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<SEC-DOCUMENT>0000950137-07-002972.txt : 20070228
<SEC-HEADER>0000950137-07-002972.hdr.sgml : 20070228
<ACCEPTANCE-DATETIME>20070228140925
ACCESSION NUMBER:		0000950137-07-002972
CONFORMED SUBMISSION TYPE:	424B3
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20070228
DATE AS OF CHANGE:		20070228

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			LAKES ENTERTAINMENT INC
		CENTRAL INDEX KEY:			0001071255
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-MISCELLANEOUS AMUSEMENT & RECREATION [7990]
		IRS NUMBER:				411913991
		STATE OF INCORPORATION:			MN
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		424B3
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-139783
		FILM NUMBER:		07656818

	BUSINESS ADDRESS:	
		STREET 1:		130 CHESHIERE LANE
		CITY:			MINNETONKA
		STATE:			MN
		ZIP:			55305
		BUSINESS PHONE:		6124499092

	MAIL ADDRESS:	
		STREET 1:		130 CHESHIRE LANE
		CITY:			MINNETONKA
		STATE:			MN
		ZIP:			55305

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	LAKES GAMING INC
		DATE OF NAME CHANGE:	19980929
</SEC-HEADER>
<DOCUMENT>
<TYPE>424B3
<SEQUENCE>1
<FILENAME>n10767b3e424b3.htm
<DESCRIPTION>FORM 424B3
<TEXT>
<HTML>
<HEAD>
<TITLE>e424b3</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->

<DIV align="right" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>Filed Pursuant to Rule 424(b)(3)</B>
</DIV>

<DIV align="right" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>File No.&#160;333-139783</B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">PROSPECTUS</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 24pt">LAKES ENTERTAINMENT,
    INC.</FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 18%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=455 length=84 -->

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B><FONT style="font-size: 18pt">1,625,000&#160;Shares of Common
    Stock</FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 18%; border-bottom: 1pt solid #000000"></CENTER><!-- callerid=999 iwidth=455 length=84 -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    This prospectus relates to the resale of up to
    1,625,000&#160;shares of our common stock that we may issue to
    the selling shareholder. The shares of common stock offered
    under this prospectus by the selling shareholder are issuable
    upon either (i)&#160;the conversion of outstanding shares of our
    series&#160;A convertible preferred stock, referred to as
    preferred stock, or (ii)&#160;the exercise of outstanding common
    stock purchase warrants, referred to as warrants. We will not
    receive any proceeds from the offer and sale of the shares.
    Rather, the selling shareholder will receive all of the net
    proceeds from any sale of the shares. However, as described in
    greater detail in this prospectus under the section &#147;Use of
    Proceeds&#148;, we may receive the proceeds from the exercise of
    the warrants issued to the selling shareholder. We have been
    advised that the selling shareholder may from time to time sell
    the common stock to or through brokers or dealers in one or more
    transactions, in The Nasdaq Global Market or otherwise, at
    market prices prevailing at the time of sale, at prices relating
    to prevailing prices, or at negotiated prices.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our common stock is listed on The Nasdaq Global Market under the
    symbol &#147;LACO.&#148; On February&#160;27, 2007, the closing
    sales price of our common stock as reported by The Nasdaq Global
    Market was $8.84.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 12pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>Investing in our common stock involves a high degree of risk.
    See &#147;<U>Risk factors</U>&#148; beginning on page&#160;5 of
    this Prospectus.</B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <B>Neither the Securities and Exchange Commission nor any state
    securities commission has approved or disapproved of these
    securities or determined if this prospectus is truthful or
    complete. Any representation to the contrary is a criminal
    offense.</B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The date of this Prospectus is February&#160;28, 2007
</DIV>

<P align="left" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV><!-- END LOGICAL PAGE -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">TABLE OF
    CONTENTS</FONT></B>
</DIV>
<DIV align="left">
<!-- TOC -->
</DIV>

<DIV align="left">
<A name="tocpage"></A>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="97%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadright -->
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#101'><B><FONT style="font-size: 10pt">SUMMARY</FONT></B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <FONT style="font-size: 10pt">1
    </FONT>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#102'><B><FONT style="font-size: 10pt">RISK
    FACTORS</FONT></B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <FONT style="font-size: 10pt">5
    </FONT>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#103'><B><FONT style="font-size: 10pt">CAUTIONARY
    NOTE&#160;REGARDING FORWARD-LOOKING STATEMENTS</FONT></B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <FONT style="font-size: 10pt">12
    </FONT>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#104'><B><FONT style="font-size: 10pt">USE OF
    PROCEEDS</FONT></B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <FONT style="font-size: 10pt">12
    </FONT>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#105'><B><FONT style="font-size: 10pt">SELLING
    SHAREHOLDER</FONT></B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <FONT style="font-size: 10pt">13
    </FONT>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#106'><B><FONT style="font-size: 10pt">DESCRIPTION OF
    CAPITAL STOCK</FONT></B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <FONT style="font-size: 10pt">14
    </FONT>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#107'><B><FONT style="font-size: 10pt">PLAN OF
    DISTRIBUTION</FONT></B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <FONT style="font-size: 10pt">17
    </FONT>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#108'><B><FONT style="font-size: 10pt">LEGAL
    MATTERS</FONT></B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <FONT style="font-size: 10pt">19
    </FONT>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#109'><B><FONT style="font-size: 10pt">EXPERTS</FONT></B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <FONT style="font-size: 10pt">19
    </FONT>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#110'><B><FONT style="font-size: 10pt">WHERE YOU CAN
    FIND MORE INFORMATION</FONT></B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <FONT style="font-size: 10pt">19
    </FONT>
</TD>
<TD>
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#111'><B><FONT style="font-size: 10pt">INDEMNIFICATION</FONT></B></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>
</TD>
<TD nowrap align="right" valign="bottom">
    <FONT style="font-size: 10pt">20
    </FONT>
</TD>
<TD>
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV align="left">
<!-- /TOC -->
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    You should rely only on the information contained in this
    prospectus or to which we have referred you. We have not, and
    the selling shareholders have not, authorized any other person
    to provide you with different information. This prospectus is
    not an offer to sell, nor is it seeking an offer to buy, these
    securities in any state where the offer or sale is not
    permitted. The information in this prospectus is accurate as of
    the date of the front cover of this prospectus, but the
    information may have changed since that date.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    This prospectus is part of a registration statement that we
    filed with the Securities and Exchange Commission. The
    registration statement containing this prospectus, including the
    exhibits to the registration statement, also contains additional
    information about us and our securities offered under this
    prospectus. That registration statement can be read at the
    Securities and Exchange Commission&#146;s website (located at
    <U>www.sec.gov</U>) or at the Securities and Exchange
    Commission&#146;s Public Reference Room mentioned under the
    heading &#147;Where You Can Find More Information&#148; on
    page&#160;19 of this prospectus.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    i
</DIV><!-- END LOGICAL PAGE -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->
<A name='101'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">SUMMARY</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>This summary highlights certain information contained
    elsewhere in this prospectus and the documents incorporated by
    reference into this prospectus. This summary does not contain
    all of the information you should consider before investing in
    our common stock. We urge you to read this entire prospectus
    carefully, including the risks of investing in our common stock
    discussed under &#147;Risk Factors&#148; and the financial
    statements and other information that is incorporated by
    reference into this prospectus, before making an investment
    decision. In addition, this prospectus summarizes other
    documents that we urge you to read. All references in this
    prospectus to &#147;Lakes,&#148; &#147;we,&#148;
    &#147;our,&#148; and &#147;us&#148; refer to Lakes
    Entertainment, Inc. and its subsidiaries.</I>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Business
    Overview</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We develop, finance and manage Indian-owned casino properties.
    We currently have development (which includes certain financing
    requirements) and management agreements with two separate tribes
    for one new casino development project in Michigan, one in
    California, and with two separate tribes in Oklahoma for five
    various casino projects. We have agreements with a second tribe
    in California to develop and finance a new casino project. We
    are also involved in other business activities, including
    development of a non-Indian casino in Mississippi and the
    development of new table games for licensing to both Tribal and
    non-Tribal casinos. In addition, as of November&#160;6, 2006, we
    owned approximately 61% of WPT Enterprises, Inc., referred to as
    WPTE, a separate publicly held media and entertainment company
    principally engaged in the development, production and marketing
    of gaming themed televised programming, the licensing and sale
    of branded products and the sale of corporate sponsorships. Our
    consolidated financial statements include the results of
    operations of WPTE, and in recent periods, our revenues have
    been derived primarily from WPTE&#146;s business.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Indian
    Casino Business</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our primary business is to develop and manage Indian-owned
    casino properties that offer the opportunity for long-term
    development of related entertainment facilities, including
    hotels, golf courses, theaters, recreational vehicle parks and
    other complementary amenities. We currently have agreements with
    five separate tribes that include one new casino development
    project in Michigan, two new casino development projects in
    California, and three new casino development projects and two
    existing casino operations in Oklahoma. We, through various
    subsidiaries, have entered into the following contracts for the
    development and financing
    <FONT style="white-space: nowrap">and/or</FONT>
    management of new casino operations, all of which are subject to
    various regulatory approvals and in some cases resolution of
    legal proceedings:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    We have contracts to develop and manage The Foothill Oaks Casino
    to be built on the Rancheria of the Shingle Springs Band of
    Miwok Indians, referred to as the Shingle Springs Tribe, in El
    Dorado County, California, adjacent to U.S.&#160;Highway 50,
    approximately 30&#160;miles east of Sacramento, California,
    referred to as the Shingle Springs Casino.
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    We have contracts to develop and manage the Four Winds Casino
    resort, which is being built on land placed into trust for the
    Pokagon Band of Potawatomi Indians in New Buffalo Township,
    Michigan near Interstate 94. The casino location is near the
    first Interstate 94 exit in southwestern Michigan and
    approximately 75&#160;miles east of Chicago, referred to as the
    Pokagon Casino. The Four Winds Casino resort is currently under
    construction with an anticipated completion date of late summer
    2007.
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    We have contracts to develop and finance a casino to be built on
    the Rancheria of the Jamul Indian Village, referred to as the
    Jamul Tribe, located on Highway 94, approximately 20&#160;miles
    east of San&#160;Diego, California, referred to as the Jamul
    Casino.
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    We have consulting agreements and management contracts with
    three wholly-owned subsidiaries, referred to collectively as the
    Pawnee Nation, of the Pawnee Tribal Development Corporation
    (&#147;TDC&#148;), in connection with assisting the Pawnee
    Nation in developing, equipping and managing (1)&#160;the
    Chilocco Casino, which is planned to be built on approximately
    800&#160;acres of Indian gaming land owned by the Pawnee Nation
    in northern Oklahoma near the Kansas border, (2)&#160;the Pawnee
    Nation&#146;s existing Trading
</TD>
</TR>

