Full House Resorts Inc. (FLL) 2009年年度報告「AMEX」.pdf

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1、Table of ContentsU.S.SECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549 FORM 10-K Annual Report Under Section 13 or 15(d)of the Securities Exchange Act of 1934For the fiscal year ended:December 31,2009 o Transition Report Under Section 13 or 15(d)of the Securities Exchange Act of 1934Commission

2、file number 1-32583 FULL HOUSE RESORTS,INC.(Exact Name of Registrant as specified in Its Charter)Delaware 13-3391527(State or Other Jurisdiction(I.R.S.Employerof Incorporation or Organization)Identification No.)4670 S.Fort Apache Rd.,Suite 190,Las Vegas,Nevada 89147(Address and zip code of principal

3、 executive offices)(702)221-7800(Registrants Telephone Number,Including Area Code)Securities registered under Section 12(b)of the Exchange Act:Common Stock,$.0001 per Share(Title of Each Class)NYSE Amex(formerly American Stock Exchange)(Name of Each Exchange on Which Registered)Securities registered

4、 under Section 12(g)of the Exchange Act:None(Title of class)Indicate by check mark if the registrant is a well-known seasoned issue,as defined in Rule 405 of the Securities Act.Yes o No Check if the issuer is not required to file reports pursuant to Section 13 or 15(d)of the Exchange Act.oCheck whet

5、her the issuer:(1)filed all reports required to be filed by Section 13 or 15(d)of the Exchange Act during thepast 12 months(or for such shorter period that the registrant was required to file such reports),and(2)has been subject tosuch filing requirements for the past 90 days.Yes No oIndicate by che

6、ck mark whether the registrant has submitted electronically and posted on its corporate Web site,if any,every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T(232.405 of thischapter)during the preceding 12 months(or for such shorter period that the reg

7、istrant was required to submit and post suchfiles).Yes o No oCheck if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-K(229.405 of this chapter)isnot contained herein,and will not be contained,to the best of registrants knowledge,in definitive proxy or information

8、statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.oIndicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,or a non-accelerated filer,orsmaller reporting company.See definition of“large accelerated filer,”“ac

9、celerated filer”and“small reporting company”inRule 12b-2 of the Exchange Act.(Check one):Large Accelerated Filer o Accelerated Filer o Non Accelerated Filer oDo not check if smallerreporting company Smaller reporting company Indicate by check mark whether the registrant is a shell company(as defined

10、 in Rule 12b-2 of the Exchange Act).Yes o No The aggregate market value of registrants voting$.0001 par value common stock held by non-affiliates of the registrant,as of June 30,2009,was:$30,016,574.As of March 23,2010,there were 18,001,681 shares of Common Stock,$.0001 parvalue per share,outstandin

11、g.Documents Incorporated By ReferenceThe information required by Part III of this Form 10-K,to the extent not set forth herein,is incorporated by reference fromthe Registrants definitive proxy statement relating the annual meeting of stockholders to be held in 2010,which definitiveproxy statement sh

12、all be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year towhich this Form 10-K relates.TABLE OF CONTENTS PART I Item 1.Business 3 Item 1A.Risk Factors 15 Item 1B.Unresolved Staff Comments 15 Item 2.Properties 16 Item 3.Legal Proceedings 16 Item 4.Sub

13、mission of Matters to a Vote of Security Holders 16 PART II Item 5.Market for Registrants Common Equity,Related Stockholder Matters and Issuer Purchases of EquitySecurities 17 Item 6.Selected Financial Data 17 Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operation

14、s 17 Item 7A.Quantitative and Qualitative Disclosures about Market Risk 28 Item 8.Financial Statements and Supplementary Data 28 Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 49 Item 9A(T).Controls and Procedures 49 Item 9B.Other Information 49 PART III

15、Item 10.Directors,Executive Officers and Corporate Governance 49 Item 11.Executive Compensation 49 Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 50 Item 13.Certain Relationships and Related Transactions,and Director Independence 50 Item 14.Pri

16、ncipal Accountants Fees and Services 50 Item 15.Exhibits 51 Exhibit 21 Exhibit 23 Exhibit 31.1 Exhibit 31.2 Exhibit 32.1 2Table of ContentsPART IItem 1.Business.BACKGROUNDFull House Resorts,Inc.,a Delaware corporation formed in 1987,(Full House,we,our,ours,us)develops,manages andinvests in gaming re

17、lated opportunities.Beginning in 1994,we became involved in several gaming projects,including theFireKeepers Casino near Battle Creek,Michigan with the Nottawaseppi Huron Band of Potawatomi(the“Michigan Tribe”)andHarrington Raceway and Casino(“Harrington Casino”),a“racino”in Harrington,Delaware,both

18、 of which are discussed indetail below.The Company also owns Stockmans Casino in Fallon,Nevada and has an agreement with the Northern CheyenneTribe of Montana for the development and management of a gaming facility in Montana.Projects Currently OperatingHarrington Raceway and Casino,DelawareWe are a

