period of one year after earlier termination of this Agreement prior to expiration of the Term, and regardless of the reason for such termination (whether by the Company or Executive), Executive shall not directly or indirectly, for himself or on behalf of any entity with which he is affiliated or employed, solicit any employee of the Company or any of its subsidiaries (or any person who was such an employee within six months prior to such occurrence) or encourage any such employee to leave the employment of the Company or any of its subsidiaries.

7.7 Non-Solicitation of Customers. During the Term and for a period of one year thereafter, or for a period of one year after the earlier termination of this Agreement prior to the expiration of the Term, and regardless of the reason for such termination (whether by the Company or Executive), Executive shall not use customer lists or Confidential Material to solicit any customers of the Company or its subsidiaries or any of their respective casinos or card clubs, or knowingly encourage any such customers to leave the Company’s casinos or card clubs or knowingly encourage any such customers to use the facilities or services of any competitor of the Company or its subsidiaries.

7.8 Irreparable Injury. The promised service of Executive under this Agreement and the other promises of this Article 7 are of special, unique, unusual, extraordinary, or intellectual character, which gives them peculiar value, the loss of which cannot be reasonably or adequately compensated in damages in an action at law.

7.9 Remedies for Breach. Executive agrees that money damages will not be a sufficient remedy for any breach of the obligations under this Article 7 and Article 2 hereof and that the Company shall be entitled to injunctive relief (which shall include, but not be limited to, restraining Executive from directly or indirectly working for or having an ownership interest (except for a Permissible Investment) in any person engaged in the casino, gaming or horseracing businesses in any market which the Company or its affiliates owns or operates any such business, using or disclosing the Confidential Material) and to specific performance as remedies for any such breach. Executive agrees that the Company shall be entitled to such relief, including temporary restraining orders, preliminary injunctions and permanent injunctions, without the necessity of proving actual damages and without the necessity of posting a bond or making any undertaking in connection therewith. Any such requirement of a bond or undertaking is hereby waived by Executive and Executive acknowledges that in the absence of such a waiver, a bond or undertaking might otherwise be required by the court. Such remedies shall not be deemed to be the exclusive remedies for any breach of the obligations in this Article 7, but shall be in addition to all other remedies available at law or in equity.

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ARTICLE 8.

ARBITRATION

8.1 General. Except for a claim for injunctive relief under Section 7.9, any controversy, dispute, or claim between the parties to this Agreement, including any claim arising out of, in connection with, or in relation to the formation, interpretation, performance or breach of this Agreement shall be settled exclusively by arbitration, before a single arbitrator, in accordance with this Article 8 and the then most applicable rules of the American Arbitration Association. Judgment upon any award rendered by the arbitrator may be entered by any state or federal court having jurisdiction thereof. Such arbitration shall be administered by the American Arbitration Association. Arbitration shall be the exclusive remedy for determining any such dispute, regardless of its nature. Notwithstanding the foregoing, either party may in an appropriate matter apply to a court for provisional relief, including a temporary restraining order or a preliminary injunction, on the ground that the award to which the applicant may be entitled in arbitration may be rendered ineffectual without provisional relief. Unless mutually agreed by the parties otherwise, any arbitration shall take place in Las Vegas, Nevada.

8.2 Selection of Arbitrator. In the event the parties are unable to agree upon an arbitrator, the parties shall select a single arbitrator from a list of nine arbitrators drawn by the parties at random from the “Independent” (or “Gold Card”) list of retired judges or, at the option of Executive, from a list of nine persons (which shall be retired judges or corporate or litigation attorneys experienced in executive employment agreements) provided by the office of the American Arbitration Association having jurisdiction over Las Vegas, Nevada. If the parties are unable to agree upon an arbitrator from the list so drawn, then the parties shall each strike names alternately from the list, with the first to strike being determined by lot. After each party has used four strikes, the remaining name on the list shall be the arbitrator. If such person is unable to serve for any reason, the parties shall repeat this process until an arbitrator is selected.

8.3 Applicability of Arbitration; Remedial Authority. This agreement to resolve any disputes by binding arbitration shall extend to claims against any parent, subsidiary or affiliate of each party, and, when acting within such capacity, any officer, director, stockholder, employee or agent of each party, or of any of the above, and shall apply as well to claims arising out of state and federal statutes and local ordinances as well as to claims arising under the common law. In the event of a dispute subject to this paragraph the parties shall be entitled to reasonable discovery subject to the discretion of the arbitrator. The remedial authority of the arbitrator (which shall include the right to grant injunctive or other equitable relief) shall be the same as, but no greater than, would be the remedial power of a court having jurisdiction over the parties and their dispute. The arbitrator shall, upon an appropriate motion, dismiss any claim without an evidentiary hearing if the party bringing the motion establishes that he or it would be entitled to summary judgment if the matter had been pursued in court litigation. In the event of a conflict between the applicable rules of the American Arbitration Association and these procedures, the provisions of these procedures shall govern.

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8.4 Fees and Costs. Any filing or administrative fees shall be borne initially by the party requesting arbitration. The Company shall be responsible for the costs and fees of the arbitration, unless Executive wishes to contribute (up to 50%) of the costs and fees of the arbitration. Notwithstanding the foregoing, the prevailing party in such arbitration, as determined by the arbitrator, and in any enforcement or other court proceedings, shall be entitled, to the extent permitted by law, to reimbursement from the other party for all of the prevailing party’s costs (including but not limited to the arbitrator’s compensation), expenses, and attorneys’ fees.

8.5 Award Final and Binding. The arbitrator shall render an award and written opinion, and the award shall be final and binding upon the parties. If any of the provisions of this paragraph, or of this Agreement, are determined to be unlawful or otherwise unenforceable, in whole or in part, such determination shall not affect the validity of the remainder of this Agreement, and this Agreement shall be reformed to the extent necessary to carry out its provisions to the greatest extent possible and to insure that the resolution of all conflicts between the parties, including those arising out of statutory claims, shall be resolved by neutral, binding arbitration. If a court should find that the arbitration provisions of this Agreement are not absolutely binding, then the parties intend any arbitration decision and award to be fully admissible in evidence in any subsequent action, given great weight by any finder of fact, and treated as determinative to the maximum extent permitted by law.

ARTICLE 9.

MISCELLANEOUS

9.1 Amendments. The provisions of this Agreement may not be waived, altered, amended or repealed in whole or in part except by the signed written consent of the parties sought to be bound by such waiver, alteration, amendment or repeal.

9.2 Entire Agreement. This Agreement and the stock option agreements between the Company and Executive constitute the total and complete agreement of the parties and supersedes all prior and contemporaneous understandings and agreements heretofore made, including the Original Agreement and the 2006 Agreement, and there are no other representations, understandings or agreements.

9.3 Counterparts. This Agreement may be executed in one of more counterparts, each of which shall be deemed and original, but all of which shall together constitute one and the same instrument. The exchange of copies of this Agreement and of signature pages by facsimile transmission or by e-mail shall constitute effective execution and delivery of this Agreement as to the parties and may be used in lieu of the original Agreement for all purposes. Signatures of the parties transmitted by facsimile or by e-mail shall be deemed to be their original signatures for any purpose whatsoever.

9.4 Severability. Each term, covenant, condition or provision of this Agreement shall be viewed as separate and distinct, and in the event that any such term, covenant, condition or provision shall be deemed by an arbitrator or a court of competent jurisdiction to be invalid or unenforceable, the court or arbitrator finding such invalidity or unenforceability shall modify or reform this Agreement to give as much effect as possible to the terms and provisions of this Agreement. Any term or provision which cannot be so modified or reformed shall be deleted and the remaining terms and provisions shall continue in full force and effect.

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9.5 Waiver or Delay. The failure or delay on the part of the Company, or Executive to exercise any right or remedy, power or privilege hereunder shall not operate as a waiver thereof. A waiver, to be effective, must be in writing and signed by the party making the waiver. A written waiver of default shall not operate as a waiver of any other default or of the same type of default on a future occasion.

9.6 Successors and Assigns. This Agreement shall be binding on and shall inure to the benefit of the parties to it and their respective heirs, legal representatives, successors and assigns, except as otherwise provided herein. Except as provided in this Section 9.6, without the prior written consent of Executive, this Agreement shall not be assignable by the Company. The Company will require any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place. “Company” means the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid that assumes and agrees to perform this Agreement by operation of law or otherwise.

9.7 No Assignment or Transfer by Executive. Neither this Agreement nor any of the rights, benefits, obligations or duties hereunder may be assigned or transferred by Executive. Any purported assignment or transfer by Executive shall be void.

9.8 Necessary Acts. Each party to this Agreement shall perform any further acts and execute and deliver any additional agreements, assignments or documents that may be reasonably necessary to carry out the provisions or to effectuate the purpose of this Agreement.

9.9 Governing Law. This Agreement and all subsequent agreements between the parties shall be governed by and interpreted, construed and enforced in accordance with the laws of the State of Nevada.

9.10 Notices. All notices, requests, demands and other communications to be given under this Agreement shall be in writing and shall be deemed to have been duly given on the date of service, if personally served on the party to whom notice is to be given, or 48 hours after mailing, if mailed to the party to whom notice is to be given by certified or registered mail, return receipt requested, postage prepaid, and properly addressed to the party at his address set forth as follows or any other address that any party may designate by written notice to the other parties:

To Executive:	Dan Lee
	3800 Howard Hughes Parkway
	Las Vegas, NV 89169
	Telephone: 702 784-7777
	Facsimile: 702 784-7701

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with copy to:	Latham & Watkins LLP
	633 West Fifth Street
	Los Angeles, CA 90071-2007
	Attn: James D. C. Barrall
	Telephone: 213 485 1234
	Facsimile: 213 891 8763
To the Company:	Pinnacle Entertainment, Inc.
	3800 Howard Hughes Parkway
	Las Vegas, NV 89169
	Attn: John A. Godfrey, Executive Vice President,
	General Counsel and Secretary
	Telephone: 702 784-7777
	Facsimile: 702 784-7701
with copy to:	Irell & Manella LLP
	1800 Avenue of the Stars, Suite 900
	Los Angeles, CA 90067-4276
	Attn: Al Segel
	Telephone: 310 277 1010
	Facsimile: 310 284 3052

9.11 Headings and Captions. The headings and captions used herein are solely for the purpose of reference only and are not to be considered as construing or interpreting the provisions of this Agreement.

9.12 Construction. All terms and definitions contained herein shall be construed in such a manner that shall give effect to the fullest extent possible to the express or implied intent of the parties hereby.

9.13 Counsel. Executive has been advised by the Company that he should consider seeking the advice of counsel in connection with the execution of this Agreement and Executive has had an opportunity to do so. Executive has read and understands this Agreement, and has sought the advice of counsel to the extent he has determined appropriate. The Company shall reimburse Executive for the reasonable fees and expenses of Executive’s counsel in connection with this Agreement.

9.14 Withholding of Compensation. Executive hereby agrees that the Company may deduct and withhold from the compensation or other amounts payable to Executive hereunder or otherwise in connection with Executive’s employment any amounts required to be deducted and withheld by the Company under the provisions of any applicable Federal, state and local statute, law, regulation, ordinance or order.

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9.15 References to Sections of the Code. All references in this Agreement and Appendix A hereto to sections of the Code shall be to such sections and to any successor or substantially comparable sections of the Code or to any successor thereto.

9.16 Effect of Delay. Executive’s or the Company’s failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right Executive or the Company may have hereunder, including without limitation the right of Executive to terminate employment for Good Reason pursuant to Section 6.5, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

[SIGNATURES TO APPEAR ON FOLLOWING PAGE]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed on the date first written above.

EXECUTIVE	THE COMPANY
	PINNACLE ENTERTAINMENT, INC.
/s/ Daniel R. Lee Daniel R. Lee	By:	/s/ John A. Godfrey John A. Godfrey,
		Executive Vice President, General Counsel and Secretary

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Appendix A

Tax Grossup Payments

(a) Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any Payment would be subject to the Excise Tax, then Executive shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by Executive of all taxes (excluding any interest, additions, increases or penalties imposed with respect to such taxes except for interest, additions, increases or penalties with respect to the Excise Tax), including, without limitation, any income taxes (except for any interest, additions, increases and penalties imposed with respect thereto) and the Excise Tax imposed upon the Payment and the Gross-Up Payment, Executive is placed in the same tax position with respect to the Payment as Executive would have been in if the Excise Tax had never been enacted.

(b) Subject to the provisions of Section (c), all determinations required to be made under this appendix, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by the Company’s independent accounting firm or such other nationally recognized certified public accounting firm as may be designated by Executive (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and Executive within fifteen (15) business days of the receipt of notice from Executive that there has been a Payment, or such earlier time as is requested by the Company. All fees and expenses of the Accounting Firm shall be borne solely by the Company. Subject to Section e) below, any Gross-Up Payment, as determined pursuant to this appendix shall be paid by the Company to Executive within five (5) days of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon the Company and Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section (c) and Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of Executive.

(c) Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after Executive is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies Executive in writing prior to the expiration of such period that it desires to contest such claim, Executive shall:

(i) give the Company any information reasonably requested by the Company relating to such claim,

(ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company,

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(iii) cooperate with the Company in good faith in order effectively to contest such claim, and

(iv) permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section (c), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim; provided, that any extension of the statute of limitations relating to payment of taxes for the taxable year of Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

(d) If Executive becomes entitled to receive any refund with respect to the Gross-Up Payment or the Excise Tax, Executive shall promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If Executive would have received a refund of all or any portion of the Gross-Up Payment or the Excise Tax, except that a taxing authority offset the amount of such refund against other tax liabilities, interest, or penalties , Executive shall pay the amount of such offset over to the Company, together with the amount of interest Executive would have received from the taxing authority if such offset had been an actual refund, promptly after receipt of notice from the taxing authority of such offset.

(e) Notwithstanding any other provision of this appendix, the Company may withhold and pay over to the Internal Revenue Service for the benefit of Executive all or any portion of the Gross-Up Payment that it determines in good faith that it is or may be in the future required to withhold, and Executive hereby consents to such withholding.

(f) Subject to the foregoing provisions of this Appendix that may require earlier payment, any Gross-Up Payment shall be paid to or for the benefit the Executive by December 31 of the calendar year following the calendar year in which the Excise Tax is remitted, or, if no Excise Tax is remitted, by December 31 of the calendar year following the calendar year in which there is a final and non-appealable settlement or other resolution of an audit or litigation relating to the Excise Tax.

(g) Definitions. The following terms shall have the following meanings for purposes of this appendix.

(i) “Excise Tax” shall mean the excise tax imposed by Section 4999 of the Code, together with any interest or penalties imposed with respect to such excise tax.

(ii) A “Payment” shall mean any payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of Executive, whether paid or payable pursuant to this Agreement or otherwise.

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APPENDIX B

RELEASE and RESIGNATION

For valuable consideration, receipt of which is hereby acknowledged, the undersigned                                          (“Executive”), for himself and his spouse, heirs, estate, administrators and executors, hereby fully and forever releases and discharges Pinnacle Entertainment, Inc., a Delaware corporation (the “Company”), and each of its subsidiaries and the officers, directors, employees, attorneys and agents of the Company and each such subsidiary, of and from any and all claims, demands, causes of action of any kind or nature, in law, equity or otherwise, whether known or unknown, which Executive has had, may have had, or now has, or may have, arising out of or in connection with Executive’s employment with the Company and/or its subsidiaries or the termination of such employment; provided, however, that nothing contained herein is intended to nor shall constitute a release of the Company from any obligations it may have to Executive under any written employment agreement between Executive and the Company in effect as of the date hereof, or any deferred compensation, medical coverage or retirement plan or arrangement in which Executive participates or any rights of indemnification under the Company’s Articles, Bylaws, Indemnity Trust Agreement or the like, or coverage under Director and Officer Insurance, nor shall it prevent Executive from exercising his rights, if any, under any such employment agreement or under any stock option, restricted stock or similar agreement in effect as of the date hereof in accordance with their terms.

Executive represents and warrants that he has not assigned or in any way conveyed, transferred or encumbered all or any portion of the claims or rights covered by this release.

Executive hereby resigns from all positions as an officer, director or employee of the Company and each of its subsidiaries or affiliates effective the date hereof and further agrees to execute such further evidence of such resignations as may be necessary or appropriate to effectuate the foregoing.

Executed this            day of                     , 20        .

Executive

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EX-10.10

Exhibit 10.10

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) is made this 22^nd day of December 2008 (the “Effective Date”), by and between PINNACLE ENTERTAINMENT, INC., a Delaware corporation (the “Company”), and STEPHEN H. CAPP, an individual (“Executive”), with respect to the following facts and circumstances:

RECITALS

The Company and Executive entered into an Employment Agreement effective as of January 11, 2003 (the “Original Agreement”) pursuant to which Executive serves as Executive Vice President and Chief Financial Officer of the Company. The Board of Directors of the Company (the “Board”) determined that it was in the best interests of the Company and its stockholders to assure that the Executive continued to serve in such capacities beyond the term provided for in the Original Agreement and, further, to assure that the Company will have the continued dedication of Executive, notwithstanding the possibility, threat or occurrence of a Change of Control (as defined herein). The Board believed it was imperative to diminish the inevitable distraction of Executive by virtue of the personal uncertainties and risks created by a pending or threatened Change of Control and to encourage Executive’s full attention and dedication to the Company, particularly in the event of any threatened or pending Change of Control, and to provide Executive with compensation and benefits arrangements upon a Change of Control that ensure that the compensation and benefits expectations of Executive will be satisfied and that are competitive with those of other corporations. Therefore, in order to accomplish these objectives, the Board caused the Company to supersede the Original Agreement by entering into an amended Employment Agreement effective as of June 13, 2006 (the “2006 Agreement”). The Board has determined that it is in the best interest of the Company and of Executive to amend and restate the 2006 Agreement to comply with the provisions of Internal Revenue Code Section 409A and to address certain technical matters.

NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements set forth herein, the parties hereto agree as follows:

ARTICLE 1.

EMPLOYMENT AND TERM

1.1 Employment. The Company agrees to engage Executive in the capacity as Executive Vice President and Chief Financial Officer, and Executive hereby accepts such engagement by the Company upon the terms and conditions specified below.

1.2 Term. The term of this Agreement shall commence as of the Effective Date and, unless earlier terminated under Article 6 below, shall continue in force until June 13, 2009, provided that commencing on June 13, 2008 and as of June 13 of each year thereafter (a “Renewal Date”), this Agreement shall automatically renew for additional one-year periods (each, a “Renewal Period”), unless either party gives notice of non-renewal at least ninety (90) days prior to the next Renewal Date. The term of this Agreement, including any Renewal Periods, is referred to as the “Term.”

Capp Employment Agreement 2008

ARTICLE 2.

DUTIES OF EXECUTIVE

2.1 Duties. Executive shall perform all the duties and obligations generally associated with the positions of Executive Vice President and Chief Financial Officer subject to the control and supervision of the Company’s Chief Executive Officer (the “Chief Executive Officer”), and such other executive duties consistent with the foregoing as may be assigned to him from time to time by the Chief Executive Officer. Executive shall perform the services contemplated herein faithfully, diligently, to the best of his ability and in the best interests of the Company. Executive shall at all times perform such services in compliance with, and to the extent of his authority, shall to the best of his ability cause the Company to be in compliance with, any and all laws, rules and regulations applicable to the Company of which Executive is aware. Executive may rely on the Company’s inside counsel and outside lawyers in connection with such matters. Executive shall, at all times during the Term, in all material respects adhere to and obey any and all written internal rules and regulations governing the conduct of the Company’s employees, as established or modified from time to time; provided, however, in the event of any conflict between the provisions of this Agreement and any such rules or regulations, the provisions of this Agreement shall control.

2.2 Location of Services. Executive’s principal place of employment shall be at the Company’s headquarters in Las Vegas, Nevada, or at such other location as Executive and the Chief Executive Officer shall agree upon. Executive understands he will be required to travel to the Company’s various operations as part of his employment.

2.3 Exclusive Service. Except as otherwise expressly provided herein, Executive shall devote his entire business time, attention, energies, skills, learning and best efforts to the business of the Company. Executive may participate in social, civic, charitable, religious, business, educational or professional associations so long as such participation does not materially interfere with the duties and obligations of Executive hereunder. This Section 2.3, however, shall not be construed to prevent Executive from making passive outside investments so long as such investments do not require material time of Executive or otherwise interfere with the performance of Executive’s duties and obligations hereunder. Executive shall not make any investment in an enterprise that competes with the Company without the prior written approval of the Company after full disclosure of the facts and circumstances; provided, however, that this sentence shall not preclude Executive from owning up to one-half percent (0.5%) of the securities of a publicly traded entity (a “Permissible Investment”). During the Term, Executive shall not directly or indirectly work for or provide services to or, except as permitted above, own an equity interest in any person, firm or entity engaged in the casino gaming, card club or horse racing business. In this regard, and for purposes of this section only, Executive acknowledges that the gaming industry is national in scope and that accordingly this covenant shall apply throughout the United States.

Capp Employment Agreement 2008

2

ARTICLE 3.

COMPENSATION

3.1 Base Salary. In consideration for Executive’s services hereunder, the Company shall pay Executive an annual base salary, effective as of June 13, 2006, at the rate of not less than Five Hundred Thousand Dollars ($500,000) per year during each of the years of the Term; payable in accordance with the Company’s regular payroll schedule from time to time (less any deductions required for Social Security, state, federal and local withholding taxes, and any other authorized or mandated similar withholdings). Executive’s annual base salary shall be reviewed by the Chief Executive Officer and, if appropriate, the Compensation Committee of the Board (the “Committee”) at least annually beginning no more than twelve (12) months from the date hereof and may be increased (but not decreased) at the discretion of the Board. If Executive’s annual salary is increased, the increased amount shall not be reduced for the remainder of the Term.

3.2 Annual and Other Bonuses. Executive shall be entitled to earn bonuses with respect to each year of the Term during which Executive is employed under this Agreement in the discretion of the Chief Executive Officer and, if appropriate, the Committee. Any such bonus earned by Executive shall be paid annually by March 15^th following the conclusion of the Company’s fiscal year, except for any portion of the bonus which is subject to required deferral by the Company and except for any portion of the bonus which Executive shall elect to defer. Bonuses relative to partial years (or a termination caused by death or disability) shall be prorated. Executive may also receive special bonuses in addition to his annual bonus eligibility at the discretion of the Chief Executive Officer and, if appropriate, the Committee.

3.3 Stock Options. Prior to June 13, 2008 and at appropriate times thereafter (no less frequently than within forty (40) months of the prior review), the Committee shall review Executive’s long-term compensation and, in consultation with the Chief Executive Officer, shall consider granting additional stock options and/or other long term incentive compensation.

ARTICLE 4.

EXECUTIVE BENEFITS

4.1 Vacation. In accordance with the general policies of the Company applicable generally to other senior executives of the Company pursuant to the Company’s personnel policies from time to time, Executive shall be entitled to not less than four weeks vacation each calendar year, without reduction in compensation.

4.2 The Company Employee Benefits. Executive shall receive all group insurance and pension plan benefits and any other benefits on the same basis as they are available generally to other senior executives of the Company under the Company personnel policies in effect from time to time.

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4.3 Benefits. Executive shall receive all other such benefits as the Company may offer to other senior executives of the Company generally under the Company personnel plans, practices, policies and programs in effect from time to time, such as health and disability insurance coverage and paid sick leave. In the event that the Company’s group health plan does not cover the annual physical examination of Executive and Executive’s spouse, if any, or any pregnancy of Executive’s spouse, if any, the Company shall bear the cost of such examinations or the medical costs of such pregnancy.

4.4 Indemnification. Executive shall have the benefit of indemnification to the fullest extent permitted by applicable law, which indemnification shall continue after the termination of this Agreement for such period as may be necessary to continue to indemnify Executive for his acts while an officer of the Company. In addition, the Company shall cause Executive to be covered by the current policies of directors and officers liability insurance in accordance with their terms, to the maximum extent of the coverage available for any director or officer of the Company. The Company shall use commercially reasonable efforts to cause the current policies of directors and officers liability insurance to be maintained throughout the term of Executive’s employment with the Company and for such period thereafter as may be necessary to continue to cover acts of Executive during the term of his employment (provided that the Company may substitute therefor, or allow to be substituted therefor, policies of at least the same coverage and amounts containing terms and conditions which are, in the aggregate, no less advantageous to the insured in any material respect). In the event of any merger or other acquisition of the Company, the Company shall no later than immediately prior to consummation of such transaction purchase the longest applicable “tail” coverage available under the directors and officers liability insurance in effect at the time of such merger or acquisition.

ARTICLE 5.

REIMBURSEMENT FOR EXPENSES

5.1 Executive shall be reimbursed by the Company for all ordinary and necessary expenses incurred by Executive in the performance of his duties or otherwise in furtherance of the business of the Company in accordance with the policies of the Company in effect from time to time. Executive shall keep accurate and complete records of all such expenses, including but not limited to, proof of payment and purpose. Executive shall account fully for all such expenses to the Company. No reimbursement will be made later than the close of the calendar year following the calendar year in which the expense was incurred. Expenses eligible for reimbursement in any one taxable year shall not affect the amount of expenses eligible for reimbursement in any other taxable year, and the right to expense reimbursement shall not be subject to liquidation or exchange for any other benefit.

ARTICLE 6.

TERMINATION

6.1 Termination for Cause. Without limiting the generality of Section 6.2, the Company shall have the right to terminate Executive’s employment, without further obligation or liability to Executive, upon the occurrence of any one or more of the following events, which events shall be deemed termination for cause (“Cause”).

6.1.1 Failure to Perform Duties. If Executive neglects to perform the material duties of his employment under this Agreement in a professional and businesslike manner other than due to his disability (except due to substance or alcohol abuse) after having received written notice specifying such failure to perform and a reasonable opportunity to perform.

6.1.2 Willful Breach. If Executive willfully commits a material breach of this Agreement and fails to cure such breach within thirty (30) days of written notice thereof or a material willful breach of his fiduciary duty to the Company.

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6.1.3 Wrongful Acts. If Executive is convicted of a felony involving acts of moral turpitude or commits fraud, misrepresentation, embezzlement or other acts of material misconduct against the Company (including violating or condoning the violation of any material rules or regulations of gaming authorities which could have a material adverse effect on the Company) that would make the continuance of his employment by the Company materially detrimental to the Company.

6.1.4 Failure To Be Licensed. If Executive fails to be licensed in all jurisdictions in which the Company or its subsidiaries has gaming facilities within the date required by any jurisdiction, or if any of such licenses shall be revoked or suspended at any time during the Term, then the Company may by written notice to Executive terminate the Agreement for Cause. Executive agrees to promptly submit to the licensing requirements of all jurisdictions in which the Company or its subsidiaries does business. The Company shall bear all expenses incurred in connection with such licenses.

6.2 Termination Without Cause. Notwithstanding anything to the contrary herein, the Company shall have the right to terminate Executive’s employment under this Agreement at any time without Cause by giving notice of such termination to Executive. Failure by the Company to extend the Term for any Renewal Period shall not be a termination of this Agreement without Cause.

6.3 Termination by Executive for Good Reason. Executive may terminate his employment under this Agreement on thirty (30) days prior notice to the Company for good reason (“Good Reason”). For purposes of this Agreement, “Good Reason” shall mean and be limited to (a) a material breach of this Agreement by the Company (including without limitation any material reduction in the authority, duties or responsibilities of Executive, or any relocation of his or its principal place of business outside the greater Las Vegas metropolitan area (without Executive’s consent); or (b) a change of control with respect to the Company (a “Change of Control”) followed by (i) any diminution of Executive’s authority, duties or responsibilities as set forth in Section 2.1; or (ii) during the first twelve (12) months following a Change of Control, the failure of the Company to award Executive an annual bonus equal to at least seventy-five percent (75%) of the average amount of the annualized bonus paid to Executive for the last two (2) full years; or (iii) Executive’s termination by the Company other than at the end of the Term of this Agreement; or (iv) termination of his employment by Executive in his sole and absolute discretion at any time during the twelve (12) months immediately following the first anniversary date of the Change of Control. Except in the cases set forth in clauses (b)(iii) and (b)(iv) of the preceding sentence, however, “Good Reason” shall not exist unless Executive gives notice of proposed termination within 30 days following the breach or condition giving rise to Good Reason, and there is a failure of the Company to remedy the breach or condition giving rise to Good Reason within thirty (30) days after such notice (or as soon thereafter as practicable so long as it commences effectuation of such remedy within such time period and diligently pursues such remedy to completion as soon as practicable). For purposes of this Agreement, a “Change of Control” shall mean the occurrence of any of the following:

(i) The direct or indirect acquisition by an unrelated “Person” or “Group” of “Beneficial Ownership” (as such terms are defined below) of more than 50% of the voting power of the Company’s issued and outstanding voting securities in a single transaction or a series of related transactions;

(ii) The direct or indirect sale or transfer by the Company of substantially all of its assets to one or more unrelated Persons or Groups in a single transaction or a series of related transactions;

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(iii) The merger, consolidation or reorganization of the Company with or into another corporation or other entity in which the Beneficial Owners of more than 50% of the voting power of the Company’s issued and outstanding voting securities immediately before such merger or consolidation do not own more than 50% of the voting power of the issued and outstanding voting securities of the surviving corporation or other entity immediately after such merger, consolidation or reorganization; or

(iv) During any consecutive 12-month period, individuals who at the beginning of such period constituted the Board of the Company (together with any new Directors whose election to such Board or whose nomination for election by the stockholders of the Company was approved by a vote of a majority of the Directors of the Company then still in office who were either Directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of the Company then in office.

None of the foregoing events, however, shall constitute a Change of Control if such event is not a “Change in Control Event” under Treasury Regulations Section 1.409A-3(i)(5) or successor IRS guidance. For purposes of determining whether a Change of Control has occurred, the following Persons and Groups shall not be deemed to be “unrelated”: (A) such Person or Group directly or indirectly has Beneficial Ownership of more than 50% of the issued and outstanding voting power of the Company’s voting securities immediately before the transaction in question, (B) the Company has Beneficial Ownership of more than 50% of the voting power of the issued and outstanding voting securities of such Person or Group, or (C) more than 50% of the voting power of the issued and outstanding voting securities of such Person or Group are owned, directly or indirectly, by Beneficial Owners of more than 50% of the issued and outstanding voting power of the Company’s voting securities immediately before the transaction in question. The terms “Person,” “Group,” “Beneficial Owner,” and “Beneficial Ownership” shall have the meanings used in the Securities Exchange Act of 1934, as amended. Notwithstanding the foregoing, (I) Persons will not be considered to be acting as a “Group” solely because they purchase or own stock of the Company at the same time, or as a result of the same public offering, (II) however, Persons will be considered to be acting as a “Group” if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction, with the Company, and (III) if a Person, including an entity, owns stock both in the Company and in a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar transaction, with the Company, such shareholders shall be considered to be acting as a Group with other shareholders only with respect to the ownership in the corporation before the transaction.

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6.4 Death or Disability. This Agreement shall terminate on the death or “Disability” of Executive. Executive will be deemed to have a “Disability” when he is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or begins receiving income replacement benefits for a period of not less than three months under an accident and health plan of the Company or an affiliate by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months. If there should be a dispute between the Company and Executive as to Executive’s physical or mental Disability for purposes of this Agreement, the question shall be settled by the opinion of an impartial reputable physician or psychiatrist agreed upon by the parties or their representatives, or if the parties cannot agree within ten (10) days after a request for designation of such party, then a physician or psychiatrist designed by the Clark County Medical Association or similar body. The certification of such physician or psychiatrist as to the questioned dispute shall be final and binding upon the parties hereto.

6.5 Effect of Termination.

6.5.1 Payment of Salary and Expenses Upon Termination. Any termination under this Section 6 shall be effective upon receipt of notice by Executive or the Company, as the case may be, of such termination or upon such other later date as may be provided herein or specified by the Company or Executive in the notice (the “Termination Date”), except as otherwise provided in this Section 6. If this Agreement is terminated, all benefits provided to Executive by the Company hereunder shall thereupon cease, except as provided in this Section 6.5, and the Company shall pay or cause to be paid to Executive all accrued but unpaid base salary, any compensation previously voluntarily deferred by Executive, payable in accordance with the provisions of the applicable deferred compensation plan and in accordance with Executive’s elections under such deferred compensation plan, and vacation benefits. In addition, promptly upon submission by Executive of his unpaid expenses incurred prior to the Termination Date and owing to Executive pursuant to Article 5, reimbursement for such expenses shall be made. If the Agreement is terminated by the Company for “Cause,” or by Executive without “Good Reason,” Executive shall not be entitled to receive any payments other than as specified in this Section 6.5.1, and provided that Executive may exercise any vested options.

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6.5.2 Termination Due to Death or Disability. If this Agreement is terminated due to death or Disability, the following shall apply:

(a) Executive shall be entitled to an amount equal to the sum of (i) Executive’s annual base salary in effect on the date of termination; plus (ii) the greater of the amount of Executive’s bonus (including all deferred amounts) in the year prior to such termination or the average of the annual bonuses (including all deferred amounts) paid to Executive in the three (3) consecutive years prior to the year of termination (the “Bonus Amount”) times (iii) one hundred fifty percent (150%) of the sum of (i) and (ii) above (the “Death or Disability Severance Benefit”); provided that in the event of death, the amount of such Death Severance Benefit shall be reduced by the amount of any life insurance provided by the Company; and, provided, further, that the amount of such Disability Severance Benefit shall be reduced under the circumstances specified in this Section 6.5.2. In addition, Executive shall be entitled to receive any amounts payable under Section 6.5.1 above a pro rata bonus for the year of death or Disability (which bonus shall be calculated by taking the Bonus Amount and multiplying it by a fraction, the numerator of which is the number of days in the year in which Executive was employed before death or Disability and the denominator of which is 365); such pro rata bonus shall be payable within thirty (30) days after death or Disability. The base salary component of the Death or Disability Severance Benefit shall be payable to Executive or his estate monthly in equal installments over a period of eighteen (18) months after the termination of Executive’s employment (the “Death or Disability Severance Benefit Period”) and seventy five percent (75%) of the bonus component shall be paid within thirty (30) days after death or Disability, and twenty five percent (25%) of the bonus component shall be payable in three annual installments on the anniversaries of death or Disability; provided that if during such period a Change of Control shall occur, the full amount of any unpaid Death or Disability Severance Benefit shall be paid to Executive or his estate in a lump sum. If, during the Disability Severance Benefit Period Executive is able to work in capacities similar to those for which he is employed hereunder, he shall have a duty to seek employment and to advise the Company of all compensation paid or payable to him from such employment. Such amounts shall reduce the amount of Disability Severance Benefits payable by the Company hereunder.

(b) Any outstanding unvested stock options at the date of death or Disability which would otherwise vest during the eighteen (18) months following death or Disability shall immediately become vested and may be exercised in accordance with their terms. The remaining unvested options shall immediately terminate.

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(c) Executive shall also be entitled to receive health benefits coverage for Executive and his dependents, and disability insurance coverage for Executive, under the same plan(s) or arrangement(s) under which Executive was were covered immediately before his death or Disability or plan(s) established or arrangement(s) provided by the Company or any of its Subsidiaries thereafter for the benefit of senior executives (“Health and Disability Coverage Continuation”). Such health benefits and disability coverage shall be paid for by the Company to the same extent as if Executive were still employed by the Company, and Executive, or his Dependents in the event of his death, will be required to make such payments as Executive would be required to make if Executive were still employed by the Company. The benefits provided under this Section 6.5.2(c) shall continue until the earliest of (a) five (5) years; (b) the date on which Executive ceases to be Disabled during the five (5) year period; and (c) the date Executive (and in the case of his dependents, the dependents) becomes covered or eligible for coverage under any other group health plan or group disability plan (as the case may be) not maintained by the Company or any of its Subsidiaries; provided, however, that if such other group health plan excludes any pre-existing condition that Executive or Executive’s dependents may have when coverage under such group health plan would otherwise begin, coverage under this Section 6.5.2(c) shall continue (but not beyond the period described in clause (a) of this sentence) with respect to such pre-existing condition until such exclusion under such other group health plan lapses or expires. In the event Executive is required to make an election under Sections 601 through 607 of the Employee Retirement Income Security Act of 1974, as amended (commonly known as COBRA) to qualify for the benefits described in this Section 6.5.2(c), the obligations of the Company and its Subsidiaries under this Section 6.5.2(c) shall be conditioned upon Executive’s timely making such an election. Any payment or reimbursement of benefits under this Section 6.5.2(c) that is taxable to Executive or his dependents shall be made by December 31 of the calendar year following the calendar year in which Executive or his dependent incurred the expense. Expenses eligible for reimbursement in any one taxable year shall not affect the amount of expenses eligible for reimbursement in any other taxable year, and the right to expense reimbursement shall not be subject to liquidation or exchange for any other benefit.

(d) The provisions of Sections 7.4, 7.5, 7.6 and 7.7 shall apply both during and after the termination of the Disability Severance Benefit Period.

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6.5.3 Termination Without Cause or Termination by Executive for Good Reason Other than in Connection with a Change of Control. If the Company terminates Executive without Cause or Executive terminates for Good Reason other than in connection with a Change of Control as contemplated by Section 6.5.4, the following shall apply:

(a) Executive shall be entitled to receive an amount equal to one hundred fifty percent (150%) times (i) Executive’s annual base salary (the “Base Severance Benefit”) in effect on the date of termination; plus (ii) the Bonus Amount, excluding any deferred bonus which was at the Company’s election rather than Executive’s. The Base Severance Benefit shall be paid to Executive in equal monthly installments over eighteen (18) months immediately following the date of termination in accordance with the Company’s regular salary payment schedule from time to time. Seventy five percent (75%) of the Bonus Amount shall be paid within thirty (30) days after the termination of employment, and twenty five percent (25%) of the Bonus Amount shall be payable in three annual installments on the anniversaries of the termination of employment. In addition, Executive shall be entitled to receive any amounts payable under Section 6.5.1 above and a pro rata annual bonus for the year of termination calculated and payable as provided in Section 6.5.2(a), including any deferred bonus which was at the Company’s election rather than Executive’s; such pro rata annual bonus shall be payable within thirty (30) days after termination of employment. The payments contemplated herein shall not be subject to any duty of mitigation by Executive nor to offset for any income earned by Executive following termination.

(b) In addition to those already vested, all of Executive’s outstanding stock options which would have vested in the eighteen (18) months following termination shall be fully vested and exercisable as of the date of termination. Any remaining unvested options shall immediately terminate.

(c) Executive shall also be entitled to receive Health and Disability Coverage Continuation for himself and his dependents, as applicable, on the terms provided in Section 6.5.2(c) above; provided that the maximum continuation period shall be eighteen (18) months from the date of termination.

(d) The provisions of Sections 7.3, 7.5, 7.6 and 7.7 shall apply from the date of termination, but the provisions of Section 7.4 (“Covenant Not to Compete”) shall not apply.

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6.5.4 Termination Without Cause or Termination by Executive for Good Reason Within the Twenty-Four (24) Months After a Change of Control. If the Company terminates Executive without Cause or Executive terminates for Good Reason within twenty-four (24) months after a Change of Control, or if Executive terminates in his sole and absolute discretion within the twelve (12) months immediately following the first anniversary date of a Change of Control, the following shall apply:

(a) The Company shall pay to Executive in lieu of the Base Severance Benefit, in a lump sum as soon as practicable, but in no event later than thirty (30) days after the termination of Executive’s employment, (i) an amount (the “Change of Control Severance Benefit”) equal to two (2) times Executive’s annual base salary in effect on the date of termination, plus (ii) two (2) times the largest annual bonus (including all deferred amounts) that was paid to Executive during the three (3) years preceding the Change of Control; plus (iii) a pro rated bonus for the year of termination (which bonus shall be calculated by taking the Bonus Amount and multiplying it as provided in section 6.5.2(a) plus (iv) any amounts payable under Section 6.5.1. Executive shall also be entitled to receive a continuation of health and disability insurance coverage as specified in Section 6.5.2(c). In addition to those already vested, all unvested stock options held by Executive shall be immediately and fully vested and exercisable by Executive.

(b) The “Covenant Not to Compete” set forth in Section 7.4 below shall not apply in any respect to Executive (and Executive’s compliance therewith shall not be a condition to the Company’s obligations hereunder), and the term of the “No Hire Away Policy” in Section 7.5 shall be limited to six (6) months from the date of termination.

6.5.5 Occurrence of a Change of Control With Six Months After Termination Without Cause or by Executive for Good Reason. If a Change of Control occurs within six months after the date of termination of Executive by the Company without Cause or the date of termination by Executive with Good Reason, the following shall apply:

(a) Executive shall receive (i) the Change of Control Severance Benefit set forth in Section 6.5.4(a)(i), less the amount of any payments Executive has already received under the first sentence of Section 6.5.3(a), and (ii) continuation of health and disability coverage as specified in Section 6.5.2(c).

(b) The “Covenant Not to Compete” set forth in Section 7.4 below shall not apply in any respect to Executive (and Executive’s compliance therewith shall not be a condition to the Company’s obligations hereunder), and the term of the “No Hire Away Policy” in Section 7.5 shall be limited to six (6) months from the date of termination.

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6.5.6 Additional Payments. In the event that any payments that Executive may receive under this Agreement or otherwise shall constitute a change in control payments under Section 280G of the Code which would subject Executive to an excise tax under Section 4999 of the Code, Executive shall be entitled to receive additional tax gross-up payments from the Company as set forth in Appendix A hereto. Notwithstanding the foregoing provisions of this Section 6.5.6, if it shall be determined that Executive is entitled to the Gross Up Payment, but that the Payments do not exceed 105% of the greatest amount that could be paid to Executive such that the receipt of the Payments would not give rise to any Excise Tax (the “Reduced Amount”), then no Gross Up Payment shall be made to Executive and the Payments, in the aggregate, shall be reduced to the Reduced Amount. If the Company elects to provide coverage under Section 6.5.2(c), 6.5.3(c), 6.5.4(a) or 6.5.5(a) under self-insured insurance plans rather than under insurance policies, the Company shall indemnify Executive for any tax liability he incurs on payment of claims under the insurance plans that he would not have incurred if the claims had been paid under insurance policies. Any such tax indemnification amounts shall be paid to or for the benefit the Executive by December 31 of the calendar year following the calendar year in which the additional tax is remitted, or, if no additional tax is remitted, by December 31 of the calendar year following the calendar year in which there is a final and non-appealable settlement or other resolution of an audit or litigation relating to such additional tax. The Company shall pay to Executive a payment (the “Gross Up Payment”) in an amount such that, after payment by Executive of all income taxes and the excise tax imposed by Internal Revenue Code Section 4999, or any similar provision of state or local tax law (the “Excise Tax”) imposed on benefits under this agreement, on all other payments from the Company to Executive in the nature of compensation, and on the Gross Up Payment itself, and any interest or penalties (other than interest and penalties imposed by reason of Executive’s failure to file timely tax returns or to pay taxes shown due on such returns and any tax liability, including interest and penalties, unrelated to the Excise Tax or the Gross Up Amount), Executive shall be placed in the same tax position with respect to benefits under this Agreement and all other payments from the Company to Executive in the nature of compensation as Executive would have been if the Excise Tax had never been enacted.