</TABLE>
</DIV><!-- End box 1 -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    1
</DIV><!-- END LOGICAL PAGE -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>
</TD>
    <TD align="left">
    Post casino operation in Pawnee, Oklahoma, and (3)&#160;the
    proposed casino operation at the Pawnee Nation&#146;s existing
    Travel Plaza at the intersection of U.S.&#160;Highway 412 and
    State Highway&#160;18, approximately 25&#160;miles from
    Stillwater, Oklahoma. However, on December&#160;1, 2006, Lakes
    announced that the Pawnee Nation of Oklahoma Business Council
    (the &#147;Business Council&#148;) declined to approve a
    proposed updated tribal agreement with a Lakes subsidiary
    relating to the Pawnee Trading Post Casino. Since the consulting
    and management agreements were originally entered into in
    January 2005, several new members have been appointed to the
    Business Council which has resulted in a substantial change in
    the Business Council&#146;s membership. Lakes, the TDC and its
    gaming subsidiaries (the tribal entities that own and operate
    the tribal casinos), which support approving the updated tribal
    agreement and Lakes&#146; involvement in the projects, are
    evaluating how they wish to proceed with their current project
    agreements given this action, including perhaps terminating the
    project agreements.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 6%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    For its consulting services, Lakes is receiving monthly fees of
    $5,000 related to the Trading Post Casino project and is to
    receive monthly fees of $25,000 and $250,000 from the Travel
    Plaza Casino and Chilocco Casino projects, respectively, upon
    their completion. Lakes had also planned to manage each of these
    facilities under management contracts, subject to regulatory
    approvals.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 6%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Lakes has advanced approximately $5.1&#160;million to the TDC
    related to these projects under the existing agreements. Lakes
    intends to work with the TDC to resolve all of the financial
    terms of the contracts including repayment of the advances if
    the project agreements are in fact terminated as a result of the
    Business Council&#146;s decision. However, if the agreements are
    terminated, there can be no assurance that Lakes will receive
    any future fees related to these projects or that it will be
    repaid in full for its advances. As a result, Lakes&#146; annual
    consolidated financial statements as of and for the year ended
    December&#160;31, 2006 are expected to be adversely impacted by
    write-downs related to these advances, the magnitude of which
    cannot be determined at this time.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    We have consulting agreements and management contracts with the
    Iowa Tribe of Oklahoma, referred to as the Iowa Tribe, in
    connection with developing, equipping and managing the Ioway
    Casino resort which is planned to be built near Route 66 and
    approximately 25&#160;miles northeast of Oklahoma City, Oklahoma
    and the Iowa Tribe&#146;s existing Cimarron Casino, located in
    Perkins, Oklahoma.
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    We have also explored, and are continuing to explore, other
    development projects with Indian tribes.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Non-Indian
    Casinos</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We also explore opportunities to develop and operate casinos
    that are not owned by Indian tribes. We have received various
    regulatory approvals to develop a company-owned casino on
    approximately 300&#160;acres near Vicksburg, Mississippi. We do
    not expect to commence this project until 2007.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">WPT
    Enterprises, Inc.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    WPTE creates branded entertainment and consumer products driven
    by the development, production, and marketing of televised
    programming based on gaming themes. WPTE&#146;s World Poker
    Tour<SUP style="font-size: 85%; vertical-align: text-top"><SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP></SUP>,
    or WPT, television series, based on a series of high-stakes
    poker tournaments, airs in the United States on the Travel
    Channel LLC, referred to as Travel Channel, and in more than 150
    territories globally. WPTE has four operating units:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>WPT Studios.</I>&#160;&#160;WPTE&#146;s multi-media
    entertainment division generates revenue from the domestic and
    international licensing of broadcast and telecast rights and
    through casino host fees. Since WPTE&#146;s inception, the WPT
    Studios division has been responsible for approximately 75% of
    WPTE&#146;s total revenue. WPTE licenses the WPT series to the
    Travel Channel for telecast in the United States under an
    exclusive licensing agreement. WPTE has produced four complete
    seasons of the World Poker Tour series under the WPTE
    agreements, and Season Five is currently in production. The
    Travel Channel continues to hold options to license Seasons Six
    and Seven. WPTE also has license agreements for the distribution
    of WPTE&#146;s World Poker Tour episodes in over 150
    territories, for which WPTE receives license fees, net of
    WPTE&#146;s agent sales fees and agreed upon sales and marketing
    expenses. In addition, WPTE has a license agreement to telecast
    WPTE&#146;s new Professional Poker
    Tour<SUP style="font-size: 85%; vertical-align: text-top"><SUP style="font-size: 85%; vertical-align: text-top">&#174;</SUP></SUP>,
    or PPT, series, which began airing in the third quarter of 2006.
    WPTE
</DIV>
</DIV><!-- End box 1 -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    2
</DIV><!-- END LOGICAL PAGE -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    also collects annual host fees from the member casinos that host
    World Poker Tour events (WPTE&#146;s member casinos). In May
    2006, WPTE was notified by the licensee that it had chosen to
    not exercise its option for Season Two and subsequent seasons of
    the PPT. WPTE is attempting to find a new broadcast partner for
    the PPT going forward.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>WPT Consumer Products.</I>&#160;&#160;WPTE&#146;s branded
    consumer products division generates revenues principally from
    royalties from the licensing of WPTE&#146;s brand to companies
    seeking to use the World Poker Tour brand and logo in the retail
    sales of their consumer products. In addition, this business
    unit generates revenue from direct sales of company-produced
    branded merchandise. WPTE has generated significant revenues
    from existing licensees, including US Playing Card, Hands-On
    Mobile, and MDI. WPTE also has a number of licensees that are
    developing new licensed products including electronic,
    casino-based, poker related gaming machines from International
    Game Technology, and interactive television games from Pixel
    Play.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>WPT Corporate Alliances.</I>&#160;&#160;WPTE sponsorship and
    event management division generates revenue from corporate
    sponsorship and management of televised and live events.
    WPTE&#146;s sponsorship program uses the professional sports
    model as a method to foster entitlement sponsorship
    opportunities and naming rights to major corporations.
    Anheuser-Busch has been the largest source of revenues from its
    sponsorship of Seasons Two, Three and Four of the World Poker
    Tour series on the Travel Channel. During the third quarter of
    2006, WPTE completed an agreement with Anheuser-Busch to
    continue its sponsorship for Season Five of the World Poker
    Tour. During the second quarter of 2006, WPTE finalized a
    sponsorship agreement with Xyience, Inc., a non-alcoholic energy
    drink developer and distributor, to promote its product as the
    &#147;official energy drink&#148; of Season Five and Season Six
    of the World Poker Tour.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>WPT Online Gaming.</I>&#160;&#160;WPTE&#146;s online poker
    and casino gaming division generates revenue from WPTE&#146;s
    agreement with WagerWorks, Inc., referred to as WagerWorks,
    pursuant to which WPTE granted to WagerWorks a license to
    utilize the WPT brand to create a WPT-branded online gaming
    website, WPTonline.com, which features an online poker room and
    an online casino with a broad selection of slots and table
    games. In exchange for the license to WagerWorks of WPTE&#146;s
    brand, WagerWorks shares with WPTE a percentage of all net
    revenue it collects from the operation of the online poker room
    and online casino. Although any Internet user can access
    WPTonline.com via the World Wide Web, the website does not
    permit bets to be made from players in the United States and
    other restricted jurisdictions.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In June 2006, WPTE entered into an agreement with CyberArts
    Licensing, LLC, referred to as CyberArts, providing WPTE with a
    perpetual, nonexclusive and nontransferable license for the
    object code of certain poker software and related banking and
    card room management software tools to develop WPTE&#146;s own
    online poker room. The CyberArts agreement enables WPTE to
    develop, manage, market and handle customer service for the
    online poker business from WPTE&#146;s own international
    headquarters.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In July 2006, WPTE amended its agreement with WagerWorks to
    permit WPTE to own and operate an online poker room, and fix a
    termination date for WagerWorks&#146; operation of WPTE&#146;s
    online poker room. The amended agreement also permits WPTE to
    offer multi-player real-money poker gaming via cellular phone
    using software provided by 3G Scene Limited, referred to as 3G
    Scene. WPTE entered into a license agreement with 3G Scene in
    July 2006 that grants 3G Scene a non-exclusive license to use
    the World Poker Tour brand in promoting its real-money mobile
    gaming application solely in jurisdictions where such gaming is
    not restricted.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In October 2006, the Unlawful Internet Gambling Act of 2006,
    referred to as the Act, was signed into law. Among other things,
    the Act prohibits financial institutions from processing
    payments in connection with unlawful internet gambling pursuant
    to state or federal laws. WPTE believes that the Act is unlikely
    to have a direct adverse effect on WPTE&#146;s
    <FONT style="white-space: nowrap">day-to-day</FONT>
    operations, since WPTE has always maintained a policy of not
    taking online wagers from patrons within the United States of
    America. The Act could potentially result in increased
    competition to secure online gaming customers outside the United
    States of America; however, the long-term impact, if any, on
    WPTE&#146;s business cannot currently be determined.
</DIV>
</DIV><!-- End box 1 -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    3
</DIV><!-- END LOGICAL PAGE -->
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Development
    and Marketing of Table Games.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We have a division that buys, patents and licenses rights for
    new table game concepts to market/distribute and license to
    casinos. We are continuing to test and market a number of games
    including World Poker Tour &#147;All In Hold&#146;Em,&#148;
    &#147;Rainbow Poker,&#148; &#147;Pyramid Poker&#148; and
    &#147;Bonus Craps.&#148; The World Poker Tour &#147;All In
    Hold&#146;Em&#148; game is currently operating in several
    casinos across the United States. Our revenue from this division
    is currently not significant.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Real
    Estate Holdings.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We have parcels of land in California and Oklahoma related to
    our Indian casino projects with the Jamul&#160;Tribe, the
    Shingle Springs Tribe and the Iowa Tribe of Oklahoma; in
    Minnesota related to our corporate headquarters; in Mississippi
    related to our planned company-owned casino; and in Texas
    related to a terminated casino project.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Executive
    Offices</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We are incorporated under the laws of the State of Minnesota.
    Our executive offices are located at 130&#160;Cheshire Lane,
    Suite&#160;101, Minnetonka, Minnesota, 55305, and our telephone
    number is
    <FONT style="white-space: nowrap">(952)&#160;449-9092.</FONT>
    Our website address is <U>www.lakesentertainment.com</U>.
    Information on our website does not constitute part of this
    prospectus.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Material
    Changes</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    There have been no material changes to our business affairs
    since the filing of our annual report on
    <FONT style="white-space: nowrap">Form&#160;10-K</FONT>
    for the fiscal year ended January&#160;1, 2006 which have not
    been described in our SEC filings since that date.
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">The
    Offering</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="36%"></TD>
    <TD width="1%"></TD>
    <TD width="63%"></TD>
</TR>