19、 50%-investor in Gaming Entertainment(Delaware),LLC(“GED”),a joint venture with Harrington Raceway,Inc.(“HRI”),which has a management contract with Harrington Casino.Harrington Casino,a division of HRI,which operates videolottery terminals under the supervision of the Delaware State Lottery Office,c

20、ommenced operations on August 20,1996.GEDprovided over$11.0 million in financing and managed the development of the project,and has a contract to providemanagement services to HRI for a fee which expires in August 2011.The fee is based primarily on a percentage of revenues andoperating profits of Ha

21、rrington Casino as defined,which was previously subject to an annual limitation.The gaming facilitywas originally 35,000 square feet and opened with 500 gaming devices,a simulcast parlor and a small buffet,but was expandedand renovated during 2007.The expansion and renovation was completed in early

22、February 2008,and the facility now offersapproximately 2,100 gaming devices,a 450-seat buffet,a fine dining restaurant,a 50-seat diner,and an entertainment loungearea.On June 18,2007,we restructured our joint venture agreement with HRI to allow HRI greater flexibility in GEDsmanagement of Harrington

23、 Casino,while providing us with guaranteed growth in our GED adjusted management feeentitlement for the remaining term of the management agreement.Under the terms of the restructured management agreement,we receive the greater of 50%of GEDs distributable net income as prescribed under the management

24、 agreement or a 5%increase in our share of GEDs management fees paid in the prior year,except for 2008 when the increase was 8%.The annualgrowth rate in 2009 through the expiration of the GED management contract in August 2011 is 5%per year.The Harrington Casino is located in Harrington,Delaware on

25、Route 13,approximately 20 miles south of Dover,Delawarebetween Philadelphia and Baltimore/Washington,D.C.and is one of three gaming facilities operating in Delaware.The closestcompeting casino is in Dover and operates over 3,000 devices.In February 2006,the law was changed to allow up to 4,000gaming

26、 devices at each of the three authorized locations in Delaware.The third facility is approximately 60 miles north of theHarrington Casino.In 2009,the Delaware law was again changed to allow betting on sporting events,commonly known assports books at the three authorized casinos.After a lawsuit filed

27、 by the NFL and related parties,the federal court ruled thatDelaware sports books were authorized only to accept bets on multiple contests,commonly called district parley bets,and notbets on individual contests.The district court ruling has been appealed to the Federal Court of Appeals.The impact on

28、 revenuesfrom Harrington Casino from sports betting has been minimized due to this restrictive limitation on what bets can be placed andaccepted.In January 2010,the Delaware state legislature passed a law allowing live table games at the three Delaware casinos.The bill was signed into law and table

29、game operations are expected to commence in 2010.In 2004,the Pennsylvania legislature passed a law authorizing gambling.Included in the authorized types of games areslot machines similar to those operated in Delaware.During 2006 and in January 2007,the Pennsylvania Gaming Control Boardissued license

30、s for operators and gaming equipment suppliers.Several of the“racino”licensed facilities and casinos havesubsequently opened.The Harrington Casino is located the furthest south of the three authorized gaming locations in Delawareand does not attract a substantial patronage from Pennsylvania.Pennsylv

31、ania has also legalized table games in 2009 which thelicensed facilities have begun to implement.3Table of ContentsDuring 2008,the Maryland legislature approved casino-type gaming in certain designated counties of the state.In theNovember 2008 elections,Maryland voters passed a referendum approving

32、the bill.The new law allows for a total of 15,000slot machines in five locations,including 4,750 slots in Anne Arundel County(within two miles of Route 295);3,750 slots inBaltimore City,(on city-owned land within one-half mile of I-95 and Route 295 that is in a nonresidential area and not adjacentto

33、 or within one-quarter mile of residential property);2,500 slots in Worcester County(within one mile of the intersection ofRoute 50 and Route 589);2,500 slots in Cecil County(within two miles of I-95)and 1,500 slots in Allegany County(on state-owned land associated with the Rocky Gap State Park that

34、 is not in the same physical building as the Rocky Gap Lodge andGolf Resort).Recently,bids were submitted to the state for authorization by private contractors to conduct gaming in Maryland.While we expect there to be an adverse impact on the revenues of Harrington Casino from this added competition

35、 when it isfully implemented,as well as from the current economic climate,we expect to be insulated from the effect of such competitiveand economic factors by the guaranteed minimum payment paid to us under the restructured management agreement with HRI,which guarantees us a 5%increase in the manage

36、ment fees we receive each year through the end of the agreement.Table gamesare not part of the authorization at Maryland gaming establishments,although the Maryland legislature is considering a bill toallow table game operations.This may give Delaware casinos an edge over Maryland gaming but the imp