6.5.7 I.R.C. Section 409A. In the event that any compensation with respect to Executive’s separation from service is “deferred compensation” within the meaning of Section 409A of the Code and the regulations thereunder (“Section 409A”), the stock of the Company or any affiliate is publicly traded on an established securities market or otherwise, and Executive is determined to be a “specified employee,” as defined in Section 409A(a)(2)(B)(i) of the Code, payment of such compensation shall be delayed as required by Section 409A. Such delay shall last six months from the date of Executive’s separation from service, except in the event of Executive’s death. Within thirty (30) days following the end of such six-month period, or, if earlier, Executive’s death, the Company will make a catch-up payment to Executive equal to the total amount of such payments that would have been made during the six-month period but for this Section 9.1. The catch-up payment amount shall accrue simple interest at the prime rate of interest as published by the Bank of America as of the beginning of the deferral period, which interest shall be paid with the catch-up payment. The Company will place an amount in a “rabbi trust” with an independent trustee reasonably acceptable to Executive equal to the catch-up payment plus the interest that will accrue thereon. Wherever payments under this Agreement are to be made in installments, each such installment shall be deemed to be a separate payment for purposes of Section 409A. Payments of compensation or benefits on Executive’s termination of employment (other than accrued salary and vacation pay, other accrued amounts that must be paid under applicable law, and “welfare benefits” specified in Treasury Regulations Section 1.409A-1(a)(5)) shall be paid only if and when the termination of employment constitutes a “separation from service” under Treasury Regulation Section 1.409A-1(h).

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6.5.8 Suspension. In lieu of terminating Executive’s employment hereunder for Cause under Section 6.1, the Company shall have the right, at its sole election, to suspend the performance of duties by Executive under this Agreement during the continuance of events or circumstances under Section 6.1 for an aggregate of not more than thirty (30) days during the Term (the “Default Period”) by giving Executive written notice of the Company’s election to do so at any time during the Default Period. The Company shall have the right to extend the Term beyond its normal expiration date by the period(s) of any suspension(s). The Company’s exercise of its right to suspend the operation of this Agreement shall not preclude the Company from subsequently terminating Executive’s employment hereunder. Executive shall not render services to any other person, firm or corporation in the casino business during any period of suspension. Executive shall be entitled to continued compensation and benefits pursuant to the provisions of this Agreement during the Default Period.

6.6 Exercisability of Options. Except with respect to options granted prior to the date hereof, all vested options will terminate on the earlier of (a) the expiration of the ten (10) year term of such options, or (b) one (1) year after the termination of Executive’s employment with the Company, regardless of the cause of such termination, except that, in the event of a termination for “Cause” or Executive’s termination without Good Reason, all vested options will terminate on the earlier of (I) the expiration of the ten (10) year term of such options, or (II) ninety (90) days after the termination. As provided in the stock option agreements, unvested options will terminate on the termination of Executive’s employment with the Company, except to the extent that such options become vested as a result of such termination under the terms of the governing stock option agreement or this Agreement. With respect to options granted prior to the date hereof, any option exercise extension shall be limited to the maximum amount permitted which would not trigger a modification under Section 409A.

6.7 No-Exclusivity of Rights. Nothing in this Agreement shall prevent or limit Executive’s continuing or future participation in any plan, program, policy or practice provided by the Company or its subsidiaries and for which the Executive may quality, nor shall anything herein limit or otherwise affect such rights as Executive may have under any other contract or agreement with the Company or its subsidiaries at or subsequent to the Date of Termination (“Other Benefits”) shall be payable in accordance with such plan, policy, practice or program or contract or agreement, except as explicitly modified by this Agreement. Notwithstanding the foregoing, if Executive receives payments and benefits pursuant to Article VI of this Agreement, Executive shall not be entitled to any severance pay or benefits under any severance plan, program or policy of the Company and its subsidiaries, unless otherwise specifically provided therein in a specific reference in or to this Agreement.

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6.8 Full Settlement. The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any setoff, counterclaim, recoupment, defense, or other claim, right or action that the Company may have against the Executive or others, except to the extent of the mitigation and setoff provisions provided for in this Agreement. Except as expressly provided for herein, in no event shall Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to Executive under any of the provisions of this Agreement and such amounts shall not be reduced whether or not Executive obtains other employment. The Company agrees to pay as incurred, to the full extent permitted by law, all legal fees and expenses that the Executive may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Company, Executive or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof (including as a result of any contest by Executive about the amount of any payment pursuant to this Agreement), plus, in each case, interest on any delayed payment at the applicable federal rate provided for in Section 7872(f)(2)(A) of the Code.

6.9 Release. It shall be a condition for Executive’s right to receive any severance benefits hereunder that he execute a general release in favor of the Company and its affiliates in the form attached hereto as Appendix B and covering such additional matters as may be reasonably requested by the Company, which release shall not encompass the payments contemplated hereby. The timing of payments under this Agreement upon the execution of the general release shall be governed by the following provisions:

(a) The Company must deliver the release to Executive for execution no later than fourteen (14) days after Executive’s termination of employment. If the Company fails to deliver the release to Executive within such fourteen (14) day period, Executive will be deemed to have satisfied the release requirement and will receive payments conditioned on execution of the release as though Executive had executed the release and all revocation rights had lapsed at the end of such 14 day period.

(b) Executive must execute the release within forty-five (45) days from its delivery to him.

(c) If Executive has revocation rights, Executive shall exercise such rights, if at all, not later than seven (7) days after executing the release.

(d) In any case in which the release (and the expiration of any revocation rights) could only become effective in a particular tax year of Executive, payments conditioned on execution of the release shall begin within thirty (30) days after the release becomes effective and revocation rights have lapsed.

(e) In any case in which the release (and the expiration of any revocation rights) could become effective in one of two taxable years of Executive depending on when Executive executes the release, payments conditioned on execution of the release shall not begin before the first business day of the later of such tax years.

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ARTICLE 7.

CONFIDENTIALITY

7.1 Nondisclosure of Confidential Material. In the performance of his duties, Executive may have access to confidential records, including, but not limited to, development, marketing, organizational, financial, managerial, administrative and sales information, data, specifications and processes presently owned or at any time hereafter developed or used by the Company or its agents or consultants that is not otherwise part of the public domain (collectively, the “Confidential Material”). All such Confidential Material is considered secret and is disclosed to Executive in confidence. Executive acknowledges that the Confidential Material constitutes proprietary information of the Company which draws independent economic value, actual or potential, from not being generally known to the public or to other persons who could obtain economic value from its disclosure or use, and that the Company has taken efforts reasonable under the circumstances, of which this Section 7.1 is an example, to maintain its secrecy. Except in the performance of his duties to the Company or as required by a court order or any gaming regulator or as required for his personal tax or legal advisors to advise him, Executive shall not, directly or indirectly for any reason whatsoever, disclose, divulge, communicate, use or otherwise disclose any such Confidential Material, unless such Confidential Material ceases to be confidential because it has become part of the public domain (not due to a breach by Executive of his obligations hereunder). Executive shall also take all reasonable actions appropriate to maintain the secrecy of all Confidential Information. All records, lists, memoranda, correspondence, reports, manuals, files, drawings, documents, equipment, and other tangible items (including computer software), wherever located, incorporating the Confidential Material, which Executive shall prepare, use or encounter, shall be and remain the Company’s sole and exclusive property and shall be included in the Confidential Material. Upon termination of this Agreement, or whenever requested by the Company, Executive shall promptly deliver to the Company any and all of the Confidential Material, not previously delivered to the Company, that is in the possession or under the control of Executive.

7.2 Assignment of Intellectual Property Rights. Any ideas, processes, know-how, copyrightable works, maskworks, trade or service marks, trade secrets, inventions, developments, discoveries, improvements and other matters that may be protected by intellectual property rights, that relate to the Company’s business and are the results of Executive’s efforts during the Term (collectively, the “Executive Work Product”), whether conceived or developed alone or with others, and whether or not conceived during the regular working hours of the Company, shall be deemed works made for hire and are the property of the Company. In the event that for whatever reason such Executive Work Product shall not be deemed a work made for hire, Executive agrees that such Executive Work Product shall become the sole and exclusive property of the Company, and Executive hereby assigns to the Company his entire right, title and interest in and to each and every patent, copyright, trade or service mark (including any attendant goodwill), trade secret or other intellectual property right embodied in Executive Work Product. The Company shall also have the right, in its sole discretion to keep any and all of Executive Work Product as the Company’s Confidential Material. The foregoing work made for hire and assignment provisions are and shall be in consideration of this agreement of employment by the Company, and no further consideration is or shall be provided to Executive by the Company with respect to these provisions. Executive agrees to execute any assignment documents the Company may require confirming the Company’s ownership of any Executive Work Product. Executive also waives any and all moral rights with respect to any such works, including without limitation any and all rights of identification of authorship and/or rights of approval, restriction or limitation on use or subsequent modifications. Executive promptly will disclose to the Company any Executive Work Product.

7.3 No Unfair Competition After Termination of Agreement. Executive hereby acknowledges that the sale or unauthorized use or disclosure of any of the Company’s Confidential Material obtained by Executive by any means whatsoever, at any time before, during or after the Term shall constitute unfair competition. Executive shall not engage in any unfair competition with the Company either during the Term or at any time thereafter.

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7.4 Covenant Not to Compete. In the event this Agreement is terminated by the Company for “Cause” under Section 6.1 above, or by Executive, for a reason other than one specified in Section 6.3 above, then for a period of one year after the effective date of such termination, Executive shall not, directly or indirectly, work for or provide services to or own an equity interest (except for a Permissible Investment) in any person, firm or entity engaged in the casino gaming, card club or horseracing business which competes against the Company in any “market” in which the Company owns or operates a casino, card club or horseracing facility. For purposes of this Agreement, “market” shall be defined as the area within a 100 mile radius of any casino, card club or horseracing facility owned or operated or under construction by the Company.

7.5 No Hire Away Policy. In the event this Agreement is terminated prior to the normal expiration of the Term, either by the Company for cause under Section 6.1 above, or by Executive, for a reason other than one specified in Section 6.3 above, then for a period of one (1) year after the effective date of such termination, Executive shall not, directly or indirectly, for himself or on behalf of any entity with which he is affiliated or employed, hire any person known to Executive to be an employee of the Company or any of its subsidiaries (or any person known to Executive to have been such an employee within six (6) months prior to such occurrence). Executive shall not be deemed to hire any such person so long as he did not directly or indirectly engage in or encourage such hiring.

7.6 No Solicitation. During the Term and for a period of one (1) year thereafter, or, if sooner, for a period of one (1) year after earlier termination of this Agreement prior to expiration of the Term, and regardless of the reason for such termination (whether by the Company or Executive), Executive shall not directly or indirectly, for himself or on behalf of any entity with which he is affiliated or employed, solicit any employee of the Company or any of its subsidiaries (or any person who was such an employee within six (6) months prior to such occurrence) or encourage any such employee to leave the employment of the Company or any of its subsidiaries.

7.7 Non-Solicitation of Customers. During the Term and for a period of one (1) year thereafter, or, if sooner, for a period of one (1) year after the earlier termination of this Agreement prior to the expiration of the Term, and regardless of the reason for such termination (whether by the Company or Executive), Executive shall not solicit any customers of the Company or its subsidiaries or any of their respective casinos or card clubs, or knowingly encourage any such customers to leave the Company’s casinos or card clubs or knowingly encourage any such customers to use the facilities or services of any competitor of the Company or its subsidiaries. Executive shall at no times use proprietary customer lists or Confidential Material to solicit customers.

7.8 Irreparable Injury. The promised service of Executive under this Agreement and the other promises of this Article 7 are of special, unique, unusual, extraordinary, or intellectual character, which gives them peculiar value, the loss of which cannot be reasonably or adequately compensated in damages in an action at law.

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7.9 Remedies for Breach. Executive agrees that money damages will not be a sufficient remedy for any breach of the obligations under this Article 7 and Article 2 hereof and that the Company shall be entitled to injunctive relief (which shall include, but not be limited to, restraining Executive from directly or indirectly working for or having an ownership interest (except for a Permissible Investment) in any person engaged in the casino, gaming or horseracing businesses in any market which the Company or its affiliates owns or operates any such business, using or disclosing the Confidential Material) and to specific performance as remedies for any such breach. Executive agrees that the Company shall be entitled to such relief, including temporary restraining orders, preliminary injunctions and permanent injunctions, without the necessity of proving actual damages and without the necessity of posting a bond or making any undertaking in connection therewith. Any such requirement of a bond or undertaking is hereby waived by Executive and Executive acknowledges that in the absence of such a waiver, a bond or undertaking might otherwise be required by the court. Such remedies shall not be deemed to be the exclusive remedies for any breach of the obligations in this Article 7, but shall be in addition to all other remedies available at law or in equity.

ARTICLE 8.

ARBITRATION

8.1 General. Except for a claim for injunctive relief under Section 7.9, any controversy, dispute, or claim between the parties to this Agreement, including any claim arising out of, in connection with, or in relation to the formation, interpretation, performance or breach of this Agreement shall be settled exclusively by arbitration, before a single arbitrator, in accordance with this Article 8 and the then most applicable rules of the American Arbitration Association. Judgment upon any award rendered by the arbitrator may be entered by any state or federal court having jurisdiction thereof. Such arbitration shall be administered by the American Arbitration Association. Arbitration shall be the exclusive remedy for determining any such dispute, regardless of its nature. Notwithstanding the foregoing, either party may in an appropriate matter apply to a court for provisional relief, including a temporary restraining order or a preliminary injunction, on the ground that the award to which the applicant may be entitled in arbitration may be rendered ineffectual without provisional relief. Unless mutually agreed by the parties otherwise, any arbitration shall take place in Las Vegas, Nevada.

8.2 Selection of Arbitrator. In the event the parties are unable to agree upon an arbitrator, the parties shall select a single arbitrator from a list of nine arbitrators drawn by the parties at random from the “Independent” (or “Gold Card”) list of retired judges or, at the option of Executive, from a list of nine persons (which shall be retired judges or corporate or litigation attorneys experienced in executive employment agreements) provided by the office of the American Arbitration Association having jurisdiction over Las Vegas, Nevada. If the parties are unable to agree upon an arbitrator from the list so drawn, then the parties shall each strike names alternately from the list, with the first to strike being determined by lot. After each party has used four strikes, the remaining name on the list shall be the arbitrator. If such person is unable to serve for any reason, the parties shall repeat this process until an arbitrator is selected.

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8.3 Applicability of Arbitration; Remedial Authority. This agreement to resolve any disputes by binding arbitration shall extend to claims against any parent, subsidiary or affiliate of each party, and, when acting within such capacity, any officer, director, stockholder, employee or agent of each party, or of any of the above, and shall apply as well to claims arising out of state and federal statutes and local ordinances as well as to claims arising under the common law. In the event of a dispute subject to this paragraph the parties shall be entitled to reasonable discovery subject to the discretion of the arbitrator. The remedial authority of the arbitrator (which shall include the right to grant injunctive or other equitable relief) shall be the same as, but no greater than, would be the remedial power of a court having jurisdiction over the parties and their dispute. The arbitrator shall, upon an appropriate motion, dismiss any claim without an evidentiary hearing if the party bringing the motion establishes that he or it would be entitled to summary judgment if the matter had been pursued in court litigation. In the event of a conflict between the applicable rules of the American Arbitration Association and these procedures, the provisions of these procedures shall govern.

8.4 Fees and Costs. Any filing or administrative fees shall be borne initially by the party requesting arbitration. The Company shall be responsible for the costs and fees of the arbitration, unless Executive wishes to contribute (up to 50%) of the costs and fees of the arbitration. Notwithstanding the foregoing, the prevailing party in such arbitration, as determined by the arbitrator, and in any enforcement or other court proceedings, shall be entitled, to the extent permitted by law, to reimbursement from the other party for all of the prevailing party’s costs (including but not limited to the arbitrator’s compensation), expenses, and attorneys’ fees.

8.5 Award Final and Binding. The arbitrator shall render an award and written opinion, and the award shall be final and binding upon the parties. If any of the provisions of this paragraph, or of this Agreement, are determined to be unlawful or otherwise unenforceable, in whole or in part, such determination shall not affect the validity of the remainder of this Agreement, and this Agreement shall be reformed to the extent necessary to carry out its provisions to the greatest extent possible and to insure that the resolution of all conflicts between the parties, including those arising out of statutory claims, shall be resolved by neutral, binding arbitration. If a court should find that the arbitration provisions of this Agreement are not absolutely binding, then the parties intend any arbitration decision and award to be fully admissible in evidence in any subsequent action, given great weight by any finder of fact, and treated as determinative to the maximum extent permitted by law.

ARTICLE 9.

MISCELLANEOUS

9.1 Amendments. The provisions of this Agreement may not be waived, altered, amended or repealed in whole or in part except by the signed written consent of the parties sought to be bound by such waiver, alteration, amendment or repeal.

9.2 Entire Agreement. This Agreement and the stock option agreements between the Company and Executive constitute the total and complete agreement of the parties and supersedes all prior and contemporaneous understandings and agreements heretofore made, including the Original Agreement and the 2006 Agreement, and there are no other representations, understandings or agreements.

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9.3 Counterparts. This Agreement may be executed in one of more counterparts, each of which shall be deemed and original, but all of which shall together constitute one and the same instrument. The exchange of copies of this Agreement and of signature pages by facsimile transmission or by e-mail shall constitute effective execution and delivery of this Agreement as to the parties and may be used in lieu of the original Agreement for all purposes. Signatures of the parties transmitted by facsimile or by e-mail shall be deemed to be their original signatures for any purpose whatsoever.

9.4 Severability. Each term, covenant, condition or provision of this Agreement shall be viewed as separate and distinct, and in the event that any such term, covenant, condition or provision shall be deemed by an arbitrator or a court of competent jurisdiction to be invalid or unenforceable, the court or arbitrator finding such invalidity or unenforceability shall modify or reform this Agreement to give as much effect as possible to the terms and provisions of this Agreement. Any term or provision which cannot be so modified or reformed shall be deleted and the remaining terms and provisions shall continue in full force and effect.

9.5 Waiver or Delay. The failure or delay on the part of the Company, or Executive to exercise any right or remedy, power or privilege hereunder shall not operate as a waiver thereof. A waiver, to be effective, must be in writing and signed by the party making the waiver. A written waiver of default shall not operate as a waiver of any other default or of the same type of default on a future occasion.

9.6 Successors and Assigns. This Agreement shall be binding on and shall inure to the benefit of the parties to it and their respective heirs, legal representatives, successors and assigns, except as otherwise provided herein. Except as provided in this Section 9.6, without the prior written consent of Executive, this Agreement shall not be assignable by the Company. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. “Company” means the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid that assumes and agrees to perform this Agreement by operation of law or otherwise.

9.7 No Assignment or Transfer by Executive. Neither this Agreement nor any of the rights, benefits, obligations or duties hereunder may be assigned or transferred by Executive. Any purported assignment or transfer by Executive shall be void.

9.8 Necessary Acts. Each party to this Agreement shall perform any further acts and execute and deliver any additional agreements, assignments or documents that may be reasonably necessary to carry out the provisions or to effectuate the purpose of this Agreement.

9.9 Governing Law. This Agreement and all subsequent agreements between the parties shall be governed by and interpreted, construed and enforced in accordance with the laws of the State of Nevada.

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9.10 Notices. All notices, requests, demands and other communications to be given under this Agreement shall be in writing and shall be deemed to have been duly given on the date of service, if personally served on the party to whom notice is to be given, or 48 hours after mailing, if mailed to the party to whom notice is to be given by certified or registered mail, return receipt requested, postage prepaid, and properly addressed to the party at his address set forth as follows or any other address that any party may designate by written notice to the other parties:

To Executive:	Stephen H. Capp
	3800 Howard Hughes Parkway
	Las Vegas, NV 89169
	Telephone: 702 784-7777
	Facsimile: 702 784-7773
To the Company:	Pinnacle Entertainment, Inc.
	3800 Howard Hughes Parkway
	Las Vegas, NV 89169
	Attn: General Counsel
	Telephone: 702 784-7777
	Facsimile: 702 784-7773
with copy to:	Irell & Manella LLP
	1800 Avenue of the Stars, Suite 900
	Los Angeles, CA 90067-4276
	Attn: Al Segel
	Telephone: 310 277-1010
	Facsimile: 310 284-3052

9.11 Headings and Captions. The headings and captions used herein are solely for the purpose of reference only and are not to be considered as construing or interpreting the provisions of this Agreement.

9.12 Construction. All terms and definitions contained herein shall be construed in such a manner that shall give effect to the fullest extent possible to the express or implied intent of the parties hereby.

9.13 Counsel. Executive has been advised by the Company that he should consider seeking the advice of counsel in connection with the execution of this Agreement and Executive has had an opportunity to do so. Executive has read and understands this Agreement, and has sought the advice of counsel to the extent he has determined appropriate. The Company shall reimburse Executive for the reasonable fees and expenses of Executive’s counsel in connection with this Agreement.

9.14 Withholding of Compensation. Executive hereby agrees that the Company may deduct and withhold from the compensation or other amounts payable to Executive hereunder or otherwise in connection with Executive’s employment any amounts required to be deducted and withheld by the Company under the provisions of any applicable Federal, state and local statute, law, regulation, ordinance or order.

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9.15 References to Sections of the Code. All references in this Agreement and Appendix A hereto to sections of the Code shall be to such sections and to any successor or substantially comparable sections of the Code or to any successor thereto.

9.16 Effect of Delay. Executive’s or the Company’s failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right Executive or the Company may have hereunder, including without limitation the right of Executive to terminate employment for Good Reason pursuant to Section 6.5.3, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed on the date first written above.

EXECUTIVE	THE COMPANY
STEPHEN H. CAPP	PINNACLE ENTERTAINMENT, INC.
/s/ Stephen H. Capp	By:	/s/ John A. Godfrey
		John A. Godfrey,
		Executive Vice President, General Counsel and Secretary

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Appendix A

Tax Gross-up Payments

(a) Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any Payment would be subject to the Excise Tax, then Executive shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by Executive of all taxes (excluding any interest, additions, increases or penalties imposed with respect to such taxes except for interest, additions, increases or penalties with respect to the Excise Tax), including, without limitation, any income taxes (except for any interest, additions, increases and penalties imposed with respect thereto) and the Excise Tax imposed upon the Payment and the Gross-Up Payment, Executive is placed in the same tax position with respect to the Payment as Executive would have been in if the Excise Tax had never been enacted.

(b) Subject to the provisions of Section (c), all determinations required to be made under this appendix, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by the Company’s independent accounting firm or such other nationally recognized certified public accounting firm as may be designated by Executive (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and Executive within fifteen (15) business days of the receipt of notice from Executive that there has been a Payment, or such earlier time as is requested by the Company. All fees and expenses of the Accounting Firm shall be borne solely by the Company. Subject to Section (e) below, any Gross-Up Payment, as determined pursuant to this appendix shall be paid by the Company to Executive within five (5) days of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon the Company and Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section (c) and Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of Executive.

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(c) Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after Executive is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies Executive in writing prior to the expiration of such period that it desires to contest such claim, Executive shall:

(i) give the Company any information reasonably requested by the Company relating to such claim,

(ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company,

(iii) cooperate with the Company in good faith in order effectively to contest such claim, and

(iv) permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section (c), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim; provided, that any extension of the statute of limitations relating to payment of taxes for the taxable year of Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

(d) If Executive becomes entitled to receive any refund with respect to the Gross-Up Payment or the Excise Tax, Executive shall promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If Executive would have received a refund of all or any portion of the Gross-Up Payment or the Excise Tax, except that a taxing authority offset the amount of such refund against other tax liabilities, interest, or penalties, Executive shall pay the amount of such offset over to the Company, together with the amount of interest Executive would have received from the taxing authority if such offset had been an actual refund, promptly after receipt of notice from the taxing authority of such offset.

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(e) Notwithstanding any other provision of this appendix, the Company may withhold and pay over to the Internal Revenue Service for the benefit of Executive all or any portion of the Gross-Up Payment that it determines in good faith that it is or may be in the future required to withhold, and Executive hereby consents to such withholding.

(f) Subject to the foregoing provisions of this Appendix that may require earlier payment, any Gross-Up Payment shall be paid to or for the benefit the Executive by December 31 of the calendar year following the calendar year in which the Excise Tax is remitted, or, if no Excise Tax is remitted, by December 31 of the calendar year following the calendar year in which there is a final and non-appealable settlement or other resolution of an audit or litigation relating to the Excise Tax.

(g) Definitions. The following terms shall have the following meanings for purposes of this appendix.

(i) “Excise Tax” shall mean the excise tax imposed by Section 4999 of the Code, together with any interest or penalties imposed with respect to such excise tax.

(ii) A “Payment” shall mean any payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of Executive, whether paid or payable pursuant to this Agreement or otherwise.

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APPENDIX B

RELEASE and RESIGNATION

For valuable consideration, receipt of which is hereby acknowledged, the undersigned                      (“Executive”), for himself and his spouse, heirs, estate, administrators and executors, hereby fully and forever releases and discharges Pinnacle Entertainment, Inc., a Delaware corporation (the “Company”), and each of its subsidiaries and the officers, directors, employees, attorneys and agents of the Company and each such subsidiary, of and from any and all claims, demands, causes of action of any kind or nature, in law, equity or otherwise, whether known or unknown, which Executive has had, may have had, or now has, or may have, arising out of or in connection with Executive’s employment with the Company and/or its subsidiaries or the termination of such employment; provided, however, that nothing contained herein is intended to nor shall constitute a release of the Company from any obligations it may have to Executive under any written employment agreement between Executive and the Company in effect as of the date hereof, or any deferred compensation plan or arrangement in which Executive participates, nor shall it prevent Executive from exercising his rights, if any, under any such employment agreement or under any stock option, restricted stock or similar agreement in effect as of the date hereof in accordance with their terms.

Executive represents and warrants that he has not assigned or in any way conveyed, transferred or encumbered all or any portion of the claims or rights covered by this release.

Executive hereby resigns from all positions as an officer, director or employee of the Company and each of its subsidiaries or affiliates effective the date hereof and further agrees to execute such further evidence of such resignations as may be necessary or appropriate to effectuate the foregoing.

Executed this                      day of                     , 20       .

Executive

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EX-10.11

Exhibit 10.11

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) is made this 22^nd day of December 2008 (the “Effective Date”), by and between PINNACLE ENTERTAINMENT, INC., a Delaware corporation (the “Company”), and JOHN A. GODFREY, an individual (“Executive”), with respect to the following facts and circumstances:

RECITALS

The Company and Executive entered into an Employment Agreement effective as of August 13, 2002 (the “Original Agreement”) pursuant to which Executive serves as Executive Vice President, General Counsel and Secretary of the Company. The Board of Directors of the Company (the “Board”) determined that it was in the best interests of the Company and its stockholders to assure that the Executive continued to serve in such capacities beyond the term provided for in the Original Agreement and, further, to assure that the Company will have the continued dedication of Executive, notwithstanding the possibility, threat or occurrence of a Change of Control (as defined herein). The Board believed it was imperative to diminish the inevitable distraction of Executive by virtue of the personal uncertainties and risks created by a pending or threatened Change of Control and to encourage Executive’s full attention and dedication to the Company, particularly in the event of any threatened or pending Change of Control, and to provide Executive with compensation and benefits arrangements upon a Change of Control that ensure that the compensation and benefits expectations of Executive will be satisfied and that are competitive with those of other corporations. Therefore, in order to accomplish these objectives, the Board caused the Company to supersede the Original Agreement by entering into an amended Employment Agreement effective as of June 13, 2006 (the “2006 Agreement”). The Board has determined that it is in the best interest of the Company and of Executive to amend and restate the 2006 Agreement to comply with the provisions of Internal Revenue Code Section 409A and to address certain technical matters.

NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements set forth herein, the parties hereto agree as follows:

ARTICLE 1.

EMPLOYMENT AND TERM

1.1 Employment. The Company agrees to engage Executive in the capacity as Executive Vice President, General Counsel and Secretary of the Company, and Executive hereby accepts such engagement by the Company upon the terms and conditions specified below.

1.2 Term. The term of this Agreement shall commence as of the Effective Date and, unless earlier terminated under Article 6 below, shall continue in force until June 13, 2009, provided that commencing on June 13, 2008 and as of June 13 of each year thereafter (a “Renewal Date”), this Agreement shall automatically renew for additional one-year periods (each, a “Renewal Period”), unless either party gives notice of non-renewal at least ninety (90) days prior to the next Renewal Date. The term of this Agreement, including any Renewal Periods, is referred to as the “Term.”

ARTICLE 2.

DUTIES OF EXECUTIVE

2.1 Duties. Executive shall perform all the duties and obligations generally associated with the positions of Executive Vice President, General Counsel and Secretary subject to the control and supervision of the Company’s Chief Executive Officer (the “Chief Executive Officer”), and such other executive duties consistent with the foregoing as may be assigned to him from time to time by the Chief Executive Officer. Executive shall perform the services contemplated herein faithfully, diligently, to the best of his ability and in the best interests of the Company. Executive shall at all times perform such services in compliance with, and to the extent of his authority, shall to the best of his ability cause the Company to be in compliance with, any and all laws, rules and regulations applicable to the Company of which Executive is aware. Executive may rely on the Company’s inside counsel and outside lawyers in connection with such matters. Executive shall, at all times during the Term, in all material respects adhere to and obey any and all written internal rules and regulations governing the conduct of the Company’s employees, as established or modified from time to time; provided, however, in the event of any conflict between the provisions of this Agreement and any such rules or regulations, the provisions of this Agreement shall control.

2.2 Location of Services. Executive’s principal place of employment shall be at the Company’s headquarters in Las Vegas, Nevada, or at such other location as Executive and the Chief Executive Officer shall agree upon. Executive understands he will be required to travel to the Company’s various operations as part of his employment.

2.3 Exclusive Service. Except as otherwise expressly provided herein, Executive shall devote his entire business time, attention, energies, skills, learning and best efforts to the business of the Company. Executive may participate in social, civic, charitable, religious, business, educational or professional associations so long as such participation does not materially interfere with the duties and obligations of Executive hereunder. This Section 2.3, however, shall not be construed to prevent Executive from making passive outside investments so long as such investments do not require material time of Executive or otherwise interfere with the performance of Executive’s duties and obligations hereunder. Executive shall not make any investment in an enterprise that competes with the Company without the prior written approval of the Company after full disclosure of the facts and circumstances; provided, however, that this sentence shall not preclude Executive from owning up to one-half percent (0.5%) of the securities of a publicly traded entity (a “Permissible Investment”). During the Term, Executive shall not directly or indirectly work for or provide services to or, except as permitted above, own an equity interest in any person, firm or entity engaged in the casino gaming, card club or horse racing business. In this regard, and for purposes of this section only, Executive acknowledges that the gaming industry is national in scope and that accordingly this covenant shall apply throughout the United States.

2

ARTICLE 3.

COMPENSATION

3.1 Base Salary. In consideration for Executive’s services hereunder, the Company shall pay Executive an annual base salary, effective as of June 13, 2006, at the rate of not less than Four Hundred Twenty-Five Thousand Dollars ($425,000) per year during each of the years of the Term; payable in accordance with the Company’s regular payroll schedule from time to time (less any deductions required for Social Security, state, federal and local withholding taxes, and any other authorized or mandated similar withholdings). Executive’s annual base salary shall be reviewed by the Chief Executive Officer and, if appropriate, the Compensation Committee of the Board (the “Committee”) at least annually beginning no more than twelve (12) months from the date hereof and may be increased (but not decreased) at the discretion of the Board. If Executive’s annual salary is increased, the increased amount shall not be reduced for the remainder of the Term.

3.2 Annual and Other Bonuses. Executive shall be entitled to earn bonuses with respect to each year of the Term during which Executive is employed under this Agreement in the discretion of the Chief Executive Officer and, if appropriate, the Committee. Any such bonus earned by Executive shall be paid annually by March 15th following the conclusion of the Company’s fiscal year, except for any portion of the bonus which is subject to required deferral by the Company and except for any portion of the bonus which Executive shall elect to defer. Bonuses relative to partial years (or a termination caused by death or disability) shall be prorated. Executive may also receive special bonuses in addition to his annual bonus eligibility at the discretion of the Chief Executive Officer and, if appropriate, the Committee.

3.3 Stock Options. Prior to June 13, 2008 and at appropriate times thereafter (no less frequently than within forty (40) months of the prior review), the Committee shall review Executive’s long-term compensation and, in consultation with the Chief Executive Officer, shall consider granting additional stock options and/or other long term incentive compensation.

ARTICLE 4.

EXECUTIVE BENEFITS

4.1 Vacation. In accordance with the general policies of the Company applicable generally to other senior executives of the Company pursuant to the Company’s personnel policies from time to time, Executive shall be entitled to not less than four weeks vacation each calendar year, without reduction in compensation.

4.2 The Company Employee Benefits. Executive shall receive all group insurance and pension plan benefits and any other benefits on the same basis as they are available generally to other senior executives of the Company under the Company personnel policies in effect from time to time.

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4.3 Benefits. Executive shall receive all other such benefits as the Company may offer to other senior executives of the Company generally under the Company personnel plans, practices, policies and programs in effect from time to time, such as health and disability insurance coverage and paid sick leave. In the event that the Company’s group health plan does not cover the annual physical examination of Executive and Executive’s spouse, if any, or any pregnancy of Executive’s spouse, if any, the Company shall bear the cost of such examinations or the medical costs of such pregnancy.

4.4 Indemnification. Executive shall have the benefit of indemnification to the fullest extent permitted by applicable law, which indemnification shall continue after the termination of this Agreement for such period as may be necessary to continue to indemnify Executive for his acts while an officer of the Company. In addition, the Company shall cause Executive to be covered by the current policies of directors and officers liability insurance in accordance with their terms, to the maximum extent of the coverage available for any director or officer of the Company. The Company shall use commercially reasonable efforts to cause the current policies of directors and officers liability insurance to be maintained throughout the term of Executive’s employment with the Company and for such period thereafter as may be necessary to continue to cover acts of Executive during the term of his employment (provided that the Company may substitute therefor, or allow to be substituted therefor, policies of at least the same coverage and amounts containing terms and conditions which are, in the aggregate, no less advantageous to the insured in any material respect). In the event of any merger or other acquisition of the Company, the Company shall no later than immediately prior to consummation of such transaction purchase the longest applicable “tail” coverage available under the directors and officers liability insurance in effect at the time of such merger or acquisition.

ARTICLE 5.

REIMBURSEMENT FOR EXPENSES

5.1 Executive shall be reimbursed by the Company for all ordinary and necessary expenses incurred by Executive in the performance of his duties or otherwise in furtherance of the business of the Company in accordance with the policies of the Company in effect from time to time. Executive shall keep accurate and complete records of all such expenses, including but not limited to, proof of payment and purpose. Executive shall account fully for all such expenses to the Company. No reimbursement will be made later than the close of the calendar year following the calendar year in which the expense was incurred. Expenses eligible for reimbursement in any one taxable year shall not affect the amount of expenses eligible for reimbursement in any other taxable year, and the right to expense reimbursement shall not be subject to liquidation or exchange for any other benefit.

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ARTICLE 6.

TERMINATION

6.1 Termination for Cause. Without limiting the generality of Section 6.2, the Company shall have the right to terminate Executive’s employment, without further obligation or liability to Executive, upon the occurrence of any one or more of the following events, which events shall be deemed termination for cause (“Cause”).

6.1.1 Failure to Perform Duties. If Executive neglects to perform the material duties of his employment under this Agreement in a professional and businesslike manner, other than due to his disability (except due to substance or alcohol abuse), after having received written notice specifying such failure to perform and a reasonable opportunity to perform.

6.1.2 Willful Breach. If Executive willfully commits a material breach of this Agreement and fails to cure such breach within thirty (30) days of written notice thereof or a material willful breach of his fiduciary duty to the Company.

6.1.3 Wrongful Acts. If Executive is convicted of a felony involving acts of moral turpitude or commits fraud, misrepresentation, embezzlement or other acts of material misconduct against the Company (including violating or condoning the violation of any material rules or regulations of gaming authorities which could have a material adverse effect on the Company) that would make the continuance of his employment by the Company materially detrimental to the Company.

6.1.4 Failure To Be Licensed. If Executive fails to be licensed in all jurisdictions in which the Company or its subsidiaries has gaming facilities within the date required by any jurisdiction, or if any of such licenses shall be revoked or suspended at any time during the Term, then the Company may by written notice to Executive terminate the Agreement for Cause. Executive agrees to promptly submit to the licensing requirements of all jurisdictions in which the Company or its subsidiaries does business. The Company shall bear all expenses incurred in connection with such licenses.

6.2 Termination Without Cause. Notwithstanding anything to the contrary herein, the Company shall have the right to terminate Executive’s employment under this Agreement at any time without Cause by giving notice of such termination to Executive. Failure by the Company to extend the Term for any Renewal Period shall not be a termination of this Agreement without Cause.

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6.3 Termination by Executive for Good Reason. Executive may terminate his employment under this Agreement on thirty (30) days prior notice to the Company for good reason (“Good Reason”). For purposes of this Agreement, “Good Reason” shall mean and be limited to (a) a material breach of this Agreement by the Company (including without limitation any material reduction in the authority, duties or responsibilities of Executive, or any relocation of his or its principal place of business outside the greater Las Vegas metropolitan area (without Executive’s consent); or (b) a change of control with respect to the Company (a “Change of Control”) followed by (i) any diminution of Executive’s authority, duties or responsibilities as set forth in Section 2.1; or (ii) during the first twelve (12) months following a Change of Control, the failure of the Company to award Executive an annual bonus equal to at least seventy-five percent (75%) of the average amount of the annualized bonus paid to Executive for the last two (2) full years; or (iii) Executive’s termination by the Company other than at the end of the Term of this Agreement; or (iv) termination of his employment by Executive in his sole and absolute discretion at any time during the twelve (12) months immediately following the first anniversary date of the Change of Control. Except in the cases set forth in clauses (b)(iii) and (b)(iv) of the preceding sentence, however, “Good Reason” shall not exist unless Executive gives notice of proposed termination within 30 days following the breach or condition giving rise to Good Reason, and there is a failure of the Company to remedy the breach or condition giving rise to Good Reason within thirty (30) days after such notice (or as soon thereafter as practicable so long as it commences effectuation of such remedy within such time period and diligently pursues such remedy to completion as soon as practicable). For purposes of this Agreement, a “Change of Control” shall mean the occurrence of any of the following:

(i) The direct or indirect acquisition by an unrelated “Person” or “Group” of “Beneficial Ownership” (as such terms are defined below) of more than 50% of the voting power of the Company’s issued and outstanding voting securities in a single transaction or a series of related transactions;

(ii) The direct or indirect sale or transfer by the Company of substantially all of its assets to one or more unrelated Persons or Groups in a single transaction or a series of related transactions;

(iii) The merger, consolidation or reorganization of the Company with or into another corporation or other entity in which the Beneficial Owners of more than 50% of the voting power of the Company’s issued and outstanding voting securities immediately before such merger or consolidation do not own more than 50% of the voting power of the issued and outstanding voting securities of the surviving corporation or other entity immediately after such merger, consolidation or reorganization; or

(iv) During any consecutive 12-month period, individuals who at the beginning of such period constituted the Board of the Company (together with any new Directors whose election to such Board or whose nomination for election by the stockholders of the Company was approved by a vote of a majority of the Directors of the Company then still in office who were either Directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of the Company then in office.

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None of the foregoing events, however, shall constitute a Change of Control if such event is not a “Change in Control Event” under Treasury Regulations Section 1.409A-3(i)(5) or successor IRS guidance. For purposes of determining whether a Change of Control has occurred, the following Persons and Groups shall not be deemed to be “unrelated”: (A) such Person or Group directly or indirectly has Beneficial Ownership of more than 50% of the issued and outstanding voting power of the Company’s voting securities immediately before the transaction in question, (B) the Company has Beneficial Ownership of more than 50% of the voting power of the issued and outstanding voting securities of such Person or Group, or (C) more than 50% of the voting power of the issued and outstanding voting securities of such Person or Group are owned, directly or indirectly, by Beneficial Owners of more than 50% of the issued and outstanding voting power of the Company’s voting securities immediately before the transaction in question. The terms “Person,” “Group,” “Beneficial Owner,” and “Beneficial Ownership” shall have the meanings used in the Securities Exchange Act of 1934, as amended. Notwithstanding the foregoing, (I) Persons will not be considered to be acting as a “Group” solely because they purchase or own stock of the Company at the same time, or as a result of the same public offering, (II) however, Persons will be considered to be acting as a “Group” if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction, with the Company, and (III) if a Person, including an entity, owns stock both in the Company and in a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar transaction, with the Company, such shareholders shall be considered to be acting as a Group with other shareholders only with respect to the ownership in the corporation before the transaction.

6.4 Death or Disability. This Agreement shall terminate on the death or “Disability” of Executive. Executive will be deemed to have a “Disability” when he is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or begins receiving income replacement benefits for a period of not less than three months under an accident and health plan of the Company or an affiliate by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months. If there should be a dispute between the Company and Executive as to Executive’s physical or mental Disability for purposes of this Agreement, the question shall be settled by the opinion of an impartial reputable physician or psychiatrist agreed upon by the parties or their representatives, or if the parties cannot agree within ten (10) days after a request for designation of such party, then a physician or psychiatrist designed by the Clark County Medical Association or similar body. The certification of such physician or psychiatrist as to the questioned dispute shall be final and binding upon the parties hereto.

6.5 Effect of Termination.

6.5.1 Payment of Salary and Expenses Upon Termination. Any termination under this Section 6 shall be effective upon receipt of notice by Executive or the Company, as the case may be, of such termination or upon such other later date as may be provided herein or specified by the Company or Executive in the notice (the “Termination Date”), except as otherwise provided in this Section 6. If this Agreement is terminated, all benefits provided to Executive by the Company hereunder shall thereupon cease, except as provided in this Section 6.5, and the Company shall pay or cause to be paid to Executive all accrued but unpaid base salary, any compensation previously voluntarily deferred by Executive, payable in accordance with the provisions of the applicable deferred compensation plan and in accordance with Executive’s elections under such deferred compensation plan, and vacation benefits. In addition, promptly upon submission by Executive of his unpaid expenses incurred prior to the Termination Date and owing to Executive pursuant to Article 5, reimbursement for such expenses shall be made. If the Agreement is terminated by the Company for “Cause,” or by Executive without “Good Reason,” Executive shall not be entitled to receive any payments other than as specified in this Section 6.5.1, and provided that Executive may exercise any vested options.