<TR>
    <TD valign="top">
    Common stock offered by selling shareholder </TD>
    <TD></TD>
    <TD valign="bottom">
    1,625,000&#160;shares</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    Common stock outstanding after offering </TD>
    <TD></TD>
    <TD valign="bottom">
    24,573,635&#160;shares</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    Use of proceeds </TD>
    <TD></TD>
    <TD valign="bottom">
    We will not receive any proceeds from the sale of common stock
    by the selling shareholders. However, as described in greater
    detail in this prospectus under the section &#147;Use of
    Proceeds&#148;, we may receive the proceeds from the exercise of
    the warrants issued to the selling shareholder.</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    Nasdaq Global Market Symbol </TD>
    <TD></TD>
    <TD valign="bottom">
    LACO</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    Risk Factors </TD>
    <TD></TD>
    <TD valign="bottom">
    Investing in our common stock is subject to several risks that
    you should carefully consider before deciding to invest in our
    common stock. These risks are discussed more fully in &#147;Risk
    Factors.&#148;</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Except as otherwise indicated, all information in this
    prospectus:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    excludes 4,716,400&#160;shares of our common stock issuable upon
    the exercise of outstanding options at a weighted average
    exercise price of $6.14&#160;per share;&#160;and
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    excludes 35,500&#160;shares of our common stock that are
    reserved for future grants of stock options under our existing
    stock option plans.
</TD>
</TR>

</TABLE>
</DIV><!-- End box 1 -->

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    <BR>
    4
</DIV><!-- END LOGICAL PAGE -->
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->
<A name='102'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">RISK
    FACTORS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Investing in our common stock involves a high degree of risk.
    You should carefully consider the following risks, together with
    all of the other information included in, or incorporated by
    reference into, this prospectus, before deciding to invest in
    our common stock. If any of the following risks, or other risks
    that we have not identified or that we believe are immaterial or
    unlikely, occur, our business, financial condition and results
    of operations could be materially harmed. If that occurs, the
    trading price of our common stock could decline, and you may
    lose all or part of your investment.</I>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Risk
    Related to Our Industry</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">The
    completion of our planned Indian and non-Indian casino
    development projects may be significantly delayed or prevented
    due to a variety of factors, many of which are beyond our
    control.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Although we have experience developing and managing casinos
    owned by Indian tribes and located on Indian land, we have not
    developed or managed a casino in the States of California or
    Michigan. The opening of each of our proposed facilities will be
    contingent upon, among other things, the completion of
    construction, hiring and training of sufficient personnel and
    receipt of all regulatory licenses, permits, allocations and
    authorizations. The scope of the approvals required to construct
    and open these facilities will be extensive, and the failure to
    obtain such approvals could prevent or delay the completion of
    construction or opening of all or part of such facilities or
    otherwise affect the design and features of the proposed casinos.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    No assurances can be given that once a schedule for such
    construction and development activities is established, such
    development activities will begin or will be completed on time,
    or any other time, or that the budget for these projects will
    not be exceeded.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In addition, the regulatory approvals necessary for the
    construction and operation of casinos are often challenged in
    litigation brought by government entities, citizens groups and
    other organizations and individuals. Such litigation can
    significantly delay the construction and opening of casinos.
    Certain of our casino projects have been significantly delayed
    as a result of such litigation, and there is no assurance that
    the litigation can be successfully resolved. Our casino projects
    may experience further significant delays before they can be
    completed, if ever.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Major construction projects entail significant risks, including
    shortages of materials or skilled labor, unforeseen engineering,
    environmental
    <FONT style="white-space: nowrap">and/or</FONT>
    geological problems, work stoppages, weather interference,
    unanticipated cost increases and non-availability of
    construction equipment. These factors or delays or difficulties
    in obtaining any of the requisite licenses, permits, allocations
    and authorizations from regulatory authorities could increase
    the total cost, delay or prevent the construction or opening of
    any of these planned casino developments or otherwise affect
    their design.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">If our
    current casino development projects are not completed or fail to
    successfully compete once completed, we may lack the funds to
    compete for and develop future gaming or other business
    opportunities which may have a material adverse effect on our
    results of operations.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The gaming industry is highly competitive. Gaming activities
    include traditional land-based casinos; river boat and dockside
    gaming; casino gaming on Indian land; state-sponsored lotteries
    and video poker in restaurants, bars and hotels; pari-mutuel
    betting on horse racing and dog racing; sports bookmaking; and
    card rooms. The casinos to be managed or owned by us compete,
    and will in the future compete, with all these forms of gaming,
    and will compete with any new forms of gaming that may be
    legalized in additional jurisdictions, as well as with other
    types of entertainment.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We also compete with other gaming companies for opportunities to
    acquire legal gaming sites in emerging and established gaming
    jurisdictions and for the opportunity to manage casinos on
    Indian land. Many of our competitors have more personnel and may
    have greater financial and other resources than us. Such
    competition in the gaming industry could adversely affect our
    ability to attract customers which would adversely affect our
    operating results. In addition, further expansion of gaming into
    new jurisdictions could
</DIV>

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    <BR>
    5
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    also adversely affect our business by diverting customers from
    our planned managed casinos to competitors in such jurisdictions.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We
    could be prevented from completing our current casino
    development projects or pursuing future development projects due
    to changes in the laws, regulations and ordinances (including
    tribal or local laws) that apply to gaming facilities or the
    inability of us or our key personnel, significant shareholders
    or joint venture partners to obtain or retain gaming regulatory
    licenses.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The ownership, management and operation of gaming facilities are
    subject to extensive federal, state, provincial, tribal
    <FONT style="white-space: nowrap">and/or</FONT> local
    laws, regulations and ordinances, which are administered by the
    relevant regulatory agency or agencies in each jurisdiction.
    These laws, regulations and ordinances vary from jurisdiction to
    jurisdiction, but generally concern the responsibility,
    financial stability and character of the owners and managers of
    gaming operations as well as persons financially interested or
    involved in gaming operations, and often require such parties to
    obtain certain licenses, permits and approvals.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The rapidly-changing political and regulatory environment
    governing the gaming industry (including gaming operations which
    are conducted on Indian land) makes it impossible for us to
    accurately predict the effects that an adoption of or changes in
    the gaming laws, regulations and ordinances will have on us.
    However, the failure of us, or any of our key personnel,
    significant shareholders or joint venture partners, to obtain or
    retain required gaming regulatory licenses could prevent us from
    expanding into new markets, prohibit us from generating revenues
    in certain jurisdictions, and subject us to sanctions and fines.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The political and regulatory environment in which we operate,
    including with respect to gaming activities on Indian land, is
    discussed in greater detail in our Annual Report on
    <FONT style="white-space: nowrap">Form&#160;10-K</FONT>
    for the fiscal year ended January&#160;1, 2006, referred to as
    the 2005
    <FONT style="white-space: nowrap">Form&#160;10-K,</FONT>
    under the caption &#147;Business-Regulation.&#148;
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">During
    September 2005, legislation was proposed to amend the Gambling
    Devices Act of 1962 which could negatively affect projected
    management/consulting fees from the Shingle Springs and Jamul
    Casino projects.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    During September 2005, the Department of Justice proposed
    legislation that would amend the Gambling Devices Act of 1962
    (commonly referred to as the Johnson Act). The proposal seeks to
    clarify the difference between Class&#160;II and Class&#160;III
    machines. It prohibits Indian tribes from operating games that
    resemble slot machines without a tribal-state compact. The
    legislation proposes to amend the Johnson Act in three
    significant ways. First, the definition of &#147;gaming
    device&#148; in Section&#160;1171 of the Johnson Act would be
    amended to clarify how the element of chance can be provided in
    a gaming device. Second, Section&#160;1172 of the Johnson Act
    would be amended to clarify that certain &#147;qualifying&#148;
    technological aids could be transported and used in Indian
    country. Third, a new Section&#160;(d)&#160;would be added to
    Section&#160;1175 of the Johnson Act to provide an express
    exception to allow technological devices to be used in
    Class&#160;II gaming.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    This is only proposed legislation, but if passed it could affect
    our planned casino operations for the Shingle Springs Tribe and
    the Jamul Tribe and distributable fees to us. Class&#160;II
    machines are currently planned to be used at the Shingle Springs
    and Jamul Casinos. If the legislation were passed there is no
    assurance that substitute allowable Class&#160;II machines would
    result in the same projected operating results as the
    Class&#160;II machines currently planned to be used and in use
    by the above-mentioned projects. If this were to occur it could
    have a material adverse effect on our results of operations and
    financial conditions.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Risks
    Related to Our Business</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Any
    significant delay in, or non-completion of, our planned Indian
    and non-Indian casino development projects could have a material
    adverse effect on our future cash flows and
    profitability.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Since the expiration of our management contract for Grand Casino
    Coushatta (the last remaining Indian-owned casino managed by us)
    on January&#160;16, 2002, we have generated minimal revenue from
    our casino management activities. We have had minimal current
    casino management-related operating revenue with which to offset
    the investment costs associated with our current or future
    casino development projects. Delays in the
</DIV>

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    <BR>
    6
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    completion of our current development projects, or the failure
    of such projects to be completed at all, may cause our operating
    results to vary significantly and may adversely affect our
    future earnings, cash flows and financial condition,
    <FONT style="white-space: nowrap">and/or</FONT> could
    ultimately cause us to cease our operations entirely. In
    addition, once developed, no assurances can be given that we
    will be able to manage these casinos on a profitable basis or to
    attract a sufficient number of guests, gaming customers and
    other visitors to make the various operations profitable
    independently. With each project we are subject to the risk that
    our investment may be lost if the project cannot obtain adequate
    financing to complete development and open the casino
    successfully. In some cases, we may be forced to provide more
    financing than we originally planned in order to complete
    development, increasing the risk to us in the event of a default
    by the casino. In addition, because our future growth in
    revenues and our ability to generate profits will depend to a
    large extent on our ability to increase the number of our
    managed casinos or develop new business opportunities, the
    delays in the completion or the non-completion of our current
    development projects may adversely affect our ability to realize
    future growth in revenues and future profits.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">The
    termination of our management contracts and consulting
    agreements with Indian tribes may have a material adverse effect
    on our results of operations and financial
    condition.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The terms of our current management contracts and consulting
    agreements provide that such contracts may be terminated under
    certain circumstances, including without limitation, the
    possible failure to obtain NIGC approval for the project, the
    loss of requisite gaming licenses, or an exercise by an Indian
    tribe of its buyout option. In addition, each of our current
    management and consulting agreements expire by their terms
    anywhere from five to seven years after commencement of casino
    operations for the project. Without the realization of new
    business opportunities or new management contracts or consulting
    agreements, the termination of management contracts
    <FONT style="white-space: nowrap">and/or</FONT>
    consulting agreements could have a material adverse effect on
    our results of operations and financial condition.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">If the
    NIGC elects to modify the terms of our management contracts with
    Indian tribes or void such contracts altogether, our revenues
    from management contracts may be reduced or
    eliminated.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The NIGC has the power to require modifications to Indian
    management contracts under certain circumstances or to void such
    contracts or ancillary agreements including loan agreements if
    the management company fails to obtain requisite approvals or to
    comply with applicable laws and regulations. The NIGC has the
    right to review each contract and has the authority to reduce
    the term of a management contract or the management fee or
    otherwise require modification of the contract, which could have
    an adverse effect on us. Currently, only our management
    contracts with Shingle Springs, Pokagon Band and the Iowa Tribe
    of Oklahoma (relating to the Cimarron Casino project in
    Oklahoma) have been approved by the NIGC. The other management
    contracts have not received final approval by the NIGC and may
    require modification prior to receiving approval.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">If
    Indian tribes default on their repayment obligations or
    wrongfully terminate their management contracts with us, we may
    be unable to collect the amounts due.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We have made, and may make, substantial loans to Indian tribes
    for the construction, development, equipment and operations of
    casinos to be managed by us. Our only recourse for collection of
    indebtedness from an Indian tribe or money damages for breach or
    wrongful termination of a management contract is from revenues,
    if any, from casino operations. We have subordinated, and may in
    the future subordinate again, to other parties related to the
    casino operations, the repayment of loans made to an Indian
    tribe and other distributions due from an Indian tribe
    (including management fees) in favor of other obligations of the
    Indian tribe. Accordingly, in the event of a default by an
    Indian tribe under such obligations, our loans and other claims
    against the Indian tribe will not be repaid until such default
    has been cured or the Indian tribe&#146;s senior casino-related
    creditors have been repaid in full.
</DIV>

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    <BR>
    7
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<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">A
    deterioration of our relationship with an Indian tribe could
    cause delays in the completion of a casino development project
    with that Indian tribe or even force us to abandon a casino
    development project altogether and prevent or significantly
    impede recovery of our investment therein.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Good personal and professional relationships with Indian tribes
    and their officials are critical to our proposed and future
    Indian-related gaming operations and activities, including our
    ability to obtain, develop and effectuate management and other
    agreements. As sovereign nations, Indian tribes establish their
    own governmental systems under which tribal officials or bodies
    representing an Indian tribe may be replaced by appointment or
    election or become subject to policy changes. Replacements of
    Indian tribe officials or administrations, changes in policies
    to which an Indian tribe is subject, or other factors that may
    lead to the deterioration of our relationship with an Indian
    tribe may cause delays in the completion of a development
    project with that Indian tribe or prevent the project&#146;s
    completion altogether, which may have an adverse effect on the
    results of our operations.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">If
    funds from our operations are insufficient to support our cash
    requirements and we are unable to obtain additional financing in
    order to satisfy these requirements, we may be forced to delay,
    scale back or eliminate some of our expansion and development
    goals, or cease our operations entirely.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will require additional capital through either public or
    private financings to meet operating and development expenses
    during fiscal 2007 and we are currently considering various
    financing alternatives. In February 2006, we closed on a
    $50&#160;million financing facility with the selling shareholder
    named in this prospectus, who is an affiliate of Prentice
    Capital Management, LP, referred to as Prentice. The
    $25&#160;million outstanding principal balance under the
    facility together with accrued interest was repaid in full in
    June 2006, as discussed below.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    On June&#160;22, 2006, we borrowed $105&#160;million under a
    financing facility with Bank of America, N.A., referred to as
    BofA, under a credit agreement among us, our subsidiary, Lakes
    Gaming and Resorts, LLC, BofA and the lenders. Approximately
    $25.2&#160;million of the initial draw was used to repay in full
    the loan payable to Prentice.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As previously announced, while the funds from the BofA credit
    agreement allow us to move forward with various casino
    development projects, we anticipate incurring additional
    pre-construction costs which will require additional sources of
    financing during fiscal 2007 to meet operational and development
    needs. Therefore, we will continue to explore additional
    financing alternatives to fund those needs. Such financings may
    not be available when needed on terms acceptable to us or at
    all. Moreover, any additional equity or debt financings may be
    dilutive to our shareholders, and any debt financing may involve
    additional restrictive covenants. An inability to raise such
    funds when needed might require us to delay, scale back or
    eliminate some of our expansion and development goals, or might
    require us to cease our operations entirely.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In addition, the construction of our Indian casino projects may
    depend on the ability of the Indian tribes to obtain financing
    for the projects. If such financing cannot be obtained on
    acceptable terms, it may not be possible to complete these
    projects. In order to assist the Indian tribes, we may be
    required to guarantee the Indian tribes&#146; debt financing or
    otherwise provide support for the Indian tribes&#146;
    obligations. Any guarantees by us or similar off-balance sheet
    obligations, if any, will increase our potential exposure in the
    event of a default by any of these Indian tribes.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">If one
    or more of our Indian casino projects fail to open, the recorded
    assets related to those projects will be impaired and there may
    be a material adverse impact on our financial
    results.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We record assets related to Indian casino projects on our
    consolidated balance sheet as long-term assets related to Indian
    casino projects. The majority of our long-term assets related to
    Indian casino projects are in the form of loans to the Indian
    tribes pursuant to our financing agreements with varying degrees
    of collection risk, and with repayment often dependent on the
    operating performance of each gaming property. These loans are
    included as notes receivable on the consolidated balance sheet,
    under the category &#147;long-term assets related to Indian
    casino projects&#148;. At October&#160;1, 2006, we had
    $224.9&#160;million in long-term assets related to Indian casino
    projects, of which $149.2&#160;million was in the form of notes
    receivable, which are recorded at estimated
</DIV>