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6.5.2 Termination Due to Death or Disability. If this Agreement is terminated due to death or Disability, the following shall apply:

(a) Executive shall be entitled to an amount equal to the sum of (i) Executive’s annual base salary in effect on the date of termination; plus (ii) the greater of the amount of Executive’s bonus (including all deferred amounts) in the year prior to such termination or the average of the annual bonuses (including all deferred amounts) paid to Executive in the three (3) consecutive years prior to the year of termination (the “Bonus Amount”) times (iii) one hundred fifty percent (150%) of the sum of (i) and (ii) above (the “Death or Disability Severance Benefit”); provided that in the event of death, the amount of such Death Severance Benefit shall be reduced by the amount of any life insurance provided by the Company; and, provided, further, that the amount of such Disability Severance Benefit shall be reduced under the circumstances specified in this Section 6.5.2. In addition, Executive shall be entitled to receive any amounts payable under Section 6.5.1 above a pro rata bonus for the year of death or Disability (which bonus shall be calculated by taking the Bonus Amount and multiplying it by a fraction, the numerator of which is the number of days in the year in which Executive was employed before death or Disability and the denominator of which is 365); such pro rata bonus shall be payable within thirty (30) days after death or Disability. The base salary component of the Death or Disability Severance Benefit shall be payable to Executive or his estate monthly in equal installments over a period of eighteen (18) months after the termination of Executive’s employment (the “Death or Disability Severance Benefit Period”) and seventy five percent (75%) of the bonus component shall be paid within thirty (30) days after death or Disability, and twenty five percent (25%) of the bonus component shall be payable in three annual installments on the anniversaries of death or Disability; provided that if during such period a Change of Control shall occur, the full amount of any unpaid Death or Disability Severance Benefit shall be paid to Executive or his estate in a lump sum. If, during the Disability Severance Benefit Period Executive is able to work in capacities similar to those for which he is employed hereunder, he shall have a duty to seek employment and to advise the Company of all compensation paid or payable to him from such employment. Such amounts shall reduce the amount of Disability Severance Benefits payable by the Company hereunder.

(b) Any outstanding unvested stock options at the date of death or Disability which would otherwise vest during the eighteen (18) months following death or Disability shall immediately become vested and may be exercised in accordance with their terms. The remaining unvested options shall immediately terminate.

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(c) Executive shall also be entitled to receive health benefits coverage for Executive and his dependents, and disability insurance coverage for Executive, under the same plan(s) or arrangement(s) under which Executive was were covered immediately before his death or Disability or plan(s) established or arrangement(s) provided by the Company or any of its Subsidiaries thereafter for the benefit of senior executives (“Health and Disability Coverage Continuation”). Such health benefits and disability coverage shall be paid for by the Company to the same extent as if Executive were still employed by the Company, and Executive, or his Dependents in the event of his death, will be required to make such payments as Executive would be required to make if Executive were still employed by the Company. The benefits provided under this Section 6.5.2(c) shall continue until the earliest of (a) five (5) years; (b) the date on which Executive ceases to be Disabled during the five (5) year period; and (c) the date Executive (and in the case of his dependents, the dependents) becomes covered or eligible for coverage under any other group health plan or group disability plan (as the case may be) not maintained by the Company or any of its Subsidiaries; provided, however, that if such other group health plan excludes any pre-existing condition that Executive or Executive’s dependents may have when coverage under such group health plan would otherwise begin, coverage under this Section 6.5.2(c) shall continue (but not beyond the period described in clause (a) of this sentence) with respect to such pre-existing condition until such exclusion under such other group health plan lapses or expires. In the event Executive is required to make an election under Sections 601 through 607 of the Employee Retirement Income Security Act of 1974, as amended (commonly known as COBRA) to qualify for the benefits described in this Section 6.5.2(c), the obligations of the Company and its Subsidiaries under this Section 6.5.2(c) shall be conditioned upon Executive’s timely making such an election. Any payment or reimbursement of benefits under this Section 6.5.2(c) that is taxable to Executive or his dependents shall be made by December 31 of the calendar year following the calendar year in which Executive or his dependent incurred the expense. Expenses eligible for reimbursement in any one taxable year shall not affect the amount of expenses eligible for reimbursement in any other taxable year, and the right to expense reimbursement shall not be subject to liquidation or exchange for any other benefit.

(d) The provisions of Sections 7.4, 7.5, 7.6 and 7.7 shall apply both during and after the termination of the Disability Severance Benefit Period.

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6.5.3 Termination Without Cause or Termination by Executive for Good Reason Other than in Connection with a Change of Control. If the Company terminates Executive without Cause or Executive terminates for Good Reason other than in connection with a Change of Control as contemplated by Section 6.5.4, the following shall apply:

(a) Executive shall be entitled to receive an amount equal to one hundred fifty percent (150%) times (i) Executive’s annual base salary (the “Base Severance Benefit”) in effect on the date of termination; plus (ii) the Bonus Amount, excluding any deferred bonus which was at the Company’s election rather than Executive’s. The Base Severance Benefit shall be paid to Executive in equal monthly installments over eighteen (18) months immediately following the date of termination in accordance with the Company’s regular salary payment schedule from time to time. Seventy five percent (75%) of the Bonus Amount shall be paid within thirty (30) days after the termination of employment, and twenty five percent (25%) of the Bonus Amount shall be payable in three annual installments on the anniversaries of the termination of employment. In addition, Executive shall be entitled to receive any amounts payable under Section 6.5.1 above and a pro rata annual bonus for the year of termination calculated and payable as provided in Section 6.5.2(a), including any deferred bonus which was at the Company’s election rather than Executive’s; such pro rata annual bonus shall be payable within thirty (30) days after termination of employment. The payments contemplated herein shall not be subject to any duty of mitigation by Executive nor to offset for any income earned by Executive following termination.

(b) In addition to those already vested, all of Executive’s outstanding stock options which would have vested in the eighteen (18) months following termination shall be fully vested and exercisable as of the date of termination. Any remaining unvested options shall immediately terminate.

(c) Executive shall also be entitled to receive Health and Disability Coverage Continuation for himself and his dependents, as applicable, on the terms provided in Section 6.5.2(c) above; provided that the maximum continuation period shall be eighteen (18) months from the date of termination.

(d) The provisions of Sections 7.3, 7.5, 7.6 and 7.7 shall apply from the date of termination, but the provisions of Section 7.4 (“Covenant Not to Compete”) shall not apply.

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6.5.4 Termination Without Cause or Termination by Executive for Good Reason Within the Twenty-Four (24) Months After a Change of Control. If the Company terminates Executive without Cause or Executive terminates for Good Reason within twenty-four (24) months after a Change of Control, or if Executive terminates in his sole and absolute discretion within the twelve (12) months immediately following the first anniversary date of a Change of Control, the following shall apply:

(a) The Company shall pay to Executive in lieu of the Base Severance Benefit, in a lump sum as soon as practicable, but in no event later than thirty (30) days after the termination of Executive’s employment, (i) an amount (the “Change of Control Severance Benefit”) equal to two (2) times Executive’s annual base salary in effect on the date of termination, plus (ii) two (2) times the largest annual bonus (including all deferred amounts) that was paid to Executive during the three (3) years preceding the Change of Control; plus (iii) a pro rated bonus for the year of termination (which bonus shall be calculated by taking the Bonus Amount and multiplying it as provided in section 6.5.2(a) plus (iv) any amounts payable under Section 6.5.1. Executive shall also be entitled to receive a continuation of health and disability insurance coverage as specified in Section 6.5.2(c). In addition to those already vested, all unvested stock options held by Executive shall be immediately and fully vested and exercisable by Executive.

(b) The “Covenant Not to Compete” set forth in Section 7.4 below shall not apply in any respect to Executive (and Executive’s compliance therewith shall not be a condition to the Company’s obligations hereunder), and the term of the “No Hire Away Policy” in Section 7.5 shall be limited to six (6) months from the date of termination.

6.5.5 Occurrence of a Change of Control With Six Months After Termination Without Cause or by Executive for Good Reason. If a Change of Control occurs within six months after the date of termination of Executive by the Company without Cause or the date of termination by Executive with Good Reason, the following shall apply:

(a) Executive shall receive (i) the Change of Control Severance Benefit set forth in Section 6.5.4(a)(i), less the amount of any payments Executive has already received under the first sentence of Section 6.5.3(a), and (ii) continuation of health and disability coverage as specified in Section 6.5.2(c).

(b) The “Covenant Not to Compete” set forth in Section 7.4 below shall not apply in any respect to Executive (and Executive’s compliance therewith shall not be a condition to the Company’s obligations hereunder), and the term of the “No Hire Away Policy” in Section 7.5 shall be limited to six (6) months from the date of termination.

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6.5.6 Additional Payments. In the event that any payments that Executive may receive under this Agreement or otherwise shall constitute a change in control payments under Section 280G of the Code which would subject Executive to an excise tax under Section 4999 of the Code, Executive shall be entitled to receive additional tax gross-up payments from the Company as set forth in Appendix A hereto. Notwithstanding the foregoing provisions of this Section 6.5.6, if it shall be determined that Executive is entitled to the Gross Up Payment, but that the Payments do not exceed 105% of the greatest amount that could be paid to Executive such that the receipt of the Payments would not give rise to any Excise Tax (the “Reduced Amount”), then no Gross Up Payment shall be made to Executive and the Payments, in the aggregate, shall be reduced to the Reduced Amount. If the Company elects to provide coverage under Section 6.5.2(c), 6.5.3(c), 6.5.4(a) or 6.5.5(a) under self-insured insurance plans rather than under insurance policies, the Company shall indemnify Executive for any tax liability he incurs on payment of claims under the insurance plans that he would not have incurred if the claims had been paid under insurance policies. Any such tax indemnification amounts shall be paid to or for the benefit the Executive by December 31 of the calendar year following the calendar year in which the additional tax is remitted, or, if no additional tax is remitted, by December 31 of the calendar year following the calendar year in which there is a final and non-appealable settlement or other resolution of an audit or litigation relating to such additional tax. The Company shall pay to Executive a payment (the “Gross Up Payment”) in an amount such that, after payment by Executive of all income taxes and the excise tax imposed by Internal Revenue Code Section 4999, or any similar provision of state or local tax law (the “Excise Tax”) imposed on benefits under this agreement, on all other payments from the Company to Executive in the nature of compensation, and on the Gross Up Payment itself, and any interest or penalties (other than interest and penalties imposed by reason of Executive’s failure to file timely tax returns or to pay taxes shown due on such returns and any tax liability, including interest and penalties, unrelated to the Excise Tax or the Gross Up Amount), Executive shall be placed in the same tax position with respect to benefits under this Agreement and all other payments from the Company to Executive in the nature of compensation as Executive would have been if the Excise Tax had never been enacted.

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6.5.7 I.R.C. Section 409A. In the event that any compensation with respect to Executive’s separation from service is “deferred compensation” within the meaning of Section 409A of the Code and the regulations thereunder (“Section 409A”), the stock of the Company or any affiliate is publicly traded on an established securities market or otherwise, and Executive is determined to be a “specified employee,” as defined in Section 409A(a)(2)(B)(i) of the Code, payment of such compensation shall be delayed as required by Section 409A. Such delay shall last six months from the date of Executive’s separation from service, except in the event of Executive’s death. Within thirty (30) days following the end of such six-month period, or, if earlier, Executive’s death, the Company will make a catch-up payment to Executive equal to the total amount of such payments that would have been made during the six-month period but for this Section 6.5.7. The catch-up payment amount shall accrue simple interest at the prime rate of interest as published by the Bank of America as of the beginning of the deferral period, which interest shall be paid with the catch-up payment. The Company will place an amount in a “rabbi trust” with an independent trustee reasonably acceptable to Executive equal to the catch-up payment plus the interest that will accrue thereon. Wherever payments under this Agreement are to be made in installments, each such installment shall be deemed to be a separate payment for purposes of Section 409A. Payments of compensation or benefits on Executive’s termination of employment (other than accrued salary and vacation pay, other accrued amounts that must be paid under applicable law, and “welfare benefits” specified in Treasury Regulations Section 1.409A-1(a)(5)) shall be paid only if and when the termination of employment constitutes a “separation from service” under Treasury Regulation Section 1.409A-1(h).

6.5.8 Suspension. In lieu of terminating Executive’s employment hereunder for Cause under Section 6.1, the Company shall have the right, at its sole election, to suspend the performance of duties by Executive under this Agreement during the continuance of events or circumstances under Section 6.1 for an aggregate of not more than thirty (30) days during the Term (the “Default Period”) by giving Executive written notice of the Company’s election to do so at any time during the Default Period. The Company shall have the right to extend the Term beyond its normal expiration date by the period(s) of any suspension(s). The Company’s exercise of its right to suspend the operation of this Agreement shall not preclude the Company from subsequently terminating Executive’s employment hereunder. Executive shall not render services to any other person, firm or corporation in the casino business during any period of suspension. Executive shall be entitled to continued compensation and benefits pursuant to the provisions of this Agreement during the Default Period.

6.6 Exercisability of Options. Except with respect to options granted prior to the date hereof, all vested options will terminate on the earlier of (a) the expiration of the ten (10) year term of such options, or (b) one (1) year after the termination of Executive’s employment with the Company, regardless of the cause of such termination, except that, in the event of a termination for “Cause” or Executive’s termination without Good Reason, all vested options will terminate on the earlier of (I) the expiration of the ten (10) year term of such options, or (II) ninety (90) days after the termination. As provided in the stock option agreements, unvested options will terminate on the termination of Executive’s employment with the Company, except to the extent that such options become vested as a result of such termination under the terms of the governing stock option agreement or this Agreement. With respect to options granted prior to the date hereof, any option exercise extension shall be limited to the maximum amount permitted which would not trigger a modification under Section 409A.

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6.7 No-Exclusivity of Rights. Nothing in this Agreement shall prevent or limit Executive’s continuing or future participation in any plan, program, policy or practice provided by the Company or its subsidiaries and for which the Executive may quality, nor shall anything herein limit or otherwise affect such rights as Executive may have under any other contract or agreement with the Company or its subsidiaries at or subsequent to the Date of Termination (“Other Benefits”) shall be payable in accordance with such plan, policy, practice or program or contract or agreement, except as explicitly modified by this Agreement. Notwithstanding the foregoing, if Executive receives payments and benefits pursuant to Article VI of this Agreement, Executive shall not be entitled to any severance pay or benefits under any severance plan, program or policy of the Company and its subsidiaries, unless otherwise specifically provided therein in a specific reference in or to this Agreement.

6.8 Full Settlement. The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any setoff, counterclaim, recoupment, defense, or other claim, right or action that the Company may have against the Executive or others, except to the extent of the mitigation and setoff provisions provided for in this Agreement. Except as expressly provided for herein, in no event shall Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to Executive under any of the provisions of this Agreement and such amounts shall not be reduced whether or not Executive obtains other employment. The Company agrees to pay as incurred, to the full extent permitted by law, all legal fees and expenses that the Executive may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Company, Executive or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof (including as a result of any contest by Executive about the amount of any payment pursuant to this Agreement), plus, in each case, interest on any delayed payment at the applicable federal rate provided for in Section 7872(f)(2)(A) of the Code.

6.9 Release. It shall be a condition for Executive’s right to receive any severance benefits hereunder that he execute a general release in favor of the Company and its affiliates in the form attached hereto as Appendix B and covering such additional matters as may be reasonably requested by the Company, which release shall not encompass the payments contemplated hereby. The timing of payments under this Agreement upon the execution of the general release shall be governed by the following provisions:

(a) The Company must deliver the release to Executive for execution no later than fourteen (14) days after Executive’s termination of employment. If the Company fails to deliver the release to Executive within such fourteen (14) day period, Executive will be deemed to have satisfied the release requirement and will receive payments conditioned on execution of the release as though Executive had executed the release and all revocation rights had lapsed at the end of such 14 day period.

(b) Executive must execute the release within forty-five (45) days from its delivery to him.

(c) If Executive has revocation rights, Executive shall exercise such rights, if at all, not later than seven (7) days after executing the release.

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(d) In any case in which the release (and the expiration of any revocation rights) could only become effective in a particular tax year of Executive, payments conditioned on execution of the release shall begin within thirty (30) days after the release becomes effective and revocation rights have lapsed.

(e) In any case in which the release (and the expiration of any revocation rights) could become effective in one of two taxable years of Executive depending on when Executive executes the release, payments conditioned on execution of the release shall not begin before the first business day of the later of such tax years.

ARTICLE 7.

CONFIDENTIALITY

7.1 Nondisclosure of Confidential Material. In the performance of his duties, Executive may have access to confidential records, including, but not limited to, development, marketing, organizational, financial, managerial, administrative and sales information, data, specifications and processes presently owned or at any time hereafter developed or used by the Company or its agents or consultants that is not otherwise part of the public domain (collectively, the “Confidential Material”). All such Confidential Material is considered secret and is disclosed to Executive in confidence. Executive acknowledges that the Confidential Material constitutes proprietary information of the Company which draws independent economic value, actual or potential, from not being generally known to the public or to other persons who could obtain economic value from its disclosure or use, and that the Company has taken efforts reasonable under the circumstances, of which this Section 7.1 is an example, to maintain its secrecy. Except in the performance of his duties to the Company or as required by a court order or any gaming regulator or as required for his personal tax or legal advisors to advise him, Executive shall not, directly or indirectly for any reason whatsoever, disclose, divulge, communicate, use or otherwise disclose any such Confidential Material, unless such Confidential Material ceases to be confidential because it has become part of the public domain (not due to a breach by Executive of his obligations hereunder). Executive shall also take all reasonable actions appropriate to maintain the secrecy of all Confidential Information. All records, lists, memoranda, correspondence, reports, manuals, files, drawings, documents, equipment, and other tangible items (including computer software), wherever located, incorporating the Confidential Material, which Executive shall prepare, use or encounter, shall be and remain the Company’s sole and exclusive property and shall be included in the Confidential Material. Upon termination of this Agreement, or whenever requested by the Company, Executive shall promptly deliver to the Company any and all of the Confidential Material, not previously delivered to the Company, that is in the possession or under the control of Executive.

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7.2 Assignment of Intellectual Property Rights. Any ideas, processes, know-how, copyrightable works, maskworks, trade or service marks, trade secrets, inventions, developments, discoveries, improvements and other matters that may be protected by intellectual property rights, that relate to the Company’s business and are the results of Executive’s efforts during the Term (collectively, the “Executive Work Product”), whether conceived or developed alone or with others, and whether or not conceived during the regular working hours of the Company, shall be deemed works made for hire and are the property of the Company. In the event that for whatever reason such Executive Work Product shall not be deemed a work made for hire, Executive agrees that such Executive Work Product shall become the sole and exclusive property of the Company, and Executive hereby assigns to the Company his entire right, title and interest in and to each and every patent, copyright, trade or service mark (including any attendant goodwill), trade secret or other intellectual property right embodied in Executive Work Product. The Company shall also have the right, in its sole discretion to keep any and all of Executive Work Product as the Company’s Confidential Material. The foregoing work made for hire and assignment provisions are and shall be in consideration of this agreement of employment by the Company, and no further consideration is or shall be provided to Executive by the Company with respect to these provisions. Executive agrees to execute any assignment documents the Company may require confirming the Company’s ownership of any Executive Work Product. Executive also waives any and all moral rights with respect to any such works, including without limitation any and all rights of identification of authorship and/or rights of approval, restriction or limitation on use or subsequent modifications. Executive promptly will disclose to the Company any Executive Work Product.

7.3 No Unfair Competition After Termination of Agreement. Executive hereby acknowledges that the sale or unauthorized use or disclosure of any of the Company’s Confidential Material obtained by Executive by any means whatsoever, at any time before, during or after the Term shall constitute unfair competition. Executive shall not engage in any unfair competition with the Company either during the Term or at any time thereafter.

7.4 Covenant Not to Compete. In the event this Agreement is terminated by the Company for “Cause” under Section 6.1 above, or by Executive, for a reason other than one specified in Section 6.3 above, then for a period of one year after the effective date of such termination, Executive shall not, directly or indirectly, work for or provide services to or own an equity interest (except for a Permissible Investment) in any person, firm or entity engaged in the casino gaming, card club or horseracing business which competes against the Company in any “market” in which the Company owns or operates a casino, card club or horseracing facility. For purposes of this Agreement, “market” shall be defined as the area within a 100 mile radius of any casino, card club or horseracing facility owned or operated or under construction by the Company.

7.5 No Hire Away Policy. In the event this Agreement is terminated prior to the normal expiration of the Term, either by the Company for cause under Section 6.1 above, or by Executive, for a reason other than one specified in Section 6.3 above, then for a period of one (1) year after the effective date of such termination, Executive shall not, directly or indirectly, for himself or on behalf of any entity with which he is affiliated or employed, hire any person known to Executive to be an employee of the Company or any of its subsidiaries (or any person known to Executive to have been such an employee within six (6) months prior to such occurrence). Executive shall not be deemed to hire any such person so long as he did not directly or indirectly engage in or encourage such hiring.

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7.6 No Solicitation. During the Term and for a period of one (1) year thereafter, or, if sooner, for a period of one (1) year after earlier termination of this Agreement prior to expiration of the Term, and regardless of the reason for such termination (whether by the Company or Executive), Executive shall not directly or indirectly, for himself or on behalf of any entity with which he is affiliated or employed, solicit any employee of the Company or any of its subsidiaries (or any person who was such an employee within six (6) months prior to such occurrence) or encourage any such employee to leave the employment of the Company or any of its subsidiaries.

7.7 Non-Solicitation of Customers. During the Term and for a period of one (1) year thereafter, or, if sooner, for a period of one (1) year after the earlier termination of this Agreement prior to the expiration of the Term, and regardless of the reason for such termination (whether by the Company or Executive), Executive shall not solicit any customers of the Company or its subsidiaries or any of their respective casinos or card clubs, or knowingly encourage any such customers to leave the Company’s casinos or card clubs or knowingly encourage any such customers to use the facilities or services of any competitor of the Company or its subsidiaries. Executive shall at no times use proprietary customer lists or Confidential Material to solicit customers.

7.8 Irreparable Injury. The promised service of Executive under this Agreement and the other promises of this Article 7 are of special, unique, unusual, extraordinary, or intellectual character, which gives them peculiar value, the loss of which cannot be reasonably or adequately compensated in damages in an action at law.

7.9 Remedies for Breach. Executive agrees that money damages will not be a sufficient remedy for any breach of the obligations under this Article 7 and Article 2 hereof and that the Company shall be entitled to injunctive relief (which shall include, but not be limited to, restraining Executive from directly or indirectly working for or having an ownership interest (except for a Permissible Investment) in any person engaged in the casino, gaming or horseracing businesses in any market which the Company or its affiliates owns or operates any such business, using or disclosing the Confidential Material) and to specific performance as remedies for any such breach. Executive agrees that the Company shall be entitled to such relief, including temporary restraining orders, preliminary injunctions and permanent injunctions, without the necessity of proving actual damages and without the necessity of posting a bond or making any undertaking in connection therewith. Any such requirement of a bond or undertaking is hereby waived by Executive and Executive acknowledges that in the absence of such a waiver, a bond or undertaking might otherwise be required by the court. Such remedies shall not be deemed to be the exclusive remedies for any breach of the obligations in this Article 7, but shall be in addition to all other remedies available at law or in equity.

ARTICLE 8.

ARBITRATION

8.1 General. Except for a claim for injunctive relief under Section 7.9, any controversy, dispute, or claim between the parties to this Agreement, including any claim arising out of, in connection with, or in relation to the formation, interpretation, performance or breach of this Agreement shall be settled exclusively by arbitration, before a single arbitrator, in accordance with this Article 8 and the then most applicable rules of the American Arbitration Association. Judgment upon any award rendered by the arbitrator may be entered by any state or federal court having jurisdiction thereof. Such arbitration shall be administered by the American Arbitration Association. Arbitration shall be the exclusive remedy for determining any such dispute, regardless of its nature. Notwithstanding the foregoing, either party may in an appropriate matter apply to a court for provisional relief, including a temporary restraining order or a preliminary injunction, on the ground that the award to which the applicant may be entitled in arbitration may be rendered ineffectual without provisional relief. Unless mutually agreed by the parties otherwise, any arbitration shall take place in Las Vegas, Nevada.

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8.2 Selection of Arbitrator. In the event the parties are unable to agree upon an arbitrator, the parties shall select a single arbitrator from a list of nine arbitrators drawn by the parties at random from the “Independent” (or “Gold Card”) list of retired judges or, at the option of Executive, from a list of nine persons (which shall be retired judges or corporate or litigation attorneys experienced in executive employment agreements) provided by the office of the American Arbitration Association having jurisdiction over Las Vegas, Nevada. If the parties are unable to agree upon an arbitrator from the list so drawn, then the parties shall each strike names alternately from the list, with the first to strike being determined by lot. After each party has used four strikes, the remaining name on the list shall be the arbitrator. If such person is unable to serve for any reason, the parties shall repeat this process until an arbitrator is selected.

8.3 Applicability of Arbitration; Remedial Authority. This agreement to resolve any disputes by binding arbitration shall extend to claims against any parent, subsidiary or affiliate of each party, and, when acting within such capacity, any officer, director, stockholder, employee or agent of each party, or of any of the above, and shall apply as well to claims arising out of state and federal statutes and local ordinances as well as to claims arising under the common law. In the event of a dispute subject to this paragraph the parties shall be entitled to reasonable discovery subject to the discretion of the arbitrator. The remedial authority of the arbitrator (which shall include the right to grant injunctive or other equitable relief) shall be the same as, but no greater than, would be the remedial power of a court having jurisdiction over the parties and their dispute. The arbitrator shall, upon an appropriate motion, dismiss any claim without an evidentiary hearing if the party bringing the motion establishes that he or it would be entitled to summary judgment if the matter had been pursued in court litigation. In the event of a conflict between the applicable rules of the American Arbitration Association and these procedures, the provisions of these procedures shall govern.

8.4 Fees and Costs. Any filing or administrative fees shall be borne initially by the party requesting arbitration. The Company shall be responsible for the costs and fees of the arbitration, unless Executive wishes to contribute (up to 50%) of the costs and fees of the arbitration. Notwithstanding the foregoing, the prevailing party in such arbitration, as determined by the arbitrator, and in any enforcement or other court proceedings, shall be entitled, to the extent permitted by law, to reimbursement from the other party for all of the prevailing party’s costs (including but not limited to the arbitrator’s compensation), expenses, and attorneys’ fees.

8.5 Award Final and Binding. The arbitrator shall render an award and written opinion, and the award shall be final and binding upon the parties. If any of the provisions of this paragraph, or of this Agreement, are determined to be unlawful or otherwise unenforceable, in whole or in part, such determination shall not affect the validity of the remainder of this Agreement, and this Agreement shall be reformed to the extent necessary to carry out its provisions to the greatest extent possible and to insure that the resolution of all conflicts between the parties, including those arising out of statutory claims, shall be resolved by neutral, binding arbitration. If a court should find that the arbitration provisions of this Agreement are not absolutely binding, then the parties intend any arbitration decision and award to be fully admissible in evidence in any subsequent action, given great weight by any finder of fact, and treated as determinative to the maximum extent permitted by law.

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ARTICLE 9.

MISCELLANEOUS

9.1 Amendments. The provisions of this Agreement may not be waived, altered, amended or repealed in whole or in part except by the signed written consent of the parties sought to be bound by such waiver, alteration, amendment or repeal.

9.2 Entire Agreement. This Agreement and the stock option agreements between the Company and Executive constitute the total and complete agreement of the parties and supersedes all prior and contemporaneous understandings and agreements heretofore made, including the Original Agreement and the 2006 Agreement, and there are no other representations, understandings or agreements.

9.3 Counterparts. This Agreement may be executed in one of more counterparts, each of which shall be deemed and original, but all of which shall together constitute one and the same instrument. The exchange of copies of this Agreement and of signature pages by facsimile transmission or by e-mail shall constitute effective execution and delivery of this Agreement as to the parties and may be used in lieu of the original Agreement for all purposes. Signatures of the parties transmitted by facsimile or by e-mail shall be deemed to be their original signatures for any purpose whatsoever.

9.4 Severability. Each term, covenant, condition or provision of this Agreement shall be viewed as separate and distinct, and in the event that any such term, covenant, condition or provision shall be deemed by an arbitrator or a court of competent jurisdiction to be invalid or unenforceable, the court or arbitrator finding such invalidity or unenforceability shall modify or reform this Agreement to give as much effect as possible to the terms and provisions of this Agreement. Any term or provision which cannot be so modified or reformed shall be deleted and the remaining terms and provisions shall continue in full force and effect.

9.5 Waiver or Delay. The failure or delay on the part of the Company, or Executive to exercise any right or remedy, power or privilege hereunder shall not operate as a waiver thereof. A waiver, to be effective, must be in writing and signed by the party making the waiver. A written waiver of default shall not operate as a waiver of any other default or of the same type of default on a future occasion.

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9.6 Successors and Assigns. This Agreement shall be binding on and shall inure to the benefit of the parties to it and their respective heirs, legal representatives, successors and assigns, except as otherwise provided herein. Except as provided in this Section 9.6, without the prior written consent of Executive, this Agreement shall not be assignable by the Company. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. “Company” means the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid that assumes and agrees to perform this Agreement by operation of law or otherwise.

9.7 No Assignment or Transfer by Executive. Neither this Agreement nor any of the rights, benefits, obligations or duties hereunder may be assigned or transferred by Executive. Any purported assignment or transfer by Executive shall be void.

9.8 Necessary Acts. Each party to this Agreement shall perform any further acts and execute and deliver any additional agreements, assignments or documents that may be reasonably necessary to carry out the provisions or to effectuate the purpose of this Agreement.

9.9 Governing Law. This Agreement and all subsequent agreements between the parties shall be governed by and interpreted, construed and enforced in accordance with the laws of the State of Nevada.

9.10 Notices. All notices, requests, demands and other communications to be given under this Agreement shall be in writing and shall be deemed to have been duly given on the date of service, if personally served on the party to whom notice is to be given, or 48 hours after mailing, if mailed to the party to whom notice is to be given by certified or registered mail, return receipt requested, postage prepaid, and properly addressed to the party at his address set forth as follows or any other address that any party may designate by written notice to the other parties:

To Executive:	John A. Godfrey
	3800 Howard Hughes Parkway
	Las Vegas, NV 89169
	Telephone: 702 784-7777
	Facsimile: 702 784-7773
To the Company:	Pinnacle Entertainment, Inc.
	3800 Howard Hughes Parkway
	Las Vegas, NV 89169
	Attn: Chief Financial Officer
	Telephone: 702 784-7777
	Facsimile: 702 784-7773
with copy to:	Irell & Manella LLP
	1800 Avenue of the Stars, Suite 900
	Los Angeles, CA 90067-4276
	Attn: Al Segel
	Telephone: 310 277-1010
	Facsimile: 310 284-3052

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9.11 Headings and Captions. The headings and captions used herein are solely for the purpose of reference only and are not to be considered as construing or interpreting the provisions of this Agreement.

9.12 Construction. All terms and definitions contained herein shall be construed in such a manner that shall give effect to the fullest extent possible to the express or implied intent of the parties hereby.

9.13 Counsel. Executive has been advised by the Company that he should consider seeking the advice of counsel in connection with the execution of this Agreement and Executive has had an opportunity to do so. Executive has read and understands this Agreement, and has sought the advice of counsel to the extent he has determined appropriate. The Company shall reimburse Executive for the reasonable fees and expenses of Executive’s counsel in connection with this Agreement.

9.14 Withholding of Compensation. Executive hereby agrees that the Company may deduct and withhold from the compensation or other amounts payable to Executive hereunder or otherwise in connection with Executive’s employment any amounts required to be deducted and withheld by the Company under the provisions of any applicable Federal, state and local statute, law, regulation, ordinance or order.

9.15 References to Sections of the Code. All references in this Agreement and Appendix A hereto to sections of the Code shall be to such sections and to any successor or substantially comparable sections of the Code or to any successor thereto.

9.16 Effect of Delay. Executive’s or the Company’s failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right Executive or the Company may have hereunder, including without limitation the right of Executive to terminate employment for Good Reason pursuant to Section 6.5.3, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

[SIGNATURES TO APPEAR ON FOLLOWING PAGE]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed on the date first written above.

EXECUTIVE	THE COMPANY
	PINNACLE ENTERTAINMENT, INC.
/s/ John A. Godfrey	By:	/s/ Daniel R. Lee
John A. Godfrey		Daniel R. Lee, Chairman and Chief Executive Officer

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Appendix A

Tax Gross-up Payments

(a) Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any Payment would be subject to the Excise Tax, then Executive shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by Executive of all taxes (excluding any interest, additions, increases or penalties imposed with respect to such taxes except for interest, additions, increases or penalties with respect to the Excise Tax), including, without limitation, any income taxes (except for any interest, additions, increases and penalties imposed with respect thereto) and the Excise Tax imposed upon the Payment and the Gross-Up Payment, Executive is placed in the same tax position with respect to the Payment as Executive would have been in if the Excise Tax had never been enacted.

(b) Subject to the provisions of Section (c), all determinations required to be made under this appendix, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by the Company’s independent accounting firm or such other nationally recognized certified public accounting firm as may be designated by Executive (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and Executive within fifteen (15) business days of the receipt of notice from Executive that there has been a Payment, or such earlier time as is requested by the Company. All fees and expenses of the Accounting Firm shall be borne solely by the Company. Subject to Section (e) below, any Gross-Up Payment, as determined pursuant to this appendix shall be paid by the Company to Executive within five (5) days of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon the Company and Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section (c) and Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of Executive.

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(c) Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after Executive is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies Executive in writing prior to the expiration of such period that it desires to contest such claim, Executive shall:

(i) give the Company any information reasonably requested by the Company relating to such claim,

(ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company,

(iii) cooperate with the Company in good faith in order effectively to contest such claim, and

(iv) permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section (c), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim; provided, that any extension of the statute of limitations relating to payment of taxes for the taxable year of Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

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(d) If Executive becomes entitled to receive any refund with respect to the Gross-Up Payment or the Excise Tax, Executive shall promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If Executive would have received a refund of all or any portion of the Gross-Up Payment or the Excise Tax, except that a taxing authority offset the amount of such refund against other tax liabilities, interest, or penalties, Executive shall pay the amount of such offset over to the Company, together with the amount of interest Executive would have received from the taxing authority if such offset had been an actual refund, promptly after receipt of notice from the taxing authority of such offset.

(e) Notwithstanding any other provision of this appendix, the Company may withhold and pay over to the Internal Revenue Service for the benefit of Executive all or any portion of the Gross-Up Payment that it determines in good faith that it is or may be in the future required to withhold, and Executive hereby consents to such withholding.

(f) Subject to the foregoing provisions of this Appendix that may require earlier payment, any Gross-Up Payment shall be paid to or for the benefit the Executive by December 31 of the calendar year following the calendar year in which the Excise Tax is remitted, or, if no Excise Tax is remitted, by December 31 of the calendar year following the calendar year in which there is a final and non-appealable settlement or other resolution of an audit or litigation relating to the Excise Tax.

(g) Definitions. The following terms shall have the following meanings for purposes of this appendix.

(i) “Excise Tax” shall mean the excise tax imposed by Section 4999 of the Code, together with any interest or penalties imposed with respect to such excise tax.

(ii) A “Payment” shall mean any payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of Executive, whether paid or payable pursuant to this Agreement or otherwise.

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APPENDIX B

RELEASE and RESIGNATION

For valuable consideration, receipt of which is hereby acknowledged, the undersigned                      (“Executive”), for himself and his spouse, heirs, estate, administrators and executors, hereby fully and forever releases and discharges Pinnacle Entertainment, Inc., a Delaware corporation (the “Company”), and each of its subsidiaries and the officers, directors, employees, attorneys and agents of the Company and each such subsidiary, of and from any and all claims, demands, causes of action of any kind or nature, in law, equity or otherwise, whether known or unknown, which Executive has had, may have had, or now has, or may have, arising out of or in connection with Executive’s employment with the Company and/or its subsidiaries or the termination of such employment; provided, however, that nothing contained herein is intended to nor shall constitute a release of the Company from any obligations it may have to Executive under any written employment agreement between Executive and the Company in effect as of the date hereof, or any deferred compensation plan or arrangement in which Executive participates, nor shall it prevent Executive from exercising his rights, if any, under any such employment agreement or under any stock option, restricted stock or similar agreement in effect as of the date hereof in accordance with their terms.

Executive represents and warrants that he has not assigned or in any way conveyed, transferred or encumbered all or any portion of the claims or rights covered by this release.

Executive hereby resigns from all positions as an officer, director or employee of the Company and each of its subsidiaries or affiliates effective the date hereof and further agrees to execute such further evidence of such resignations as may be necessary or appropriate to effectuate the foregoing.

Executed this  _____ day of  _____, 20_____.

Executive

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EX-10.12

Exhibit 10.12

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) is made this 22^nd day of December 2008 (the “Effective Date”), by and between PINNACLE ENTERTAINMENT, INC., a Delaware corporation (the “Company”), and CARLOS A. RUISANCHEZ, an individual (“Executive”), with respect to the following facts and circumstances:

RECITALS

The Company and Executive entered into an Employment Agreement effective as of August 1, 2008 (the “Original Agreement”) pursuant to which Executive serves as Executive Vice President, Strategic Planning and Development of the Company. The Board of Directors of the Company has determined that it is in the best interest of the Company and of Executive to amend and restate the Original Agreement to comply with the provisions of Internal Revenue Code Section 409A and to address certain technical matters.

NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements set forth herein, the parties hereto agree as follows:

ARTICLE 1.

EMPLOYMENT AND TERM

1.1 Employment. The Company agrees to engage Executive in the capacity as Executive Vice President, Strategic Planning and Development of the Company, and Executive hereby accepts such engagement by the Company upon the terms and conditions specified below.

1.2 Term. The term of this Agreement shall commence as of the Effective Date and, unless earlier terminated under Article 6 below, shall continue in force until August 1, 2011, provided that commencing on August 1, 2010 and as of August 1 of each year thereafter (a “Renewal Date”), this Agreement shall automatically renew for additional one-year periods (each, a “Renewal Period”), unless either party gives notice of non-renewal at least ninety (90) days prior to the next Renewal Date. The term of this Agreement, including any Renewal Periods, is referred to as the “Term.”

ARTICLE 2.

DUTIES OF EXECUTIVE

2.1 Duties. Executive shall perform all the duties and obligations generally associated with the positions of Executive Vice President, Strategic Planning and Development subject to the control and supervision of the Company’s Chief Executive Officer (the “Chief Executive Officer”), and such other executive duties consistent with the foregoing as may be assigned to him from time to time by the Chief Executive Officer. Executive shall perform the services contemplated herein faithfully, diligently, to the best of his ability and in the best interests of the Company. Executive shall at all times perform such services in compliance with, and to the extent of his authority, shall to the best of his ability cause the Company to be in compliance with, any and all laws, rules and regulations applicable to the Company of which Executive is aware. Executive may rely on the Company’s inside counsel and outside lawyers in connection with such matters. Executive shall, at all times during the Term, in all material respects adhere to and obey any and all written internal rules and regulations governing the conduct of the Company’s employees, as established or modified from time to time; provided, however, in the event of any conflict between the provisions of this Agreement and any such rules or regulations, the provisions of this Agreement shall control.

2.2 Location of Services. Executive’s principal place of employment shall be at the Company’s headquarters in Las Vegas, Nevada, or at such other location as Executive and the Chief Executive Officer shall agree upon. Executive understands he will be required to travel to the Company’s various operations as part of his employment.

2.3 Exclusive Service. Except as otherwise expressly provided herein, Executive shall devote his entire business time, attention, energies, skills, learning and best efforts to the business of the Company. Executive may participate in social, civic, charitable, religious, business, educational or professional associations so long as such participation does not materially interfere with the duties and obligations of Executive hereunder. This Section 2.3, however, shall not be construed to prevent Executive from making passive outside investments so long as such investments do not require material time of Executive or otherwise interfere with the performance of Executive’s duties and obligations hereunder. Executive shall not make any investment in an enterprise that competes with the Company without the prior written approval of the Company after full disclosure of the facts and circumstances; provided, however, that this sentence shall not preclude Executive from owning up to one-half percent (0.5%) of the securities of a publicly traded entity (a “Permissible Investment”). During the Term, Executive shall not directly or indirectly work for or provide services to or, except as permitted above, own an equity interest in any person, firm or entity engaged in the casino gaming, card club or horse racing business. In this regard, and for purposes of this section only, Executive acknowledges that the gaming industry is national in scope and that accordingly this covenant shall apply throughout the United States.

ARTICLE 3.

COMPENSATION

3.1 Base Salary. In consideration for Executive’s services hereunder, the Company shall pay Executive an annual base salary, effective as of August 1, 2008, at the rate of not less than Four Hundred Twenty-Five Thousand Dollars ($425,000) per year during each of the years of the Term, prorated based on four (4) months for 2008, and prorated for any other partial year; payable in accordance with the Company’s regular payroll schedule from time to time (less any deductions required for Social Security, state, federal and local withholding taxes, and any other authorized or mandated similar withholdings). Executive’s annual base salary shall be reviewed by the Chief Executive Officer and, if appropriate, the Compensation Committee of the Board (the “Committee”) at least annually beginning no more than twelve (12) months from the date hereof and may be increased (but not decreased) at the discretion of the Board. If Executive’s annual salary is increased, the increased amount shall not be reduced for the remainder of the Term.

Ruisanchez December 2008

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3.2 Annual and Other Bonuses. Executive shall be entitled to earn bonuses with respect to each year of the Term during which Executive is employed under this Agreement in the discretion of the Chief Executive Officer and, if appropriate, the Committee; provided, however, that for 2008, Executive’s bonus shall not be less than Sixty-Six Thousand Six Hundred Sixty-Six Dollars ($66,666), including any deferred amount, and for 2009, Executive’s bonus shall not be less than Two Hundred Thousand Dollars ($200,000), including any deferred amount. Any such bonus earned by Executive shall be paid annually by March 15^th following the conclusion of the Company’s fiscal year, except for any portion of the bonus which is subject to required deferral by the Company and except for any portion of the bonus which Executive shall elect to defer. Bonuses relative to partial years (or a termination caused by death or disability) shall be prorated. Executive may also receive special bonuses in addition to his annual bonus eligibility at the discretion of the Chief Executive Officer and, if appropriate, the Committee.

3.3 Stock Options. As an additional element of compensation to Executive, in consideration of the services to be rendered hereunder, as of the date hereof, the Company has granted to Executive options to purchase Two Hundred Thousand (200,000) shares of the Company’s common stock which have an exercise price equal to the closing price on the Effective Date of this Agreement. Such options shall vest in four (4) equal consecutive annual installments of Twenty-Five Percent (25%) each, with the first Twenty-Five Percent (25%) vested on the first anniversary of the date hereof. The terms and conditions of such options shall be governed by a stock option agreement. Prior to August 1, 2010 and at appropriate times thereafter (no less frequently than within forty (40) months of the prior review), the Committee shall review Executive’s long-term compensation and, in consultation with the Chief Executive Officer, shall consider granting additional stock options and/or other long term incentive compensation.

ARTICLE 4.

EXECUTIVE BENEFITS

4.1 Vacation. In accordance with the general policies of the Company applicable generally to other senior executives of the Company pursuant to the Company’s personnel policies from time to time, Executive shall be entitled to not less than four weeks vacation each calendar year, without reduction in compensation; provided, however, that for 2008, Executive shall be entitled to five and one-third weeks vacation without reduction in compensation.

4.2 The Company Employee Benefits. Executive shall receive all group insurance and pension plan benefits and any other benefits on the same basis as they are available generally to other senior executives of the Company under the Company personnel policies in effect from time to time.

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4.3 Benefits. Executive shall receive all other such benefits as the Company may offer to other senior executives of the Company generally under the Company personnel plans, practices, policies and programs in effect from time to time, such as health and disability insurance coverage and paid sick leave. In the event that the Company’s group health plan does not cover the annual physical examination of Executive and Executive’s spouse, if any, or any pregnancy of Executive’s spouse, if any, the Company shall bear the cost of such examinations or the medical costs of such pregnancy.

4.4 Indemnification. Executive shall have the benefit of indemnification to the fullest extent permitted by applicable law, which indemnification shall continue after the termination of this Agreement for such period as may be necessary to continue to indemnify Executive for his acts while an officer of the Company. In addition, the Company shall cause Executive to be covered by the current policies of directors and officers liability insurance in accordance with their terms, to the maximum extent of the coverage available for any director or officer of the Company. The Company shall use commercially reasonable efforts to cause the current policies of directors and officers liability insurance to be maintained throughout the term of Executive’s employment with the Company and for such period thereafter as may be necessary to continue to cover acts of Executive during the term of his employment (provided that the Company may substitute therefor, or allow to be substituted therefor, policies of at least the same coverage and amounts containing terms and conditions which are, in the aggregate, no less advantageous to the insured in any material respect). In the event of any merger or other acquisition of the Company, the Company shall no later than immediately prior to consummation of such transaction purchase the longest applicable “tail” coverage available under the directors and officers liability insurance in effect at the time of such merger or acquisition.

4.5 Relocation. Company shall reimburse Executive for normal and reasonable moving expenses incurred for relocation to Las Vegas in accordance with Company’s relocation policy, a copy of which has been provided to Executive. Executive shall keep accurate and complete records of all such expenses, including but not limited to, proof of payment and purpose. Executive shall account fully for all such expenses to Company.

ARTICLE 5.

REIMBURSEMENT FOR EXPENSES

5.1 Executive shall be reimbursed by the Company for all ordinary and necessary expenses incurred by Executive in the performance of his duties or otherwise in furtherance of the business of the Company in accordance with the policies of the Company in effect from time to time. Executive shall keep accurate and complete records of all such expenses, including but not limited to, proof of payment and purpose. Executive shall account fully for all such expenses to the Company. No reimbursement will be made later than the close of the calendar year following the calendar year in which the expense was incurred. Expenses eligible for reimbursement in any one taxable year shall not affect the amount of expenses eligible for reimbursement in any other taxable year, and the right to expense reimbursement shall not be subject to liquidation or exchange for any other benefit.

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ARTICLE 6.

TERMINATION

6.1 Termination for Cause. Without limiting the generality of Section 6.2, the Company shall have the right to terminate Executive’s employment, without further obligation or liability to Executive, upon the occurrence of any one or more of the following events, which events shall be deemed termination for cause (“Cause”).

6.1.1 Failure to Perform Duties. If Executive neglects to perform the material duties of his employment under this Agreement in a professional and businesslike manner, other than due to his disability (except due to substance or alcohol abuse), after having received written notice specifying such failure to perform and a reasonable opportunity to perform.

6.1.2 Willful Breach. If Executive willfully commits a material breach of this Agreement and fails to cure such breach within thirty (30) days of written notice thereof or a material willful breach of his fiduciary duty to the Company.

6.1.3 Wrongful Acts. If Executive is convicted of a felony involving acts of moral turpitude or commits fraud, misrepresentation, embezzlement or other acts of material misconduct against the Company (including violating or condoning the violation of any material rules or regulations of gaming authorities which could have a material adverse effect on the Company) that would make the continuance of his employment by the Company materially detrimental to the Company.

6.1.4 Failure To Be Licensed or Approved by Pinnacle’s Compliance Committee. Executive shall promptly, accurately and truthfully complete all forms provided by the Company’s Compliance Committee and shall fully cooperate in any background investigation conducted pursuant to the Company’s Compliance Program. Executive shall also apply for all applicable gaming licenses, if required, within one hundred twenty (120) days of the effective date of this Agreement or such shorter period required by regulatory authorities. If Executive fails to be recommended for approval and retention by the Compliance Committee or fails to be licensed in all jurisdictions in which the Company or its subsidiaries has gaming facilities within the date required by any jurisdiction, or if any of such licenses shall be revoked or suspended at any time during the Term, then the Company may by written notice to Executive terminate the Agreement for Cause. Executive agrees to promptly submit to the licensing requirements of all jurisdictions in which the Company or its subsidiaries does business. The Company shall bear all expenses incurred in connection with such licenses.

6.2 Termination Without Cause. Notwithstanding anything to the contrary herein, the Company shall have the right to terminate Executive’s employment under this Agreement at any time without Cause by giving notice of such termination to Executive. Failure by the Company to extend the Term for any Renewal Period shall not be a termination of this Agreement without Cause.

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6.3 Termination by Executive for Good Reason. Executive may terminate his employment under this Agreement on thirty (30) days prior notice to the Company for good reason (“Good Reason”). For purposes of this Agreement, “Good Reason” shall mean and be limited to (a) a material breach of this Agreement by the Company (including without limitation any material reduction in the authority, duties or responsibilities of Executive, or any relocation of his or its principal place of business outside the greater Las Vegas metropolitan area (without Executive’s consent); or (b) a change of control with respect to the Company (a “Change of Control”) followed by (i) any diminution of Executive’s authority, duties or responsibilities as set forth in Section 2.1; or (ii) during the first twelve (12) months following a Change of Control, the failure of the Company to award Executive an annual bonus equal to at least seventy-five percent (75%) of the average amount of the annualized bonus paid to Executive for the last two (2) full years; or (iii) Executive’s termination by the Company other than at the end of the Term of this Agreement; or (iv) termination of his employment by Executive in his sole and absolute discretion at any time during the twelve (12) months immediately following the first anniversary date of the Change of Control. Except in the cases set forth in clauses (b)(iii) and (b)(iv) of the preceding sentence, however, “Good Reason” shall not exist unless Executive gives notice of proposed termination within 30 days following the breach or condition giving rise to Good Reason, and there is a failure of the Company to remedy the breach or condition giving rise to Good Reason within thirty (30) days after such notice (or as soon thereafter as practicable so long as it commences effectuation of such remedy within such time period and diligently pursues such remedy to completion as soon as practicable). For purposes of this Agreement, a “Change of Control” shall mean the occurrence of any of the following:

(i) The direct or indirect acquisition by an unrelated “Person” or “Group” of “Beneficial Ownership” (as such terms are defined below) of more than 50% of the voting power of the Company’s issued and outstanding voting securities in a single transaction or a series of related transactions;

(ii) The direct or indirect sale or transfer by the Company of substantially all of its assets to one or more unrelated Persons or Groups in a single transaction or a series of related transactions;

(iii) The merger, consolidation or reorganization of the Company with or into another corporation or other entity in which the Beneficial Owners of more than 50% of the voting power of the Company’s issued and outstanding voting securities immediately before such merger or consolidation do not own more than 50% of the voting power of the issued and outstanding voting securities of the surviving corporation or other entity immediately after such merger, consolidation or reorganization; or

(iv) During any consecutive 12-month period, individuals who at the beginning of such period constituted the Board of the Company (together with any new Directors whose election to such Board or whose nomination for election by the stockholders of the Company was approved by a vote of a majority of the Directors of the Company then still in office who were either Directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of the Company then in office.

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None of the foregoing events, however, shall constitute a Change of Control if such event is not a “Change in Control Event” under Treasury Regulations Section 1.409A-3(i)(5) or successor IRS guidance. For purposes of determining whether a Change of Control has occurred, the following Persons and Groups shall not be deemed to be “unrelated”: (A) such Person or Group directly or indirectly has Beneficial Ownership of more than 50% of the issued and outstanding voting power of the Company’s voting securities immediately before the transaction in question, (B) the Company has Beneficial Ownership of more than 50% of the voting power of the issued and outstanding voting securities of such Person or Group, or (C) more than 50% of the voting power of the issued and outstanding voting securities of such Person or Group are owned, directly or indirectly, by Beneficial Owners of more than 50% of the issued and outstanding voting power of the Company’s voting securities immediately before the transaction in question. The terms “Person,” “Group,” “Beneficial Owner,” and “Beneficial Ownership” shall have the meanings used in the Securities Exchange Act of 1934, as amended. Notwithstanding the foregoing, (I) Persons will not be considered to be acting as a “Group” solely because they purchase or own stock of the Company at the same time, or as a result of the same public offering, (II) however, Persons will be considered to be acting as a “Group” if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction, with the Company, and (III) if a Person, including an entity, owns stock both in the Company and in a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar transaction, with the Company, such shareholders shall be considered to be acting as a Group with other shareholders only with respect to the ownership in the corporation before the transaction.

6.4 Death or Disability. This Agreement shall terminate on the death or “Disability” of Executive. Executive will be deemed to have a “Disability” when he is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or begins receiving income replacement benefits for a period of not less than three months under an accident and health plan of the Company or an affiliate by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months. If there should be a dispute between the Company and Executive as to Executive’s physical or mental Disability for purposes of this Agreement, the question shall be settled by the opinion of an impartial reputable physician or psychiatrist agreed upon by the parties or their representatives, or if the parties cannot agree within ten (10) days after a request for designation of such party, then a physician or psychiatrist designed by the Clark County Medical Association or similar body. The certification of such physician or psychiatrist as to the questioned dispute shall be final and binding upon the parties hereto.

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6.5 Effect of Termination.

6.5.1 Payment of Salary and Expenses Upon Termination. Any termination under this Section 6 shall be effective upon receipt of notice by Executive or the Company, as the case may be, of such termination or upon such other later date as may be provided herein or specified by the Company or Executive in the notice (the “Termination Date”), except as otherwise provided in this Section 6. If this Agreement is terminated, all benefits provided to Executive by the Company hereunder shall thereupon cease, except as provided in this Section 6.5, and the Company shall pay or cause to be paid to Executive all accrued but unpaid base salary, any compensation previously voluntarily deferred by Executive, payable in accordance with the provisions of the applicable deferred compensation plan and in accordance with Executive’s elections under such deferred compensation plan, and vacation benefits. In addition, promptly upon submission by Executive of his unpaid expenses incurred prior to the Termination Date and owing to Executive pursuant to Article 5, reimbursement for such expenses shall be made. If the Agreement is terminated by the Company for “Cause,” or by Executive without “Good Reason,” Executive shall not be entitled to receive any payments other than as specified in this Section 6.5.1, and provided that Executive may exercise any vested options.

6.5.2 Termination Due to Death or Disability. If this Agreement is terminated due to death or Disability, the following shall apply:

(a) Executive shall be entitled to an amount equal to the sum of (i) Executive’s annual base salary in effect on the date of termination; plus (ii) the greater of the amount of Executive’s bonus (including all deferred amounts) in the year prior to such termination or the average of the annual bonuses (including all deferred amounts) paid to Executive in the three (3) consecutive years prior to the year of termination (the “Bonus Amount”) times (iii) one hundred fifty percent (150%) of the sum of (i) and (ii) above (the “Death or Disability Severance Benefit”); provided that in the event of death, the amount of such Death Severance Benefit shall be reduced by the amount of any life insurance provided by the Company; and, provided, further, that the amount of such Disability Severance Benefit shall be reduced under the circumstances specified in this Section 6.5.2. In addition, Executive shall be entitled to receive any amounts payable under Section 6.5.1 above a pro rata bonus for the year of death or Disability (which bonus shall be calculated by taking the Bonus Amount and multiplying it by a fraction, the numerator of which is the number of days in the year in which Executive was employed before death or Disability and the denominator of which is 365); such pro rata bonus shall be payable within thirty (30) days after death or Disability. The base salary component of the Death or Disability Severance Benefit shall be payable to Executive or his estate monthly in equal installments over a period of eighteen (18) months after the termination of Executive’s employment (the “Death or Disability Severance Benefit Period”) and seventy five percent (75%) of the bonus component shall be paid within thirty (30) days after death or Disability, and twenty five percent (25%) of the bonus component shall be payable in three annual installments on the anniversaries of death or Disability; provided that if during such period a Change of Control shall occur, the full amount of any unpaid Death or Disability Severance Benefit shall be paid to Executive or his estate in a lump sum. If, during the Disability Severance Benefit Period Executive is able to work in capacities similar to those for which he is employed hereunder, he shall have a duty to seek employment and to advise the Company of all compensation paid or payable to him from such employment. Such amounts shall reduce the amount of Disability Severance Benefits payable by the Company hereunder.

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(b)

Any outstanding unvested stock options at the date of death or Disability which would otherwise vest during the eighteen (18) months following death or Disability shall immediately become vested and may be exercised in accordance with their terms. The remaining unvested options shall immediately terminate.

(c)

Executive shall also be entitled to receive health benefits coverage for Executive and his dependents, and disability insurance coverage for Executive, under the same plan(s) or arrangement(s) under which Executive was were covered immediately before his death or Disability or plan(s) established or arrangement(s) provided by the Company or any of its Subsidiaries thereafter for the benefit of senior executives (“Health and Disability Coverage Continuation”). Such health benefits and disability coverage shall be paid for by the Company to the same extent as if Executive were still employed by the Company, and Executive, or his Dependents in the event of his death, will be required to make such payments as Executive would be required to make if Executive were still employed by the Company. The benefits provided under this Section 6.5.2(c) shall continue until the earliest of (a) five (5) years; (b) the date on which Executive ceases to be Disabled during the five (5) year period; and (c) the date Executive (and in the case of his dependents, the dependents) becomes covered or eligible for coverage under any other group health plan or group disability plan (as the case may be) not maintained by the Company or any of its Subsidiaries; provided, however, that if such other group health plan excludes any pre-existing condition that Executive or Executive’s dependents may have when coverage under such group health plan would otherwise begin, coverage under this Section 6.5.2(c) shall continue (but not beyond the period described in clause (a) of this sentence) with respect to such pre-existing condition until such exclusion under such other group health plan lapses or expires. In the event Executive is required to make an election under Sections 601 through 607 of the Employee Retirement Income Security Act of 1974, as amended (commonly known as COBRA) to qualify for the benefits described in this Section 6.5.2(c), the obligations of the Company and its Subsidiaries under this Section 6.5.2(c) shall be conditioned upon Executive’s timely making such an election. Any payment or reimbursement of benefits under this Section 6.5.2(c) that is taxable to Executive or his dependents shall be made by December 31 of the calendar year following the calendar year in which Executive or his dependent incurred the expense. Expenses eligible for reimbursement in any one taxable year shall not affect the amount of expenses eligible for reimbursement in any other taxable year, and the right to expense reimbursement shall not be subject to liquidation or exchange for any other benefit.

(d) The provisions of Sections 7.4, 7.5, 7.6 and 7.7 shall apply both during and after the termination of the Disability Severance Benefit Period.

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6.5.3 Termination Without Cause or Termination by Executive for Good Reason Other than in Connection with a Change of Control. If the Company terminates Executive without Cause or Executive terminates for Good Reason other than in connection with a Change of Control as contemplated by Section 6.5.4, the following shall apply:

(a)

Executive shall be entitled to receive an amount equal to one hundred fifty percent (150%) times (i) Executive’s annual base salary (the “Base Severance Benefit”) in effect on the date of termination; plus (ii) the Bonus Amount, excluding any deferred bonus which was at the Company’s election rather than Executive’s. The Base Severance Benefit shall be paid to Executive in equal monthly installments over eighteen (18) months immediately following the date of termination in accordance with the Company’s regular salary payment schedule from time to time. Seventy five percent (75%) of the Bonus Amount shall be paid within thirty (30) days after the termination of employment, and twenty five percent (25%) of the Bonus Amount shall be payable in three annual installments on the anniversaries of the termination of employment. In addition, Executive shall be entitled to receive any amounts payable under Section 6.5.1 above and a pro rata annual bonus for the year of termination calculated and payable as provided in Section 6.5.2(a), including any deferred bonus which was at the Company’s election rather than Executive’s; such pro rata annual bonus shall be payable within thirty (30) days after termination of employment. The payments contemplated herein shall not be subject to any duty of mitigation by Executive nor to offset for any income earned by Executive following termination.

(b)

In addition to those already vested, all of Executive’s outstanding stock options which would have vested in the eighteen (18) months following termination shall be fully vested and exercisable as of the date of termination. Any remaining unvested options shall immediately terminate.

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(c)	Executive shall also be entitled to receive Health and Disability Coverage Continuation for himself and his dependents, as applicable, on the terms provided in Section 6.5.2(c) above; provided that the maximum continuation period shall be eighteen (18) months from the date of termination.
(d)	The provisions of Sections 7.3, 7.5, 7.6 and 7.7 shall apply from the date of termination, but the provisions of Section 7.4 (“Covenant Not to Compete”) shall not apply.

6.5.4 Termination Without Cause or Termination by Executive for Good Reason Within the Twenty-Four (24) Months After a Change of Control. If the Company terminates Executive without Cause or Executive terminates for Good Reason within twenty-four (24) months after a Change of Control, or if Executive terminates in his sole and absolute discretion within the twelve (12) months immediately following the first anniversary date of a Change of Control, the following shall apply:

(a)

The Company shall pay to Executive in lieu of the Base Severance Benefit, in a lump sum as soon as practicable, but in no event later than thirty (30) days after the termination of Executive’s employment, (i) an amount (the “Change of Control Severance Benefit”) equal to two (2) times Executive’s annual base salary in effect on the date of termination, plus (ii) two (2) times the largest annual bonus (including all deferred amounts) that was paid to Executive during the three (3) years preceding the Change of Control; plus (iii) a pro rated bonus for the year of termination (which bonus shall be calculated by taking the Bonus Amount and multiplying it as provided in section 6.5.2(a) plus (iv) any amounts payable under Section 6.5.1. Executive shall also be entitled to receive a continuation of health and disability insurance coverage as specified in Section 6.5.2(c). In addition to those already vested, all unvested stock options held by Executive shall be immediately and fully vested and exercisable by Executive.

(b)

The “Covenant Not to Compete” set forth in Section 7.4 below shall not apply in any respect to Executive (and Executive’s compliance therewith shall not be a condition to the Company’s obligations hereunder), and the term of the “No Hire Away Policy” in Section 7.5 shall be limited to six (6) months from the date of termination.

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6.5.5 Occurrence of a Change of Control With Six Months After Termination Without Cause or by Executive for Good Reason. If a Change of Control occurs within six months after the date of termination of Executive by the Company without Cause or the date of termination by Executive with Good Reason, the following shall apply:

(a)	Executive shall receive (i) the Change of Control Severance Benefit set forth in Section 6.5.4(a)(i), less the amount of any payments Executive has already received under the first sentence of Section 6.5.3(a), and (ii) continuation of health and disability coverage as specified in Section 6.5.2(c).
(b)	The “Covenant Not to Compete” set forth in Section 7.4 below shall not apply in any respect to Executive (and Executive’s compliance therewith shall not be a condition to the Company’s obligations hereunder), and the term of the “No Hire Away Policy” in Section 7.5 shall be limited to six (6) months from the date of termination.

6.5.6 Additional Payments. In the event that any payments that Executive may receive under this Agreement or otherwise shall constitute a change in control payments under Section 280G of the Code which would subject Executive to an excise tax under Section 4999 of the Code, Executive shall be entitled to receive additional tax gross-up payments from the Company as set forth in Appendix A hereto. Notwithstanding the foregoing provisions of this Section 6.5.6, if it shall be determined that Executive is entitled to the Gross Up Payment, but that the Payments do not exceed 105% of the greatest amount that could be paid to Executive such that the receipt of the Payments would not give rise to any Excise Tax (the “Reduced Amount”), then no Gross Up Payment shall be made to Executive and the Payments, in the aggregate, shall be reduced to the Reduced Amount. If the Company elects to provide coverage under Section 6.5.2(c), 6.5.3(c), 6.5.4(a) or 6.5.5(a) under self-insured insurance plans rather than under insurance policies, the Company shall indemnify Executive for any tax liability he incurs on payment of claims under the insurance plans that he would not have incurred if the claims had been paid under insurance policies. Any such tax indemnification amounts shall be paid to or for the benefit the Executive by December 31 of the calendar year following the calendar year in which the additional tax is remitted, or, if no additional tax is remitted, by December 31 of the calendar year following the calendar year in which there is a final and non-appealable settlement or other resolution of an audit or litigation relating to such additional tax. The Company shall pay to Executive a payment (the “Gross Up Payment”) in an amount such that, after payment by Executive of all income taxes and the excise tax imposed by Internal Revenue Code Section 4999, or any similar provision of state or local tax law (the “Excise Tax”) imposed on benefits under this agreement, on all other payments from the Company to Executive in the nature of compensation, and on the Gross Up Payment itself, and any interest or penalties (other than interest and penalties imposed by reason of Executive’s failure to file timely tax returns or to pay taxes shown due on such returns and any tax liability, including interest and penalties, unrelated to the Excise Tax or the Gross Up Amount), Executive shall be placed in the same tax position with respect to benefits under this Agreement and all other payments from the Company to Executive in the nature of compensation as Executive would have been if the Excise Tax had never been enacted.

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6.5.7 I.R.C. Section 409A. In the event that any compensation with respect to Executive’s separation from service is “deferred compensation” within the meaning of Section 409A of the Code and the regulations thereunder (“Section 409A”), the stock of the Company or any affiliate is publicly traded on an established securities market or otherwise, and Executive is determined to be a “specified employee,” as defined in Section 409A(a)(2)(B)(i) of the Code, payment of such compensation shall be delayed as required by Section 409A. Such delay shall last six months from the date of Executive’s separation from service, except in the event of Executive’s death. Within thirty (30) days following the end of such six-month period, or, if earlier, Executive’s death, the Company will make a catch-up payment to Executive equal to the total amount of such payments that would have been made during the six-month period but for this Section 9.1. The catch-up payment amount shall accrue simple interest at the prime rate of interest as published by the Bank of America as of the beginning of the deferral period, which interest shall be paid with the catch-up payment. The Company will place an amount in a “rabbi trust” with an independent trustee reasonably acceptable to Executive equal to the catch-up payment plus the interest that will accrue thereon. Wherever payments under this Agreement are to be made in installments, each such installment shall be deemed to be a separate payment for purposes of Section 409A. Payments of compensation or benefits on Executive’s termination of employment (other than accrued salary and vacation pay, other accrued amounts that must be paid under applicable law, and “welfare benefits” specified in Treasury Regulations Section 1.409A-1(a)(5)) shall be paid only if and when the termination of employment constitutes a “separation from service” under Treasury Regulation Section 1.409A-1(h).

6.5.8 Suspension. In lieu of terminating Executive’s employment hereunder for Cause under Section 6.1, the Company shall have the right, at its sole election, to suspend the performance of duties by Executive under this Agreement during the continuance of events or circumstances under Section 6.1 for an aggregate of not more than thirty (30) days during the Term (the “Default Period”) by giving Executive written notice of the Company’s election to do so at any time during the Default Period. The Company shall have the right to extend the Term beyond its normal expiration date by the period(s) of any suspension(s). The Company’s exercise of its right to suspend the operation of this Agreement shall not preclude the Company from subsequently terminating Executive’s employment hereunder. Executive shall not render services to any other person, firm or corporation in the casino business during any period of suspension. Executive shall be entitled to continued compensation and benefits pursuant to the provisions of this Agreement during the Default Period.

6.6 Exercisability of Options. Except with respect to options granted prior to the date hereof, all vested options will terminate on the earlier of (a) the expiration of the ten (10) year term of such options, or (b) one (1) year after the termination of Executive’s employment with the Company, regardless of the cause of such termination, except that, in the event of a termination for “Cause” or Executive’s termination without Good Reason, all vested options will terminate on the earlier of (I) the expiration of the ten (10) year term of such options, or (II) ninety (90) days after the termination. As provided in the stock option agreements, unvested options will terminate on the termination of Executive’s employment with the Company, except to the extent that such options become vested as a result of such termination under the terms of the governing stock option agreement or this Agreement. With respect to options granted prior to the date hereof, any option exercise extension shall be limited to the maximum amount permitted which would not trigger a modification under Section 409A.

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6.7 No-Exclusivity of Rights. Nothing in this Agreement shall prevent or limit Executive’s continuing or future participation in any plan, program, policy or practice provided by the Company or its subsidiaries and for which the Executive may quality, nor shall anything herein limit or otherwise affect such rights as Executive may have under any other contract or agreement with the Company or its subsidiaries at or subsequent to the Date of Termination (“Other Benefits”) shall be payable in accordance with such plan, policy, practice or program or contract or agreement, except as explicitly modified by this Agreement. Notwithstanding the foregoing, if Executive receives payments and benefits pursuant to Article VI of this Agreement, Executive shall not be entitled to any severance pay or benefits under any severance plan, program or policy of the Company and its subsidiaries, unless otherwise specifically provided therein in a specific reference in or to this Agreement.

6.8 Full Settlement. The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any setoff, counterclaim, recoupment, defense, or other claim, right or action that the Company may have against the Executive or others, except to the extent of the mitigation and setoff provisions provided for in this Agreement. Except as expressly provided for herein, in no event shall Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to Executive under any of the provisions of this Agreement and such amounts shall not be reduced whether or not Executive obtains other employment. The Company agrees to pay as incurred, to the full extent permitted by law, all legal fees and expenses that the Executive may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Company, Executive or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof (including as a result of any contest by Executive about the amount of any payment pursuant to this Agreement), plus, in each case, interest on any delayed payment at the applicable federal rate provided for in Section 7872(f)(2)(A) of the Code.

6.9 Release. It shall be a condition for Executive’s right to receive any severance benefits hereunder that he execute a general release in favor of the Company and its affiliates in the form attached hereto as Appendix B and covering such additional matters as may be reasonably requested by the Company, which release shall not encompass the payments contemplated hereby. The timing of payments under this Agreement upon the execution of the general release shall be governed by the following provisions:

(a) The Company must deliver the release to Executive for execution no later than fourteen (14) days after Executive’s termination of employment. If the Company fails to deliver the release to Executive within such fourteen (14) day period, Executive will be deemed to have satisfied the release requirement and will receive payments conditioned on execution of the release as though Executive had executed the release and all revocation rights had lapsed at the end of such 14 day period.

(b) Executive must execute the release within forty-five (45) days from its delivery to him.

(c) If Executive has revocation rights, Executive shall exercise such rights, if at all, not later than seven (7) days after executing the release.

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(d) In any case in which the release (and the expiration of any revocation rights) could only become effective in a particular tax year of Executive, payments conditioned on execution of the release shall begin within thirty (30) days after the release becomes effective and revocation rights have lapsed.

(e) In any case in which the release (and the expiration of any revocation rights) could become effective in one of two taxable years of Executive depending on when Executive executes the release, payments conditioned on execution of the release shall not begin before the first business day of the later of such tax years.

ARTICLE 7.

CONFIDENTIALITY

7.1 Nondisclosure of Confidential Material. In the performance of his duties, Executive may have access to confidential records, including, but not limited to, development, marketing, organizational, financial, managerial, administrative and sales information, data, specifications and processes presently owned or at any time hereafter developed or used by the Company or its agents or consultants that is not otherwise part of the public domain (collectively, the “Confidential Material”). All such Confidential Material is considered secret and is disclosed to Executive in confidence. Executive acknowledges that the Confidential Material constitutes proprietary information of the Company which draws independent economic value, actual or potential, from not being generally known to the public or to other persons who could obtain economic value from its disclosure or use, and that the Company has taken efforts reasonable under the circumstances, of which this Section 7.1 is an example, to maintain its secrecy. Except in the performance of his duties to the Company or as required by a court order or any gaming regulator or as required for his personal tax or legal advisors to advise him, Executive shall not, directly or indirectly for any reason whatsoever, disclose, divulge, communicate, use or otherwise disclose any such Confidential Material, unless such Confidential Material ceases to be confidential because it has become part of the public domain (not due to a breach by Executive of his obligations hereunder). Executive shall also take all reasonable actions appropriate to maintain the secrecy of all Confidential Information. All records, lists, memoranda, correspondence, reports, manuals, files, drawings, documents, equipment, and other tangible items (including computer software), wherever located, incorporating the Confidential Material, which Executive shall prepare, use or encounter, shall be and remain the Company’s sole and exclusive property and shall be included in the Confidential Material. Upon termination of this Agreement, or whenever requested by the Company, Executive shall promptly deliver to the Company any and all of the Confidential Material, not previously delivered to the Company, that is in the possession or under the control of Executive.

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7.2 Assignment of Intellectual Property Rights. Any ideas, processes, know-how, copyrightable works, maskworks, trade or service marks, trade secrets, inventions, developments, discoveries, improvements and other matters that may be protected by intellectual property rights, that relate to the Company’s business and are the results of Executive’s efforts during the Term (collectively, the “Executive Work Product”), whether conceived or developed alone or with others, and whether or not conceived during the regular working hours of the Company, shall be deemed works made for hire and are the property of the Company. In the event that for whatever reason such Executive Work Product shall not be deemed a work made for hire, Executive agrees that such Executive Work Product shall become the sole and exclusive property of the Company, and Executive hereby assigns to the Company his entire right, title and interest in and to each and every patent, copyright, trade or service mark (including any attendant goodwill), trade secret or other intellectual property right embodied in Executive Work Product. The Company shall also have the right, in its sole discretion to keep any and all of Executive Work Product as the Company’s Confidential Material. The foregoing work made for hire and assignment provisions are and shall be in consideration of this agreement of employment by the Company, and no further consideration is or shall be provided to Executive by the Company with respect to these provisions. Executive agrees to execute any assignment documents the Company may require confirming the Company’s ownership of any Executive Work Product. Executive also waives any and all moral rights with respect to any such works, including without limitation any and all rights of identification of authorship and/or rights of approval, restriction or limitation on use or subsequent modifications. Executive promptly will disclose to the Company any Executive Work Product.

7.3 No Unfair Competition After Termination of Agreement. Executive hereby acknowledges that the sale or unauthorized use or disclosure of any of the Company’s Confidential Material obtained by Executive by any means whatsoever, at any time before, during or after the Term shall constitute unfair competition. Executive shall not engage in any unfair competition with the Company either during the Term or at any time thereafter.

7.4 Covenant Not to Compete. In the event this Agreement is terminated by the Company for “Cause” under Section 6.1 above, or by Executive, for a reason other than one specified in Section 6.3 above, then for a period of one year after the effective date of such termination, Executive shall not, directly or indirectly, work for or provide services to or own an equity interest (except for a Permissible Investment) in any person, firm or entity engaged in the casino gaming, card club or horseracing business which competes against the Company in any “market” in which the Company owns or operates a casino, card club or horseracing facility. For purposes of this Agreement, “market” shall be defined as the area within a 100 mile radius of any casino, card club or horseracing facility owned or operated or under construction by the Company.

7.5 No Hire Away Policy. In the event this Agreement is terminated prior to the normal expiration of the Term, either by the Company for cause under Section 6.1 above, or by Executive, for a reason other than one specified in Section 6.3 above, then for a period of one (1) year after the effective date of such termination, Executive shall not, directly or indirectly, for himself or on behalf of any entity with which he is affiliated or employed, hire any person known to Executive to be an employee of the Company or any of its subsidiaries (or any person known to Executive to have been such an employee within six (6) months prior to such occurrence). Executive shall not be deemed to hire any such person so long as he did not directly or indirectly engage in or encourage such hiring.

7.6 No Solicitation. During the Term and for a period of one (1) year thereafter, or, if sooner, for a period of one (1) year after earlier termination of this Agreement prior to expiration of the Term, and regardless of the reason for such termination (whether by the Company or Executive), Executive shall not directly or indirectly, for himself or on behalf of any entity with which he is affiliated or employed, solicit any employee of the Company or any of its subsidiaries (or any person who was such an employee within six (6) months prior to such occurrence) or encourage any such employee to leave the employment of the Company or any of its subsidiaries.

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7.7 Non-Solicitation of Customers. During the Term and for a period of one (1) year thereafter, or, if sooner, for a period of one (1) year after the earlier termination of this Agreement prior to the expiration of the Term, and regardless of the reason for such termination (whether by the Company or Executive), Executive shall not solicit any customers of the Company or its subsidiaries or any of their respective casinos or card clubs, or knowingly encourage any such customers to leave the Company’s casinos or card clubs or knowingly encourage any such customers to use the facilities or services of any competitor of the Company or its subsidiaries. Executive shall at no times use proprietary customer lists or Confidential Material to solicit customers.

7.8 Irreparable Injury. The promised service of Executive under this Agreement and the other promises of this Article 7 are of special, unique, unusual, extraordinary, or intellectual character, which gives them peculiar value, the loss of which cannot be reasonably or adequately compensated in damages in an action at law.

7.9 Remedies for Breach. Executive agrees that money damages will not be a sufficient remedy for any breach of the obligations under this Article 7 and Article 2 hereof and that the Company shall be entitled to injunctive relief (which shall include, but not be limited to, restraining Executive from directly or indirectly working for or having an ownership interest (except for a Permissible Investment) in any person engaged in the casino, gaming or horseracing businesses in any market which the Company or its affiliates owns or operates any such business, using or disclosing the Confidential Material) and to specific performance as remedies for any such breach. Executive agrees that the Company shall be entitled to such relief, including temporary restraining orders, preliminary injunctions and permanent injunctions, without the necessity of proving actual damages and without the necessity of posting a bond or making any undertaking in connection therewith. Any such requirement of a bond or undertaking is hereby waived by Executive and Executive acknowledges that in the absence of such a waiver, a bond or undertaking might otherwise be required by the court. Such remedies shall not be deemed to be the exclusive remedies for any breach of the obligations in this Article 7, but shall be in addition to all other remedies available at law or in equity.

ARTICLE 8.

ARBITRATION

8.1 General. Except for a claim for injunctive relief under Section 7.9, any controversy, dispute, or claim between the parties to this Agreement, including any claim arising out of, in connection with, or in relation to the formation, interpretation, performance or breach of this Agreement shall be settled exclusively by arbitration, before a single arbitrator, in accordance with this Article 8 and the then most applicable rules of the American Arbitration Association. Judgment upon any award rendered by the arbitrator may be entered by any state or federal court having jurisdiction thereof. Such arbitration shall be administered by the American Arbitration Association. Arbitration shall be the exclusive remedy for determining any such dispute, regardless of its nature. Notwithstanding the foregoing, either party may in an appropriate matter apply to a court for provisional relief, including a temporary restraining order or a preliminary injunction, on the ground that the award to which the applicant may be entitled in arbitration may be rendered ineffectual without provisional relief. Unless mutually agreed by the parties otherwise, any arbitration shall take place in Las Vegas, Nevada.

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8.2 Selection of Arbitrator. In the event the parties are unable to agree upon an arbitrator, the parties shall select a single arbitrator from a list of nine arbitrators drawn by the parties at random from the “Independent” (or “Gold Card”) list of retired judges or, at the option of Executive, from a list of nine persons (which shall be retired judges or corporate or litigation attorneys experienced in executive employment agreements) provided by the office of the American Arbitration Association having jurisdiction over Las Vegas, Nevada. If the parties are unable to agree upon an arbitrator from the list so drawn, then the parties shall each strike names alternately from the list, with the first to strike being determined by lot. After each party has used four strikes, the remaining name on the list shall be the arbitrator. If such person is unable to serve for any reason, the parties shall repeat this process until an arbitrator is selected.

8.3 Applicability of Arbitration; Remedial Authority. This agreement to resolve any disputes by binding arbitration shall extend to claims against any parent, subsidiary or affiliate of each party, and, when acting within such capacity, any officer, director, stockholder, employee or agent of each party, or of any of the above, and shall apply as well to claims arising out of state and federal statutes and local ordinances as well as to claims arising under the common law. In the event of a dispute subject to this paragraph the parties shall be entitled to reasonable discovery subject to the discretion of the arbitrator. The remedial authority of the arbitrator (which shall include the right to grant injunctive or other equitable relief) shall be the same as, but no greater than, would be the remedial power of a court having jurisdiction over the parties and their dispute. The arbitrator shall, upon an appropriate motion, dismiss any claim without an evidentiary hearing if the party bringing the motion establishes that he or it would be entitled to summary judgment if the matter had been pursued in court litigation. In the event of a conflict between the applicable rules of the American Arbitration Association and these procedures, the provisions of these procedures shall govern.

8.4 Fees and Costs. Any filing or administrative fees shall be borne initially by the party requesting arbitration. The Company shall be responsible for the costs and fees of the arbitration, unless Executive wishes to contribute (up to 50%) of the costs and fees of the arbitration. Notwithstanding the foregoing, the prevailing party in such arbitration, as determined by the arbitrator, and in any enforcement or other court proceedings, shall be entitled, to the extent permitted by law, to reimbursement from the other party for all of the prevailing party’s costs (including but not limited to the arbitrator’s compensation), expenses, and attorneys’ fees.

8.5 Award Final and Binding. The arbitrator shall render an award and written opinion, and the award shall be final and binding upon the parties. If any of the provisions of this paragraph, or of this Agreement, are determined to be unlawful or otherwise unenforceable, in whole or in part, such determination shall not affect the validity of the remainder of this Agreement, and this Agreement shall be reformed to the extent necessary to carry out its provisions to the greatest extent possible and to insure that the resolution of all conflicts between the parties, including those arising out of statutory claims, shall be resolved by neutral, binding arbitration. If a court should find that the arbitration provisions of this Agreement are not absolutely binding, then the parties intend any arbitration decision and award to be fully admissible in evidence in any subsequent action, given great weight by any finder of fact, and treated as determinative to the maximum extent permitted by law.

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ARTICLE 9.

MISCELLANEOUS

9.1 Amendments. The provisions of this Agreement may not be waived, altered, amended or repealed in whole or in part except by the signed written consent of the parties sought to be bound by such waiver, alteration, amendment or repeal.

9.2 Entire Agreement. This Agreement and the stock option agreements between the Company and Executive constitute the total and complete agreement of the parties and supersedes all prior and contemporaneous understandings and agreements heretofore made, including the Original Agreement, and there are no other representations, understandings or agreements.

9.3 Counterparts. This Agreement may be executed in one of more counterparts, each of which shall be deemed and original, but all of which shall together constitute one and the same instrument. The exchange of copies of this Agreement and of signature pages by facsimile transmission or by e-mail shall constitute effective execution and delivery of this Agreement as to the parties and may be used in lieu of the original Agreement for all purposes. Signatures of the parties transmitted by facsimile or by e-mail shall be deemed to be their original signatures for any purpose whatsoever.

9.4 Severability. Each term, covenant, condition or provision of this Agreement shall be viewed as separate and distinct, and in the event that any such term, covenant, condition or provision shall be deemed by an arbitrator or a court of competent jurisdiction to be invalid or unenforceable, the court or arbitrator finding such invalidity or unenforceability shall modify or reform this Agreement to give as much effect as possible to the terms and provisions of this Agreement. Any term or provision which cannot be so modified or reformed shall be deleted and the remaining terms and provisions shall continue in full force and effect.

9.5 Waiver or Delay. The failure or delay on the part of the Company, or Executive to exercise any right or remedy, power or privilege hereunder shall not operate as a waiver thereof. A waiver, to be effective, must be in writing and signed by the party making the waiver. A written waiver of default shall not operate as a waiver of any other default or of the same type of default on a future occasion.

9.6 Successors and Assigns. This Agreement shall be binding on and shall inure to the benefit of the parties to it and their respective heirs, legal representatives, successors and assigns, except as otherwise provided herein. Except as provided in this Section 9.6, without the prior written consent of Executive, this Agreement shall not be assignable by the Company. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. “Company” means the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid that assumes and agrees to perform this Agreement by operation of law or otherwise.

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9.7 No Assignment or Transfer by Executive. Neither this Agreement nor any of the rights, benefits, obligations or duties hereunder may be assigned or transferred by Executive. Any purported assignment or transfer by Executive shall be void.

9.8 Necessary Acts. Each party to this Agreement shall perform any further acts and execute and deliver any additional agreements, assignments or documents that may be reasonably necessary to carry out the provisions or to effectuate the purpose of this Agreement.

9.9 Governing Law. This Agreement and all subsequent agreements between the parties shall be governed by and interpreted, construed and enforced in accordance with the laws of the State of Nevada.

9.10 Notices. All notices, requests, demands and other communications to be given under this Agreement shall be in writing and shall be deemed to have been duly given on the date of service, if personally served on the party to whom notice is to be given, or 48 hours after mailing, if mailed to the party to whom notice is to be given by certified or registered mail, return receipt requested, postage prepaid, and properly addressed to the party at his address set forth as follows or any other address that any party may designate by written notice to the other parties:

To Executive:	Carlos A. Ruisanchez 3800 Howard Hughes Parkway Las Vegas, NV 89169 Telephone: 702 784-7777 Facsimile: 702 784-7773
To the Company:	Pinnacle Entertainment, Inc. 3800 Howard Hughes Parkway Las Vegas, NV 89169 Attn: General Counsel Telephone: 702 784-7777 Facsimile: 702 784-7773
with copy to:	Irell & Manella LLP
	1800 Avenue of the Stars, Suite 900
	Los Angeles, CA 90067-4276
	Attn: Al Segel
	Telephone: 310 277-1010
	Facsimile: 310 284-3052

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9.11 Headings and Captions. The headings and captions used herein are solely for the purpose of reference only and are not to be considered as construing or interpreting the provisions of this Agreement.

9.12 Construction. All terms and definitions contained herein shall be construed in such a manner that shall give effect to the fullest extent possible to the express or implied intent of the parties hereby.

9.13 Counsel. Executive has been advised by the Company that he should consider seeking the advice of counsel in connection with the execution of this Agreement and Executive has had an opportunity to do so. Executive has read and understands this Agreement, and has sought the advice of counsel to the extent he has determined appropriate. The Company shall reimburse Executive for the reasonable fees and expenses of Executive’s counsel in connection with this Agreement.

9.14 Withholding of Compensation. Executive hereby agrees that the Company may deduct and withhold from the compensation or other amounts payable to Executive hereunder or otherwise in connection with Executive’s employment any amounts required to be deducted and withheld by the Company under the provisions of any applicable Federal, state and local statute, law, regulation, ordinance or order.

9.15 References to Sections of the Code. All references in this Agreement and Appendix A hereto to sections of the Code shall be to such sections and to any successor or substantially comparable sections of the Code or to any successor thereto.

9.16 Effect of Delay. Executive’s or the Company’s failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right Executive or the Company may have hereunder, including without limitation the right of Executive to terminate employment for Good Reason pursuant to Section 6.5.3, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed on the date first written above.

EXECUTIVE	THE COMPANY
CARLOS A. RUISANCHEZ	PINNACLE ENTERTAINMENT, INC.
/s/ Carlos A. Ruisanchez	By:	/s/ John A. Godfrey
		John A. Godfrey
		Its:  Executive Vice President,        General Counsel and Secretary

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Appendix A

Tax Gross-up Payments

(a) Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any Payment would be subject to the Excise Tax, then Executive shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by Executive of all taxes (excluding any interest, additions, increases or penalties imposed with respect to such taxes except for interest, additions, increases or penalties with respect to the Excise Tax), including, without limitation, any income taxes (except for any interest, additions, increases and penalties imposed with respect thereto) and the Excise Tax imposed upon the Payment and the Gross-Up Payment, Executive is placed in the same tax position with respect to the Payment as Executive would have been in if the Excise Tax had never been enacted.