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    <BR>
    8
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    fair value on the consolidated balance sheet, which represented
    approximately 42% of our total assets. See Note&#160;3 to our
    consolidated financial statements included in our Quarterly
    Report on
    <FONT style="white-space: nowrap">Form&#160;10-Q</FONT>
    for the quarterly period ended October&#160;1, 2006, referred to
    as our 2006 Third Quarter
    <FONT style="white-space: nowrap">Form&#160;10-Q.</FONT>
    The loans are made to Indian tribes for pre-construction
    financing related to gaming properties being developed by us.
    All of the loans are subject to varying degrees of collection
    risk and there is no established market for these loans. For the
    loans representing indebtedness of Indian tribes, the repayment
    terms are specific to each Indian tribe and are largely
    dependent upon the operating performance of each gaming
    property. Repayments of such loans are required to be made only
    if distributable profits are available from the operation of the
    related casinos. Repayments are also the subject of certain
    distribution priorities specified in the management contracts.
    In addition, repayment to us of the loans and the manager&#146;s
    fees under our management contracts are subordinated to certain
    other financial obligations of the respective Indian tribes.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Included in long-term assets related to Indian casino projects
    are intangible assets related to the acquisition of the
    management contract, land held for development and other costs
    incurred in connection with opening the casino of
    $54.1&#160;million, $16.7&#160;million and $4.9&#160;million,
    respectively, at October&#160;1, 2006. It is possible that one
    or more of our Indian casino projects will fail to open, which
    will render the majority of the assets related to the failed
    Indian casino project impaired. See the latest version of our
    critical accounting policies and estimates in the section
    entitled &#147;Management&#146;s Discussion and Analysis of
    Financial Condition and Results of Operations&#148; in our Third
    Quarter
    <FONT style="white-space: nowrap">Form&#160;10-Q.</FONT>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    entry into new businesses may result in future
    losses.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We have announced that part of our strategy involves
    diversifying into other businesses such as developing and owning
    our own casino and the development and marketing of our own
    table games. Development of table games involves business risks
    separate from the risks involved in casino development and these
    investments may result in future losses to us. These risks
    include but are not limited to negative cash flow, initial high
    development costs of new products
    <FONT style="white-space: nowrap">and/or</FONT>
    services without corresponding sales pending receipt of
    corporate and regulatory approvals, market introduction and
    acceptance of new products
    <FONT style="white-space: nowrap">and/or</FONT>
    services, and obtaining regulatory approvals required to conduct
    the new businesses. Our diversification activities may never
    successfully add to our future revenues and income.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We
    cannot guarantee the financial results of the expansion of the
    World Poker Tour business, the results of which may negatively
    impact our financial results.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As of November&#160;6, 2006, we, through our subsidiary Lakes
    Poker Tour, LLC, owned approximately 61% of the outstanding
    common stock of WPTE. As a result, our consolidated financial
    results include WPTE&#146;s operations. In fiscal 2004, our
    consolidated revenues of $17.6&#160;million, were derived
    entirely from the WPTE business, mainly from license fees for
    United States telecast of World Poker Tour television episodes.
    In fiscal 2005 our consolidated revenues of $18.2&#160;million
    were derived from WPTE. WPTE&#146;s revenues were
    $18.1&#160;million for fiscal 2005 from the delivery of 13
    Season Three episodes and five Season Four episodes,
    international television licensing of the World Poker
    Tour&#146;s Season One and Two and product licensing fees.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    WPTE&#146;s revenues for the first nine months of 2006 were
    $23.2&#160;million and primarily included delivery of 16
    episodes of Season Four of the World Poker Tour, one episode of
    Season Five of the World Poker Tour and 19 episodes of the
    Professional Poker Tour. Additionally, by the end of 2006, WPTE
    expects to deliver three additional episodes of Season Five of
    the World Poker Tour and the remaining five episodes of Season
    One of the Professional Poker Tour. The margins for the PPT were
    higher in the first three quarters of 2006 as certain production
    costs had previously been expensed. WPTE has produced four
    complete seasons of the World Poker Tour series under the
    agreements, and Season Five is currently in production. The
    Travel Channel continues to hold options to license Seasons Six
    and Seven. On May&#160;1, 2006, the Travel Channel notified WPTE
    that it had chosen to not exercise its options for Season Two
    and subsequent seasons of the PPT. The PPT&#146;s first season,
    which includes 24
    <FONT style="white-space: nowrap">two-hour</FONT>
    episodes, has already been filmed and began to air on TRV in
    July 2006. WPTE is attempting to find a new broadcast partner
    for the PPT going forward. WPTE expects to continue to increase
    sales and marketing expenses related to WPTonline.com during the
    remainder of 2006 in
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    9
</DIV><!-- END LOGICAL PAGE -->
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    order to increase player traffic on the site. Fiscal 2006
    operating and net earnings has been negatively impacted by the
    adoption of FAS&#160;123R, requiring WPTE to expense employee
    stock options.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We can provide no assurance that WPTE will achieve its
    forecasted revenues for the remainder of 2006 and thereafter,
    that WPTE will be able to expand its business, or that
    WPTE&#146;s operations will positively impact our financial
    results because WPTE&#146;s business is subject to many risks
    and uncertainties. The risks include, but are not limited to,
    WPTE&#146;s relatively short operating history, WPTE&#146;s
    dependence on its agreements with Travel Channel, continued
    public acceptance of the World Poker Tour programming and brand,
    protection of WPTE&#146;s intellectual property rights, and its
    ability to successfully expand into new and complementary
    businesses, including internet gaming. The Unlawful Internet
    Gambling Enforcement Act of 2006 prohibits online gaming in the
    United States of America. Because WPTE&#146;s internet gambling
    site does not allow for online gambling from within the United
    States of America, the Act is not currently expected to
    adversely impact WPTE, but the potential long-term effects of
    the Act on market competition can not be predicted at this time.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We are
    dependent on the ongoing services of our Chairman and Chief
    Executive Officer, Lyle Berman, and the loss of his services
    could have a detrimental effect on the pursuit of our business
    objectives, profitability and the price of our common
    stock.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our success will depend largely on the efforts and abilities of
    our senior corporate management, particularly Lyle Berman, our
    Chairman and Chief Executive Officer. The loss of the services
    of Mr.&#160;Berman or other members of senior corporate
    management could have a material adverse effect on us. We have a
    $20&#160;million key man life insurance policy on him.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Risks
    Relating to this Offering</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    Articles of Incorporation and Bylaws may discourage lawsuits and
    other claims against our directors.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our Articles of Incorporation and Bylaws provide, to the fullest
    extent permitted by Minnesota law, that our directors shall have
    no personal liability for breaches of their fiduciary duties to
    us. In addition, our Bylaws provide for mandatory
    indemnification of directors and officers to the fullest extent
    permitted by Minnesota law. These provisions reduce the
    likelihood of derivative litigation against our directors and
    may discourage shareholders from bringing a lawsuit against
    directors for a breach of their duty.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    Articles of Incorporation contain provisions that could
    discourage or prevent a potential takeover, even if the
    transaction would be beneficial to our
    shareholders.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our Articles of Incorporation authorize our Board of Directors
    to issue up to 200&#160;million shares of capital stock, the
    terms of which may be determined at the time of issuance by the
    Board of Directors, without further action by our shareholders.
    The Board of Directors may authorize additional classes or
    series of shares that may include voting rights, preferences as
    to dividends and liquidation, conversion and redemptive rights
    and sinking fund provisions that could adversely affect the
    rights of holders of our common stock and reduce the value of
    our common stock. In connection with closing on a
    $50&#160;million financing facility in February 2006, our Board
    of Directors authorized the creation of class of Series&#160;A
    Convertible Preferred Stock with contingent conversion rights
    and limited voting rights, and we issued an aggregate of
    4,451,751&#160;shares of such preferred stock to an affiliate of
    Prentice. The Series&#160;A Convertible Preferred Stock and any
    other class of preferred stock that may be authorized by our
    Board of Directors for issuance in the future could make it more
    difficult for a third party to acquire us, even if a majority of
    our holders of common stock approved of such acquisition.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    10
</DIV><!-- END LOGICAL PAGE -->
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">The
    price of our common stock may be adversely affected by
    significant price fluctuations due to a number of factors, many
    of which are beyond our control.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The market price of our common stock has experienced significant
    fluctuations and may continue to fluctuate in the future. The
    market price of our common stock may be significantly affected
    by many factors, including:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    obtaining all necessary regulatory approvals for our casino
    development projects;
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    litigation surrounding one or more of our casino developments;
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    changes in requirements or demands for our services or
    WPTE&#146;s products;
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the announcement of new products or product enhancements by us
    or our competitors;
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    technological innovations by us or our competitors;
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    quarterly variations in our or our competitors&#146; operating
    results;
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    changes in prices of our or our competitors&#146; products and
    services;
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    changes in our revenue and revenue growth rates;
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    changes in earnings or (loss) per share estimates by market
    analysts or speculation in the press or analyst
    community;&#160;and
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    general market conditions or market conditions specific to
    particular industries.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We
    have issued numerous options and warrants to acquire our common
    stock that could have a dilutive effect on our common
    stock.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As of October&#160;1, 2006, we had options outstanding to
    acquire 4.8&#160;million shares of our common stock, exercisable
    at prices ranging from $3.25 to $18.16 per share, with a
    weighted average exercise price of approximately $6.11&#160;per
    share. During the terms of these options, the holders will have
    the opportunity to profit from an increase in the market price
    of our common stock with resulting dilution to the holders of
    shares who purchased shares for a price higher than the
    respective exercise or conversion price. In addition, the
    increase in the outstanding shares of our common stock as a
    result of the exercise or conversion of these options could
    result in a significant decrease in the percentage ownership of
    our common stock by the purchasers of its common stock.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In February 2006, we closed on a $50&#160;million financing
    facility with Prentice. As consideration for the financing, we
    issued to an affiliate of Prentice warrants to purchase up to
    1.25&#160;million shares of common stock that can be immediately
    exercised at $7.50&#160;per share. The warrants are subject to
    customary anti-dilution protections. The shares underlying these
    warrants are being registered for resale by the selling
    shareholder. The warrants expire in February 2013.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">The
    market price of our common stock may be reduced by future sales
    of our common stock in the public market.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Sales of substantial amounts of our common stock in the public
    market that are not currently freely tradable, or even the
    potential for such sales, could have an adverse effect on the
    market price for shares of our common stock and could impair the
    ability of purchasers of our common stock to recover their
    investment or make a profit. As of October&#160;1, 2006, these
    shares consist of approximately 8.0&#160;million shares
    beneficially owned by our executive officers and directors.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Certain
    provisions in our articles of incorporation may require a
    shareholder to sell to us shares of our capital stock held by
    such shareholder, even if the shareholder does not want to
    sell.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Gaming regulations in various jurisdictions in which we have
    casino development projects impose certain restrictions on the
    equity ownership of licensed casino operators. In order to
    facilitate compliance with these
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    11
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    regulations and to preserve our ability to be awarded additional
    gaming licenses in the future, our articles of incorporation
    include a provision that allows us to redeem, at fair market
    value, shares of our capital stock held by any shareholder whose
    status as a shareholder, in the opinion of our board of
    directors, jeopardizes the approval, continued existence or
    renewal by any gaming regulatory authority, of a contract to
    manage gaming operations, or any other tribal, federal or state
    license or franchise held by us or any of our subsidiaries. As a
    result, a shareholder could be required to sell our capital
    stock at a time when the shareholder may consider our securities
    to be undervalued or may otherwise not want to sell our
    securities.
</DIV>
<A name='103'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">CAUTIONARY
    NOTE&#160;REGARDING FORWARD-LOOKING STATEMENTS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The Private Securities Litigation Reform Act of 1995 provides a
    &#147;safe harbor&#148; for forward-looking statements. Certain
    information included in this prospectus, including the documents
    that are incorporated by reference into this prospectus, contain
    statements that are forward-looking, such as plans for future
    expansion and other business development activities as well as
    other statements regarding capital spending, financing sources
    and the effects of regulation (including gaming and tax
    regulation) and competition.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Such forward looking information involves important risks and
    uncertainties that could significantly affect our anticipated
    results in the future and, accordingly, actual results may
    differ materially from those expressed in any forward-looking
    statements made by or on behalf of us.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    These risks and uncertainties include, but are not limited to,
    need for current financing to meet our operational and
    development needs; those relating to the inability to complete
    or possible delays in completion of our casino projects,
    including various regulatory approvals and numerous other
    conditions which must be satisfied before completion of these
    projects; possible termination or adverse modification of
    management or development contracts; we operate in a highly
    competitive industry; possible changes in regulations; reliance
    on continued positive relationships with Indian tribes and
    repayment of amounts owed to us by Indian tribes; continued
    contracts with the Pawnee Nation as a result of the change in
    its business council membership; possible need for future
    financing to meet our expansion goals; risks of entry into new
    businesses; reliance on our management; and the fact that WPTE
    shares held by us are currently not liquid assets, and there is
    no assurance that we will be able to realize value from these
    holdings equal to the current or future market value of WPTE
    common stock. There are also risks and uncertainties relating to
    WPTE that may have a material effect on our consolidated results
    of operations or the market value of the WPTE shares held by us,
    including WPTE&#146;s significant dependence on the Travel
    Channel LLC as a source of revenue; the potential that
    WPTE&#146;s television programming may fail to maintain a
    sufficient audience; difficulty of predicting the growth of
    WPTE&#146;s online casino business, which is a relatively new
    industry with an increasing number of market entrants; the risk
    that WPTE may not be able to protect its entertainment concepts,
    current and future brands and other intellectual property
    rights; the risk that competitors with greater financial
    resources or marketplace presence might develop television
    programming that would directly compete with WPTE&#146;s
    television programming; the increased time, cost and expense of
    developing and maintaining WPTE&#146;s own online gaming
    software; the risk that WPTE may not be able to protect its
    entertainment concepts, current and future brands and other
    intellectual property rights; risks associated with future
    expansion into new or complementary businesses; the termination
    or impairment of WPTE&#146;s relationships with key licensing
    and strategic partners; and WPTE&#146;s dependence on its senior
    management team. For more information, review our filings with
    the United States Securities and Exchange Commission. For
    further information regarding the risks and uncertainties, see
    &#147;Risk Factors.&#148;
</DIV>
<A name='104'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">USE OF
    PROCEEDS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    All net proceeds from the sale of shares of our common stock in
    this offering will go to the selling shareholder who offers and
    sells them. We will not receive any proceeds from this offering.
    Any sale of shares by us to the selling shareholder in
    connection with the exercise of the warrants will be made
    pursuant to an exemption from the registration requirements of
    the applicable securities laws. We expect to use the proceeds
    from such sales for general working capital purposes.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    12
</DIV><!-- END LOGICAL PAGE -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->
<A name='105'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">SELLING
    SHAREHOLDER</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The shares of our common stock being offered by the selling
    shareholder are issuable upon conversion of the preferred shares
    and upon exercise of the warrants. In February 2006, pursuant to
    the terms of a securities purchase agreement, we sold
    4.46&#160;million preferred shares and warrants for the purchase
    of up to 4.46&#160;million shares of our common stock to the
    selling shareholder. The preferred shares and warrants were
    issued in connection with closing on a $50&#160;million
    financing facility with an affiliate of the selling shareholder.
    The aggregate purchase price for the preferred shares was
    approximately $44,578, and a nominal amount was paid for the
    warrants. The preferred shares and warrants were issued to the
    selling shareholder in reliance upon exemptions from the
    registration requirements of applicable securities laws. As a
    result of the financing facility being paid off in full,
    warrants for the purchase of up to 3.21&#160;million shares
    lapsed and are no longer exercisable. We are registering the
    shares of our common stock in order to permit the selling
    shareholder to offer the shares for resale from time to time.
    Except for the ownership of the preferred shares and the
    warrants issued pursuant to the securities purchase agreement,
    and the $50&#160;million financing facility, the selling
    shareholder has not had any material financial relationship with
    us within the past three years.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The table below lists the selling shareholder and other
    information regarding the beneficial ownership of the shares of
    common stock by the selling shareholder. The second column lists
    the number of shares of common stock beneficially owned by the
    selling shareholder, based on its ownership of the preferred
    shares and warrants, as of December&#160;29, 2006, assuming
    conversion of all preferred shares and exercise of the warrants
    held by the selling shareholder on that date, without regard to
    any limitations on conversions or exercise.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The third column lists the shares of our common stock being
    offered by this prospectus by the selling shareholder.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    In accordance with the terms of a registration rights agreement
    between us and the selling shareholder, this prospectus
    generally covers the resale of at least 130% of the sum of
    (i)&#160;the number of shares of common stock issuable upon
    conversion of the preferred shares as of the trading day
    immediately preceding the date the registration statement is
    initially filed with the Securities and Exchange Commission and
    (ii)&#160;the number of shares of common stock issuable upon
    exercise of the related warrants as of the trading day
    immediately preceding the date the registration statement is
    initially filed with the Securities and Exchange Commission.
    Because the conversion price of the preferred shares may be
    adjusted and the exercise price of the warrants may be adjusted,
    the number of shares that will actually be issued may be more or
    less than the number of shares being offered by this prospectus.
    The fourth column assumes the sale of all of the shares offered
    by the selling shareholder pursuant to this prospectus.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Under the terms of the preferred shares and the warrants, the
    selling shareholder may not convert the preferred shares or
    exercise the warrants to the extent such conversion or exercise
    would cause the selling shareholder, together with its
    affiliates, to beneficially own a number of shares of our common
    stock which would exceed 4.99% of our then outstanding shares of
    common stock following such conversion or exercise, excluding
    for purposes of such determination shares of common stock
    issuable upon conversion of the preferred shares that have not
    been converted and upon exercise of the warrants that have not
    been exercised. The number of shares in the second column does
    not reflect this limitation. The selling shareholder may sell
    all, some or none of its shares in this offering. See &#147;Plan
    of Distribution.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
<!-- Table Width Row -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="44%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="13%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="16%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="13%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Maximum Number of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Number of Shares<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Shares to be Sold<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Number of Shares<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Owned Prior to<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Pursuant to this<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Owned After<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Name of Selling Shareholder</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Offering</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Prospectus</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Offering</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-size: 10pt">PLKS Holdings, LLC(1)
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,250,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,625,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 13%; align: left; border-bottom: 1pt solid #000000"></DIV><!-- callerid=999 iwidth=455 length=60 -->

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    (1) </TD>
    <TD></TD>
    <TD valign="bottom">
    Prentice Capital Management, L.P. has investment and voting
    power with respect to the securities held by PLKS Holdings, LLC.
    Mr.&#160;Michael Zimmerman is the managing member of the general
    partner of Prentice Capital Management, L.P. Each of Prentice
    Capital Management and Mr.&#160;Zimmerman disclaim beneficial
    ownership of any of these securities.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    13
</DIV><!-- END LOGICAL PAGE -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->
<A name='106'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">DESCRIPTION
    OF CAPITAL STOCK</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">General</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our articles of incorporation authorize our board of directors
    to issue 200,000,000&#160;shares of capital stock,
    $0.01&#160;par value per share. As of December&#160;29, 2006,
    these shares consist of 22,948,635 issued and outstanding shares
    of common stock, $0.01&#160;par value, referred to as common
    stock, and 7,500,000&#160;shares of authorized series&#160;A
    convertible preferred stock,$0.01&#160;par value per share.
    Apart from those shares and shares of common stock reserved for
    issuance under our stock option plans and our outstanding common
    stock purchase warrants, our remaining authorized capital stock
    consists of authorized voting common stock unless and until our
    board of directors establishes by resolution additional
    different classes or series of capital stock.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Series&#160;A
    Convertible Preferred Stock</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As of December&#160;29, 2006, we had 4,457,751&#160;shares of
    our series&#160;A convertible preferred stock, referred to as
    preferred stock, issued and outstanding. We issued these
    preferred shares to the selling stockholder who provided us with
    a $50&#160;million financing facility under a financing
    agreement dated February&#160;15, 2006, referred to as the
    financing agreement. Of the 4,457,751&#160;shares of preferred
    stock outstanding, only 1,250,000&#160;shares can ever become
    convertible as described further below in the section entitled
    &#147;Conversion Rights.&#148; The following is a summary of the
    material rights and privileges of our preferred stock.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Voting.</I>&#160;&#160;The holders of preferred stock
    currently do not have cumulative voting for the election of
    directors or other voting rights, except as required under
    applicable laws.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Dividends.</I>&#160;&#160;The holders of our preferred stock
    have no special dividend rights.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Preemptive Rights.</I>&#160;&#160;The holders of our
    preferred stock have no preemptive rights to subscribe for any
    additional shares of any class of our capital stock or for any
    issue of bonds, notes or other securities convertible into any
    class of our capital stock.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Liquidation Preference.</I>&#160;&#160;The holders of our
    preferred stock have no liquidation preference over holders of
    our common stock.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Redemption&#160;Rights.</I>&#160;&#160;The holders of our
    preferred stock have the following redemption rights:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the preferred stock must be redeemed by us upon the occurrence
    of a &#147;regulatory redemption event&#148; as defined in the
    certificate of designation at a price specified in the
    certificate of designation;&#160;and
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the holders of the preferred stock have the optional right to
    require us to redeem the preferred stock if a &#147;registration
    rights default&#148; as defined in the certificate of
    designation occurs at a price specified in the certificate of
    designation.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Conversion Rights.</I>&#160;&#160;Up to 1,250,000&#160;shares
    of preferred stock can each become immediately convertible into
    one share of common stock if, but only if:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    we cancel or redeem the warrants issued to the selling
    shareholder in connection with the $50&#160;million financing
    facility or the shares of common stock issued pursuant to an
    exercise of the warrants;&#160;and
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the cancellation or redemption of the warrants results from the
    application of the terms and conditions of our articles of
    incorporation or any applicable law, rule or regulation.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Under our articles of incorporation, our board of directors may,
    at any time, authorize us to redeem the shares of our capital
    stock held by any &#147;disqualified holder&#148; as defined in
    our articles of incorporation. A &#147;disqualified holder&#148;
    means any beneficial owner of our capital stock whose ownership
    may result, in the judgment of our board of directors, in:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the disapproval, modification, or non-renewal of any contract
    under which we or any of our subsidiaries has sole or shared
    authority to manage any gaming operations;&#160;or
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    14
</DIV><!-- END LOGICAL PAGE -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the failure to obtain or the loss or nonreinstatement of any
    license or franchise from any governmental agency held by us or
    any of our subsidiaries to conduct any portion of our business
    or the business of any of our subsidiaries if the license or
    franchise is conditioned upon some or all of the holders of
    capital stock meeting certain criteria.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The shares are redeemable at a redemption price equal to the
    capital stock&#146;s fair market value (as defined in our
    articles of incorporation). The redemption price is payable in
    cash or our securities or any combination of cash or securities
    selected by our board of directors.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    At any time after any of the shares of preferred stock become
    convertible, the holder of the preferred stock can elect to
    convert some or all of the holder&#146;s then convertible
    preferred stock by:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    giving written notice of conversion to us;&#160;and
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    paying to us in cash or by wire transfer an amount equal to the
    number of shares of preferred stock being converted multiplied
    by the applicable conversion price.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The conversion price is currently equal to $7.50&#160;per share.
    The conversion price is subject to adjustment in the event of,
    among other things, stock splits, stock dividends or similar
    events. The conversion price and the number of shares of
    outstanding preferred stock are also subject to adjustment if we
    issue shares of our common stock at prices below the then
    existing conversion price. The preferred stock may be converted
    on a cashless basis only if a registration statement is not
    available for the resale of the shares of common stock issuable
    upon conversion of the preferred stock at the time of conversion.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Neither we nor any holder of preferred stock can effect the
    conversion of any share of preferred stock to the extent that
    after giving effect to such conversion, the holder converting
    shares of preferred stock would beneficially own (directly or
    indirectly) in excess of 4.99% of our outstanding shares of
    common stock outstanding after giving effect to such conversion.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Purchase Rights.</I>&#160;&#160;If we grant, issue or sell
    options, warrants, other convertible securities or other
    property pro rata to holders of our common stock, the holders of
    our preferred stock will be entitled to acquire such securities
    or property on similar terms determined as if the preferred
    stock then held by them has been fully converted into common
    stock.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Rights in the Event of Certain Fundamental
    Transactions.</I>&#160;&#160;If we engage in one or more
    &#147;fundamental transactions&#148; as defined in the
    certificate of designation, then each holder of preferred stock
    has the right to either:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    purchase and receive the shares of stock, securities or assets
    issuable or payable with respect to the number of shares of
    common stock then issuable upon a conversion of the preferred
    stock as if the fundamental transaction had not taken
    place;&#160;or
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    require the repurchase of the preferred stock held by the holder
    for a purchase price equal to the &#147;black scholes
    value&#148; as defined in the certificate of designation of the
    remaining unconverted portion of preferred stock held by the
    holder on the date of the request. The purchase price is payable
    in cash within five trading days after such a request.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The term &#147;fundamental transactions&#148; means, among other
    things, a merger, consolidation, sale of substantially all of
    our properties or assets or the acquisition of more than 50% of
    our outstanding shares of preferred stock.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Common
    Stock</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    As of December&#160;29, 2006, we had 22,948,635&#160;shares of
    common stock outstanding. All outstanding shares of our common
    stock are fully paid and nonassessable. Our shares of common
    stock are quoted on The Nasdaq Global Market. The following is a
    summary of the material rights and privileges of our common
    stock.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    15
</DIV><!-- END LOGICAL PAGE -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Voting.</I>&#160;&#160;Holders of our common stock are
    entitled to cast one vote for each share held at all shareholder
    meetings for all purposes, including the election of directors.
    The holders of more than 50% of the voting power of our common
    stock issued and outstanding and entitled to vote and present in
    person or by proxy, together with any preferred stock issued and
    outstanding and entitled to vote and present in person or by
    proxy, constitute a quorum at all meetings of our shareholders.
    The vote of the holders of a majority of our common stock
    present and entitled to vote at a meeting, together with any
    preferred stock present and entitled to vote at a meeting, will
    decide any question brought before the meeting, except when
    Minnesota law requires a greater vote and except when Minnesota
    law requires a vote of any preferred stock issued and
    outstanding, voting as a separate class, to approve a matter
    brought before the meeting. Holders of our common stock do not
    have cumulative voting for the election of directors.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Dividends.</I>&#160;&#160;Holders of our common stock are
    entitled to dividends when, as and if declared by the board of
    directors out of funds available for distribution. The payment
    of any dividends are limited by the terms of the BofA financing
    agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Pre-emptive Rights.</I>&#160;&#160;The holders of our common
    stock have no pre-emptive rights to subscribe for any additional
    shares of any class of our capital stock or for any issue of
    bonds, notes or other securities convertible into any class of
    our capital stock.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <I>Liquidation.</I>&#160;&#160;If we liquidate or dissolve, the
    holders of each outstanding share of our common stock will be
    entitled to share equally in our assets legally available for
    distribution to our shareholders after payment of all
    liabilities and after distributions to holders of preferred
    stock legally entitled to be paid distributions prior to the
    payment of distributions to holders of our common stock. As of
    the date of this prospectus, we have not issued any preferred
    stock with preferential liquidation rights over our common stock.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Warrants</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    This prospectus includes 130% of the number of shares of our
    common stock issuable upon the exercise of the warrants which
    have an exercise price of $7.50&#160;per share and expire in
    February 2013. The exercise price and the amount of securities
    issuable pursuant to these warrants are subject to adjustment as
    may be required to prevent dilution resulting from, among other
    things, stock splits, stock dividends or similar events or the
    issuance of shares of our common stock at prices below the
    exercise price of the warrants. The warrants were issued to the
    selling shareholder in connection with an affiliate of the
    selling shareholder providing a $50&#160;million financing
    facility to us in February 2006. We have since paid off the
    financing facility in full.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Certain
    Provisions in Governance Documents</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The rights of holders of our common stock may become subject in
    the future to prior and superior rights and preferences in the
    event our board of directors establishes one or more additional
    classes of common stock, or one or more series of preferred
    stock. Such additional classes or series may be established by
    our board of directors at the time of issuance without further
    action by our shareholders. The issuance of a class or series of
    preferred stock could also prevent a potential takeover because
    the terms of any issued preferred stock may require the approval
    of the holders of the outstanding shares of preferred stock in
    order to consummate a merger, reorganization or sale of
    substantially all of our assets or other extraordinary corporate
    transaction.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Our articles of incorporation provide that no person or entity
    may become the beneficial owner of five percent or more of any
    class or series of our capital stock unless such person or
    entity agrees in writing to provide personal background and
    financial information to gaming authorities, consent to a
    background investigation, and respond to questions from gaming
    authorities. Our articles of incorporation also provide that we
    may redeem, at fair market value, shares of our capital stock
    held by any person or entity whose status as a shareholder, in
    the opinion of our board of directors, jeopardizes the approval,
    continued existence, or renewal by any gaming regulatory
    authority, of a contract to manage gaming operations, or any
    other tribal, federal or state license or franchise held by us
    or any of our subsidiaries. These restrictions will be contained
    in a legend on each certificate issued evidencing shares of our
    common stock.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    16
</DIV><!-- END LOGICAL PAGE -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">Minnesota
    Business Corporation Act</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We have not opted out of the control share acquisition or
    business combination provisions of the Minnesota Business
    Corporation Act. In general, the control share acquisition
    provision provides that shares of our voting capital stock
    acquired in a &#147;control share acquisition&#148; have no
    voting rights unless voting rights are approved by disinterested
    shareholders in a prescribed manner. A &#147;control share
    acquisition&#148; is an acquisition, directly or indirectly, of
    the beneficial ownership of shares of voting capital stock that
    would, when added to all other shares beneficially owned by the
    acquiring person, exceed 20% or more of our outstanding voting
    capital stock entitled to vote for the election of directors,
    subject to certain exceptions. In general, the business
    combination provision prohibits any business combination by us
    or our subsidiary with any shareholder that purchases 10% or
    more of our voting capital stock within four years following the
    date such interested shareholder first held 10% or more of our
    voting capital stock, referred to as the share acquisition date,
    unless the business combination is approved by a committee of
    all the disinterested members of our board of directors before
    the interested shareholder&#146;s share acquisition date. These
    provisions may have the effect of delaying, deferring or
    preventing a change in control of us or the removal of our
    existing management. We have no control over, and therefore can
    not predict, what effect these impediments to the ability of
    third parties to acquire control of us might have on the market
    price of our common stock.
</DIV>
<A name='107'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">PLAN OF
    DISTRIBUTION</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We are registering the shares of common stock issuable upon
    conversion of the preferred shares and upon exercise of the
    warrants to permit the resale of these shares of common stock by
    the holders of the preferred shares and warrants from time to
    time after the date of this prospectus. We will not receive any
    of the proceeds from the sale by the selling shareholder of the
    shares of common stock. We will bear all fees and expenses
    incident to our obligation to register the shares of common
    stock.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The selling shareholder may sell all or a portion of the shares
    of common stock beneficially owned by it and offered hereby from
    time to time directly or through one or more underwriters,
    broker-dealers or agents. If the shares of common stock are sold
    through underwriters or broker-dealers, the selling shareholder
    will be responsible for underwriting discounts or commissions or
    agent&#146;s commissions. The shares of common stock may be sold
    in one or more transactions at fixed prices, at prevailing
    market prices at the time of the sale, at varying prices
    determined at the time of sale, or at negotiated prices. These
    sales may be effected in transactions, which may involve crosses
    or block transactions,
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    on any national securities exchange or quotation service on
    which the securities may be listed or quoted at the time of sale;
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    in the
    <FONT style="white-space: nowrap">over-the-counter</FONT>
    market;
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    in transactions otherwise than on these exchanges or systems or
    in the
    <FONT style="white-space: nowrap">over-the-counter</FONT>
    market;
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    through the writing of options, whether such options are listed
    on an options exchange or otherwise;
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    ordinary brokerage transactions and transactions in which the
    broker-dealer solicits purchasers;
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    block trades in which the broker-dealer will attempt to sell the
    shares as agent but may position and resell a portion of the
    block as principal to facilitate the transaction;
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    purchases by a broker-dealer as principal and resale by the
    broker-dealer for its account;
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    an exchange distribution in accordance with the rules of the
    applicable exchange;
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    privately negotiated transactions;
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    settlement of short sales entered into after the date of this
    prospectus;
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    sales pursuant to Rule&#160;144;
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    broker-dealers may agree with the selling securityholders to
    sell a specified number of such shares at a stipulated price per
    share;
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    17
</DIV><!-- END LOGICAL PAGE -->
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a combination of any such methods of sale;&#160;and
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any other method permitted pursuant to applicable law.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    If the selling shareholder effects such transactions by selling
    shares of common stock to or through underwriters,
    broker-dealers or agents, such underwriters, broker-dealers or
    agents may receive commissions in the form of discounts,
    concessions or commissions from the selling shareholder or
    commissions from purchasers of the shares of common stock for
    whom they may act as agent or to whom they may sell as principal
    (which discounts, concessions or commissions as to particular
    underwriters, broker-dealers or agents may be in excess of those
    customary in the types of transactions involved). In connection
    with sales of the shares of common stock or otherwise, the
    selling shareholder may enter into hedging transactions with
    broker-dealers, which may in turn engage in short sales of the
    shares of common stock in the course of hedging in positions
    they assume. The selling shareholder may also sell shares of
    common stock short and deliver shares of common stock covered by
    this prospectus to close out short positions and to return
    borrowed shares in connection with such short sales. The selling
    shareholder may also loan or pledge shares of common stock to
    broker-dealers that in turn may sell such shares.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The selling shareholder may pledge or grant a security interest
    in some or all of the preferred shares and warrants or shares of
    common stock owned by it and, if it defaults in the performance
    of its secured obligations, the pledgees or secured parties may
    offer and sell the shares of common stock from time to time
    pursuant to this prospectus or any amendment to this prospectus
    under Rule&#160;424(b)(3) or other applicable provision of the
    Securities Act of 1933, as amended, referred to as the
    Securities Act, amending, if necessary, the list of selling
    shareholders to include the pledgee, transferee or other
    successors in interest as selling shareholders under this
    prospectus. The selling shareholder also may transfer and donate
    the shares of common stock in other circumstances in which case
    the transferees, donees, pledgees or other successors in
    interest will be the selling beneficial owners for purposes of
    this prospectus.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The selling shareholder and any broker-dealer participating in
    the distribution of the shares of common stock may be deemed to
    be &#147;underwriters&#148; within the meaning of the Securities
    Act, and any commission paid, or any discounts or concessions
    allowed to, any such broker-dealer may be deemed to be
    underwriting commissions or discounts under the Securities Act.
    At the time a particular offering of the shares of common stock
    is made, a prospectus supplement, if required, will be
    distributed which will set forth the aggregate amount of shares
    of common stock being offered and the terms of the offering,
    including the name or names of any broker-dealers or agents, any
    discounts, commissions and other terms constituting compensation
    from the selling shareholder and any discounts, commissions or
    concessions allowed or reallowed or paid to broker-dealers.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Under the securities laws of some states, the shares of common
    stock may be sold in such states only through registered or
    licensed brokers or dealers. In addition, in some states the
    shares of common stock may not be sold unless such shares have
    been registered or qualified for sale in such state or an
    exemption from registration or qualification is available and is
    complied with.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    There can be no assurance that any selling shareholder will sell
    any or all of the shares of common stock registered pursuant to
    the shelf registration statement, of which this prospectus forms
    a part.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The selling shareholder and any other person participating in
    such distribution will be subject to applicable provisions of
    the Securities Exchange Act of 1934, as amended (referred to as
    the Exchange Act), and the rules and regulations thereunder,
    including, without limitation, Regulation&#160;M of the Exchange
    Act, which may limit the timing of purchases and sales of any of
    the shares of common stock by the selling shareholder and any
    other participating person. Regulation&#160;M may also restrict
    the ability of any person engaged in the distribution of the
    shares of common stock to engage in market-making activities
    with respect to the shares of common stock. All of the foregoing
    may affect the marketability of the shares of common stock and
    the ability of any person or entity to engage in market-making
    activities with respect to the shares of common stock.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will pay all expenses of the registration of the shares of
    common stock pursuant to the registration rights agreement;
    provided, however, that a selling shareholder will pay all
    underwriting discounts and selling
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    18
</DIV><!-- END LOGICAL PAGE -->
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    commissions, if any. We will indemnify the selling shareholder
    against liabilities, including liabilities under the Securities
    Act, in accordance with the registration rights agreement, or
    the selling shareholder will be entitled to contribution. We may
    be indemnified by the selling shareholder against civil
    liabilities, including liabilities under the Securities Act,
    that may arise from any written information furnished to us by
    the selling shareholder specifically for use in this prospectus,
    in accordance with the related registration rights agreement, or
    we may be entitled to contribution.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Once sold under the shelf registration statement, of which this
    prospectus forms a part, the shares of common stock will be
    freely tradable in the hands of persons other than our
    affiliates.
</DIV>
<A name='108'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">LEGAL
    MATTERS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The validity of our common stock offered by this prospectus will
    be passed upon for us by Gray, Plant, Mooty, Mooty&#160;&#38;
    Bennett, P.A.
</DIV>
<A name='109'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">EXPERTS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The financial statements as of January&#160;1, 2006 and for the
    year then ended incorporated into this prospectus by reference
    from our Annual Report on
    <FONT style="white-space: nowrap">Form&#160;10-K</FONT>
    for the year ended January&#160;1, 2006 have been audited by
    Piercy, Bowler, Taylor&#160;&#38; Kern, Certified Public
    Accountants and Business Advisors a Professional Corporation,
    referred to as Piercy Bowler Taylor&#160;&#38; Kern, an
    independent registered public accounting firm, as stated in
    their report, which is incorporated herein by reference, and has
    been so incorporated in reliance upon the report of such firm
    given upon their authority as experts in accounting and auditing.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The financial statements as of January&#160;2, 2005 and for each
    of the two years in the period then ended incorporated in this
    prospectus by reference from our Annual Report on
    <FONT style="white-space: nowrap">Form&#160;10-K</FONT>
    for the year ended January&#160;1, 2006 have been audited by
    Deloitte&#160;&#38; Touche LLP, an independent registered public
    accounting firm, as stated in their report, which is
    incorporated herein by reference, and have been so incorporated
    in reliance upon the report of such firm given upon their
    authority as experts in accounting and auditing.
</DIV>
<A name='110'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">WHERE YOU
    CAN FIND MORE INFORMATION</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We file annual, quarterly and current reports, proxy statements
    and other information with the Securities and Exchange
    Commission, referred to as the SEC. The reports, proxy
    statements and other information that we file electronically
    with the SEC are available to the public free of charge over the
    Internet at the SEC&#146;s website at <U>http://www.sec.gov.</U>
    You may also read and copy any document we file with the SEC, at
    prescribed rates, at the SEC&#146;s Public Reference Room at 100
    F Street, N.E., Washington,&#160;D.C. 20549. You may obtain
    information on the operation of the SEC&#146;s Public Reference
    Room by calling the SEC at
    <FONT style="white-space: nowrap">1-800-SEC-0330.</FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We &#147;incorporate by reference&#148; into this prospectus
    certain information that we have filed with the SEC, which means
    that we can disclose important information to you by referring
    you to those documents. The information incorporated by
    reference is an important part of this prospectus. The
    information about us that is contained in this prospectus is not
    comprehensive and you should also read the information in the
    documents incorporated by reference into this prospectus. We
    incorporate by reference into this prospectus the reports and
    documents listed below and any future filings we will make with
    the SEC under Sections&#160;13(a), 13(c), 14 or 15(d) of the
    Exchange Act, other than current reports on
    <FONT style="white-space: nowrap">Form&#160;8-K</FONT>
    furnished under Item&#160;2.02 or Item&#160;7.01 of
    <FONT style="white-space: nowrap">Form&#160;8-K</FONT>
    and exhibits filed on such form that are related to such items,
    until the termination of the offering covered by this prospectus:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Our Annual Report on
    <FONT style="white-space: nowrap">Form&#160;10-K</FONT>
    for the year ended January&#160;1, 2006 (including information
    specifically incorporated by reference into our
    <FONT style="white-space: nowrap">Form&#160;10-K),</FONT>
    as filed with the SEC on March&#160;8, 2006;&#160;and
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Our Proxy Statement dated March&#160;17, 2006 as filed with the
    SEC on March&#160;8, 2006;&#160;and
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    19
</DIV><!-- END LOGICAL PAGE -->
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Our Quarterly Report on
    <FONT style="white-space: nowrap">Form&#160;10-Q</FONT>
    for the quarterly period ended April&#160;2, 2006 as filed with
    the SEC on May&#160;12, 2006 (including our unaudited interim
    financial statements as of April&#160;2, 2006, and for the
    three-month periods ended April&#160;2, 2006, and April&#160;3,
    2005);&#160;and
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Our Quarterly Report on
    <FONT style="white-space: nowrap">Form&#160;10-Q</FONT>
    for the quarterly period ended July&#160;2, 2006 as filed with
    the SEC on August&#160;10, 2006 (including our unaudited interim
    financial statements as of July&#160;2, 2006, and for the
    three-month and six-month periods ended July&#160;2, 2006 and
    July&#160;3, 2005); and
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Our Quarterly Report on
    <FONT style="white-space: nowrap">Form&#160;10-Q</FONT>
    for the quarterly period ended October&#160;1, 2006 as filed
    with the SEC on November&#160;9, 2006 (including our unaudited
    interim financial statements as of October&#160;1, 2006, and for
    the three-month and nine-month periods ended October&#160;1,
    2006 and October&#160;2, 2005);&#160;and
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Our Current Reports on
    <FONT style="white-space: nowrap">Forms&#160;8-K</FONT>
    as filed with the SEC on March&#160;22, 2006, March&#160;23,
    2006, April&#160;5, 2006, April&#160;7, 2006 (reporting
    disclosures under Items&#160;1.01 and 1.02), April&#160;21,
    2006, June&#160;28, 2006, October&#160;4, 2006, October&#160;6,
    2006, November&#160;9, 2006, December&#160;6, 2006,
    December&#160;14, 2006; December&#160;27, 2006; January&#160;9,
    2007;&#160;and
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    The description of our common stock contained in our
    registration statement on Form&#160;10 registering our common
    stock under Section&#160;12 of the Exchange Act as filed with
    the SEC on October&#160;23, 1998, as amended by our registration
    statement on
    <FONT style="white-space: nowrap">Form&#160;8-A/A</FONT>
    as filed with the SEC on May&#160;16, 2000.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We will provide to each person, including any beneficial owner,
    to whom a prospectus is delivered, a copy of any or all of the
    above reports and documents which are incorporated by reference
    into this prospectus but not delivered with the prospectus. You
    can make a written or oral request for a free copy of any or all
    of the above reports and documents by writing to Timothy J.
    Cope, our President and Chief Financial Officer, at 130 Cheshire
    Lane, Suite&#160;101, Minnetonka, MN 55305; or by emailing
    Mr.&#160;Cope at <U>tcope@lakesentertainment.com</U>; or by
    telephoning Mr.&#160;Cope at
    <FONT style="white-space: nowrap">(952)&#160;449-9092.</FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    The address of our website is
    <U>http://www.lakesentertainment.com</U>. Our most current SEC
    filings, such as our annual, quarterly and current reports,
    proxy statements and press releases, including the reports and
    documents that are incorporated by reference into this
    prospectus, are available to the public free of charge on our
    website. Our website is not a part of this prospectus.
</DIV>
<A name='111'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: #FFFFFF">