(b) Subject to the provisions of Section (c), all determinations required to be made under this appendix, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by the Company’s independent accounting firm or such other nationally recognized certified public accounting firm as may be designated by Executive (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and Executive within fifteen (15) business days of the receipt of notice from Executive that there has been a Payment, or such earlier time as is requested by the Company. All fees and expenses of the Accounting Firm shall be borne solely by the Company. Subject to Section (e) below, any Gross-Up Payment, as determined pursuant to this appendix shall be paid by the Company to Executive within five (5) days of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon the Company and Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section (c) and Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of Executive.

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(c) Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after Executive is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies Executive in writing prior to the expiration of such period that it desires to contest such claim, Executive shall:

(i) give the Company any information reasonably requested by the Company relating to such claim,

(ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company,

(iii) cooperate with the Company in good faith in order effectively to contest such claim, and

(iv) permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section (c), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim; provided, that any extension of the statute of limitations relating to payment of taxes for the taxable year of Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

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(d) If Executive becomes entitled to receive any refund with respect to the Gross-Up Payment or the Excise Tax, Executive shall promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If Executive would have received a refund of all or any portion of the Gross-Up Payment or the Excise Tax, except that a taxing authority offset the amount of such refund against other tax liabilities, interest, or penalties, Executive shall pay the amount of such offset over to the Company, together with the amount of interest Executive would have received from the taxing authority if such offset had been an actual refund, promptly after receipt of notice from the taxing authority of such offset.

(e) Notwithstanding any other provision of this appendix, the Company may withhold and pay over to the Internal Revenue Service for the benefit of Executive all or any portion of the Gross-Up Payment that it determines in good faith that it is or may be in the future required to withhold, and Executive hereby consents to such withholding.

(f) Subject to the foregoing provisions of this Appendix that may require earlier payment, any Gross-Up Payment shall be paid to or for the benefit the Executive by December 31 of the calendar year following the calendar year in which the Excise Tax is remitted, or, if no Excise Tax is remitted, by December 31 of the calendar year following the calendar year in which there is a final and non-appealable settlement or other resolution of an audit or litigation relating to the Excise Tax.

(g) Definitions. The following terms shall have the following meanings for purposes of this appendix.

(i) “Excise Tax” shall mean the excise tax imposed by Section 4999 of the Code, together with any interest or penalties imposed with respect to such excise tax.

(ii) A “Payment” shall mean any payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of Executive, whether paid or payable pursuant to this Agreement or otherwise.

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APPENDIX B

RELEASE and RESIGNATION

For valuable consideration, receipt of which is hereby acknowledged, the undersigned                                          (“Executive”), for himself and his spouse, heirs, estate, administrators and executors, hereby fully and forever releases and discharges Pinnacle Entertainment, Inc., a Delaware corporation (the “Company”), and each of its subsidiaries and the officers, directors, employees, attorneys and agents of the Company and each such subsidiary, of and from any and all claims, demands, causes of action of any kind or nature, in law, equity or otherwise, whether known or unknown, which Executive has had, may have had, or now has, or may have, arising out of or in connection with Executive’s employment with the Company and/or its subsidiaries or the termination of such employment; provided, however, that nothing contained herein is intended to nor shall constitute a release of the Company from any obligations it may have to Executive under any written employment agreement between Executive and the Company in effect as of the date hereof, or any deferred compensation plan or arrangement in which Executive participates or any rights of indemnification under the Company’s Articles, Bylaws, Indemnity Trust Agreement or the like, or coverage under Director and Officer Insurance, nor shall it prevent Executive from exercising his rights, if any, under any such employment agreement or under any stock option, restricted stock or similar agreement in effect as of the date hereof in accordance with their terms.

Executive represents and warrants that he has not assigned or in any way conveyed, transferred or encumbered all or any portion of the claims or rights covered by this release.

Executive hereby resigns from all positions as an officer, director or employee of the Company and each of its subsidiaries or affiliates effective the date hereof and further agrees to execute such further evidence of such resignations as may be necessary or appropriate to effectuate the foregoing.

Executed this                      day of                      20       .

Executive

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EX-10.13

Exhibit 10.13

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) is made this 22^nd day of December 2008 (the “Effective Date”), by and between PINNACLE ENTERTAINMENT, INC., a Delaware corporation (the “Company”), and ALAIN UBOLDI, an individual (“Executive”), with respect to the following facts and circumstances:

RECITALS

The Company and Executive entered into an Employment Agreement effective as of February 17, 2005 (the “Original Agreement”) pursuant to which Executive serves as Chief Operating Officer of the Company. The Board of Directors of the Company (the “Board”) determined that it was in the best interests of the Company and its stockholders to assure that the Executive continued to serve in such capacities beyond the term provided for in the Original Agreement and, further, to assure that the Company will have the continued dedication of Executive, notwithstanding the possibility, threat or occurrence of a Change of Control (as defined herein). The Board believed it was imperative to diminish the inevitable distraction of Executive by virtue of the personal uncertainties and risks created by a pending or threatened Change of Control and to encourage Executive’s full attention and dedication to the Company, particularly in the event of any threatened or pending Change of Control, and to provide Executive with compensation and benefits arrangements upon a Change of Control that ensure that the compensation and benefits expectations of Executive will be satisfied and that are competitive with those of other corporations. Therefore, in order to accomplish these objectives, the Board caused the Company to supersede the Original Agreement by entering into an amended Employment Agreement effective as of June 13, 2006 (the “2006 Agreement”). The Board has determined that it is in the best interest of the Company and of Executive to amend and restate the 2006 Agreement to comply with the provisions of Internal Revenue Code Section 409A and to address certain technical matters.

NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements set forth herein, the parties hereto agree as follows:

ARTICLE 1.

EMPLOYMENT AND TERM

1.1 Employment. The Company agrees to engage Executive in the capacity as Chief Operating Officer, and Executive hereby accepts such engagement by the Company upon the terms and conditions specified below.

1.2 Term. The term of this Agreement shall commence as of the Effective Date and, unless earlier terminated under Article 6 below, shall continue in force until June 13, 2009, provided that commencing on June 13, 2008 and as of June 13 of each year thereafter (a “Renewal Date”), this Agreement shall automatically renew for additional one-year periods (each, a “Renewal Period”), unless either party gives notice of non-renewal at least ninety (90) days prior to the next Renewal Date. The term of this Agreement, including any Renewal Periods, is referred to as the “Term.”

Uboldi December 2008

ARTICLE 2.

DUTIES OF EXECUTIVE

2.1 Duties. Executive shall perform all the duties and obligations generally associated with the positions of Chief Operating Officer subject to the control and supervision of the Company’s Chief Executive Officer (the “Chief Executive Officer”), and such other executive duties consistent with the foregoing as may be assigned to him from time to time by the Chief Executive Officer. Executive shall perform the services contemplated herein faithfully, diligently, to the best of his ability and in the best interests of the Company. Executive shall at all times perform such services in compliance with, and to the extent of his authority, shall to the best of his ability cause the Company to be in compliance with, any and all laws, rules and regulations applicable to the Company of which Executive is aware. Executive may rely on the Company’s inside counsel and outside lawyers in connection with such matters. Executive shall, at all times during the Term, in all material respects adhere to and obey any and all written internal rules and regulations governing the conduct of the Company’s employees, as established or modified from time to time; provided, however, in the event of any conflict between the provisions of this Agreement and any such rules or regulations, the provisions of this Agreement shall control.

2.2 Location of Services. Executive’s principal place of employment shall be at the Company’s headquarters in Las Vegas, Nevada, or at such other location as Executive and the Chief Executive Officer shall agree upon. Executive understands he will be required to travel to the Company’s various operations as part of his employment.

2.3 Exclusive Service. Except as otherwise expressly provided herein, Executive shall devote his entire business time, attention, energies, skills, learning and best efforts to the business of the Company. Executive may participate in social, civic, charitable, religious, business, educational or professional associations so long as such participation does not materially interfere with the duties and obligations of Executive hereunder. This Section 2.3, however, shall not be construed to prevent Executive from making passive outside investments so long as such investments do not require material time of Executive or otherwise interfere with the performance of Executive’s duties and obligations hereunder. Executive shall not make any investment in an enterprise that competes with the Company without the prior written approval of the Company after full disclosure of the facts and circumstances; provided, however, that this sentence shall not preclude Executive from owning up to one-half percent (0.5%) of the securities of a publicly traded entity (a “Permissible Investment”). During the Term, Executive shall not directly or indirectly work for or provide services to or, except as permitted above, own an equity interest in any person, firm or entity engaged in the casino gaming, card club or horse racing business. In this regard, and for purposes of this section only, Executive acknowledges that the gaming industry is national in scope and that accordingly this covenant shall apply throughout the United States.

Uboldi December 2008

2

ARTICLE 3.

COMPENSATION

3.1 Base Salary. In consideration for Executive’s services hereunder, the Company shall pay Executive an annual base salary, effective as of June 13, 2006, at the rate of not less than Four Hundred Twenty-Five Thousand Dollars ($425,000) per year during each of the years of the Term; payable in accordance with the Company’s regular payroll schedule from time to time (less any deductions required for Social Security, state, federal and local withholding taxes, and any other authorized or mandated similar withholdings). Executive’s annual base salary shall be reviewed by the Chief Executive Officer and, if appropriate, the Compensation Committee of the Board (the “Committee”) at least annually beginning no more than twelve (12) months from the date hereof and may be increased (but not decreased) at the discretion of the Board. If Executive’s annual salary is increased, the increased amount shall not be reduced for the remainder of the Term.

3.2 Annual and Other Bonuses. Executive shall be entitled to earn bonuses with respect to each year of the Term during which Executive is employed under this Agreement in the discretion of the Chief Executive Officer and, if appropriate, the Committee. Any such bonus earned by Executive shall be paid annually by March 15^th following the conclusion of the Company’s fiscal year, except for any portion of the bonus which is subject to required deferral by the Company and except for any portion of the bonus which Executive shall elect to defer. Bonuses relative to partial years (or a termination caused by death or disability) shall be prorated. Executive may also receive special bonuses in addition to his annual bonus eligibility at the discretion of the Chief Executive Officer and, if appropriate, the Committee.

3.3 Stock Options. Prior to June 13, 2008 and at appropriate times thereafter (no less frequently than within forty (40) months of the prior review), the Committee shall review Executive’s long-term compensation and, in consultation with the Chief Executive Officer, shall consider granting additional stock options and/or other long term incentive compensation.

ARTICLE 4.

EXECUTIVE BENEFITS

4.1 Vacation. In accordance with the general policies of the Company applicable generally to other senior executives of the Company pursuant to the Company’s personnel policies from time to time, Executive shall be entitled to not less than four weeks vacation each calendar year, without reduction in compensation.

4.2 The Company Employee Benefits. Executive shall receive all group insurance and pension plan benefits and any other benefits on the same basis as they are available generally to other senior executives of the Company under the Company personnel policies in effect from time to time.

4.3 Benefits. Executive shall receive all other such benefits as the Company may offer to other senior executives of the Company generally under the Company personnel plans, practices, policies and programs in effect from time to time, such as health and disability insurance coverage and paid sick leave. In the event that the Company’s group health plan does not cover the annual physical examination of Executive and Executive’s spouse, if any, or any pregnancy of Executive’s spouse, if any, the Company shall bear the cost of such examinations or the medical costs of such pregnancy.

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4.4 Indemnification. Executive shall have the benefit of indemnification to the fullest extent permitted by applicable law, which indemnification shall continue after the termination of this Agreement for such period as may be necessary to continue to indemnify Executive for his acts while an officer of the Company. In addition, the Company shall cause Executive to be covered by the current policies of directors and officers liability insurance in accordance with their terms, to the maximum extent of the coverage available for any director or officer of the Company. The Company shall use commercially reasonable efforts to cause the current policies of directors and officers liability insurance to be maintained throughout the term of Executive’s employment with the Company and for such period thereafter as may be necessary to continue to cover acts of Executive during the term of his employment (provided that the Company may substitute therefor, or allow to be substituted therefor, policies of at least the same coverage and amounts containing terms and conditions which are, in the aggregate, no less advantageous to the insured in any material respect). In the event of any merger or other acquisition of the Company, the Company shall no later than immediately prior to consummation of such transaction purchase the longest applicable “tail” coverage available under the directors and officers liability insurance in effect at the time of such merger or acquisition.

ARTICLE 5.

REIMBURSEMENT FOR EXPENSES

5.1 Executive shall be reimbursed by the Company for all ordinary and necessary expenses incurred by Executive in the performance of his duties or otherwise in furtherance of the business of the Company in accordance with the policies of the Company in effect from time to time. Executive shall keep accurate and complete records of all such expenses, including but not limited to, proof of payment and purpose. Executive shall account fully for all such expenses to the Company. No reimbursement will be made later than the close of the calendar year following the calendar year in which the expense was incurred. Expenses eligible for reimbursement in any one taxable year shall not affect the amount of expenses eligible for reimbursement in any other taxable year, and the right to expense reimbursement shall not be subject to liquidation or exchange for any other benefit.

ARTICLE 6.

TERMINATION

6.1 Termination for Cause. Without limiting the generality of Section 6.2, the Company shall have the right to terminate Executive’s employment, without further obligation or liability to Executive, upon the occurrence of any one or more of the following events, which events shall be deemed termination for cause (“Cause”).

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6.1.1 Failure to Perform Duties. If Executive neglects to perform the material duties of his employment under this Agreement in a professional and businesslike manner, other than due to his disability (except due to substance or alcohol abuse), after having received written notice specifying such failure to perform and a reasonable opportunity to perform.

6.1.2 Willful Breach. If Executive willfully commits a material breach of this Agreement and fails to cure such breach within thirty (30) days of written notice thereof or a material willful breach of his fiduciary duty to the Company.

6.1.3 Wrongful Acts. If Executive is convicted of a felony involving acts of moral turpitude or commits fraud, misrepresentation, embezzlement or other acts of material misconduct against the Company (including violating or condoning the violation of any material rules or regulations of gaming authorities which could have a material adverse effect on the Company) that would make the continuance of his employment by the Company materially detrimental to the Company.

6.1.4 Failure To Be Licensed. If Executive fails to be licensed in all jurisdictions in which the Company or its subsidiaries has gaming facilities within the date required by any jurisdiction, or if any of such licenses shall be revoked or suspended at any time during the Term, then the Company may by written notice to Executive terminate the Agreement for Cause. Executive agrees to promptly submit to the licensing requirements of all jurisdictions in which the Company or its subsidiaries does business. The Company shall bear all expenses incurred in connection with such licenses.

6.2 Termination Without Cause. Notwithstanding anything to the contrary herein, the Company shall have the right to terminate Executive’s employment under this Agreement at any time without Cause by giving notice of such termination to Executive. Failure by the Company to extend the Term for any Renewal Period shall not be a termination of this Agreement without Cause.

6.3 Termination by Executive for Good Reason. Executive may terminate his employment under this Agreement on thirty (30) days prior notice to the Company for good reason (“Good Reason”). For purposes of this Agreement, “Good Reason” shall mean and be limited to (a) a material breach of this Agreement by the Company (including without limitation any material reduction in the authority, duties or responsibilities of Executive, or any relocation of his or its principal place of business outside the greater Las Vegas metropolitan area (without Executive’s consent); or (b) a change of control with respect to the Company (a “Change of Control”) followed by (i) any diminution of Executive’s authority, duties or responsibilities as set forth in Section 2.1; or (ii) during the first twelve (12) months following a Change of Control, the failure of the Company to award Executive an annual bonus equal to at least seventy-five percent (75%) of the average amount of the annualized bonus paid to

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Executive for the last two (2) full years; or (iii) Executive’s termination by the Company other than at the end of the Term of this Agreement; or (iv) termination of his employment by Executive in his sole and absolute discretion at any time during the twelve (12) months immediately following the first anniversary date of the Change of Control. Except in the cases set forth in clauses (b)(iii) and (b)(iv) of the preceding sentence, however, “Good Reason” shall not exist unless Executive gives notice of proposed termination within 30 days following the breach or condition giving rise to Good Reason, and there is a failure of the Company to remedy the breach or condition giving rise to Good Reason within thirty (30) days after such notice (or as soon thereafter as practicable so long as it commences effectuation of such remedy within such time period and diligently pursues such remedy to completion as soon as practicable). For purposes of this Agreement, a “Change of Control” shall mean the occurrence of any of the following:

(i) The direct or indirect acquisition by an unrelated “Person” or “Group” of “Beneficial Ownership” (as such terms are defined below) of more than 50% of the voting power of the Company’s issued and outstanding voting securities in a single transaction or a series of related transactions;

(ii) The direct or indirect sale or transfer by the Company of substantially all of its assets to one or more unrelated Persons or Groups in a single transaction or a series of related transactions;

(iii) The merger, consolidation or reorganization of the Company with or into another corporation or other entity in which the Beneficial Owners of more than 50% of the voting power of the Company’s issued and outstanding voting securities immediately before such merger or consolidation do not own more than 50% of the voting power of the issued and outstanding voting securities of the surviving corporation or other entity immediately after such merger, consolidation or reorganization; or

(iv) During any consecutive 12-month period, individuals who at the beginning of such period constituted the Board of the Company (together with any new Directors whose election to such Board or whose nomination for election by the stockholders of the Company was approved by a vote of a majority of the Directors of the Company then still in office who were either Directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of the Company then in office.

None of the foregoing events, however, shall constitute a Change of Control if such event is not a “Change in Control Event” under Treasury Regulations Section 1.409A-3(i)(5) or successor IRS guidance. For purposes of determining whether a Change of Control has occurred, the following Persons and Groups shall not be deemed to be “unrelated”: (A) such Person or Group directly or indirectly has Beneficial Ownership of more than 50% of the issued and outstanding voting power of the Company’s voting securities immediately before the transaction in question, (B) the Company has Beneficial Ownership of more than 50% of the voting power of the issued and outstanding voting securities of such Person or Group, or (C) more than 50% of the voting power of the issued and outstanding voting securities of such Person or Group are owned, directly or indirectly, by Beneficial Owners of more than 50% of the issued and outstanding voting power of the Company’s voting securities immediately before the transaction in question. The terms “Person,” “Group,” “Beneficial Owner,” and “Beneficial Ownership” shall have the meanings used in the Securities Exchange Act of 1934, as amended. Notwithstanding the foregoing, (I) Persons will not be considered to be acting as a “Group” solely because they purchase or own stock of the Company at the same time, or as a result of the same public offering, (II) however, Persons will be considered to be acting as a “Group” if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction, with the Company, and (III) if a Person, including an entity, owns stock both in the Company and in a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar transaction, with the Company, such shareholders shall be considered to be acting as a Group with other shareholders only with respect to the ownership in the corporation before the transaction.

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6.4 Death or Disability. This Agreement shall terminate on the death or “Disability” of Executive. Executive will be deemed to have a “Disability” when he is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or begins receiving income replacement benefits for a period of not less than three months under an accident and health plan of the Company or an affiliate by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months. If there should be a dispute between the Company and Executive as to Executive’s physical or mental Disability for purposes of this Agreement, the question shall be settled by the opinion of an impartial reputable physician or psychiatrist agreed upon by the parties or their representatives, or if the parties cannot agree within ten (10) days after a request for designation of such party, then a physician or psychiatrist designed by the Clark County Medical Association or similar body. The certification of such physician or psychiatrist as to the questioned dispute shall be final and binding upon the parties hereto.

6.5 Effect of Termination.

6.5.1 Payment of Salary and Expenses Upon Termination. Any termination under this Section 6 shall be effective upon receipt of notice by Executive or the Company, as the case may be, of such termination or upon such other later date as may be provided herein or specified by the Company or Executive in the notice (the “Termination Date”), except as otherwise provided in this Section 6. If this Agreement is terminated, all benefits provided to Executive by the Company hereunder shall thereupon cease, except as provided in this Section 6.5, and the Company shall pay or cause to be paid to Executive all accrued but unpaid base salary, any compensation previously voluntarily deferred by Executive, payable in accordance with the provisions of the applicable deferred compensation plan and in accordance with Executive’s elections under such deferred compensation plan, and vacation benefits. In addition, promptly upon submission by Executive of his unpaid expenses incurred prior to the Termination Date and owing to Executive pursuant to Article 5, reimbursement for such expenses shall be made. If the Agreement is terminated by the Company for “Cause,” or by Executive without “Good Reason,” Executive shall not be entitled to receive any payments other than as specified in this Section 6.5.1, and provided that Executive may exercise any vested options.

6.5.2 Termination Due to Death or Disability. If this Agreement is terminated due to death or Disability, the following shall apply:

(a) Executive shall be entitled to an amount equal to the sum of (i) Executive’s annual base salary in effect on the date of termination; plus (ii) the greater of the amount of Executive’s bonus (including all deferred amounts) in the year prior to such termination or the average of the annual bonuses (including all deferred amounts) paid to Executive in the three (3) consecutive years prior to the year of termination (the “Bonus Amount”) times (iii) one hundred fifty percent (150%) of the sum of (i) and (ii) above (the “Death or Disability Severance Benefit”); provided that in the event of death, the amount of such Death Severance Benefit shall be reduced by the amount of any life insurance provided by the Company; and, provided, further, that the amount of such Disability Severance Benefit shall be reduced under the circumstances specified in this Section 6.5.2. In addition, Executive shall be entitled to receive any amounts payable under

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Section 6.5.1 above a pro rata bonus for the year of death or Disability (which bonus shall be calculated by taking the Bonus Amount and multiplying it by a fraction, the numerator of which is the number of days in the year in which Executive was employed before death or Disability and the denominator of which is 365); such pro rata bonus shall be payable within thirty (30) days after death or Disability. The base salary component of the Death or Disability Severance Benefit shall be payable to Executive or his estate monthly in equal installments over a period of eighteen (18) months after the termination of Executive’s employment (the “Death or Disability Severance Benefit Period”) and seventy five percent (75%) of the bonus component shall be paid within thirty (30) days after death or Disability, and twenty five percent (25%) of the bonus component shall be payable in three annual installments on the anniversaries of death or Disability; provided that if during such period a Change of Control shall occur, the full amount of any unpaid Death or Disability Severance Benefit shall be paid to Executive or his estate in a lump sum. If, during the Disability Severance Benefit Period Executive is able to work in capacities similar to those for which he is employed hereunder, he shall have a duty to seek employment and to advise the Company of all compensation paid or payable to him from such employment. Such amounts shall reduce the amount of Disability Severance Benefits payable by the Company hereunder.

(b)

Any outstanding unvested stock options at the date of death or Disability which would otherwise vest during the eighteen (18) months following death or Disability shall immediately become vested and may be exercised in accordance with their terms. The remaining unvested options shall immediately terminate.

(c)

Executive shall also be entitled to receive health benefits coverage for Executive and his dependents, and disability insurance coverage for Executive, under the same plan(s) or arrangement(s) under which Executive was were covered immediately before his death or Disability or plan(s) established or arrangement(s) provided by the Company or any of its Subsidiaries thereafter for the benefit of senior executives (“Health and Disability Coverage Continuation”). Such health benefits and disability coverage shall be paid for by the Company to the same extent as if Executive were still employed by the Company, and Executive, or his Dependents in the event of his death, will be required to make such payments as Executive would be required to make if Executive were still employed by the Company. The benefits provided under this Section 6.5.2(c) shall continue until the earliest of (a) five (5) years; (b) the date on which Executive ceases to be Disabled during the five (5) year period; and (c) the date Executive (and in the

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case of his dependents, the dependents) becomes covered or eligible for coverage under any other group health plan or group disability plan (as the case may be) not maintained by the Company or any of its Subsidiaries; provided, however, that if such other group health plan excludes any pre-existing condition that Executive or Executive’s dependents may have when coverage under such group health plan would otherwise begin, coverage under this Section 6.5.2(c) shall continue (but not beyond the period described in clause (a) of this sentence) with respect to such pre-existing condition until such exclusion under such other group health plan lapses or expires. In the event Executive is required to make an election under Sections 601 through 607 of the Employee Retirement Income Security Act of 1974, as amended (commonly known as COBRA) to qualify for the benefits described in this Section 6.5.2(c), the obligations of the Company and its Subsidiaries under this Section 6.5.2(c) shall be conditioned upon Executive’s timely making such an election. Any payment or reimbursement of benefits under this Section 6.5.2(c) that is taxable to Executive or his dependents shall be made by December 31 of the calendar year following the calendar year in which Executive or his dependent incurred the expense. Expenses eligible for reimbursement in any one taxable year shall not affect the amount of expenses eligible for reimbursement in any other taxable year, and the right to expense reimbursement shall not be subject to liquidation or exchange for any other benefit.

(d)

The provisions of Sections 7.4, 7.5, 7.6 and 7.7 shall apply both during and after the termination of the Disability Severance Benefit Period.

6.5.3 Termination Without Cause or Termination by Executive for Good Reason Other than in Connection with a Change of Control. If the Company terminates Executive without Cause or Executive terminates for Good Reason other than in connection with a Change of Control as contemplated by Section 6.5.4, the following shall apply:

(a) Executive shall be entitled to receive an amount equal to one hundred fifty percent (150%) times (i) Executive’s annual base salary (the “Base Severance Benefit”) in effect on the date of termination; plus (ii) the Bonus Amount, excluding any deferred bonus which was at the Company’s election rather than Executive’s. The Base Severance Benefit shall be paid to Executive in equal monthly installments over eighteen (18) months immediately following the date of termination in accordance with the Company’s regular salary payment schedule from time to time. Seventy five percent (75%) of the Bonus Amount shall be paid within thirty (30) days after the termination of employment, and twenty five percent (25%) of the

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Bonus Amount shall be payable in three annual installments on the anniversaries of the termination of employment. In addition, Executive shall be entitled to receive any amounts payable under Section 6.5.1 above and a pro rata annual bonus for the year of termination calculated and payable as provided in Section 6.5.2(a), including any deferred bonus which was at the Company’s election rather than Executive’s; such pro rata annual bonus shall be payable within thirty (30) days after termination of employment. The payments contemplated herein shall not be subject to any duty of mitigation by Executive nor to offset for any income earned by Executive following termination.

(b)	In addition to those already vested, all of Executive’s outstanding stock options which would have vested in the eighteen (18) months following termination shall be fully vested and exercisable as of the date of termination. Any remaining unvested options shall immediately terminate.
(c)	Executive shall also be entitled to receive Health and Disability Coverage Continuation for himself and his dependents, as applicable, on the terms provided in Section 6.5.2(c) above; provided that the maximum continuation period shall be eighteen (18) months from the date of termination.
(d)	The provisions of Sections 7.3, 7.5, 7.6 and 7.7 shall apply from the date of termination, but the provisions of Section 7.4 (“Covenant Not to Compete”) shall not apply.

6.5.4 Termination Without Cause or Termination by Executive for Good Reason Within the Twenty-Four (24) Months After a Change of Control. If the Company terminates Executive without Cause or Executive terminates for Good Reason within twenty-four (24) months after a Change of Control, or if Executive terminates in his sole and absolute discretion within the twelve (12) months immediately following the first anniversary date of a Change of Control, the following shall apply:

(a) The Company shall pay to Executive in lieu of the Base Severance Benefit, in a lump sum as soon as practicable, but in no event later than thirty (30) days after the termination of Executive’s employment, (i) an amount (the “Change of Control Severance Benefit”) equal to two (2) times Executive’s annual base salary in effect on the date of termination, plus (ii) two (2) times the largest annual bonus (including all deferred amounts) that was paid to Executive during the three (3) years preceding the Change of Control; plus (iii) a pro rated bonus for the year of termination (which bonus shall be calculated by taking the Bonus Amount and multiplying it as provided in section 6.5.2(a) plus (iv) any amounts payable under Section 6.5.1. Executive shall also be entitled to receive a continuation of health and disability insurance coverage as specified in Section 6.5.2(c). In addition to those already vested, all unvested stock options held by Executive shall be immediately and fully vested and exercisable by Executive.

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(b) The “Covenant Not to Compete” set forth in Section 7.4 below shall not apply in any respect to Executive (and Executive’s compliance therewith shall not be a condition to the Company’s obligations hereunder), and the term of the “No Hire Away Policy” in Section 7.5 shall be limited to six (6) months from the date of termination.

6.5.5 Occurrence of a Change of Control With Six Months After Termination Without Cause or by Executive for Good Reason. If a Change of Control occurs within six months after the date of termination of Executive by the Company without Cause or the date of termination by Executive with Good Reason, the following shall apply:

(a)	Executive shall receive (i) the Change of Control Severance Benefit set forth in Section 6.5.4(a)(i), less the amount of any payments Executive has already received under the first sentence of Section 6.5.3(a), and (ii) continuation of health and disability coverage as specified in Section 6.5.2(c).
(b)	The “Covenant Not to Compete” set forth in Section 7.4 below shall not apply in any respect to Executive (and Executive’s compliance therewith shall not be a condition to the Company’s obligations hereunder), and the term of the “No Hire Away Policy” in Section 7.5 shall be limited to six (6) months from the date of termination.

6.5.6 Additional Payments. In the event that any payments that Executive may receive under this Agreement or otherwise shall constitute a change in control payments under Section 280G of the Code which would subject Executive to an excise tax under Section 4999 of the Code, Executive shall be entitled to receive additional tax gross-up payments from the Company as set forth in Appendix A hereto. Notwithstanding the foregoing provisions of this Section 6.5.6, if it shall be determined that Executive is entitled to the Gross Up Payment, but that the Payments do not exceed 105% of the greatest amount that could be paid to Executive such that the receipt of the Payments would not give rise to any Excise Tax (the “Reduced Amount”), then no Gross Up Payment shall be made to Executive and the Payments, in the aggregate, shall be reduced to the Reduced Amount. If the Company elects to provide coverage under Section 6.5.2(c), 6.5.3(c), 6.5.4(a) or 6.5.5(a) under self-insured insurance plans rather than under insurance policies, the Company shall indemnify Executive for any tax liability he

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incurs on payment of claims under the insurance plans that he would not have incurred if the claims had been paid under insurance policies. Any such tax indemnification amounts shall be paid to or for the benefit the Executive by December 31 of the calendar year following the calendar year in which the additional tax is remitted, or, if no additional tax is remitted, by December 31 of the calendar year following the calendar year in which there is a final and non-appealable settlement or other resolution of an audit or litigation relating to such additional tax. The Company shall pay to Executive a payment (the “Gross Up Payment”) in an amount such that, after payment by Executive of all income taxes and the excise tax imposed by Internal Revenue Code Section 4999, or any similar provision of state or local tax law (the “Excise Tax”) imposed on benefits under this agreement, on all other payments from the Company to Executive in the nature of compensation, and on the Gross Up Payment itself, and any interest or penalties (other than interest and penalties imposed by reason of Executive’s failure to file timely tax returns or to pay taxes shown due on such returns and any tax liability, including interest and penalties, unrelated to the Excise Tax or the Gross Up Amount), Executive shall be placed in the same tax position with respect to benefits under this Agreement and all other payments from the Company to Executive in the nature of compensation as Executive would have been if the Excise Tax had never been enacted.

6.5.7 I.R.C. Section 409A. In the event that any compensation with respect to Executive’s separation from service is “deferred compensation” within the meaning of Section 409A of the Code and the regulations thereunder (“Section 409A”), the stock of the Company or any affiliate is publicly traded on an established securities market or otherwise, and Executive is determined to be a “specified employee,” as defined in Section 409A(a)(2)(B)(i) of the Code, payment of such compensation shall be delayed as required by Section 409A. Such delay shall last six months from the date of Executive’s separation from service, except in the event of Executive’s death. Within thirty (30) days following the end of such six-month period, or, if earlier, Executive’s death, the Company will make a catch-up payment to Executive equal to the total amount of such payments that would have been made during the six-month period but for this Section 9.1. The catch-up payment amount shall accrue simple interest at the prime rate of interest as published by the Bank of America as of the beginning of the deferral period, which interest shall be paid with the catch-up payment. The Company will place an amount in a “rabbi trust” with an independent trustee reasonably acceptable to Executive equal to the catch-up payment plus the interest that will accrue thereon. Wherever payments under this Agreement are to be made in installments, each such installment shall be deemed to be a separate payment for purposes of Section 409A. Payments of compensation or benefits on Executive’s termination of employment (other than accrued salary and vacation pay, other accrued amounts that must be paid under applicable law, and “welfare benefits” specified in Treasury Regulations Section 1.409A-1(a)(5)) shall be paid only if and when the termination of employment constitutes a “separation from service” under Treasury Regulation Section 1.409A-1(h).

6.5.8 Suspension. In lieu of terminating Executive’s employment hereunder for Cause under Section 6.1, the Company shall have the right, at its sole election, to suspend the performance of duties by Executive under this Agreement during the continuance of events or circumstances under Section 6.1 for an aggregate of not more than thirty (30) days during the Term (the “Default Period”) by giving Executive written notice of the Company’s election to do so at any time during the Default Period. The Company shall have the right to extend the Term beyond its normal expiration date by the period(s) of any suspension(s). The Company’s exercise of its right to suspend the operation of this Agreement shall not preclude the Company from subsequently terminating Executive’s employment hereunder. Executive shall not render services to any other person, firm or corporation in the casino business during any period of suspension. Executive shall be entitled to continued compensation and benefits pursuant to the provisions of this Agreement during the Default Period.

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6.6 Exercisability of Options. Except with respect to options granted prior to the date hereof, all vested options will terminate on the earlier of (a) the expiration of the ten (10) year term of such options, or (b) one (1) year after the termination of Executive’s employment with the Company, regardless of the cause of such termination, except that, in the event of a termination for “Cause” or Executive’s termination without Good Reason, all vested options will terminate on the earlier of (I) the expiration of the ten (10) year term of such options, or (II) ninety (90) days after the termination. As provided in the stock option agreements, unvested options will terminate on the termination of Executive’s employment with the Company, except to the extent that such options become vested as a result of such termination under the terms of the governing stock option agreement or this Agreement. With respect to options granted prior to the date hereof, any option exercise extension shall be limited to the maximum amount permitted which would not trigger a modification under Section 409A.

6.7 No-Exclusivity of Rights. Nothing in this Agreement shall prevent or limit Executive’s continuing or future participation in any plan, program, policy or practice provided by the Company or its subsidiaries and for which the Executive may quality, nor shall anything herein limit or otherwise affect such rights as Executive may have under any other contract or agreement with the Company or its subsidiaries at or subsequent to the Date of Termination (“Other Benefits”) shall be payable in accordance with such plan, policy, practice or program or contract or agreement, except as explicitly modified by this Agreement. Notwithstanding the foregoing, if Executive receives payments and benefits pursuant to Article VI of this Agreement, Executive shall not be entitled to any severance pay or benefits under any severance plan, program or policy of the Company and its subsidiaries, unless otherwise specifically provided therein in a specific reference in or to this Agreement.

6.8 Full Settlement. The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any setoff, counterclaim, recoupment, defense, or other claim, right or action that the Company may have against the Executive or others, except to the extent of the mitigation and setoff provisions provided for in this Agreement. Except as expressly provided for herein, in no event shall Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to Executive under any of the provisions of this Agreement and such amounts shall not be reduced whether or not Executive obtains other employment. The Company agrees to pay as incurred, to the full extent permitted by law, all legal fees and expenses that the Executive may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Company, Executive or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof (including as a result of any contest by Executive about the amount of any payment pursuant to this Agreement), plus, in each case, interest on any delayed payment at the applicable federal rate provided for in Section 7872(f)(2)(A) of the Code.

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6.9 Release. It shall be a condition for Executive’s right to receive any severance benefits hereunder that he execute a general release in favor of the Company and its affiliates in the form attached hereto as Appendix B and covering such additional matters as may be reasonably requested by the Company, which release shall not encompass the payments contemplated hereby. The timing of payments under this Agreement upon the execution of the general release shall be governed by the following provisions:

(a) The Company must deliver the release to Executive for execution no later than fourteen (14) days after Executive’s termination of employment. If the Company fails to deliver the release to Executive within such fourteen (14) day period, Executive will be deemed to have satisfied the release requirement and will receive payments conditioned on execution of the release as though Executive had executed the release and all revocation rights had lapsed at the end of such 14 day period.

(b) Executive must execute the release within forty-five (45) days from its delivery to him.

(c) If Executive has revocation rights, Executive shall exercise such rights, if at all, not later than seven (7) days after executing the release.

(d) In any case in which the release (and the expiration of any revocation rights) could only become effective in a particular tax year of Executive, payments conditioned on execution of the release shall begin within thirty (30) days after the release becomes effective and revocation rights have lapsed.

(e) In any case in which the release (and the expiration of any revocation rights) could become effective in one of two taxable years of Executive depending on when Executive executes the release, payments conditioned on execution of the release shall not begin before the first business day of the later of such tax years.

ARTICLE 7.

CONFIDENTIALITY

7.1 Nondisclosure of Confidential Material. In the performance of his duties, Executive may have access to confidential records, including, but not limited to, development, marketing, organizational, financial, managerial, administrative and sales information, data, specifications and processes presently owned or at any time hereafter developed or used by the Company or its agents or consultants that is not otherwise part of the public domain (collectively, the “Confidential Material”). All such Confidential Material is considered secret and is disclosed to Executive in confidence. Executive acknowledges that the Confidential Material constitutes proprietary information of the Company which draws independent economic value, actual or potential, from not being generally known to the public or to other persons who could obtain economic value from its disclosure or use, and that the Company has taken efforts reasonable under the circumstances, of which this Section 7.1 is an example, to maintain its secrecy. Except in the performance of his duties to the Company or as required by a court order or any gaming regulator or as required for his personal tax or legal advisors to advise him, Executive shall not, directly or indirectly for any reason whatsoever, disclose, divulge, communicate, use or otherwise disclose any such Confidential Material, unless such Confidential Material ceases to be confidential because it has become part of the public domain (not due to a breach by Executive of his obligations hereunder). Executive shall also take all reasonable actions appropriate to maintain the secrecy of all Confidential Information. All records, lists, memoranda, correspondence, reports, manuals, files, drawings, documents, equipment, and other tangible items (including computer software), wherever located, incorporating the Confidential Material, which Executive shall prepare, use or encounter, shall be and remain the Company’s sole and exclusive property and shall be included in the Confidential Material. Upon termination of this Agreement, or whenever requested by the Company, Executive shall promptly deliver to the Company any and all of the Confidential Material, not previously delivered to the Company, that is in the possession or under the control of Executive.

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7.2 Assignment of Intellectual Property Rights. Any ideas, processes, know-how, copyrightable works, maskworks, trade or service marks, trade secrets, inventions, developments, discoveries, improvements and other matters that may be protected by intellectual property rights, that relate to the Company’s business and are the results of Executive’s efforts during the Term (collectively, the “Executive Work Product”), whether conceived or developed alone or with others, and whether or not conceived during the regular working hours of the Company, shall be deemed works made for hire and are the property of the Company. In the event that for whatever reason such Executive Work Product shall not be deemed a work made for hire, Executive agrees that such Executive Work Product shall become the sole and exclusive property of the Company, and Executive hereby assigns to the Company his entire right, title and interest in and to each and every patent, copyright, trade or service mark (including any attendant goodwill), trade secret or other intellectual property right embodied in Executive Work Product. The Company shall also have the right, in its sole discretion to keep any and all of Executive Work Product as the Company’s Confidential Material. The foregoing work made for hire and assignment provisions are and shall be in consideration of this agreement of employment by the Company, and no further consideration is or shall be provided to Executive by the Company with respect to these provisions. Executive agrees to execute any assignment documents the Company may require confirming the Company’s ownership of any Executive Work Product. Executive also waives any and all moral rights with respect to any such works, including without limitation any and all rights of identification of authorship and/or rights of approval, restriction or limitation on use or subsequent modifications. Executive promptly will disclose to the Company any Executive Work Product.

7.3 No Unfair Competition After Termination of Agreement. Executive hereby acknowledges that the sale or unauthorized use or disclosure of any of the Company’s Confidential Material obtained by Executive by any means whatsoever, at any time before, during or after the Term shall constitute unfair competition. Executive shall not engage in any unfair competition with the Company either during the Term or at any time thereafter.

7.4 Covenant Not to Compete. In the event this Agreement is terminated by the Company for “Cause” under Section 6.1 above, or by Executive, for a reason other than one specified in Section 6.3 above, then for a period of one year after the effective date of such termination, Executive shall not, directly or indirectly, work for or provide services to or own an equity interest (except for a Permissible Investment) in any person, firm or entity engaged in the casino gaming, card club or horseracing business which competes against the Company in any “market” in which the Company owns or operates a casino, card club or horseracing facility. For purposes of this Agreement, “market” shall be defined as the area within a 100 mile radius of any casino, card club or horseracing facility owned or operated or under construction by the Company.

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7.5 No Hire Away Policy. In the event this Agreement is terminated prior to the normal expiration of the Term, either by the Company for cause under Section 6.1 above, or by Executive, for a reason other than one specified in Section 6.3 above, then for a period of one (1) year after the effective date of such termination, Executive shall not, directly or indirectly, for himself or on behalf of any entity with which he is affiliated or employed, hire any person known to Executive to be an employee of the Company or any of its subsidiaries (or any person known to Executive to have been such an employee within six (6) months prior to such occurrence). Executive shall not be deemed to hire any such person so long as he did not directly or indirectly engage in or encourage such hiring.

7.6 No Solicitation. During the Term and for a period of one (1) year thereafter, or, if sooner, for a period of one (1) year after earlier termination of this Agreement prior to expiration of the Term, and regardless of the reason for such termination (whether by the Company or Executive), Executive shall not directly or indirectly, for himself or on behalf of any entity with which he is affiliated or employed, solicit any employee of the Company or any of its subsidiaries (or any person who was such an employee within six (6) months prior to such occurrence) or encourage any such employee to leave the employment of the Company or any of its subsidiaries.

7.7 Non-Solicitation of Customers. During the Term and for a period of one (1) year thereafter, or, if sooner, for a period of one (1) year after the earlier termination of this Agreement prior to the expiration of the Term, and regardless of the reason for such termination (whether by the Company or Executive), Executive shall not solicit any customers of the Company or its subsidiaries or any of their respective casinos or card clubs, or knowingly encourage any such customers to leave the Company’s casinos or card clubs or knowingly encourage any such customers to use the facilities or services of any competitor of the Company or its subsidiaries. Executive shall at no times use proprietary customer lists or Confidential Material to solicit customers.

7.8 Irreparable Injury. The promised service of Executive under this Agreement and the other promises of this Article 7 are of special, unique, unusual, extraordinary, or intellectual character, which gives them peculiar value, the loss of which cannot be reasonably or adequately compensated in damages in an action at law.

7.9 Remedies for Breach. Executive agrees that money damages will not be a sufficient remedy for any breach of the obligations under this Article 7 and Article 2 hereof and that the Company shall be entitled to injunctive relief (which shall include, but not be limited to, restraining Executive from directly or indirectly working for or having an ownership interest (except for a Permissible Investment) in any person engaged in the casino, gaming or horseracing businesses in any market which the Company or its affiliates owns or operates any such business, using or disclosing the Confidential Material) and to specific performance as remedies for any such breach. Executive agrees that the Company shall be entitled to such relief, including temporary restraining orders, preliminary injunctions and permanent injunctions, without the necessity of proving actual damages and without the necessity of posting a bond or making any undertaking in connection therewith. Any such requirement of a bond or undertaking is hereby waived by Executive and Executive acknowledges that in the absence of such a waiver, a bond or undertaking might otherwise be required by the court. Such remedies shall not be deemed to be the exclusive remedies for any breach of the obligations in this Article 7, but shall be in addition to all other remedies available at law or in equity.

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ARTICLE 8.

ARBITRATION

8.1 General. Except for a claim for injunctive relief under Section 7.9, any controversy, dispute, or claim between the parties to this Agreement, including any claim arising out of, in connection with, or in relation to the formation, interpretation, performance or breach of this Agreement shall be settled exclusively by arbitration, before a single arbitrator, in accordance with this Article 8 and the then most applicable rules of the American Arbitration Association. Judgment upon any award rendered by the arbitrator may be entered by any state or federal court having jurisdiction thereof. Such arbitration shall be administered by the American Arbitration Association. Arbitration shall be the exclusive remedy for determining any such dispute, regardless of its nature. Notwithstanding the foregoing, either party may in an appropriate matter apply to a court for provisional relief, including a temporary restraining order or a preliminary injunction, on the ground that the award to which the applicant may be entitled in arbitration may be rendered ineffectual without provisional relief. Unless mutually agreed by the parties otherwise, any arbitration shall take place in Las Vegas, Nevada.

8.2 Selection of Arbitrator. In the event the parties are unable to agree upon an arbitrator, the parties shall select a single arbitrator from a list of nine arbitrators drawn by the parties at random from the “Independent” (or “Gold Card”) list of retired judges or, at the option of Executive, from a list of nine persons (which shall be retired judges or corporate or litigation attorneys experienced in executive employment agreements) provided by the office of the American Arbitration Association having jurisdiction over Las Vegas, Nevada. If the parties are unable to agree upon an arbitrator from the list so drawn, then the parties shall each strike names alternately from the list, with the first to strike being determined by lot. After each party has used four strikes, the remaining name on the list shall be the arbitrator. If such person is unable to serve for any reason, the parties shall repeat this process until an arbitrator is selected.

8.3 Applicability of Arbitration; Remedial Authority. This agreement to resolve any disputes by binding arbitration shall extend to claims against any parent, subsidiary or affiliate of each party, and, when acting within such capacity, any officer, director, stockholder, employee or agent of each party, or of any of the above, and shall apply as well to claims arising out of state and federal statutes and local ordinances as well as to claims arising under the common law. In the event of a dispute subject to this paragraph the parties shall be entitled to reasonable discovery subject to the discretion of the arbitrator. The remedial authority of the arbitrator (which shall include the right to grant injunctive or other equitable relief) shall be the same as, but no greater than, would be the remedial power of a court having jurisdiction over the parties and their dispute. The arbitrator shall, upon an appropriate motion, dismiss any claim without an evidentiary hearing if the party bringing the motion establishes that he or it would be entitled to summary judgment if the matter had been pursued in court litigation. In the event of a conflict between the applicable rules of the American Arbitration Association and these procedures, the provisions of these procedures shall govern.

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8.4 Fees and Costs. Any filing or administrative fees shall be borne initially by the party requesting arbitration. The Company shall be responsible for the costs and fees of the arbitration, unless Executive wishes to contribute (up to 50%) of the costs and fees of the arbitration. Notwithstanding the foregoing, the prevailing party in such arbitration, as determined by the arbitrator, and in any enforcement or other court proceedings, shall be entitled, to the extent permitted by law, to reimbursement from the other party for all of the prevailing party’s costs (including but not limited to the arbitrator’s compensation), expenses, and attorneys’ fees.

8.5 Award Final and Binding. The arbitrator shall render an award and written opinion, and the award shall be final and binding upon the parties. If any of the provisions of this paragraph, or of this Agreement, are determined to be unlawful or otherwise unenforceable, in whole or in part, such determination shall not affect the validity of the remainder of this Agreement, and this Agreement shall be reformed to the extent necessary to carry out its provisions to the greatest extent possible and to insure that the resolution of all conflicts between the parties, including those arising out of statutory claims, shall be resolved by neutral, binding arbitration. If a court should find that the arbitration provisions of this Agreement are not absolutely binding, then the parties intend any arbitration decision and award to be fully admissible in evidence in any subsequent action, given great weight by any finder of fact, and treated as determinative to the maximum extent permitted by law.

ARTICLE 9.

MISCELLANEOUS

9.1 Amendments. The provisions of this Agreement may not be waived, altered, amended or repealed in whole or in part except by the signed written consent of the parties sought to be bound by such waiver, alteration, amendment or repeal.

9.2 Entire Agreement. This Agreement and the stock option agreements between the Company and Executive constitute the total and complete agreement of the parties and supersedes all prior and contemporaneous understandings and agreements heretofore made, including the Original Agreement and the 2006 Agreement, and there are no other representations, understandings or agreements.

9.3 Counterparts. This Agreement may be executed in one of more counterparts, each of which shall be deemed and original, but all of which shall together constitute one and the same instrument. The exchange of copies of this Agreement and of signature pages by facsimile transmission or by e-mail shall constitute effective execution and delivery of this Agreement as to the parties and may be used in lieu of the original Agreement for all purposes. Signatures of the parties transmitted by facsimile or by e-mail shall be deemed to be their original signatures for any purpose whatsoever.

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9.4 Severability. Each term, covenant, condition or provision of this Agreement shall be viewed as separate and distinct, and in the event that any such term, covenant, condition or provision shall be deemed by an arbitrator or a court of competent jurisdiction to be invalid or unenforceable, the court or arbitrator finding such invalidity or unenforceability shall modify or reform this Agreement to give as much effect as possible to the terms and provisions of this Agreement. Any term or provision which cannot be so modified or reformed shall be deleted and the remaining terms and provisions shall continue in full force and effect.

9.5 Waiver or Delay. The failure or delay on the part of the Company, or Executive to exercise any right or remedy, power or privilege hereunder shall not operate as a waiver thereof. A waiver, to be effective, must be in writing and signed by the party making the waiver. A written waiver of default shall not operate as a waiver of any other default or of the same type of default on a future occasion.

9.6 Successors and Assigns. This Agreement shall be binding on and shall inure to the benefit of the parties to it and their respective heirs, legal representatives, successors and assigns, except as otherwise provided herein. Except as provided in this Section 9.6, without the prior written consent of Executive, this Agreement shall not be assignable by the Company. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. “Company” means the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid that assumes and agrees to perform this Agreement by operation of law or otherwise.

9.7 No Assignment or Transfer by Executive. Neither this Agreement nor any of the rights, benefits, obligations or duties hereunder may be assigned or transferred by Executive. Any purported assignment or transfer by Executive shall be void.

9.8 Necessary Acts. Each party to this Agreement shall perform any further acts and execute and deliver any additional agreements, assignments or documents that may be reasonably necessary to carry out the provisions or to effectuate the purpose of this Agreement.

9.9 Governing Law. This Agreement and all subsequent agreements between the parties shall be governed by and interpreted, construed and enforced in accordance with the laws of the State of Nevada.

9.10 Notices. All notices, requests, demands and other communications to be given under this Agreement shall be in writing and shall be deemed to have been duly given on the date of service, if personally served on the party to whom notice is to be given, or 48 hours after mailing, if mailed to the party to whom notice is to be given by certified or registered mail, return receipt requested, postage prepaid, and properly addressed to the party at his address set forth as follows or any other address that any party may designate by written notice to the other parties:

To Executive:	Alain Uboldi
	3800 Howard Hughes Parkway
	Las Vegas, NV 89169
	Telephone: 702 784-7777
	Facsimile: 702 784-7773

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To the Company:	Pinnacle Entertainment, Inc.
	3800 Howard Hughes Parkway
	Las Vegas, NV 89169
	Attn: General Counsel
	Telephone: 702 784-7777
	Facsimile: 702 784-7773
with copy to:	Irell & Manella LLP
	1800 Avenue of the Stars, Suite 900
	Los Angeles, CA 90067-4276
	Attn: Al Segel
	Telephone: 310 277-1010
	Facsimile: 310 284-3052

9.11 Headings and Captions. The headings and captions used herein are solely for the purpose of reference only and are not to be considered as construing or interpreting the provisions of this Agreement.

9.12 Construction. All terms and definitions contained herein shall be construed in such a manner that shall give effect to the fullest extent possible to the express or implied intent of the parties hereby.

9.13 Counsel. Executive has been advised by the Company that he should consider seeking the advice of counsel in connection with the execution of this Agreement and Executive has had an opportunity to do so. Executive has read and understands this Agreement, and has sought the advice of counsel to the extent he has determined appropriate. The Company shall reimburse Executive for the reasonable fees and expenses of Executive’s counsel in connection with this Agreement.

9.14 Withholding of Compensation. Executive hereby agrees that the Company may deduct and withhold from the compensation or other amounts payable to Executive hereunder or otherwise in connection with Executive’s employment any amounts required to be deducted and withheld by the Company under the provisions of any applicable Federal, state and local statute, law, regulation, ordinance or order.

9.15 References to Sections of the Code. All references in this Agreement and Appendix A hereto to sections of the Code shall be to such sections and to any successor or substantially comparable sections of the Code or to any successor thereto.

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9.16 Effect of Delay. Executive’s or the Company’s failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right Executive or the Company may have hereunder, including without limitation the right of Executive to terminate employment for Good Reason pursuant to Section 6.5.3, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed on the date first written above.

EXECUTIVE	THE COMPANY
ALAIN UBOLDI	PINNACLE ENTERTAINMENT, INC.
/s/ Alain Uboldi	By:	/s/ John A. Godfrey
		John A. Godfrey,
		Executive Vice President, General Counsel and Secretary

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Appendix A

Tax Gross-up Payments

(a) Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any Payment would be subject to the Excise Tax, then Executive shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by Executive of all taxes (excluding any interest, additions, increases or penalties imposed with respect to such taxes except for interest, additions, increases or penalties with respect to the Excise Tax), including, without limitation, any income taxes (except for any interest, additions, increases and penalties imposed with respect thereto) and the Excise Tax imposed upon the Payment and the Gross-Up Payment, Executive is placed in the same tax position with respect to the Payment as Executive would have been in if the Excise Tax had never been enacted.

(b) Subject to the provisions of Section (c), all determinations required to be made under this appendix, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by the Company’s independent accounting firm or such other nationally recognized certified public accounting firm as may be designated by Executive (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and Executive within fifteen (15) business days of the receipt of notice from Executive that there has been a Payment, or such earlier time as is requested by the Company. All fees and expenses of the Accounting Firm shall be borne solely by the Company. Subject to Section (e) below, any Gross-Up Payment, as determined pursuant to this appendix shall be paid by the Company to Executive within five (5) days of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon the Company and Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section (c) and Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of Executive.

(c) Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after Executive is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies Executive in writing prior to the expiration of such period that it desires to contest such claim, Executive shall:

(i) give the Company any information reasonably requested by the Company relating to such claim,

(ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company,

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(iii) cooperate with the Company in good faith in order effectively to contest such claim, and

(iv) permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section (c), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim; provided, that any extension of the statute of limitations relating to payment of taxes for the taxable year of Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

(d) If Executive becomes entitled to receive any refund with respect to the Gross-Up Payment or the Excise Tax, Executive shall promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If Executive would have received a refund of all or any portion of the Gross-Up Payment or the Excise Tax, except that a taxing authority offset the amount of such refund against other tax liabilities, interest, or penalties, Executive shall pay the amount of such offset over to the Company, together with the amount of interest Executive would have received from the taxing authority if such offset had been an actual refund, promptly after receipt of notice from the taxing authority of such offset.

(e) Notwithstanding any other provision of this appendix, the Company may withhold and pay over to the Internal Revenue Service for the benefit of Executive all or any portion of the Gross-Up Payment that it determines in good faith that it is or may be in the future required to withhold, and Executive hereby consents to such withholding.

(f) Subject to the foregoing provisions of this Appendix that may require earlier payment, any Gross-Up Payment shall be paid to or for the benefit the Executive by December 31 of the calendar year following the calendar year in which the Excise Tax is remitted, or, if no Excise Tax is remitted, by December 31 of the calendar year following the calendar year in which there is a final and non-appealable settlement or other resolution of an audit or litigation relating to the Excise Tax.

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(g) Definitions. The following terms shall have the following meanings for purposes of this appendix.

(i) “Excise Tax” shall mean the excise tax imposed by Section 4999 of the Code, together with any interest or penalties imposed with respect to such excise tax.

(ii) A “Payment” shall mean any payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of Executive, whether paid or payable pursuant to this Agreement or otherwise.

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APPENDIX B

RELEASE and RESIGNATION

For valuable consideration, receipt of which is hereby acknowledged, the undersigned                                          (“Executive”), for himself and his spouse, heirs, estate, administrators and executors, hereby fully and forever releases and discharges Pinnacle Entertainment, Inc., a Delaware corporation (the “Company”), and each of its subsidiaries and the officers, directors, employees, attorneys and agents of the Company and each such subsidiary, of and from any and all claims, demands, causes of action of any kind or nature, in law, equity or otherwise, whether known or unknown, which Executive has had, may have had, or now has, or may have, arising out of or in connection with Executive’s employment with the Company and/or its subsidiaries or the termination of such employment; provided, however, that nothing contained herein is intended to nor shall constitute a release of the Company from any obligations it may have to Executive under any written employment agreement between Executive and the Company in effect as of the date hereof, or any deferred compensation plan or arrangement in which Executive participates, nor shall it prevent Executive from exercising his rights, if any, under any such employment agreement or under any stock option, restricted stock or similar agreement in effect as of the date hereof in accordance with their terms.

Executive represents and warrants that he has not assigned or in any way conveyed, transferred or encumbered all or any portion of the claims or rights covered by this release.

Executive hereby resigns from all positions as an officer, director or employee of the Company and each of its subsidiaries or affiliates effective the date hereof and further agrees to execute such further evidence of such resignations as may be necessary or appropriate to effectuate the foregoing.

Executed this               day of                     , 20        .

Executive

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EX-10.45

Exhibit 10.45

PINNACLE ENTERTAINMENT, INC.

EXECUTIVE HEALTH EXPENSE PLAN

January 2009

ARTICLE I
PURPOSE

1.01 The Pinnacle Entertainment, Inc. Executive Health Expense Plan (the “Plan”) is effective January 1, 2003. The purpose of the Plan is to provide payment or reimbursement for certain Medical, Dental and Vision Care expenses incurred by a Participant and his/her Dependents. No benefits payable under the Plan shall be applied for any other purpose.

1.02 It is the intention of Pinnacle Entertainment, Inc. (the “Company”) that the Plan constitute an employee welfare benefit plan maintained primarily for the purpose of providing benefits for a select group of management employees in accordance with Department of Labor Regulation § 2520.104-24.

ARTICLE II

PERMANENT PROGRAM OR ARRANGEMENT

2.01 The Company intends that the Plan be a permanent program or arrangement for the exclusive benefit of Plan Participants and their Dependents.

2.02 Notwithstanding the foregoing, nothing herein shall prevent the Company from amending or terminating the Plan, provided such amendment or termination shall not affect a Participant’s rights to benefits hereunder with respect to reimbursable expenses that have been incurred prior to the date Company action is taken to terminate the Plan or the effective date of such termination, whichever occurs last.

ARTICLE III
EFFECTIVE DATE

3.01 The effective date of the Plan is January 1, 2003. The records of the Plan shall be kept on a calendar year basis. The Plan year shall be the calendar year.

ARTICLE IV
ELIGIBILITY

4.01 An employee of the Company shall be eligible to participate in the Plan (an “Eligible Employee”) if he/she is covered under the Pinnacle Entertainment, Inc. Group Health Plan, the Corporate Group Health Plan, Boomtown, Reno, New Orleans, Belterra, Pinnacle Atlantic City, Lumiere Place, L’Auberge du Lac Group Health Plan, the Director Health and Medical Insurance Plan, or any other major medical group health plan sponsored by the Company (referred to hereinafter collectively as the “Group Health Plan”) and:

(a) He/she is a Class 3 employee of the Company, which means: President and Chairman and all appointed members of the Board of Directors (the “Board”), Chief Executive Officer of the Company, the Executive Vice President, Chief Operating Officer of the Company, or a Senior Vice President, Vice President, General Manager of the Company, or other as may be designated by the Corporate Benefits Committee.

ARTICLE V
PARTICIPATION

5.01 Each Eligible Employee shall become participant in the Plan (a “Participant”) on the effective date of the Plan if he/she was an Eligible Employee on such date. Each other Eligible Employee shall become a Participant on the date he/she becomes an Eligible Employee. Subject to § 5.02, participation in the Plan shall terminate upon termination of the Participant’s employment with the Company, termination of the Participant’s status as a Class 3 employee of the Company in an Applicable Group Health Plan, or upon termination of the Plan.

Each Participant (and his/her Dependents) shall, however, retain the right to have payment made or to be reimbursed for claims incurred prior to the Applicable Group Health Plan, or termination of the Plan. For this Purpose, a claim shall be considered to be incurred when the service relating to such claim has been rendered.

5.02 Notwithstanding the foregoing, to the extent required by § 4980B of the Internal Revenue Code of 1986, as amended (the “Code”) [COBRA], a qualified beneficiary (as defined in Code § 4980B(g)(1)) who would lose coverage under the Plan upon the occurrence of a qualifying event (as defined in Code § 49808(f)(3)) shall be permitted to continue coverage under the Plan by electing to make applicable premium payments in accordance with procedures established by the Benefits Committee that are consistent with COBRA.

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ARTICLE VI
BENEFITS

6.01 The Company shall reimburse, or shall pay the service provider on behalf of each Participant for Medical, Dental and Vision Care Expenses incurred by the Participant or his/her Dependents in accordance with the following:

(a) Participants shall be reimbursed, or payment shall be made by the Plan, for one hundred percent (100%) of the Applicable Group Health Plan allowable amount paid or incurred by the Participant for Medical, Dental and Vision Care Expenses; provided, however, that (i) if providers are used who are not in the PPO network of the Applicable Group Health Plan, full reimbursement will be limited to 125% of usual and customary charges for the geographic area, and, for charges above this amount, the Company will reimburse 50% and the Participant will be responsible for 50%, and (ii) reimbursement will be subject to the limitations of Section 7.01.

(b) Any payment or reimbursement of benefits under this Plan that is taxable to a Participant shall be made by December 31 of the calendar year following the calendar year in which the Participant or Dependent incurred the expense.

6.02 For purposes of the Plan, the following terms shall have the definitions set forth below:

(a) “Applicable Group Health Plan” means the specific Group Health Plan under which the Participant and his/her Dependents are covered.

(b) “Medical, Dental and Vision Care Expenses” means deductibles, co-payments, and/or coinsurance amounts paid or incurred by the Participant in accordance with the terms of the Applicable Group Health Plan.

(c) “Dependent” means a dependent of the Participant as defined under the Applicable Group Health Plan who is covered under such plan either as a Dependent of the Participant or as an employee of the Company.

ARTICLE VII
LIMITATION OF BENEFITS PROVIDED

7.01 Except as otherwise provided herein, reimbursements to Participants, or payments made on behalf of participants, shall be made only with respect to Medical, Dental and Vision Care Expenses that are paid or incurred for expenses that are eligible expenses under the terms of the Applicable Group Health Plan. Also, except as otherwise provided herein, all exclusions, benefit maximums, and benefit limits applicable under the terms of the Applicable Group Health Plan shall also apply to the Plan and are incorporated herein by reference except in the following areas:

(a) Total Dental maximum yearly coverage per covered person will be three thousand dollars ($3,000.00). This total includes the one thousand five hundred dollars ($1,500.00) dental coverage under the Group Health Plan.

(b) Exclusive of the regular dental coverages: Total Orthodontics coverage for the dependent child up to 23 will be two thousand five hundred dollars ($2,500.00). This total includes the one thousand dollars ($1,000.00) covered orthodontics expense under the Group Health Plan. This is a separate benefit from dental and has a one time only lifetime maximum benefit and applies to a dependent child up to the age of 23.

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(c) Total Vision maximum yearly coverage per person for lenses frames, and eye exam will be a maximum of five hundred dollars ($500.00). This total includes the two hundred dollars ($200.00) coverage under the Group Health Plan for lenses, frames and eye exam. The usual and customary charges for an eye exam are 100% reimbursable up to one hundred dollars ($100.00).

(d) The Total Executive Health Expense Plan under Medical Preventative coverage shall include a complete yearly routine physical per covered person up to one thousand dollars ($1,000.00). This total includes the five hundred dollars ($500.00) under the Group Health Plan. This benefit will be provided to the Participant, spouse and dependent.

ARTICLE VIII
BENEFITS FROM ANOTHER SOURCE

8.01 Reimbursement or payment under the Plan shall be made only in the event, and to the extent, that reimbursement or payment for Medical, Dental and Vision Care Expenses is not provided for under any insurance policy or under any other plan of the Company (including the Group Health Plan) or under the plan of another employer, or under any federal or state law, to the extent that such federal or state law permits this Plan not to make reimbursement for Participants covered by such federal or state law. If there is such a policy, plan or law in effect providing for such reimbursement or payment in whole or in part, then to the extent of the coverage under such policy, plan or law, the Company shall be relieved of any and all liability hereunder to the extent permitted by law. Medicare will apply as primary coverage for participants over the age of 65 and designated as retirees or non-employees; in other cases, this Plan shall be primary to Medicare.

ARTICLE IX
CLAIMS AND CLAIMS REVIEW PROCEDURE

9.01 To obtain reimbursement for Medical, Dental and Vision Care Expenses hereunder, a Participant or provider must submit a request for reimbursement, together with such evidence of payment of such expenses as shall be required by the Company in accordance with rules uniformly applied.

9.02 If any claim for benefits under the Plan is denied in whole or in part, the Claims Procedure of the Applicable Group Health Plan shall apply, with the Benefits Committee being the deciding body.

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ARTICLE X
ADMINISTRATION

10.01 The Benefits Committee is the person or committee appointed by the Company to be the administrator of the Plan, as defined in § 3(16)(A) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). In carrying out its responsibilities under the Plan, the Benefits Committee shall have full and final discretion and authority to interpret the terms of the Plan and to determine eligibility for and entitlement to Plan benefits in accordance with the terms of the Plan.

10.02 The Company shall indemnify and hold harmless the members of the Benefits Committee, and any other persons to whom any duty of the Benefits Committee is allocated or delegated from and against any and all liabilities, claims, demands, costs and expenses, including attorneys’ fees, arising out of an alleged breach in the performance of their fiduciary duties under the Plan and under ERISA, other than such liabilities, claims, demands, costs and expenses as may result from the gross negligence or willful misconduct of such persons.

ARTICLE XI
MISCELLANEOUS

11.01 To the extent not preempted by ERISA, questions concerning the proper interpretation of the terms of the Plan shall be determined in accordance with the law of the Sate of Nevada.

11.02 The Benefits Committee shall keep a copy of the Plan document and any other disclosure documents relating thereto that are in the public domain on file at its office where Participants may inspect them during the Company’s regular business hours. Upon request, the Benefits Committee shall provide a Participant or Dependent with copies of such documents. The Benefits Committee may charge the requesting party a reasonable charge for photocopying these materials.

11.03 Except as otherwise provided herein, this document contains all of the operative provisions of the Plan. Any conflict between the provisions of this document and any other Company documents purporting to explain the rights, benefits, or obligations of the parties hereunder shall be resolved in favor of the Plan document. In the event that a court of competent jurisdiction shall determine in a final judgment of decree that one or more of the provisions of the Plan is invalid due to the provisions of applicable law, the Plan shall be interpreted as if the invalid provision had been stricken form its provisions and the remainder of the Plan document shall continue in full force and effect.

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11.04 The Company has the right to take whatever steps the Company deems necessary or appropriate to comply with all applicable federal, state, local, and employment tax withholding requirements on benefits and reimbursements provided under this Plan. Without limiting the generality of the foregoing, upon paying benefits or reimbursements under this Plan, the Company will have the right to withhold taxes from any other compensation or other amounts which it may owe to the Participant, or to require the Participant to pay to the Company the amount of any taxes which the Company may be required to withhold with respect to such payment or reimbursement.

The Pinnacle Entertainment, Inc. Executive Health Expense Plan has been executed this 30^th day of December, 2008.

PINNACLE ENTERTAINMENT, INC.
By:	/s/ John A. Godfrey
	Title:  John A. Godfrey
	Executive Vice President

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SCHEDULE A

INTENTION TO CONFORM TO
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974

It is the intention of the Plan Sponsor to establish hereby a program of benefits constituting an “Employee Welfare Benefit Plan” under ERISA.

SUPPLEMENTAL ERISA INFORMATION
Plan Name:	Pinnacle Entertainment, Inc.
	Employee Health & Welfare Benefit Plan
Plan Sponsor:	Pinnacle Entertainment, Inc.
	3800 Howard Hughes Pkwy, #1800
	Las Vegas, NV 89109
Employer Identification:	95-3667491
P/N:	502
Type of Plan:	Welfare Plan providing Medical Care and Prescription Drug Benefits for Employees and Dependents
Type of Administration:	The benefits for Medical, Dental and Vision Care and Prescription Drug Coverage for Employees and Dependents are funded and provided by Pinnacle Entertainment, Inc. The entity designated by the Plan Sponsor to pay claims for benefits under this Plan is:
	Pinnacle Health Claims Management
	2248 Meridian Boulevard, #B
	Minden, NV 89423
Plan Administrator:	Pinnacle Entertainment, Inc.
	3800 Howard Hughes Pkwy, #1800
	Las Vegas, NV 89109
Agent for Legal Services:	Pinnacle Entertainment, Inc.
	3800 Howard Hughes Pkwy, #1800
	Las Vegas, NV 89109
Plan Year Ends:	December 31

EX-10.46

Exhibit 10.46

PINNACLE ENTERTAINMENT, INC.

DEFERRED BONUS PLAN

(2008 Restatement)

The following sets forth the Deferred Bonus Plan.

POLICY

As a part of corporate compensation, Pinnacle Entertainment, Inc. (the “Company”) created the Deferred Bonus Plan. The Deferred Bonus Plan’s purpose is to encourage loyalty and motivate corporate employees to continue strong performance for the years ahead. Typically, bonus compensation structure reflects the performance of the individual and/or individual’s department. The overall intent is to create loyalty, particularly as an employee begins to have overlapping deferrals. A decision to leave the Company becomes also a decision to forego a potentially significant payment.

PROVISIONS

1. General

a. The Deferred Bonus Plan is only for executives and corporate employees who receive a bonus, a portion of which payment is deferred. Each deferred portion of such person’s bonus will be paid over three years, one-third on each anniversary of such year’s bonus payment date.

2. Guidelines

a. The employee must be an employee in good standing on each anniversary date to receive the deferred amount.

b. The employee will be eligible to receive a bonus if hired before November (two months) prior to the bonus process. Typically, Pinnacle Entertainment, Inc. distributes bonuses in early January. This does not include corporate hires that have a guaranteed hiring bonus or other agreement with the Company.

c. Employees who are 65 years old or older will receive the deferred amounts on the anniversary dates so long as such individuals are not terminated for cause. Therefore, employees who are 65 years old or older can retire or otherwise leave their employment with the Company on good terms and will receive the deferred amounts as scheduled.

d. Deferred amounts will be paid in full immediately in the events of: death, “Permanent Disability” and “Change of Control” (as such terms are defined below).

e. Deferred amounts will not earn interest and are unsecured obligations of the Company subordinated to all other indebtedness of the Company.

f. Deferred amounts cannot be borrowed against or pledged as collateral. There are no provisions permitting access to deferred amounts in hardship cases, as is sometime permitted under 401(k) or similar programs.

g. There is no guarantee of employment associated with any deferred compensation. This Deferred Bonus Plan does not confer any right to receive an award of a bonus.

h. The Company may at any time terminate the Deferred Bonus Plan or amend the Deferred Bonus Plan in any manner it deems advisable; provided, however, that (i) no amendment or termination shall impair the rights of an executive or employee with respect to outstanding deferred amounts, and (ii) no amendment or termination shall accelerate or defer any payments that would have been made under the Deferred Bonus Plan if it had not been amended or terminated, except to the extent that such acceleration or deferral could be made without subjecting the employees to additional taxes under Section 409A of the Internal Revenue Code of 1986, as amended.

PROCEDURES

NONE

EXCEPTIONS

NONE

DEFINITIONS

1. “Change of Control” shall mean the occurrence of any of the following events:

(i) The direct or indirect acquisition by an unrelated “Person” or “Group” of “Beneficial Ownership” (as such terms are defined below) of more than 50% of the voting power of the Company’s issued and outstanding voting securities in a single transaction or a series of related transactions;

(ii) The direct or indirect sale or transfer by the Company of substantially all of its assets to one or more unrelated Persons or Groups in a single transaction or a series of related transactions;

(iii) The merger, consolidation or reorganization of the Company with or into another corporation or other entity in which the Beneficial Owners of more than 50% of the voting power of the Company’s issued and outstanding voting securities immediately before such merger or consolidation do not own more than 50% of the voting power of the issued and outstanding voting securities of the surviving corporation or other entity immediately after such merger, consolidation or reorganization; or

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(iv) During any consecutive 12-month period, individuals who at the beginning of such period constituted the Board of Directors (the “Board”) of the Company (together with any new Directors whose election to such Board or whose nomination for election by the stockholders of the Company was approved by a vote of a majority of the Directors of the Company then still in office who were either Directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of the Company then in office.

None of the foregoing events, however, shall constitute a Change of Control if such event is not a “Change in Control Event” under Treasury Regulations Section 1.409A-3(i)(5) or successor IRS guidance. For purposes of determining whether a Change of Control has occurred, the following Persons and Groups shall not be deemed to be “unrelated”: (A) such Person or Group directly or indirectly has Beneficial Ownership of more than 50% of the issued and outstanding voting power of the Company’s voting securities immediately before the transaction in question, (B) the Company has Beneficial Ownership of more than 50% of the voting power of the issued and outstanding voting securities of such Person or Group, or (C) more than 50% of the voting power of the issued and outstanding voting securities of such Person or Group are owned, directly or indirectly, by Beneficial Owners of more than 50% of the issued and outstanding voting power of the Company’s voting securities immediately before the transaction in question. The terms “Person,” “Group,” “Beneficial Owner,” and “Beneficial Ownership” shall have the meanings used in the Securities Exchange Act of 1934, as amended. Notwithstanding the foregoing, (I) Persons will not be considered to be acting as a “Group” solely because they purchase or own stock of this Company at the same time, or as a result of the same public offering, (II) however, Persons will be considered to be acting as a “Group” if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction, with the Company, and (III) if a Person, including an entity, owns stock both in the Company and in a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar transaction, with the Company, such shareholders shall be considered to be acting as a Group with other shareholders only with respect to the ownership in the corporation before the transaction.

2. “Permanent Disability” shall mean (i) inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) the receipt of income replacement benefits for a period of not less than three months under an accident and health plan of the Company by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months. An employee shall be deemed to have suffered a Disability if determined to be totally disabled by the Social Security Administration.

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EX-10.47

Exhibit 10.47

PINNACLE ENTERTAINMENT, INC.

DIRECTOR HEALTH AND MEDICAL INSURANCE PLAN

1. Purposes of the Plan. The purposes of this Plan are to attract and retain qualified individuals to serve as members of the Company’s Board of Directors and to provide them and their Eligible Dependents with Health and Medical Insurance Coverage as additional incentive for such service.

2. Definitions. For the purposes of this Plan, the following terms will have the following meanings:

(a) “Board” means the Board of Directors of the Company.

(b) “Change of Control” means

(i) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d 3 promulgated under the Exchange Act) of 20% or more of either (A) the then-outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that, for purposes of this clause (i), the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company; (ii) any acquisition by the Company; (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any subsidiary; or (iv) any acquisition by any corporation pursuant to a transaction that complies with clauses (b)(iii)(A); (iii)(B) and (iii)(C);

(ii) Any time at which individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board;

PEI - director health and medical insurance plan

(iii) Consummation of a reorganization, merger, consolidation or a sale or other disposition of all or substantially all of the assets of the Company (each, a “Business Combination”), in each case unless, following such Business Combination, (A) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Company Common Stock and the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the entity resulting from such Business Combination (including, without limitation, a corporation that, as a result of such transaction, owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and the Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation, except to the extent that such ownership existed prior to the Business Combination, and (C) at least a majority of the members of the board of directors of the corportion resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination; or

(iv) Approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

(c) “Company” means Pinnacle Entertainment, Inc., a Delaware corporation and any successor as provided in Section 5(a).

(d) “Covered Period” means (i) as to the Director, five years following the date on which the director leaves the Company’s Board of Directors (ii) as to a Spouse, five years following the date on which the director leaves the Company’s Board of Directors, unless either (A) he or she shall have divorced Director prior to the end of such five year period, in which case the Covered Period for the Spouse shall end on the date such divorce is final, or (B) he or she shall have remarried following the death of the Director, in which case the Covered Period for the Spouse shall end on the date of remarriage; and (iii) as to a Minor Child, the period of time during which such person remains a Minor Child, as defined.

(e) “Director” means a member of the Board.

(f) “Eligible Dependent” means a Spouse and a Minor Child.

(g) “Eligible Insureds” means (1) members of the Board who are in office at age 70 and who thereafter die, retire or resign from the Board or are not nominated for re-election for any reason; (2) members of the Board who are in office at the time of a Change of Control; and in each case (3) their Spouses and their Minor Children, if any.

(h) “Insurance Plans” means the health and medical insurance plans of the Company (whether or not under insurance policies) in effect from time to time covering its corporate executives during the Covered Period; provided, however, that if at any time during the Covered Period, the Company does not have any such plans and in all events following a Change of Control, it shall secure, at the Company’s expense, health and medical insurance coverage for the Eligible Insureds from an insurance carrier rated A or higher providing health and medical coverage in the aggregate no less favorable than that provided as of the date the Eligible Insureds become entitled to medical and health insurance coverage hereunder.

PEI - director health and medical insurance plan

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(i) “Minor Child” or “Minor Children” means a child or children of the Director who has or have been born prior to or during the time Director is a member of the Board of Directors; provided, however, that such child or children shall cease to be a Minor Child or Minor Children on the later of (i) the date on which they reach their eighteenth birthday, or (ii) the date after such eighteenth birthday on which they cease to be full time students, but in no event after the end of the school year during which they reach their twenty-fourth birthday.

(j) “Plan” means this Director Health and Medical Insurance Plan.

(k) “Plan Participant” means each Director, each Eligible Dependent and each Eligible Insured.

(l) “Spouse” means and shall be limited to the Director’s spouse at the date of the Director’s death, retirement or other departure from the Board of Directors after age 70 or at the date of his or her departure from the Board of Directors following a Change of Control, as the case may be.

3. Health and Medical Insurance. Directors and their Eligible Dependents shall participate in the Company’s health and medical insurance plans applicable to its corporate executives during the Director’s service on the Board. In addition, Eligible Insureds shall receive health and medical coverage from the Company under the Insurance Plans as are in effect from time to time during the Covered Period; or, if no such plans are in effect at any time during the Covered Period, the coverage in the aggregate no less favorable than that provided to corporate executives under the Insurance Plans as of the date of cessation. Following a Change of Control, the Company shall use its best efforts to cause such coverage to be provided under insurance policies written by third party insurance carriers and shall provide copies of such policies to the Eligible Participants. The cost of such coverage shall be borne by the Company except for any co-pay or similar provisions equally applicable to all insureds under the Insurance Plans. If for any reason the Company shall fail to maintain such coverage at all times during the Covered Period, it shall indemnify and hold the Eligible Insureds harmless from all cost, loss, liability or expense caused by such failure. Except as provided herein, the Eligible Insureds shall be responsible for all imputed income taxes with respect to the premiums under the Insurance Plans in accordance with the Company’s policies, but any taxes relative to benefits provided under the Insurance Plans shall be paid by the Company. Any payment or reimbursement of benefits under the Insurance Plans, or paid by the Company by way of indemnification for failure to maintain and Insurance Plan, that is taxable to an Eligible Insured shall be made by December 31 of the calendar year following the calendar year in which the Eligible Insured incurred the expense. If the Company elects to provide coverage under the Insurance Plans other than through insurance policies issued by third party insurance carriers, the Company shall indemnify the Eligible Insureds for any tax liability they incur on payments of claims under the Insurance Plans that they would not have incurred if the claims had been paid under insurance policies (“Benefits Tax”). The Company

PEI - director health and medical insurance plan

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shall pay to each Director a payment (the “Gross-Up Payment”) in an amount such that, after payment by the Director of all income taxes and the excise tax imposed by Internal Revenue Code Section 4999 or any similar provision of state or local tax law (the “Excise Tax”) imposed on benefits under this Agreement, on all other payments from the Company to the Director in the nature of compensation, and on the Gross-Up Payment itself, and any interest or penalties (other than interest and penalties imposed by reason of Director’s failure to file timely tax returns or to pay taxes shown due on such returns and any tax liability, including interest and penalties, unrelated to the Excise Tax or the Gross-Up Amount), Director shall be placed in the same tax position with respect to benefits under this Plan and all other payments from the Company to Director in the nature of compensation as Director would have been in if the Excise Tax had never been enacted. Any Gross-Up Payment or payment of Benefits Tax shall be paid to or for the benefit the Eligible Insured not later than December 31 of the calendar year following the calendar year in which the Excise Tax or Benefits Tax is remitted, or, if no Excise Tax Benefits Tax is remitted, by December 31 of the calendar year following the calendar year in which there is a final and non-appealable settlement or other resolution of an audit or litigation relating to the Excise Tax or Benefits Tax.

4. Insurance Offset. If at any time during the Covered Period an Eligible Insured is insured under other health or medical plans or under Medicare, then the Insurance Plans shall provide supplemental coverage to the extent permitted by Law to the extent that such other plans do not provide full coverage for any given claim. The Eligible Insureds shall notify the Company’s human resources office upon request of their coverage under any such other plans or Medicare but, except as provided herein shall have no obligation to seek any such coverage. If eligible for Medicare coverage, Eligible Insureds shall enroll in Medicare and remain enrolled through the Covered Period.

5. Miscellaneous.

(a) Successors and Assigns. This Plan will be binding upon and inure to the benefit of the parties and, in the case of the Company, its successors and assigns. The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform the Company’s obligations under the Plan in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place, but such successor’s obligation to do so shall not be dependent on such express assumption. “Company” means the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid that assumes and agrees to perform this agreement by operation of law or otherwise.

(b) Governing Law/Jurisdiction. This Plan and the rights and obligations of the Company and the Plan Participants shall be governed by and construed in accordance with the laws of the State of Delaware in all respects, including all matters of construction, validity and performance, without regard to the conflict of law rules of such state.

(c) Modification and Waiver. No provisions of this Plan will be amended, waived or modified except by an instrument in writing and no such amendment, waiver or modification shall adversely affect any rights of Plan Participants to health and medical insurance coverage as provided for herein.

PEI - director health and medical insurance plan

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(d) Attorneys’ Fees. Any dispute, controversy or claim arising out of this Plan or the rights and obligations of the Company and any Plan Participant shall be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association and judgment on the award rendered by the arbitrators may be entered into any court having jurisdiction. If any arbitration is instituted to remedy, prevent or obtain relief from a default in the performance by the Company or a Plan Participant of its obligations under this Plan, or to recover damages from a breach of a representation or warranty, the prevailing party will recover all of such party’s attorneys’ fees incurred in each and every such arbitration, including any and all appeals or petitions therefrom. As used in this section, attorneys’ fees means the full and actual costs of any legal services actually performed in connection with the matters involved calculated on the basis of the usual fee charged by the attorney performing such services and will not be limited to “reasonable attorneys’ fees” as defined in any statute or rule of court.

(e) Claims Procedure. The claims procedure for benefits under this Plan shall be the Claims Procedure under the applicable Insurance Plan.

(f) Required Delay For Certain Deferred Compensation and Section 409A. In the event that any compensation with respect to the Director’s termination is “deferred compensation” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the regulations thereunder (“Section 409A”), the stock of the Company or any affiliate is publicly traded on an established securities market or otherwise, and the Director is determined to be a “specified employee,” as defined in Section 409A(a)(2)(B)(i), payment of such compensation shall be delayed as required by Section 409A. Such delay shall last six months from the date of the Director’s termination, except in the even of the Director’s death. Within 30 days following the end of such six-month period, or, if earlier, the Director’s death, the Company will make a catch-up payment to the Director equal to the total amount of such payments that would have been made during the six-month period but for this Section 5(f). Wherever payments under this Plan are to be made in installments, each such installment shall be deemed to be a separate payment for purposes of Section 409A.

(g) Notices. Any notice, request, demand, instruction or other communication to be given to the Company or a Plan Participant shall be in writing and shall be hand delivered or sent by FedEx or comparable overnight courier or mail service, or mailed by U.S. or certified mail, return receipt requested, postage prepaid, to such person at the most current address in the Company’s records.

(h) Third Party Beneficiaries. Each Plan Participant is an Express Beneficiary hereunder and may enforce his or her rights under the Plan. The Company shall provide each Director and each Plan Participant notice of his or her participation in the Plan, but such participation shall not be dependent upon such notification.

PEI - director health and medical insurance plan

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EX-10.48

Exhibit 10.48

2008 AMENDED AND RESTATED
PINNACLE ENTERTAINMENT, INC.
DIRECTORS DEFERRED COMPENSATION PLAN

Pinnacle Entertainment, Inc., a Delaware corporation (the “Corporation”), hereby amends and restates in its entirety the Hollywood Park, Inc. Directors Deferred Compensation Plan (the “Plan”) heretofore maintained by the Corporation, effective as of the time set forth in Section 8 below, as follows:

1. Eligibility. Each member of the Board of Directors of the Corporation (the “Board”) is eligible to participate in the Plan.

2. Participation.

(a) Time of Election. Before the beginning of a calendar year, each eligible Director may elect to participate in the Plan by directing that all or any part of the compensation (including fees payable for services as chairman or a member of a committee of the Board) which otherwise would have been earned currently for services rendered as a Director (“Compensation”) during such calendar year shall be credited to a deferred compensation account (the “Director’s Account”); provided, however, that the Director may elect to defer only Compensation earned from and after the first day of the calendar year or after a specified date that is later than the first day of the calendar year. Any person who shall become a Director during any calendar year, and who was not a Director of the Corporation before the beginning of such calendar year, may elect, within 30 days after the Director’s term begins, to defer payment of all or any part of the Director’s Compensation earned during the remainder of such calendar year from and after the date of such election, or, if the election so provides, earned after a specified date that is later than the date of the election.

(b) Form and Duration of Election. An election to participate in the Plan shall be made by written notice signed by the Director and filed with the Secretary of the Corporation only at the times specified in Section 2(a). Such election shall specify the amount of the Director’s Compensation to be deferred and specify an allocation of the deferred Compensation between cash and “Shares” as herein provided. For purposes of this Plan, “Shares” shall mean shares of the common stock of the Corporation. Any such election shall be irrevocable once made with respect to the calendar year for which it is made; amounts credited to the Director’s Account with respect to such calendar year shall be credited and distributed in accordance with such election and with the terms of the Plan notwithstanding any later change, termination or renewal of an election with respect to later calendar years. An election made with respect to a calendar year shall continue in effect for later calendar years unless and until the Director changes or terminates the election by signed written notice filed with the Secretary of the Corporation. Any such change or termination shall become effective with respect to Compensation earned from and after the first day of the calendar year following the calendar year in which such notice is given, or, at the election of the Director as set forth in such notice, effective only with respect to Compensation earned after a specified date that is later than the first day of the calendar year following the calendar year in which such notice is given.