    <B><FONT style="font-family: 'Times New Roman', Times">INDEMNIFICATION</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    We are subject to the Minnesota Business Corporation Act,
    referred to as the MBCA. Section&#160;302A.521 of the MBCA
    provides that we shall indemnify a person made or threatened to
    be made a party to a proceeding by reason of the former or
    present official capacity of such person against judgments,
    penalties, fines, including, without limitation, excise taxes
    assessed against such person with respect to any employee
    benefit plan, settlements and reasonable expenses, including
    attorneys&#146; fees and disbursements, incurred by such person
    in connection with the proceeding, if, with respect to the acts
    or omissions of such person complained of in the proceeding,
    such person:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    has not been indemnified by another organization or employee
    benefit plan for the same judgments, penalties, fines,
    including, without limitation, excise taxes assessed against the
    person with respect to an employee benefit plan, settlements,
    and reasonable expenses, including attorneys&#146; fees and
    disbursements, incurred by the person in connection with the
    proceeding with respect to the same acts or omissions;
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    acted in good faith;
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    received no improper personal benefit and Section&#160;302A.255
    of the MBCA, if applicable, has been satisfied;
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    in the case of a criminal proceeding, had no reasonable cause to
    believe the conduct was unlawful;&#160;and
</TD>
</TR>