(c) Renewal. A Director who has terminated his election to participate may thereafter file another election to participate for the calendar year subsequent to the filing of such election in accordance with the requirements of Section 2(a) hereof.

3. The Director’s Account. All compensation which a Director has elected to defer under the Plan shall be credited, at the Director’s election, to the Director’s Account as follows:

(a) As of the date the Director’s Compensation would otherwise be payable, the Director’s Account will be credited with an amount of cash equal to the amount of such Compensation which the Director elected to defer and to be allocated to cash.

(b) As of the date the Director’s Compensation would otherwise be payable, there shall be credited to the Director’s Account the number of full and fractional Shares obtained by dividing the amount of such Compensation which the Director elected to defer and to be allocated to Shares by the average of the closing price of a Share on the principal stock exchange on which such Shares are then listed, or, if they are not then listed on a stock exchange, the average of the closing price of a Share on the NASDAQ National Market System, on the last ten business days of the calendar quarter or month, as the case may be, for which such Compensation is payable.

(c) At the end of each calendar quarter there shall be credited to the Director’s Account the number of full and/or fractional Shares obtained by dividing the dividends which would have been paid on the Shares credited to the Director’s Account as of the dividend record date, if any, occurring during such calendar quarter if such Shares had been issued and outstanding Shares on such date, by the closing price of a Share on the principal stock exchange on which such Shares are then listed, or, if Shares are not then listed on a stock exchange, the closing price of a Share on the NASDAQ National Market System, on the date such dividend(s) is paid. In the case of stock dividends, there shall be credited to the Director’s Account the number of full and/or fractional shares of Shares which would have been issued with respect to the Shares credited to the Director’s Account as of the dividend record date if such Shares had been shares of issued and outstanding Shares on such date.

(d) No fractional share interests credited to a Director’s Account shall be distributed pursuant to Section 4 hereof. Instead, any fractional Shares remaining at the time the final distribution is made pursuant to Section 4 herein shall be converted into a cash credit by multiplying the number of fractional shares by the average of the closing price of a Share on the principal stock exchange on which Shares are then listed, or, if they are not then listed on any stock exchange, the average of the closing price of a Share on the NASDAQ National Market System, on the last ten business days prior to the date of the final distribution from the Director’s Account.

(e) Cash amounts credited to the Director’s Account pursuant to subparagraph (a) above shall accrue interest commencing from the date the cash amounts are credited to the Director’s Account at a rate per annum to be determined from time to time by the Board. Amounts credited to the Director’s Account shall continue to accrue interest until distributed in accordance with the Plan.

-2-

The Director shall not have any interest in the cash or Shares credited to the Director’s Account until distributed in accordance with the Plan.

4. Distribution from Accounts.

(a) Form of Election. At the time a Director makes a participation election pursuant to Sections 2(a) or 2(c), the Director shall also file with the Secretary of the Corporation a signed written election with respect to the method of distribution of the aggregate amount of cash and Shares credited to the Director’s Account pursuant to such participation election. A Director may elect to receive such amount in one lump-sum payment or in a number of approximately equal annual installments (provided the payout period does not exceed 15 years). The lump-sum payment or the first installment shall be paid as of the first business day of the calendar quarter immediately following the cessation of the Director’s service as a Director of the Corporation. Subsequent installments shall be paid as of the first business day of each succeeding calendar quarter until the entire amount credited to the Director’s Account shall have been paid. A cash payment will be made with the final distribution for any fraction of a Share in accordance with Section 3(d) hereof.

(b) Adjustment of Method of Distribution. A Director participating in the Plan may, prior to the beginning of any calendar year, file another written notice with the Secretary of the Corporation electing to change the method of distribution of the aggregate amount of cash and Shares credited to the Director’s Account for services rendered as a Director commencing with such calendar year. Amounts credited to the Director’s Account prior to the effective date of such change shall not be affected by such change and shall be distributed only in accordance with the election in effect at the time such amounts were credited to the Director’s Account.

5. Distribution on Death. If a Director should die before all amounts credited to the Director’s Account shall have been paid in accordance with the election referred to in Section 4, the balance in such Account as of the date of the Director’s death shall be paid promptly following the Director’s death to the beneficiary designated in writing by the Director. Such balance shall be paid to the estate of the Director if (a) no such designation has been made, or (b) the designated beneficiary shall have predeceased the Director and no further designation has been made.

6. Withdrawal in the Event of a Financial Emergency. A Director who believes he has experienced a “Financial Emergency” (as defined below) may request in writing a withdrawal of a portion of his Director’s Account to satisfy the emergency. The Board (without the participation of such Director) shall determine, in its sole discretion, (i) whether a Financial Emergency has occurred, and (ii) the amount reasonably required to satisfy the Financial Emergency; provided, however, that the withdrawal shall not exceed the balance in the Director’s Director Account, or the amount the Board (without the participation of such Director) reasonably determines, under Treasury Regulations Section 1.401A-3(j)(3)(ii), to be necessary to meet such emergency needs (including taxes reasonably anticipated to be incurred by reason of a taxable distribution), after taking into account the extent to which such hardship is or may be relieved through reimbursement or compensation by insurance or otherwise or by liquidation of the Director’s assets (unless the liquidation of such assets would itself cause severe financial hardship). If, subject to the sole discretion of the Board (without the participation of such Director), the petition for a withdrawal is approved, the distribution shall be made within 30 days of the date of approval by the Board (without the participation of such Director). For purposes of this Plan, “Financial Emergency” shall mean a severe financial hardship to the Director resulting from an illness or accident of the Director, the Director’s spouse, or a dependent (as defined in Section 152 of the Internal Revenue Code of 1986, as amended (the “Code”), without regard to Sections 152(b)(1), 152(b)(2) and 152(d)(1)(B)) of the Director, loss of the Director’s property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Director.

-3-

7. Directors Who Are Specified Employees. Notwithstanding any other provision of this Plan, if any stock of the Corporation or any affiliate is publicly traded on an established securities market or otherwise, and payment of benefits under this Plan to a Director who is a “Specified Employee” (as defined below) would be deemed to be on account of his separation from service under Section 409A of the Code, no payments shall be made to such Specified Employee within six months after such Specified Employee’s separation from service (or, if earlier, the date of his death). Any amounts subject to delayed payment under the preceding sentence shall be paid on the first business day after the expiration of such six-month period, together with any earnings accrued in the Director’s Account on such amounts during such six-month period. This Section 7 is intended to comply with the requirements of Section 409A of the Code and shall be interpreted accordingly. For purposes of this Plan, the term “Specified Employee” shall mean a Specified Employee of the Corporation or any affiliate, as defined in Treasury Regulations Section 1.409A-1(i).

8. Effective Date. This Plan originally became effective on its approval by the stockholders of this Corporation in September, 1991. The Plan was amended and restated at the annual meeting of the stockholders held on May 20, 2008, which such amendment and restatement became effective upon approval by the stockholders. The Plan was further amended and restated at a regular meeting of the Board held on December 9, 2008, which such amendment and restatement became effective upon adoption by the Board.

9. Shares Issuable. The maximum number of Shares which may be issued pursuant to this Plan is 325,000.

10. Miscellaneous.

(a) The right of a Director to receive any amount in the Director’s Account shall not be transferable or assignable by the Director, except by a beneficiary designation under Section 5, by will or by the laws of descent and distribution, or pursuant to a qualified domestic relations order as defined by the Code, or Title I of the Employee Retirement Income Security Act, as amended, or the rules thereunder, and no part of such amount shall be subject to attachment or other legal process.

(b) The Corporation shall not be required to reserve or otherwise set aside funds or Shares for the payment of its obligations hereunder. The Corporation shall make available as and when required a sufficient number of Shares to meet the needs of the Plan, either by the issuance of new shares of the common stock of the Corporation, or the purchase of Shares on the open market or through private purchases, as the Corporation may determine.

-4-

(c) The establishment and maintenance of, or allocation and credits, to the Director’s Account shall not vest in the Director or his beneficiary any right, title or interest in and to any specific assets of the Corporation. A Director shall not have any dividend or voting rights or any other rights of a stockholder (except as expressly set forth in Section 3 with respect to dividends and as provided in subparagraph (g) below) until the Shares credited to a Director’s Account are distributed. The rights of a Director to receive payments under this Plan shall be no greater than the right of an unsecured general creditor of this Corporation.

(d) The Plan shall be administered by the Board. The Board shall have the full discretion and power to interpret provisions of the Plan, to prescribe, amend and rescind rules and regulations relating to the Plan, to compute amounts to be credited to and distributed from Directors’ Accounts, and to make all other determinations it deems necessary or advisable to administer the Plan, with all such determinations being final and binding; provided, however, that the Board will not have the power to take any action relating to eligibility for participation in the Plan or the number of Shares to be issued to each participating Director.

(e) The Board may at any time terminate the Plan or amend the Plan in any manner it deems advisable and in the best interests of the Corporation; provided, however, that (i) no amendment or termination shall impair the rights of a Director with respect to amounts then credited to the Director’s Account, and (ii) no amendment or termination shall accelerate or defer any payments or distributions that would have been made under the Plan if it had not been amended or terminated, except to the extent that such acceleration or deferral could be made without subjecting the Directors to additional taxes under Section 409A of the Code.

(f) Each Director participating in the Plan will receive an annual statement indicating the amount of cash and number of Shares credited to the Director’s Account as of the end of the preceding calendar year.

(g) If adjustments are made to outstanding shares of Shares, or if outstanding shares of Shares are converted into or exchanged for, other securities or property, as a result of stock dividends, stock splits, reverse stock splits, recapitalizations, reclassifications, mergers, split-ups, reorganizations, consolidations and the like, an appropriate adjustment (as determined in good faith by the Board) will also be made in the number and kind of shares or property credited to the Director’s Account, so that, when distributions are made pursuant to this Plan, the Director will receive the number and kind of securities or property to which a holder of Shares would have been entitled upon such event. In addition, if outstanding Shares are converted into or exchanged for another security, all references to “Shares” in this Plan shall be deemed to be references to such other security.

(h) The name of the Plan shall be the “2008 Amended and Restated Pinnacle Entertainment, Inc. Directors Deferred Compensation Plan.”

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EX-10.49

Exhibit 10.49

FIRST AMENDMENT TO THE
SECOND AMENDMENT AND RESTATEMENT OF THE
PINNACLE ENTERTAINMENT, INC.
EXECUTIVE DEFERRED COMPENSATION PLAN

THIS FIRST AMENDMENT TO THE SECOND AMENDMENT AND RESTATEMENT OF THE PINNACLE ENTERTAINMENT, INC. EXECUTIVE DEFERRED COMPENSATION PLAN is adopted as of the 24^th day of December, 2008, by Pinnacle Entertainment, Inc., a Delaware corporation (“Pinnacle”), with reference to the following facts:

A. Pinnacle has established the Pinnacle Entertainment, Inc. Executive Deferred Compensation Plan, most recently embodied by the Second Amendment and Restatement of the Pinnacle Entertainment, Inc. Executive Deferred Compensation Plan Effective December 30, 2007 (the “Plan”), to provide additional retirement benefits and income deferral opportunities for a select group of management and highly compensated employees;

B. By Section 11.2 of the Plan, Pinnacle has reserved the right to amend the Plan, provided that no amendment shall decrease or restrict the balance of a Participant’s Combined Account or any component thereof;

C. Pinnacle wishes to amend the Plan to permit a Participant to elect, during 2008, that all or any portion of his Annuity Account (as well as all or any portion of his Deferral Contribution Account) shall be distributed on an Interim Distribution Date of January 15, 2009 or January 15 of any later year, and has determined that such amendment does not decrease or restrict the balance of a Participant’s Combined Account or any component thereof.

NOW, THEREFORE, Pinnacle hereby adopts this First Amendment to the Second Amendment and Restatement of the Pinnacle Entertainment, Inc. Executive Deferred Compensation Plan, effective as of December 24, 2008, as follows:

1. Section 5.1 of the Plan is hereby amended to provide in its entirety as follows:

“5.1 Interim Distributions. A Participant may make an election, at the time he files an Election Form for a Plan Year, to have a specified amount or percentage paid from his Deferral Contribution Account on one or more Interim Distribution Dates. The Participant’s selection of an Interim Distribution Date must be made on a timely, effective Election Form. The amounts which would otherwise be paid on such Interim Distribution Date or Dates shall be distributed upon the earlier occurrence of Participant’s Benefit Distribution Date. Notwithstanding the foregoing, (A) during calendar 2007, a Participant may elect, by written notice to the Committee, that all or a portion of his Combined Account as of December 31, 2007 (computed under the provisions of the First Amendment and Restatement)

be distributed on an Interim Distribution Date, provided that no such election shall have the effect of deferring until calendar 2008 or later any benefit payments under this Plan that would otherwise have been paid in calendar 2007, or of accelerating into calendar 2007 any benefit payments under this Plan that would otherwise have been paid in calendar 2008 or later, and (B) during calendar 2008, a Participant may elect, by written notice to the Committee, that all or a portion of his Combined Account as of December 31, 2008 be distributed on an Interim Distribution Date of January 15, 2009 or January 15 of any later year, provided that (i) no such election shall have the effect of deferring until calendar 2009 or later any benefit payments under this Plan that would otherwise have been paid in calendar 2008, or of accelerating into calendar 2008 any benefit payments under this Plan that would otherwise have been paid in calendar 2009 or later, and (ii) no Participant who makes such election shall be entitled to elect to defer Base Annual Salary or Bonus earned by the Participant during 2009 (i.e., Base Annual Salary or Bonus for which the Participant performs services in 2009) into the Plan.”

2. In all other respects, the terms and provisions of the Plan are hereby ratified and declared to continue in force and effect.

IN WITNESS WHEREOF, Pinnacle has executed this First Amendment to the Second Amendment and Restatement of the Pinnacle Entertainment, Inc. Executive Deferred Compensation Plan as of the date first above written.

PINNACLE ENTERTAINMENT, INC. A Delaware Corporation
By:	/s/ John A. Godfrey
	John A. Godfrey,
	Executive Vice President, General Counsel and Secretary

EX-11

Exhibit 11

Pinnacle Entertainment, Inc.
Computation of Earnings Per Share

	For the three months ended December 31,
	Basic									Diluted (a)
	2008			2007			2006			2008			2007			2006
	(in thousands, except per share data)
Average number of common shares outstanding		59,981			59,852			48,120			59,981			59,852			48,120
Average common shares due to assumed conversion of stock options		—			—			—			—			—			—
Total shares		59,981			59,852			48,120			59,981			59,852			48,120
Income (loss) from continuing operations, net	$	(297,783	)	$	(18,004	)	$	(4,270	)	$	(297,783	)	$	(18,004	)	$	(4,270	)
Income (loss) from discontinued operations, net		85			(1,192	)		(717	)		85			(1,192	)		(717	)
Net income (loss)	$	(297,698	)	$	(19,196	)	$	(4,987	)	$	(297,698	)	$	(19,196	)	$	(4,987	)
Per share data:
Income (loss) from continuing operations, net	$	(4.97	)	$	(0.30	)	$	(0.09	)	$	(4.97	)	$	(0.30	)	$	(0.09	)
Income (loss) from discontinued operations, net		(0.00	)		(0.02	)		(0.01	)		(0.00	)		(0.02	)		(0.01	)
Net income per share	$	(4.97	)	$	(0.32	)	$	(0.10	)	$	(4.97	)	$	(0.32	)	$	(0.10	)

	For the years ended December 31,
	Basic								Diluted (a)
	2008			2007			2006		2008			2007			2006
	(in thousands, except per share data)
Average number of common shares outstanding		59,966			59,221			47,629		59,966			59,221			47,629
Average common shares due to assumed conversion of stock options		—			—			—		—			—			1,643
Total shares		59,966			59,221			47,629		59,966			59,211			49,272
Income (loss) from continuing operations, net	$	(370,196	)	$	44		$	63,322	$	(370,196	)	$	44		$	63,322
Income (loss) from discontinued operations, net		47,599			(1,450	)		13,564		47,599			(1,450	)		13,564
Net income (loss)	$	(322,597	)	$	(1,406	)	$	76,886	$	(322,597	)	$	(1,406	)	$	76,886
Per share data:
Income (loss) from continuing operations, net	$	(6.17	)	$	0.00		$	1.33	$	(6.17	)	$	0.00		$	1.28
Income (loss) from discontinued operations, net		0.79			(0.02	)		0.28		0.79			(0.02	)		0.28
Net income per share	$	(5.38	)	$	(0.02	)	$	1.61	$	(5.38	)	$	(0.02	)	$	1.56

(a) When the computed diluted values are antidilutive, the basic per share values are presented on the face of the Consolidated Income Statements.

EX-12

Exhibit 12

Pinnacle Entertainment, Inc.
Computation of Ratio of Earnings to Fixed Charges

	2004			2005			2006			2007			2008
	(in thousands)
Earnings:
Pre-tax income (loss)	$	6,079		$	(17,350	)	$	102,909		$	(1,851	)	$	(424,741	)
Add fixed charges		60,789			62,385			62,023			72,339			82,521
Less capitalized interest		(5,102	)		(7,130	)		(5,750	)		(42,851	)		(25,144	)
Total earnings	$	61,766		$	37,905		$	159,182		$	27,637		$	(367,364	)
Fixed charges
Interest expense — inclusive of the amortization of debt issuance costs	$	51,778		$	49,535		$	53,678		$	25,715		$	53,049
Capitalized interest		5,102			7,130			5,750			42,851			25,144
Estimated interest portion of rent expense		3,909			5,720			2,595			3,773			4,328
Total fixed charges	$	60,789		$	62,385		$	62,023		$	72,339		$	82,521
Ratio of earnings to fixed charges		1.02 x			0.61 x			2.57 x			0.38 x		$	(4.45)x

EX-21

Exhibit 21

Pinnacle Entertainment, Inc.

List of Subsidiaries

Subsidiary	State of Organization
ACE Gaming, LLC	New Jersey
AREH MLK LLC	Delaware
AREP Boardwalk Properties LLC	Delaware
Belterra Resort Indiana, LLC	Nevada
BILOXI CASINO CORP.	Mississippi
Boomtown, LLC	Delaware
Brighton Park Maintenance Corp.	New Jersey
Casino Magic Corp.	Minnesota
Casino Magic Buenos Aires, SA	Argentina
Casino Magic (Europe) B.V.	Netherlands
Casino Magic Hellas Management Services, S.A.	Greece
Casino Magic Management Services Corp.	Minnesota
Casino Magic Neuquén SA	Argentina
Casino One Corporation	Mississippi
Double Bogey, LLC	Texas
Landing Condominium, LLC	Missouri
Louisiana-I Gaming, A Louisiana Partnership in Commendam	Louisiana
Mitre Associates LLC	Delaware
OGLE HAUS, LLC	Indiana
Pinnacle Design & Construction, LLC	Nevada
PNK (Baton Rouge) Partnership	Louisiana
PNK (BOSSIER CITY), Inc.	Louisiana
PNK (CHILE 1), LLC	Delaware
PNK (CHILE 2), LLC	Delaware
PNK Development 1, Inc.	Delaware
PNK Development 2, Inc.	Delaware
PNK Development 3, Inc.	Delaware
PNK Development 4, Inc.	Delaware
PNK Development 5, Inc.	Delaware
PNK Development 6, Inc.	Delaware
PNK Development 7, LLC	Delaware
PNK Development 8, LLC	Delaware
PNK Development 9, LLC	Delaware
PNK Development 10, LLC	Delaware
PNK Development 11, LLC	Nevada
PNK Development 12, LLC	Nevada
PNK Development 13, LLC	New Jersey
PNK Development 14, LLC	Missouri
PNK Development 15, LLC	Pennsylvania
PNK Development 16, LLC	Indiana
PNK Development 17, LLC	Nevada
PNK (ES), LLC	Delaware
PNK (EXUMA), LIMITED	Bahamas
PNK (Kansas), LLC	Kansas
PNK (LAKE CHARLES), L.L.C.	Louisiana
PNK (RENO), LLC	Nevada
PNK (SCB), L.L.C.	Louisiana
PNK (STLH), LLC	Delaware
PNK (ST. LOUIS RE), LLC	Delaware
Port St. Louis Condominium, LLC (50% ownership)	Missouri
President Riverboat Casino-Missouri, Inc.	Missouri
PSW Properties LLC	Delaware
Realty Investment Group, Inc.	Delaware
St. Louis Casino Corp.	Missouri
Yankton Investments, LLC	Nevada

EX-23

Exhibit 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement Nos. 033-63793, 333-27501, 333-31065, 333-67155, 333-86223, 333-31162, 333-60616, 333-62378, 333-107081 and 333-134130 on Form S-8 of our reports dated March 9, 2009, relating to the consolidated financial statements and financial statement schedule of Pinnacle Entertainment, Inc. (which report expresses an unqualified opinion and includes an explanatory paragraph related to the adoption of Financial Accounting Standards Board Interpretation No. 48) and the effectiveness of Pinnacle Entertainment, Inc.’s internal control over financial reporting, appearing in this Annual Report on Form 10-K of Pinnacle Entertainment, Inc. for the year ended December 31, 2008.

/s/ DELOITTE & TOUCHE LLP
Las Vegas, Nevada
March 9, 2009

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Daniel R. Lee, certify that:

1. I have reviewed this annual report on Form 10-K of Pinnacle Entertainment, Inc.;

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 control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-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 (the registrant’s fourth fiscal quarter in the case of an annual report) 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 9, 2009

/s/ DANIEL R. LEE

Daniel R. Lee

Chairman of the Board and
Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Stephen H. Capp, certify that:

1. I have reviewed this annual report on Form 10-K of Pinnacle Entertainment, Inc.;

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 control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-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 (the registrant’s fourth fiscal quarter in the case of an annual report) 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 9, 2009

/s/ STEPHEN H. CAPP

Stephen H. Capp

Executive Vice President and
Chief Financial Officer

EX-32

Exhibit 32

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 Pinnacle Entertainment, Inc. (the “Company”) on Form 10-K for the fiscal year ended December 31, 2008, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge:

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.

Dated: March 9, 2009

/s/ DANIEL R. LEE
Name:	Daniel R. Lee
Title:	Chairman of the Board and
	Chief Executive Officer
/s/ STEPHEN H. CAPP
Name:	Stephen H. Capp
Title:	Executive Vice President and
	Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-99.1

Exhibit 99.1

GOVERNMENT REGULATION AND GAMING ISSUES

The ownership and operation of gaming companies are subject to extensive regulation. In particular, Indiana, Louisiana, Missouri, Nevada, New Jersey, and the Province of Neuquen in Argentina have laws, statutes, ordinances and/or regulations (collectively, “Gaming Laws”) affecting the operation of our gaming business and the ownership and disposition of our securities. We summarize these Gaming Laws below.

Our certificate of incorporation requires that any person (as defined in our certificate of incorporation) who owns or controls our securities must comply with Gaming Laws governing such person’s “suitability” as an investor. These provisions apply to all the securities offered by us. Any purchaser or holder of securities that we have offered shall be deemed to have agreed to such provisions. If a person owns or controls our securities or the securities of our affiliated companies and is determined by a gaming authority to be unsuitable to own or control such securities or in the sole discretion of our board of directors is deemed likely to jeopardize our right to conduct gaming activities in any of the jurisdictions in which we conduct or intend to conduct gaming activities, we may redeem, and if required by a gaming authority shall redeem, such person’s securities to the extent required by the gaming authority or deemed necessary or advisable by us.

If a gaming authority requires us, or if we deem it necessary or advisable, to redeem a holder’s securities, we will serve notice on the holder who holds the securities subject to redemption and will call for the redemption of the securities of such holder at a redemption price equal to that required to be paid by the gaming authority making the finding of unsuitability, or if such gaming authority does not require a certain price per share to be paid, a sum deemed reasonable by us.

Indiana. The ownership and operation of riverboat casinos at Indiana-based sites are subject to extensive state regulation under the Indiana Riverboat Gambling Act (the “Indiana Act”), as well as regulations which the Indiana Gaming Commission (the “Indiana Commission”) has adopted pertaining to the Indiana Act. The Indiana Act grants broad and pervasive regulatory powers and authorities to the Indiana Commission. The comprehensive regulations cover ownership, reporting, rules of game and operational matters; thus, the Indiana Act and regulations are significant to prospects for successfully operating the Belterra facility. The Indiana Act has been challenged based on its constitutionality on two occasions and was found constitutional on both occasions.

The Indiana Act authorizes the issuance of up to ten riverboat owner’s licenses to be operated from counties that are contiguous to the Ohio River and Lake Michigan. In October 2000, Belterra, the tenth riverboat, commenced operations along the Ohio River. Five of the riverboats are in counties contiguous to the Ohio River and five are in counties contiguous to Lake Michigan. The Indiana Act originally included an eleventh license for a county contiguous to Patoka Lake. In April 2003, the Indiana General Assembly passed legislation that eliminated the license for a county contiguous to Patoka Lake, but authorized the establishment and operation of a riverboat casino in Orange County, Indiana. Under this legislation, the Indiana Commission is authorized to enter into an operating agreement for up to 20 years with a qualified operator for this facility. The Indiana Commission has selected an operator for the facility and has entered into an operating agreement with this operator. The Orange County riverboat casino began operations in November 2006.

In 2007, the Indiana General Assembly adopted legislation that authorized the holders of Indiana’s two parimutuel racing permits to obtain gambling game licenses from the Indiana Commission and install up to 2,000 slot machines at their respective racetracks. The first of these new racinos opened on June 2, 2008 in Anderson, and the second racino opened one week later in Shelbyville. Both racinos are regulated by the Indiana Commission.

A riverboat owner’s license is a revocable privilege and is not a property right under the Indiana Act. An Indiana license entitles the licensee to own and operate one riverboat. In its 2003 session, the Indiana General Assembly passed legislation that became effective July 1, 2003, that permits a company to own up to 100% of two separate riverboat owner licenses. An Indiana riverboat owner’s license has an initial effective period of five years; thereafter, a license is subject to annual renewal. After the expiration of the initial license, the Indiana Commission will conduct a complete re-investigation every three years, but the Indiana Commission reserves the right to investigate licenses at any times it deems necessary. The Indiana Commission has broad discretion over the initial issuance of licenses and over the renewal, revocation, suspension, restriction and control of riverboat owner’s licenses. Officers, directors and principal owners of the actual license holder and employees who are to work on the riverboat are subject to substantial disclosure requirements as a part of securing and maintaining necessary licenses. The license granted to Belterra had an initial five-year term, which expired on October 22, 2005. We submitted a formal request for a renewal of Belterra’s riverboat owner’s license within the timetable established by the Indiana Commission, and on November 17, 2005, the Indiana Commission approved the renewal of Belterra’s riverboat owner’s license for a period of one year. Our riverboat owner’s license was renewed again on September 14, 2006 and will continue to be subject to annual renewal. Our most recent one-year renewal was granted by the Indiana Commission on November 13, 2008, retroactive to October 23, 2008.

Contracts to which Belterra is party are subject to disclosure and approval processes imposed by the regulations. A riverboat owner licensee may not enter into or perform any contract or transaction in which it transfers or receives consideration which is not commercially reasonable or which does not reflect the fair market value of the goods or services rendered or received. All contracts are subject to approval by the Indiana Commission. Suppliers of gaming equipment and materials must also be licensed under the Indiana Act.

Licensees are statutorily required to disclose to the Indiana Commission the identity of all directors, officers and persons holding direct or indirect beneficial interests of 1% or greater. The Indiana Commission also requires a broad and comprehensive disclosure of financial and operating information on licensees and their principal officers, their parent corporations and other upstream owners. The Indiana Act prohibits contributions to a candidate for a state, legislative, or local office, to a candidate’s committee or to a regular party committee by the holder of a riverboat owner’s license or a supplier’s license, by an officer of a licensee, by an officer of a person that holds at least a 1% interest in the licensee or by a person holding at least a 1% interest in the licensee. The Indiana Commission has promulgated a rule requiring quarterly reporting of such licensees, officers, and persons. Prior to June 2002, riverboats were required to conduct excursions, which limited the times during which patrons could enter the riverboat. In June 2002, the Indiana General Assembly authorized riverboats to either continue conducting excursions or to implement a flexible boarding schedule and remain dockside in order to allow patrons to enter the riverboat at any time during operating hours. Belterra began dockside operation on August 1, 2002.

Under the Indiana Act, “adjusted gross receipts” (“AGR”) means the total of all cash and property received from gaming less cash paid out as winnings and uncollectible gaming receivables (not to exceed 2%). Those riverboats electing to operate dockside will be subject to the following graduated wagering tax based on a state fiscal year (July 1 of one year through June 30 of the following year):

• 15% of the first $25 million of AGR.

• 20% of AGR in excess of $25 million, but not exceeding $50 million.

• 25% of AGR in excess of $50 million, but not exceeding $75 million.

• 30% of AGR in excess of $75 million, but not exceeding $150 million.

• 35% of AGR in excess of $150 million, but not exceeding $600 million.

• 40% of AGR in excess of $600 million.

A wagering tax of 22.5% is imposed on those riverboats that continue to conduct excursions.

The Indiana Act also prescribes an additional tax for admissions, based on $3 per person for riverboats operated from counties contiguous to Lake Michigan and the Ohio, and $4 per person for the riverboat in Orange County. Those riverboats conducting excursions must pay the admissions tax on a passenger per excursion basis which requires payment of the admission tax on carryover patrons. Those riverboats conducting dockside operations pay the admission tax on each person admitted to the riverboat. The carryover patron calculation is, thus, eliminated with the commencement of dockside operations. Real property taxes are imposed on riverboats at rates determined by local taxing authorities. Income to us from Belterra is subject to the Indiana adjusted gross income tax. Sales on a riverboat and at related resort facilities are subject to applicable use, excise and retail taxes. The Indiana Act requires a riverboat owner licensee to directly reimburse the Indiana Commission for the costs of inspectors and agents required to be present while authorized gaming is conducted.

In its 2003 legislative session, the Indiana General Assembly authorized riverboat casinos to remain open 24 hours per day, seven days a week, with those hours to be set at the election of the riverboat. In July 2003, Belterra began continuous 24-hour gaming each day of the week. In its 2003 legislative session, the Indiana General Assembly imposed a retroactive wagering tax on all riverboats, moving the effective date of the 2002 graduated wagering tax from August 1, 2002 to July 1, 2002. The state Department of Revenue has assessed this retroactive tax on the riverboats, without providing an offset for taxes paid at a higher tax rate during that one-month period. Belterra and the other riverboat casinos filed protests with the state, asserting that this interpretation of the legislation is erroneous and should be set aside. These protests were not successful.

Through the establishment of purchasing goals, the Indiana Act encourages minority and women’s business enterprise participation in the riverboat gaming industry. The Indiana Commission is required to establish annual goals for the use of minority and women business enterprises by a riverboat licensee. The goals must be derived from a statistical analysis of utilization study of licensee contracts for goods and services. The Indiana Commission may suspend, limit or revoke the owner’s license or impose a fine for failure to comply with the statutory goals. Under the goals in effect through December 31, 2007, each riverboat licensee was required to expend at least 10% of the total dollar value of the licensee’s qualified contracts for goods and services with minority business enterprises and 5% with women business enterprises. In 2007, the Indiana Commission completed a utilization study of expenditures made by Indiana riverboats from January 1, 2003 to December 31, 2005 in four categories: construction; procurement/supplies; professional services; and other services. The results indicated that the only statistically significant disparity existed in expenditures made to women owned business enterprises in the construction category. On September 13, 2007, the Indiana Commission adopted a resolution establishing new expenditure goals solely in the area where the significant statistical disparity existed. These goals, effective January 1, 2008, established a 10.9% annual goal for expenditures to women owned business enterprises for the purchase of construction goods and services.

Minimum and maximum wagers on games on the riverboat are left to the discretion of the licensee. Wagering may not be conducted with money or other negotiable currency. There are no statutory restrictions on extending credit to patrons with the exception of persons participating in the voluntary exclusion program; however, the matter of credit continues to be a matter of potential legislative action.

If an institutional investor acquires 5% or more of any class of voting securities of a licensee (or a holding or intermediary company of a licensee), the investor is required to notify the Indiana Commission and to provide additional information, and may be subject to a finding of suitability. Institutional investors who acquire 15% or more of any class of voting securities are subject to a finding of suitability. Any other person who acquires 5% or more of any class of voting securities of a licensee (or a holding or intermediary company of a licensee) is required to apply to the Indiana Commission for a finding of suitability.

A riverboat licensee or an affiliate may not enter into a debt transaction of $1,000,000 or more without approval of the Indiana Commission. The Indiana Commission has taken the position that a “debt transaction” includes increases in maximum amount available under revolving credit facilities. A riverboat owner licensee or any other person may not lease, hypothecate, borrow money against or loan money against or otherwise securitize a riverboat owner’s license. Indiana Commission regulations also require a licensee or applicant (or affiliate) to conduct due diligence to ensure that each person with whom the licensee or applicant (or affiliate) enters into a debt transaction would be suitable for licensure under the Indiana Act. The Indiana Commission rules require that:

• a written request for approval of the debt transaction, along with relevant information regarding the debt transaction, be submitted to the Indiana Commission at least ten days prior to a scheduled meeting of the Indiana Commission;

• a representative of the riverboat licensee or applicant be present at the meeting to answer any questions; and

• a decision regarding the approval of the debt transaction be issued by the Indiana Commission at the next following meeting.

The Indiana Commission rules also authorize the Executive Director of the Indiana Commission to waive certain of these requirements with the approval of the chairperson of the Indiana Commission and an outside financial expert retained by the Indiana Commission. A licensee, or its parent company, that is publicly traded must notify the Indiana Commission of a public offering that will be registered with the SEC. The licensee must notify the Indiana Commission within 10 business days of the initial filing of a registration statement with the SEC. An ownership interest in a licensee may only be transferred in accordance with the Indiana Act and rules promulgated thereunder.

The Indiana Commission has promulgated a rule that prohibits distributions, excluding distributions for the payment of state or federal taxes, by a licensee to its partners, shareholders, itself or any affiliated entity if the distribution would impair the financial viability of the riverboat gaming operation. The Indiana Commission has also promulgated a rule mandating licensees to maintain a cash reserve against defaults in gaming debts. The cash reserve must be equal to licensee’s average payout for a three-day period based on the riverboat’s performance the prior calendar quarter. The cash reserve can consist of cash on hand, cash maintained in Indiana bank accounts and cash equivalents not otherwise committed or obligated.

Louisiana. The ownership and operation of our riverboat gaming vessels in Louisiana are subject to the Louisiana Gaming Control Law, including the Louisiana Riverboat Economic Development and Gaming Control Act and applicable regulations (collectively, the “Louisiana Act”). The Louisiana Gaming Control Board (the “Board”) is the sole and exclusive regulatory and supervisory board for gaming operations and activities in Louisiana. The Louisiana Department of Public Safety, Office of State Police, Gaming Enforcement Section (the “Division”) provides investigatory, regulatory, and enforcement services to the Board in the implementation, administration, and enforcement of the Louisiana Act. The Louisiana Attorney General acts as legal counsel to the Board.

The Louisiana Act is based upon the public policy declarations that the development of a controlled gaming industry to promote economic development requires thorough and careful exercise of legislative power to protect the general welfare of the people by keeping the state free from criminal and corrupt elements. The Louisiana Act thus seeks, among other things, to (i) prevent unsavory or unsuitable persons from having any direct or indirect involvement with gaming at any time or in any capacity; (ii) establish and maintain responsible accounting practices and procedures; (iii) maintain effective control over the financial practices of licensees, including establishing procedures for reliable record keeping and making periodic reports to the Board; (iv) prevent cheating and fraudulent practices; (v) develop and implement comprehensive compulsive and problem gambling programs; (vi) provide a source of state and local revenues through fees; and (vii) ensure that gaming licensees, to the extent practicable, employ and contract with Louisiana residents, women, and minorities.

The Board is responsible for issuing gaming licenses and is empowered to issue up to fifteen licenses to conduct gaming activities on riverboats in accordance with applicable law. However, no more than six licenses may be granted to riverboats operating from any one designated waterway. The Louisiana Act provides that an initial license to conduct gaming operations is valid for a term of five years and may be renewed for successive five year terms after the initial term upon application and continued satisfaction of suitability standards and other provisions of the Louisiana Act.

Louisiana subsidiaries or our affiliates currently hold five riverboat gaming licenses: (i) Louisiana-I Gaming, a Partnership in Commendam, the operator of Boomtown New Orleans, which license expires March 22, 2010, subject to renewal; (ii) PNK (Bossier City), Inc., the operator of Boomtown Bossier City, which license expires November 28, 2009, subject to renewal; (iii) PNK (Lake Charles), L.L.C., the operator of L’Auberge du Lac in Lake Charles, which license expires April 19, 2012, subject to renewal; (iv) PNK (SCB), L.L.C., the developer and future operator of Sugarcane Bay in Lake Charles, which license expires December 6, 2009, subject to renewal; and (v) PNK (Baton Rouge) Partnership, the developer and future operator of a project in East Baton Rouge Parish, which license expires August 19, 2009, subject to renewal.

A gaming license is deemed to be a pure and absolute revocable privilege under the Louisiana Act, and not a right. As such, a gaming license may be denied, revoked, suspended, conditioned, or limited at any time by the Board. To issue a license, the Board must find that the applicant has demonstrated by clear and convincing evidence that such applicant is suitable, which requires submission of detailed personal and financial information followed by a thorough investigation. Pursuant to the Louisiana Act, “suitable” means that the applicant (i) is a person of good character, honesty, and integrity; (ii) is a person whose prior activities, criminal record, if any, reputation, habits and associations do not pose a threat to the public interest of the State of Louisiana or to the effective regulation and control of gaming, or create or enhance the dangers of unsuitable, unfair, or illegal practices, methods, and activities in the conduct of gaming or the carrying on of business and financial arrangements in connection therewith; (iii) is capable of and likely to conduct the activities for which such applicant is licensed pursuant to the Louisiana Act; and (iv) is not otherwise disqualified pursuant to the Louisiana Act. In addition, the Board will not grant any license unless it finds that (i) the applicant is capable of conducting gaming operations, which means that the applicant can demonstrate the capability, either through training, education, business experience, or a combination of the above, to operate a gaming casino; (ii) the proposed financing of the riverboat and the gaming operations is adequate for the nature of the proposed operation and from a source suitable and acceptable to the Board; (iii) the applicant demonstrates a proven ability to operate a vessel of comparable size, capacity, and complexity to a riverboat in its application for a license; (iv) the applicant designates the docking facilities to be used by the riverboat; (v) the applicant shows adequate financial ability to construct and maintain a riverboat; (vi) the applicant has a good faith plan to recruit, train, and upgrade minorities in all employment classifications; and (vii) the applicant will provide the maximum practical opportunities for participation by the broadest number of minority-owned businesses.

Once the Board has issued a license, the licensee must maintain suitability throughout the term of the license and any renewal terms and has a continuing duty to inform the Board of any possible violation of the Louisiana Act. In addition, other persons may be subject to the suitability standards of the Louisiana Act and may be required to hold certain permits under the Louisiana Act, including without limitation the following: (i) certain of our and the licensee’s officers, directors, key gaming employees, and non-key gaming employees; (ii) persons who manufacture any gaming device, supplies, or equipment for use under the provisions of the Louisiana Act; (iii) persons who supply, sell, lease, or repair, or contract to supply, sell, lease, or repair gaming devices, equipment, and supplies to a licensee; and (iv) persons who furnish services or goods and receive compensation or remuneration in excess of two hundred thousand dollars per calendar year for such goods or services, as defined by the rules of the Board, to a licensee. We believe that we have obtained or applied for all necessary findings of suitability and/or permits with respect to such persons associated with us or our Louisiana licensed riverboat gaming vessels. The Board may, however, in its discretion require additional persons to file applications for permits or findings of suitability.

A licensee may conduct its gaming operations only in accordance with the terms of the license and must also comply with all restrictions and conditions relating to the operation of riverboat gaming, as specified in the Louisiana Act, including restrictions on gaming space, rules and odds of authorized games, and permitted devices. The Louisiana Act was amended in 2001 to provide, with exceptions not applicable to the location of any of the Company’s licensees, that gaming may only be conducted on a riverboat while it is docked and that the licensee shall not conduct cruises or excursions. The Louisiana Act also prescribes grounds for the revocation, limitation, or suspension of licenses or permits.

A licensee must periodically report the following information to the Board, which is not confidential and is to be available for public inspection: (i) the licensee’s net gaming proceeds from all authorized games; (ii) the amount of net gaming proceeds tax paid; and, (iii) all quarterly and annual financial statements presenting historical data that are submitted to the Board, including annual financial statements that have been audited by an independent certified public accountant. An annual license fee is payable to the State of Louisiana in the amount of $50,000 for each riverboat for the first year of operation and $100,000 for each year thereafter. In addition, our Louisiana riverboat gaming vessels are subject to annual license and franchise fees in the amount of 21.5% of net gaming proceeds. The local governing authority of the parish or municipality in which the licensed berth of a riverboat is located may also levy certain admission fees, computed in various ways as provided by the Louisiana Act. As to Boomtown Bossier City, the Louisiana Act establishes that the admission fee for any riverboat located within Bossier City in Bossier Parish shall be four and five-tenths percent of monthly net gaming proceeds. For Boomtown New Orleans, the Louisiana Act provides that the admission fee for any riverboat licensed to operate within the unincorporated area of Jefferson Parish on the West Bank of the Mississippi River shall be six percent of weekly net gaming proceeds. As to L’Auberge du Lac and Sugarcane Bay, the Louisiana Act provides that the local governing authority in Calcasieu Parish may, in lieu of the admission fee, levy a fee not to exceed four and five-tenths percent of the monthly net gaming proceeds, which fee shall be established by contract between the governing authority and the licensee. As to the project in East Baton Rouge Parish, the Louisiana Act provides that the local governing authority may, in lieu of the admission fee, levy a fee not to exceed four and five-tenths percent of the monthly net gaming proceeds, which fee shall be established by contract between the governing authority and the licensee.

The transfer of a license or an interest in a license is prohibited. The sale, assignment, transfer, pledge, or disposition of a security or securities that represent 5% or more of the total outstanding shares issued by a holder of a license is conditional and ineffective if disapproved by the Board. Moreover, the prior written approval of the Board is required of all persons involved in the sale, purchase, assignment, lease, grant or foreclosure of a security interest, hypothecation, transfer, conveyance or acquisition of an ownership interest (other than in a corporation) or economic interest of 5% or more in any licensee. Failure to obtain approval of a transfer is grounds for license revocation. A security issued by a holder of a license must generally disclose these restrictions.

Any person with an ownership interest or economic interest in a licensee may be required to submit to an investigation by the Board to determine suitability. Any person acquiring a 5% or more ownership interest or economic interest shall be subject to a suitability determination, unless otherwise exempted. Under certain circumstances, an “institutional investor” or an “institutional lender” otherwise required to be found suitable or qualified shall be presumed suitable or qualified upon submitting documentation sufficient to establish qualifications as an institutional investor or as an institutional lender, each as defined in the Louisiana Act. An institutional investor must also certify that (i) it owns, holds, or controls publicly traded securities of a licensee or its parent company in the ordinary course of business for investment purposes only; (ii) it does not exercise influence over the affairs of the issuer of the securities or of the licensee; and (iii) it does not intend to exercise influence over the affairs of the issuer of the securities or of the licensee. The exercise of voting privileges with regard to publicly traded securities shall not be deemed to constitute the exercise of influence over the affairs of a licensee. Notwithstanding presumptions of suitability, the Board may investigate the suitability or qualifications of an institutional investor or institutional lender should the Board or the Division become aware of facts or information which may result in such institutional investor or institutional lender being found unsuitable or disqualified.

If the Board finds that the individual owner or holder of a security of a corporate licensee or intermediary company or any person with an economic interest in a licensee is not qualified under the Louisiana Act, the Board may require, under penalty of suspension or revocation of the license, that the person not (i) receive dividends or interest on securities of the licensee or company holding a license, (ii) exercise directly or indirectly a right conferred by securities of the licensee or company holding a license, (iii) receive remuneration or economic benefit from the licensee or company holding a license, or (iv) continue in an ownership or economic interest in the licensee, or remain as a manager, officer, director, or partner of a licensee.

In addition to its obligation to periodically submit detailed financial and operating reports to the Board, a licensee or person acting on a licensee’s behalf must notify the Board and obtain prior written approval whenever it (i) applies for, receives, accepts, or modifies the terms of any loan, line of credit, third-party financing agreement, sale with buy-back or lease-back provisions, or similar financing transaction; (ii) makes use of any cash, property, credit, loan, or line of credit; or (iii) guarantees or grants any other form of security for a loan. Exceptions to prior written approval include, without limitation, transactions not exceeding $2,500,000 in which all of the lending institutions are federally regulated; transactions which do not substantially modify or alter the terms of an existing, previously approved loan transaction, or transactions involving publicly registered debt and securities sold pursuant to a firm underwriting agreement. Transactions involving publicly registered debt and securities registered with the Securities and Exchange Commission and sold pursuant to a firm underwriting agreement are, however, subject to certain notice and reporting requirements.

If it should be determined that the Louisiana Act has been violated by us or any of our Louisiana subsidiaries holding riverboat gaming licenses, the Board could revoke, suspend, limit, or condition the licenses, subject to compliance with certain statutory and regulatory procedures. In addition, we, the Louisiana subsidiaries holding riverboat gaming licenses, and the persons involved in any violations of the Louisiana Act could be subject to substantial fines for each separate violation of the Louisiana Act at the discretion of the Board. To the extent a decision of the Board is appealable, such appeal may be made to the 19th Judicial District Court for the Parish of East Baton Rouge, State of Louisiana.

Certain related Louisiana legislation required statewide local elections on a parish-by-parish basis to determine whether to prohibit or continue to permit licensed riverboat gaming, licensed video poker gaming, and licensed land based gaming. The applicable local elections have occurred in all parishes in which we operate our riverboat gaming vessels, and the voters in those parishes voted to continue licensed riverboat and video poker gaming. However, it is noteworthy that the current legislation does not provide for any moratorium on future local elections on gaming.

Missouri . On November 3, 1992, a statewide referendum authorized gaming in the State of Missouri on the Missouri and the Mississippi Rivers. On April 29, 1993, Missouri enacted revised legislation (as amended, the “Missouri Gaming Law”) which amended the existing legislation. In a decision handed down on January 25, 1994, the Missouri Supreme Court held that games of chance were prohibited under the Missouri constitution. In a statewide election held on November 8, 1994, Missouri voters approved the adoption of an amendment to the Missouri Constitution which permits the legislature to allow games of chance to be conducted on excursion boats and floating facilities on the Mississippi River and the Missouri River. As a result of the amendment, games of chance are also permitted subject to Missouri Gaming Law. Pursuant to the Missouri Gaming Law, there are eleven operating riverboat gaming facility sites in Missouri: one in Caruthersville; one in Boonville; three in the St. Louis area; four in the Kansas City area; one in LaGrange; and one in St. Joseph.

On September 1, 2004, the Missouri Gaming Commission selected one of our subsidiaries, Casino One Corporation (“Casino One”) as a priority to be investigated to determine suitability for Class A licenses in both the City of St. Louis and in the County of St. Louis. Subsequent to receipt of these designations, Casino One filed on behalf of both the City of St. Louis and the St. Louis County sites applications to obtain permanent docking and placement of the gaming facilities in a basin within 1,000 feet of the Mississippi River. Approval for placement and permanent docking are required under the Missouri Gaming Law. On January 12, 2005 and on May 25, 2005, the Missouri Gaming Commission granted approval to Casino One of the location of the City of St. Louis and the St. Louis County gaming facilities.

In December 2006, Pinnacle acquired 100% of the stock of President Riverboat Casino Missouri (“PRC-MO”). PRC-MO is a licensee authorized to conduct gaming in Missouri and Pinnacle is a holding company of PRC-MO. PRC-MO is operating a gaming facility in St. Louis, Missouri. Pinnacle is also the holding company of Casino One which obtained a Class A license to operate a gaming facility known as Lumiere Place in St. Louis, Missouri, on November 27, 2007. Casino One also has a pending application before the Missouri Gaming Commission to construct, own and operate a casino in St. Louis County, Missouri. On July 26, 2006, Pinnacle was licensed in Missouri as a “key person” business entity for the applicant for license, Casino One. As a key person business entity, Pinnacle is licensed and regulated by the Missouri Gaming Commission, and its ability to engage in certain transactions is restricted.

Effective May 30, 2008, certain amendments were made to Missouri’s gaming regulations, including 11 CSR 45-4.020(10) that provide for the division of Missouri gaming licenses into Class A and Class B Licenses. Pinnacle now holds a Class A License which allows Pinnacle to “operate” the PRC-MO and Casino One business entities. PRC-MO and Casino One now hold Class B Licenses allowing them to operate the respective riverboat gaming operations in Missouri. Based on these amended regulations, PRC-MO as operator of the President Riverboat Casino gaming facility and Casino One as operator of the Lumiere Place gaming facility became Class B license holders. Pinnacle, as the holding and parent company of PRC-MO and Casino One, holds a Class A license.

Pinnacle must obtain advance approval of the Missouri Gaming Commission to transfer or issue any ownership interest in Pinnacle, PRC-MO, and/or Casino One, or to enter into any contract or arrangement, whereby a person or group of persons acting in concert (A) owns, controls, or has power to vote twenty-five percent or more of the voting ownership interest in Pinnacle or PRC-MO or Casino One, or (B) controls the election of a majority of the directors or managers of Pinnacle or PRC-MO.

Pinnacle may not transfer or issue any ownership interest in PRC-MO or Casino One without providing sixty days advance notice to the Missouri Gaming Commission. During the notice period the Commission may disapprove the transaction or require the transaction to be delayed pending further investigation.

Pinnacle may not pledge or hypothecate its ownership interest in PRC-MO or Casino One, or subject such ownership interests to any type of security interest held by any entity or person other than a financial institution without providing sixty days advance notice to, and without obtaining prior approval from, the Missouri Gaming Commission. During the notice period the Commission may disapprove the transaction or require the transaction to be delayed pending further investigation. If a transfer of ownership is involved, separate notice must be provided at least thirty days prior to the transfer, and this restriction must be specifically included in the grant of the pledge, hypothecation, or security interest.

Neither the Missouri Gaming licenses of PRC-MO and Casino One, nor any interest in such licenses may be pledged, hypothecated, or transferred in any way.

The Missouri Gaming Commission must be notified of the intention to consummate any of the following transactions at least fifteen days prior to consummation, and the Commission may reopen the licensing hearing of PRC-MO or Casino One to consider the effect of the transaction on suitability for each or either licensee: (A) any issuance of an ownership interest in Pinnacle or PRC-MO or Casino One if such issuance will involve five percent or greater of the ownership interest of Pinnacle or PRC-MO or Casino One, assuming that all of the ownership interest in the issuance is issued and outstanding; (B) any private incurrence of debt equal to or exceeding one million dollars by Pinnacle or PRC-MO or Casino One; (C) any public issuance of debt by Pinnacle or PRC-MO or Casino One; or (D) any transaction involving PRC-MO or Casino One and a “related party” (any key person or holding company of PRC-MO or Casino One, including Pinnacle and Casino Magic Corporation, another subsidiary of Pinnacle; any person under the control of PRC-MO or Casino One, or any of its key persons, including Pinnacle; or any person sharing a holding company in common with PRC-MO or Casino One) where the transaction involves any of the following: (1) consideration paid for services provided by the related party or personnel working on behalf of the related party; (2) any arrangement in which consideration paid to the related party is based upon any measure of financial or business production of PRC-MO or Casino One; (3) any allocation of expenses between related parties; or (4) any loan or credit issued from the related party to PRC-MO or Casino One at

a rate of interest that is at least one percent higher than the “bank prime loan rate” as reported by the Federal Reserve System Board of Governors on Form H.15. Pinnacle must report the consummation of any of the following transactions to the Missouri Gaming Commission within seven days: (A) any transfer or issuance of ownership interest in Pinnacle or PRC-MO or Casino One that has resulted in an entity or group of entities acting in concert owning a total ownership interest equaling five percent or greater of the ownership interest of Pinnacle or PRC-MO or Casino One, or (B) any pledge or hypothecation of, or grant of a security interest in, five percent or more of the ownership interest of Pinnacle or PRC-MO or Casino One, provided that if any ownership interest is transferred pursuant to a pledge, hypothecation, or security interest, separate notice to the Commission is required not later than seven days after consummation of the transfer.

PRC-MO and Casino One must notify the Missouri Gaming Commission no later than seven days following the consummation of any transaction by Pinnacle, PRC-MO, or Casino One, or any entity affiliated with PRC-MO and/or Casino One that involves or relates to PRC-MO and/or Casino One and has a dollar value equal to or greater than one million dollars.

Casino One is also required to disclose any of the above transactions to the Missouri Gaming Commission that may occur with respect to Pinnacle, and the Missouri Gaming Commission can then take into account the continuing suitability of Casino One to construct, own and operate the proposed St. Louis County facilities.

All direct, indirect or beneficial owners of our common stock, holding an interest of 5% or more in us, are subject to licensing requirements of the Missouri Gaming Commission that require the filing of an application that includes extensive suitability and financial information and is subject to review and approval of Missouri Gaming Commission. We are permitted to require any such “key person” or business that either fails to file for a license with the Missouri Gaming Commission or is not found suitable by the Missouri Gaming Commission, to divest itself of all such common stock in accordance with our certificate of incorporation. The Missouri Gaming Commission or its Director may also determine that any other holder of our common stock is subject to the above licensing requirements regardless of the percentage interest of ownership in us. Additionally, an institutional investor holding an interest of 20% or less in us for only passive investment purposes, may be exempted from these licensure requirements by the Missouri Gaming Commission.

Under the Missouri Gaming Law, the ownership and operation of riverboat gaming facilities in Missouri are subject to extensive state and local regulation. After the receipt of licensing approval from and in the discretion of the Missouri Gaming Commission, the construction of the St. Louis County facilities and the commencement of operations of the St. Louis County facilities, we, Casino One, our subsidiary that will operate the County project, any subsidiaries, and some of their officers and employees are and will be subject to specific regulations, including ongoing licensing requirements. As part of the application and licensing process for a gaming license, the applicant must submit detailed financial, operating and other reports to the Missouri Gaming Commission. Each applicant has an ongoing duty to update the information provided to the Missouri Gaming Commission in the application, usually within seven days of a material change in the information on file with the Commission. Casino One has frequently updated its application materials since it initially filed its applications. In addition to the information required of the applicant, directors, officers, affiliated business entities and other defined “key persons” (which include individuals and companies designated by the Missouri Gaming Commission) must submit Personal Disclosure Forms, which include detailed financial information, and are subject to thorough investigations. In addition, we and some of our officers and directors have submitted Personal Disclosure Forms and applications to the Missouri Gaming Commission. All gaming employees must obtain an occupational license issued by the Missouri Gaming Commission. Suppliers are also subject to licensing requirements of the Missouri Gaming Commission.

The Class A (parent organization or controlling entity) and Class B (operator of the gaming facility) licenses are issued through application to the Missouri Gaming Commission, which requires, among other things:

• suitability investigations into an applicant’s character, financial responsibility, experience, and qualifications;

• suitability investigations into each designated key person or affiliated business entity’s character, financial responsibility, experience and qualifications;

• disclosure of required financial (see above) and other personal information on each key person or designated affiliated business entity;

• disclosure of detailed information about the applicant’s history, business, affiliations, officers, directors and owners;

• an affirmative action plan for the hiring and training of minorities and women; and

• an economic development or impact report.

License fees cover all related costs of the Missouri Gaming Commission investigation and are a minimum of $50,000 for the initial application and $25,000 annually thereafter. We and Casino One each are undergoing a full licensing investigation and hearing in connection with its licensing as above stated.

The Missouri Gaming Law and implementing regulations impose restrictions on the use of and do not permit the transfer of the gaming licenses as well as limitations on transactions engaged in by licensees. The licenses issued by the Missouri Gaming Commission may not be transferred nor pledged as collateral. The Missouri Gaming Law regulations bar a licensee from taking any of the following actions without prior notice to, and approval by, the Missouri Gaming Commission:

• any transfer or issuance of an ownership interest in a gaming licensee that is not a publicly held company;

• any transfer or issuance of an ownership interest of five percent or more of the issued and outstanding ownership interest of a company which is publicly traded and is a holding company;

• any private incurrence of debt by the licensee or any holding company of $1,000,000 or more;

• any public issuance of debt by a licensee or its holding company; and

• defined “significant related party transactions.”

In addition, the licensee must notify the Missouri Gaming Commission of other transactions that include the transfer of five percent or more of an ownership interest in the licensee or holding company if publicly held and any transaction of at least $1,000,000.

The restrictions on transfer of ownership apply to us as well as the direct licensee, Casino One. Gaming equipment may not be pledged. Corporate stock of some licensees may not be pledged except in narrow circumstances and subject to regulatory conditions.

Missouri statutes and administrative rules contain detailed requirements and conditions concerning the operation of a licensed excursion gaming boat facility, including, but not limited to the following:

• a charge of two dollars per gaming customer per excursion that licensees must either collect from each customer or pay itself to the Missouri Gaming Commission;

• minimum payouts;

• the payment of a 21% tax on adjusted gross receipts;

• prohibitions against providing credit to gaming customers;

• the use of credit cards and the cashing of checks by customers;

• providing security on the excursion gambling boat, including a requirement that each licensee reimburse the Missouri Gaming Commission for all costs of any Missouri Gaming Commission staff, including Missouri Highway Patrol Officers necessary to protect the public on the licensee’s riverboat;

• the receipt of liquor licenses from the Missouri Gaming Commission and local jurisdictions; and

• the adoption of minimum control standards for the conduct of gaming and the operation of the facility approved by the Missouri Gaming Commission.

The Missouri Gaming Commission has the power, as well as broad discretion in exercising this power, to revoke or suspend gaming or occupational licenses and impose other penalties for violations of the Missouri Gaming Law and the rules and regulations promulgated thereunder, including without limitation, forfeiture of all gaming equipment used for improper gaming and fines of up to three times a licensee’s highest daily gross receipts during the preceding twelve months.

The Class A license issued to Casino One in November 2007 for Lumiere Place was issued for a period of ninety days or for the period through the March 2008 Commission meeting, pending the completion of certain American Bureau of Shipping certifications as to the installation of certain strain gauge devices (the “Devices”) by Casino One at the casino dock site. Casino One and Pinnacle signed a hold harmless agreement with the Missouri Gaming Commission indemnifying the Missouri Gaming Commission as to claims and costs incurred as a result of issuance of the license to Casino One. The hold harmless agreement related to the Devices.

On December 19, 2008, the Missouri Gaming Commission issued Casino One a Class B license for a period of one year, expiring December 19, 2009, and terminated the hold harmless agreement previously executed by Casino One and Pinnacle. The Class B license rather than a Class A license was issued by the Commission as a result of the May 30, 2008, amendments to the Missouri gaming regulations. A Class A license was issued to Pinnacle on July 26, 2006, expiring October 31, 2011.

Although the Missouri Gaming Law provides no limit on the amount of riverboat space that may be used for gaming, the Missouri Gaming Commission is empowered to impose space limitations through the adoption of rules and regulations.

Previously, the Missouri Gaming Law imposed as to each customer a $500 loss limit per two-hour period established by each licensee with the approval of the Missouri Gaming Commission. However, Missouri registered voters approved of Proposition A on November 4, 2008, which amended Section 313.805(3) RSMo to provide that the Missouri Gaming Commission shall not establish any regulations or policies that limit the amount of wagers, losses, or buy-in amounts.

Specifically, Proposition A, which was a ballot referendum (1) repealed the maximum loss limit for gambling; (2) repealed the current individual maximum loss limit for gambling; (3) prohibited any future loss limits; (4) required identification to enter the gambling area only if necessary to establish that an individual is at least 21 years old; (5) restricted the number of casinos to those already built or being built; (6) increased the casino gambling tax from 20% to 21%; (7) created a new specific education fund from additional gambling tax proceeds generated as a result of this measure called the “Schools First Elementary and Secondary Education Improvement Fund”; and (8) required annual audits of this new fund.

In addition, the Missouri Gaming Commission is empowered to determine on a city and county-specific basis where “dockside” or permanently-docked gaming is appropriate and may be permitted. The Missouri Gaming Commission has authorized all eleven licensed sites to operate all or a portion of their facilities on a continuously docked basis.

Nevada . The ownership and operation of casino gaming facilities in Nevada are subject to: (i) the Nevada Gaming Control Act and the regulations promulgated thereunder (collectively, the “Nevada Act”); and (ii) various local regulations. Our gaming operations are subject to the licensing and regulatory control of the Nevada Gaming Commission (the “Nevada Commission”), the Nevada State Gaming Control Board (the “Nevada Board”) and the City of Reno. The Nevada Commission, the Nevada Board and the City of Reno 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 which are concerned with, among other things: (i) the prevention of unsavory or unsuitable persons from having a direct or indirect involvement with gaming at any time or in any capacity; (ii) the establishment and maintenance of responsible accounting practices and procedures; (iii) the maintenance of effective controls over the financial practices of licensees, including the establishment of minimum procedures for internal fiscal affairs and the safeguarding of assets and revenues, providing reliable record keeping and requiring the filing of periodic reports with the Nevada Gaming Authorities; (iv) the prevention of cheating and fraudulent practices; and (v) providing a source of state and local revenues through taxation and licensing fees. Changes in such laws, regulations and procedures could have an adverse effect on Boomtown Reno’s gaming operations.

Our subsidiary which operates Boomtown Reno and two other gaming operations that have only slot machines (the “Gaming Subsidiary”) is required to be licensed by the Nevada Gaming Authorities. The gaming licenses require the periodic payment of fees and taxes and are not transferable. We are currently registered by the Nevada Commission as a publicly traded corporation (a “Nevada Registered Corporation”) and have been found suitable as the parent company of the Gaming Subsidiary, which is a gaming licensee under the terms of the Nevada Act. As a Registered Corporation, we are required periodically to submit detailed financial and operating reports to the Nevada Commission and furnish any other information which the Nevada Commission may require. No person may become a stockholder of, or holder of an interest of, or receive any percentage of profits from, a gaming licensee without first obtaining licenses and approvals from the Nevada Gaming Authorities. We and the Gaming Subsidiary have obtained from the Nevada Gaming Authorities the various registrations, findings of suitability, approvals, permits and licenses required in order to engage in gaming activities in Nevada.

The Nevada Gaming Authorities may investigate any individual who has a material relationship to, or material involvement with, us or the Gaming Subsidiary in order to determine whether such individual is suitable or should be licensed as a business associate of a gaming licensee. Our and the Gaming Subsidiary’s officers, directors and certain key employees, must file applications with the Nevada Gaming Authorities and may be required to be licensed or found suitable by the Nevada Gaming Authorities. Our officers, directors and key employees who are actively and directly involved in gaming activities of the Gaming Subsidiary may be required to be licensed or found suitable by the Nevada Gaming Authorities. The Nevada Gaming Authorities may deny an application for licensing for any cause which they deem reasonable. A finding of suitability is comparable to licensing, and both require submission of detailed personal and financial information followed by a thorough investigation. The applicant for licensing or a finding of suitability must pay all the costs of the investigation. Changes in licensed positions must be reported to the Nevada Gaming Authorities and, in addition to their authority to deny an application for a finding of suitability or licensure, the Nevada Gaming Authorities have jurisdiction to disapprove a change in a corporate position. If the Nevada Gaming Authorities were to find an officer, director or key employee unsuitable for licensing or unsuitable to continue having a relationship with us or the Gaming Subsidiary, the companies involved would have to sever all relationships with such person. In addition, the Nevada Commission may require us or the Gaming Subsidiary 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.

We and the Gaming Subsidiary are required to submit detailed financial and operating reports to the Nevada Commission. Substantially all material loans, leases, sales of securities and similar financing transactions by us and the Gaming Subsidiary must be reported to or approved by the Nevada Commission.

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

Any beneficial holder of our voting or non-voting securities, regardless of the number of shares owned, may be required to file an application, be investigated, and be found suitable as a beneficial holder of our voting securities if the Nevada Commission has reason to believe that such ownership would otherwise be inconsistent with the declared policies of the State of Nevada. 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 beneficial ownership of more than 5% of a Nevada Registered Corporation’s voting securities to report the acquisition to the Nevada Commission. The Nevada Act requires that beneficial owners of more than 10% of a Nevada Registered Corporation’s voting securities apply to the Nevada Commission for a finding of suitability within thirty days after the Chairman of the Nevada Board mails the written notice requiring such filing. Under certain circumstances, an “institutional investor,” as defined in the Nevada Act, which acquires more than 10%, but not more than 15%, of a Nevada Registered Corporation’s voting securities may apply to the Nevada Commission for a waiver of such finding of suitability if such institutional investor holds the voting securities for investment purposes only. In certain circumstances, an institutional investor can hold up to 19% of a Nevada Registered Corporation’s voting securities for a limited period of time and maintain the waiver. An institutional investor shall not be deemed to hold voting securities for investment purposes unless the voting securities were acquired and are held in the ordinary course of business as an institutional investor and not for the purpose of causing, directly or indirectly, the election of a majority of the members of the board of directors of the Nevada Registered Corporation, any change in the Nevada Registered Corporation’s corporate charter, restated bylaws, management, policies or operations of the Nevada Registered Corporation, or any of its gaming affiliates, or any other action which the Nevada Commission finds to be inconsistent with holding the Nevada Registered Corporation’s voting securities for investment purposes only. Activities which are not deemed to be inconsistent with holding voting securities for investment purposes only include: (i) voting on all matters voted on by stockholders; (ii) making financial and other inquiries of management of the type normally made by securities analysts for informational purposes and not to cause a change in its management, policies or operations; and (iii) such other activities as the Nevada Commission may determine to be consistent with such investment intent. If the beneficial holder of voting securities who must be found suitable is a corporation, partnership or trust, it must submit detailed business and financial information, including a list of beneficial owners. The applicant is required to pay all costs of investigation.

Any person who fails or refuses to apply for a finding of suitability or a license within thirty days after being ordered to do so by the Nevada Commission or the Chairman of the Nevada Board, may be found unsuitable. The same restrictions apply to a record owner if the record owner, after request, fails to identify the beneficial owner. Any securityholder found unsuitable and who holds, directly or indirectly, any beneficial ownership of the security beyond such period of time as may be prescribed by the Nevada Commission may be guilty of a criminal offense. We are subject to disciplinary action if, after we receive notice that a person is unsuitable to be a securityholder or to have any other relationship with us or the Gaming Subsidiary, we: (i) pay that person any dividend or interest upon our voting securities, (ii) allow that person to exercise, directly or indirectly, any voting right conferred through securities held by that person, (iii) pay remuneration in any form to that person for services rendered or otherwise, or (iv) fail to pursue all lawful efforts to require such unsuitable person to relinquish such person’s voting securities including, if necessary, the immediate purchase of said securities for cash at fair market value.

The Nevada Commission may, in its discretion, require the holder of any debt security of a Nevada Registered Corporation to file applications, be investigated and be found suitable to own the debt or other security of a Nevada Registered Corporation if the Nevada Commission has reason to believe that such holder’s acquisition of such debt or other security would otherwise be inconsistent with the policy of the State of Nevada. If the Nevada Commission determines that a person is unsuitable to own such security, then pursuant to the Nevada Act, the Nevada Registered Corporation can be sanctioned, including the loss of its approvals if, without the prior approval of the Nevada 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.

We are required to maintain a current stock ledger in Nevada which 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. We are also required to render maximum assistance in determining the identity of the beneficial owner. The Nevada Commission has the power to require that our stock certificates bear a legend indicating that the securities are subject to the Nevada Act. However, to date the Nevada Commission has not imposed such a requirement on us.

We are not permitted to make a public offering of our securities without the prior approval of the Nevada Commission if the securities or the proceeds therefrom are intended to be used to construct, acquire or finance gaming facilities in Nevada, or to retire or extend obligations incurred for such purposes. On February 19, 2009, the Nevada Commission granted us prior approval to make public offerings for a period of two years, subject to certain conditions (the “Nevada Shelf Approval”). The Nevada Shelf Approval also applies to any affiliated company wholly owned by us (an “Affiliate”), which is a publicly traded corporation or would thereby become a publicly traded corporation pursuant to a public offering. The Nevada Shelf Approval, however, may be rescinded for good cause without prior notice upon the issuance of an interlocutory stop order by the Chairman of the Nevada Board. The Nevada Shelf Approval does not constitute a finding, recommendation or approval of the Nevada Gaming Authorities as to the accuracy or the adequacy of the prospectus or the investment merits of the securities offered thereby. Any representation to the contrary is unlawful.

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

The Nevada legislature has declared that some corporate acquisitions opposed by management, repurchases of voting securities and corporate defense tactics affecting Nevada corporate gaming licensees, and Nevada Registered Corporations that are affiliated with those operations, may be injurious to stable and productive corporate gaming. The Nevada 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 licensees and their affiliates; (ii) preserve the beneficial aspects of conducting business in the corporate form; and (iii) promote a neutral environment for the orderly governance of corporate affairs. Approvals are, in certain circumstances, required from the Nevada Commission before the Nevada Registered Corporation can make exceptional repurchases of voting securities above the current market price thereof and before a corporate acquisition opposed by management can be consummated. The Nevada Act also requires prior approval of a plan of recapitalization proposed by the Nevada Registered Corporation’s Board of Directors in response to a tender offer made directly to the Nevada Registered Corporation’s stockholders for the purposes of acquiring control of the Nevada Registered Corporation.

License fees and taxes, computed in various ways depending on the type of gaming or activity involved, are payable to the State of Nevada and to the City of Reno, in which the Gaming Subsidiary’s operations are conducted. 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. An entertainment tax is also paid by casino operations where live entertainment is furnished in connection with an admission charge and the serving or selling of food or refreshments, or the selling of any merchandise.

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

New Jersey . The ownership and operation of casino facilities and the conduct of gaming activities in Atlantic City, New Jersey, are subject to extensive state regulation under the New Jersey Casino Control Act (the “New Jersey Act”), the regulations of the New Jersey Casino Control Commission (the “New Jersey Commission”), and the recommendations and investigative powers of the New Jersey Division of Gaming Enforcement (the “New Jersey Division”).

The New Jersey Act and regulations concern primarily (i) the financial stability, business ability, and good character, honesty and integrity of casino licensees and casino service industry (“CSI”) licensees, their intermediary and holding companies, and the directors, employees, security holders and lenders of each (with the exception of banks or other licensed lending institutions that make loans or hold mortgages or other liens acquired in the ordinary course of business); (ii) the nature of hotel and casino facilities; and (iii) the operating methods and financial and accounting practices used in connection therewith.

The New Jersey Act imposes a tax of eight percent (8%) on gross gaming revenues and an investment alternative tax of two and one-half percent (2.5%) of gross gaming revenues that can be fully offset by investment tax credits equal to one and one-quarter percent (1.25%) of gross gaming revenues. Credits are obtained by purchasing bonds issued by, or investing in housing or other development projects approved by, the Casino Reinvestment Development Authority. Casinos are subject to additional taxes and fees, including, among others, an annual license fee of $500.00 on every slot machine in use or maintained for use.

The Company is subject to the jurisdiction of the New Jersey Commission and the New Jersey Act by reason of (i) having been granted a Statement of Compliance that the Company is qualified to be a holding company of a casino licensee; and (ii) being an applicant for a gaming-related CSI license. The CSI license application was required by the New Jersey Commission as a condition of, among other things, the Company’s being able to possess, store and transport slot machines in connection with the closing of the Sands Hotel and Casino. The Company anticipates that a New Jersey affiliate of the Company will become an applicant for a casino license.

The New Jersey Commission has broad discretion regarding the issuance, renewal, revocation, suspension and control of all gaming licenses. Casino licenses and CSI licenses are not transferable, but control of an entity that holds a casino license can be transferred with the express prior written approval of the New Jersey Commission. By comparison, if control of an entity that holds a CSI license is transferred, the license is forfeited, and the newly-controlled entity must reapply for a license. Applicants for gaming-related CSI licenses can do business with casino licensees pursuant to transactional waivers sought by petition to the New Jersey Commission.

Participation in casino operations as a licensee is deemed a revocable privilege, not a property right. It is conditioned on the proper and continued qualification of the licensee and upon the discharge of the affirmative responsibility of each such licensee to provide to the regulatory and investigatory authorities any assistance and information necessary to ensure that the policies declared by the New Jersey Act are achieved.

The New Jersey Act imposes restrictions on the ownership and transfer of equity or debt instruments issued by an entity that holds a casino license or is deemed a holding company, intermediary company, subsidiary or “entity qualifier” of a casino licensee (collectively, “affiliates”). The New Jersey Act provides that the corporate charter of a publicly traded affiliate of a casino licensee must require that a holder of the affiliate’s securities dispose of them if the New Jersey Commission finds that the holder is not qualified under the New Jersey Act (is “disqualified”). The Act also requires that the corporate charter (or certificate of formation for an LLC) of a casino licensee or a privately-held affiliate of the licensee must:

• establish the right of prior approval by the New Jersey Commission with regard to the transfer of any interest in the entity; and

• create the absolute right of the entity to repurchase any security, share or other interest in the entity at the market price or purchase price, whichever is less, if the New Jersey Commission disapproves a transfer of the interest in accordance with the provisions of the New Jersey Act.

The Company’s corporate charter will be amended to conform to the requirements of the New Jersey Act before an affiliate of the Company is granted a casino license. The organic documents for any subsidiary that becomes a New Jersey casino licensee and any other affiliates in the chain of ownership of the licensee will likewise need to conform.

If the New Jersey Commission finds that an individual owner or holder of the securities or other interests of a casino licensee, a CSI licensee, or any of their affiliates is disqualified under the New Jersey Act, the New Jersey Commission may propose remedial action, including divestiture of the securities or other interests. If disqualified persons fail to divest the interests, the New Jersey Commission may revoke or suspend the license; however, if an affiliate of a casino licensee is a publicly traded company, and the New Jersey Commission makes a disqualification finding with respect to an owner or holder of any interest therein, and the New Jersey Commission also finds that:

• the affiliate has adopted the required charter provisions;

• the affiliate has made a good faith effort, including the prosecution of all legal remedies, to comply with any order of the New Jersey Commission requiring the divestiture of the interest held by the disqualified owner or holder; and

• the disqualified owner or holder does not have the ability to control the affiliate or the licensee, or to elect one or more members of the board of directors of the affiliate or licensee, then the New Jersey Commission will not take action against the casino licensee or its affiliate with respect to the continued ownership of the interest by the disqualified owner or holder.

Before a casino license or CSI license will be granted or renewed, all security holders of a publicly traded holding company of the applicant or licensee must qualify under the New Jersey Act or have the qualification requirement waived or deemed inapplicable. Under the New Jersey Act, a security holder is presumed to have the ability to control a publicly traded corporation or to elect one or more members of its board of directors, and thus to be ineligible for waiver, if the holder owns or beneficially holds five percent (5%) or more of the voting securities of the corporation. Typically, the publicly traded issuer or its licensed casino affiliate will seek a blanket waiver for persons holding less than five percent (5%) of the issuer’s voting securities. (Holders of less than 5% of the voting securities of a CSI or its affiliates are not “qualifiers” and therefore do not need a waiver of the qualification requirement.) The presumption of control can be rebutted by clear and convincing evidence, including a showing that a holder is an “institutional investor,” as that term is defined under the New Jersey Act, and satisfies the conditions for institutional investor waiver described below.

An institutional investor is defined by the New Jersey Act as: any retirement fund administered by a public agency for the exclusive benefit of federal, state, or local public employees; any investment company registered under the Investment Company Act of 1940, any collective investment trust organized by banks under Part Nine of the Rules of the Comptroller of the Currency; any closed end investment trust; any chartered or licensed life insurance company or property and casualty insurance company; any banking or other chartered or licensed lending institution; any investment adviser registered under the Investment Advisers Act of 1940; and such other persons as the New Jersey Commission may determine for reasons consistent with the policies of the New Jersey Act.

An institutional investor is entitled to a waiver of qualification if it holds less than ten percent (l0%) of the “equity” securities (interpreted by the New Jersey Commission to mean the voting securities) of a publicly traded holding or intermediary company of a casino licensee or gaming-related CSI licensee, or of the CSI licensee itself, and:

• the securities were purchased for investment purposes only;

• the New Jersey Commission finds no cause to believe the institutional investor may be found unqualified; and

• upon request by the New Jersey Commission, the institutional investor files a certified statement to the effect that it has no intention of influencing or affecting the affairs of the issuer, the licensee, or any of the licensee’s other affiliates. Voting on matters put to the vote of the outstanding security holders does not constitute an attempt to influence.

The New Jersey Commission may grant a waiver of qualification to an institutional investor holding ten percent (10%) or more of the equity securities of a publicly traded affiliate of a casino licensee or gaming-related CSI licensee, or of the CSI licensee itself, upon a showing of good cause and if the conditions specified above are met.

Institutional holders of publicly traded debt securities of an affiliate of a casino licensee are entitled to a waiver of qualification if the holder’s position in the aggregate is not more than twenty percent (20%) of the total outstanding debt of the affiliate and not more than fifty percent (50%) of any outstanding publicly traded debt issue of the affiliate (such as individual series of subordinated debt ), and if the institutional investor satisfies the conditions specified above. As with equity securities, the New Jersey Commission may grant a waiver of qualification to institutional investors holding larger positions upon a showing of good cause and if the institutional investor satisfies all the conditions specified above.

The New Jersey Act and regulations do not specifically call for the qualification of holders of publicly traded debt of CSI’s, but the New Jersey Commission could at any time require such qualification, in which case similar waiver requirements to those applied to the holders of publicly traded debt of affiliates of casino licensees would likely apply.

Generally, the New Jersey Commission requires that institutional holders seeking waiver of qualification execute a certification stating that:

• the holder has reviewed the definition of institutional investor under the New Jersey Act and believes that it meets the definition of institutional investor;

• the holder purchased the securities for investment purposes only and holds them in the ordinary course of business;

• the holder has no involvement in the business activities of, and no intention of influencing or affecting the affairs of, the issuer, the licensee or any affiliate;

• if the holder subsequently determines to influence or affect the affairs of the issuer, the licensee or any affiliate, it will provide not less than 30 days’ notice of its intent and will file an application for qualification with the New Jersey Commission before taking the action; and

• the holder acknowledges that it is subject to the jurisdiction of the New Jersey Commission and the requirements of the New Jersey Act and the regulations promulgated thereunder.

With respect to non-institutional holders of publicly traded debt securities, the New Jersey Commission generally waives the qualification requirement for holders of less than 15.0% of a series of publicly-traded debt as long as the securities remain widely distributed and freely traded in the public market, and the holder has no ability to control the issuer or the licensee. We cannot assure you that the New Jersey Commission will continue to apply the 15.0% qualification threshold. The New Jersey Commission could at any time establish a lower threshold.

Beginning on the date that the New Jersey Commission serves notice on a casino licensee or affiliate that a holder of a security or other interest has been disqualified, it will be unlawful for the holder to:

• receive any dividends or interest upon any such security or other interest;

• exercise, directly or through any trustee or nominee, any right conferred by such security or other interest; or

• receive any remuneration in any form from the casino licensee for services rendered or otherwise.

Persons required to qualify under the New Jersey Act because they hold debt or equity securities of a casino licensee or its affiliates and who are not already qualified are required either to (i) divest within 120 days such securities as the New Jersey Commission may require to remove the need for qualification or, in the alternative, (ii) file a completed application for qualification and place the securities into an interim casino authorization (“ICA”) trust pending qualification. Unless and until the New Jersey Commission denies ICA or finds reasonable cause to believe that the investor may not be found qualified, the investor will retain the ability to direct the trustee how to vote, or whether to dispose of, the securities. If the New Jersey Commission denies ICA or finds reasonable cause to believe that the investor may be found unqualified, the New Jersey Commission can order that the trust become “operative,” in which case the investor will lose voting power, if any, over the securities but will retain the right to petition the New Jersey Commission to order the trustee to dispose of the securities.

Once an ICA trust is funded, and regardless of whether it becomes operative, the investor has no right to receive a return on the investment until the investor becomes fully qualified. Should an investor ultimately be found unqualified, the trustee would dispose of the trust property, and the proceeds would be distributed to the unqualified applicant only in an amount not to exceed the lower of the actual cost of the trust property to the unqualified applicant or the value of such trust property calculated as if the investment had been made on the date the trust became operative. Any excess proceeds would be paid to the State of New Jersey. If the securities were sold by the trustee pending qualification, the investor would receive only actual cost, with disposition of the remainder of the proceeds, if any, to await the investor’s qualification hearing.

The Company must notify the New Jersey Commission and the New Jersey Division of any new debt or equity issued and must provide them with the related documentation, including lists of holders. The Company may have to petition the New Jersey Commission for waiver of the qualification requirement for particular security holders subsequent to such issuance of debt or equity securities. If necessary waivers are not granted, the holders of such debt or equity securities will either have to be found qualified by the New Jersey Commission or divest enough securities to permit waiver. There can be no assurance that necessary waivers will be granted.

If a casino license is not renewed, is suspended for more than 120 days or revoked, the New Jersey Commission can appoint a conservator to preserve and operate the business. Upon appointment, the conservator is vested with title to all the property relating to the casino hotel, subject to any and all valid liens, claims, and encumbrances. While the conservator is operating the business, the former or suspended casino licensee is entitled to a fair rate of return from net earnings, with any excess to be paid to the State. The New Jersey Commission can authorize the conservator to sell the property in bulk, subject to valid liens, claims and encumbrances, after the resolution of any suspensions of, or appeals by, the former or suspended licensee, after appropriate prior consultation with the licensee as to the reasonableness of the terms of sale, upon prior written notice to all creditors and other parties in interest, and only to persons eligible to apply for and able to qualify for a casino license under the New Jersey Act. The former or suspended licensee is entitled to the net proceeds of the sale after payment of all obligations owed to the State and to the conservator.

Argentina. In Argentina, the regulation of gaming is generally under the jurisdiction of the provinces of the country. All of our casinos in Argentina are located in the province of Neuquén. In May 1994, the Provincial Government of Neuquén enacted a casino privatization program to issue twelve-year exclusive concession agreements to operate existing casinos. The concession agreements are renewable for five or ten years, provided that certain conditions are met. The Executive Power of Neuquén granted a casino license to Casino Magic Corporation pursuant to a Concession Agreement dated December 21, 1994, between the Provincial Government of Neuquén and Casino Magic Neuquén S.A (the “Concession Agreement”). Casino Magic Corporation and Casino Magic Neuquén S.A. are direct or indirectly wholly-owned subsidiaries of ours. The Concession Agreement granted Casino Magic Neuquén S.A. the exclusive right to operate casinos in the cities of Neuquén and San Martín de los Andes in the Province of Neuquén. The Concession Agreement also granted Casino Magic Neuquén S.A. the exclusive right to operate casinos within 50 kilometers (31.05 miles) of its existing properties as long as those casinos are within the Province of Neuquén. It should be noted that we still retain a priority to match any bidding offer to open and operate other casinos within the Province of Neuquén, however, such casinos would not be covered by the exclusivity provisions of the Concession Agreement and provided that in the corresponding bidding process our original offer is not lower than 15% of that of the best offeror’s. We also opened a new facility in the city of Junín de los Andes, in the Province of Neuquén. This casino was opened under the scope of the existing casino license for the property located in San Martín de los Andes. In July 2005, we closed the largest of our casinos located in the city of Neuquén, which had been operating since 1995, and opened a larger facility including a more lavish casino; an upscale restaurant; a wine bar; three other casino bars; and a large entertainment venue, one mile away from the original location on approximately 20 acres owned by us. Additionally, we have obtained a casino license to open casinos in the cities of Caviahue and Copahue, in the Province of Neuquén. These casino licenses are for a term of 12 years and are renewable for an additional 10 year term at the discretion of the granting authority. In light of the above, we are currently operating four casinos in the Province of Neuquén (in the cities of Neuquén, San Martín de los Andes, Junín de los Andes, and Caviahue), and the one in Copahue in the same Province, in west central Argentina, seasonally.

On July 14, 2003, the Executive Power of Neuquén approved the terms of an agreement establishing the conditions for the renewal of our casino license pursuant to which we operate our three Neuquén casinos, either for a five year or for a ten year term. In July 2005, we opened the new facility in order to qualify for and obtain the ten year extension through 2016, extension which has already been formally granted. We are currently finalizing the construction of a hotel facility by the casino in the city of Neuquén which, once finished and upon approval by the authorities, would grant us an additional 5 year extension in the terms of our casino license, through 2021. The Concession Agreement establishes that the shareholders approved by the Provincial Government of Neuquén shall maintain control (i.e., 51% of the shareholding of the corporate capital with voting power) of the licensee. It also establishes that any transfer of shares up to 49% of its shareholding in the licensee shall not require prior authorization. Otherwise, prior authorization from the Provincial Government of Neuquén shall be required. Notwithstanding that, no transfer of shares shall be performed to those persons detailed under Section 5 of the bidding terms approved under the casino privatization program (i.e., among others, foreign persons or legal entities if in their country there are no regulations prohibiting money laundering, natural or legal persons that cannot contract with the Province of Neuquén). We cannot predict what effect the enactment of any laws, regulations or pronouncements relating to casino operations would have on the operations of Casino Magic Argentina.

Other. In addition to the requirements discussed above, if we sought to establish gaming operations in any jurisdiction in which we currently do not operate, we would need to be registered, licensed, or found suitable to conduct gaming activities in that jurisdiction and, if successful in doing so, would be subject to such jurisdiction’s regulatory requirements applicable to gaming companies. Holders of our securities would also be subject to additional requirements regarding the ownership and disposition of their securities, including possibly being called forward by applicable gaming authorities to be licensed or found suitable to be the beneficial owner of our securities.

From time to time, legislators and special interest groups have proposed legislation that would restrict or prevent gaming operations. In addition, changes in regulations affecting the casino business can impact our existing or proposed operations. For example, on January 24, 2007, the Atlantic City counsel passed an initial vote prohibiting smoking in 75% of gaming areas in Atlantic City casinos. Any new restriction on or prohibition of our gaming operations could force us to curtail operations and incur significant losses.