<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    reasonably believed that the conduct was in our best interests
    in the case of acts or omissions in such person&#146;s official
    capacity for us or reasonably believed that the conduct was not
    opposed to our best
</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    20
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN LOGICAL PAGE -->

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <TD>&nbsp;</TD>
    <TD>
</TD>
    <TD align="left">
    interests in the case of acts or omissions in such person&#146;s
    official capacity for other affiliated organizations.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Article&#160;7 of our articles of incorporation further provide
    that our directors shall not be personally liable to us or our
    shareholders for breaches of fiduciary duty. In addition,
    Article&#160;6 of our Bylaws provides that we shall indemnify
    our directors to the fullest extent permitted under the MBCA. We
    also maintain a director and officer insurance policy to cover
    ourselves, our directors and our officers against certain
    liabilities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    Although indemnification for liabilities arising under the
    Securities Act of 1933, referred to as the Securities Act, may
    be permitted to our directors, officers and controlling persons
    under these provisions, we have been advised that, in the
    opinion of the SEC, such indemnification is against public
    policy as expressed in the Securities Act and is, therefore,
    unenforceable.
</DIV>

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: #FFFFFF">
    <BR>
    21
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<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

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    <B><FONT style="font-size: 14pt">
    1,625,000&#160;Shares</FONT></B>
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    <B><FONT style="font-size: 24pt"> LAKES ENTERTAINMENT,
    INC.</FONT></B>
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    <B><FONT style="font-size: 14pt"> Common Stock</FONT></B>
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    <B><FONT style="font-size: 12pt">
    <FONT style="word-spacing: 100pt; white-space: nowrap; font-size: 1pt"><U>_
    _</U></FONT><!-- callerid=128 iwidth=455 length=68 --></FONT></B>
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    <B><FONT style="font-size: 12pt">PROSPECTUS</FONT></B>
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     February&#160;28, 2007
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