37、act on revenues isunknown and is not expected to have a positive impact on our management fees.Stockmans CasinoWe acquired Stockmans Casino and Holiday Inn Express in Fallon,Nevada(“Stockmans”)on January 31,2007.Theacquisition was funded by a reducing revolving loan agreement from Nevada State Bank

38、of$16.0 million,approximately$1.2 million of seller financing in the form of a promissory note and approximately$10.2 million in cash which was raised aspart of an equity offering in December 2006.Stockmans Casino has approximately 8,400 square feet of gaming space withapproximately 265 slot machine

39、s,four table games and keno.There is a bar,a fine dining restaurant and a coffee shop.Initially,our facility included a Holiday Inn Express,which had 98 guest rooms,indoor and outdoor pools,sauna,fitness center and ameeting room.On October 1,2007,we entered into an agreement to sell the Holiday Inn

40、Express.Under the terms of the agreement,thebuyer agreed to purchase the real property,building,improvements and personal property comprising the hotel operations for$7.2 million.On February 20,2008,the sale was consummated and we received net cash proceeds of approximately$7.0 million,which we used

41、 to reduce debt.Stockmans is located on the west side of Fallon on Highway 50,approximately 60 miles east of Reno,Nevada and is thelargest of several casinos in the Churchill County area.Churchill Countys population is roughly 25,000 with a nearby naval airbase which has a significant economic impac

42、t on our business.Of the nine casinos currently operating in the Fallon,Nevadamarket,our major competitors are three other casinos that are smaller than Stockmans in size and the number of gamingmachines.At December 31,2009,Stockmans share of the slot units in the Churchill County market was approxi

43、mately 23.6%and our share of slot revenues for the 2009 year was approximately 36.9%.While we are not aware of any planned expansion togaming capacity in the Churchill County area,additional competition in the area may adversely affect the financial conditionor results of operations of Stockmans Cas

44、ino.FireKeepersWe own 50%of Gaming Entertainment Michigan,LLC(“GEM”),a joint venture with RAM Entertainment,LLC(“RAM”),where we are the primary beneficiary and,therefore,consolidate in our consolidated financial statements.GEM has amanagement agreement with the Michigan Tribe,for the development and

45、 management of the FireKeepers Casino near BattleCreek,Michigan.The land for the development was taken into trust in December 2006.The Michigan Tribes compact with theState of Michigan was recently amended to permit gaming until 2030 and other matters.The management agreement wasapproved by the Nati

46、onal Indian Gaming Commission(“NIGC”)on December 14,2007,and an amended version was approvedby the NIGC on April 21,2008.The Michigan Tribe achieved final federal recognition as a tribe in April 1996 and obtained a gaming compact fromMichigans governor in December 1998 to operate an unlimited number

47、 of electronic gaming devices as well as roulette,keno,dice and banking card games.The Michigan legislature ratified the compact by resolution in December 1998.The compactbecame effective in 1999 upon its approval by the Secretary of the Interior and remains in effect for 20 years thereafter,but the

48、recent amendment extended the term until 2030.The land designated for the casino was designated reservation land underfederal law by the Secretary of the Interior in October 2007.4Table of ContentsEffective May 15,2007,GEM entered into an agreement with Green Acres Casino Management,Inc.(“Green Acre

49、s”)toacquire all of Green Acres interests in GEM for$10.0 million.Prior to the execution of the agreement,Green Acres had a rightto receive royalty payments based on numerous metrics,which would approximate in excess of 15%of the total managementfee to be received by GEM from the management of the F

50、ireKeepers Casino.GEMs members equally funded an initial depositand periodic payments totaling approximately$0.6 million and the remaining obligation became due once financing wasobtained as part of the project funding for the casino.On May 6,2008,the FireKeepers Development Authority of theNottawas

51、eppi Huron Band of Potawatomi Michigan Tribe(the“Authority”)closed on$340.0 million of Senior Secured Notesand a$35.0 million equipment financing facility to fund the development and construction of the FireKeepers Casino.Inconnection with the project financing,GEM received partial reimbursement of

52、its tribal notes receivable in the amount of$9.3 million,which was used to repay the remaining obligation to Green Acres.Through 2007 total advances to or on behalf of the Michigan Tribe,related to reimbursable development costs,were$14.3 million.Effective December 14,2007,following the land being t

53、aken into trust and final approval of the managementcontract from NIGC,RAM exercised its right to convert the loan into a$2.0 million capital contribution in,and a$0.4 millionloan to,GEM.In addition,interest payable in the amount of$0.6 million,previously due on the original promissory note,wasalso

54、converted into a loan to GEM.Pursuant to the parties agreement,the balance of the original note payable($1.0 million)isan obligation solely of GEM and will mature no sooner than two years after the opening of the casino.In connection with the2008 Michigan project financing,GEM received partial reimb

55、ursement of its tribal notes receivable in the amount of$9.3 million,which was used to repay the remaining obligation to Green Acres,leaving a balance of$5.0 million outstandingdue to GEM from the Michigan Tribe.The Michigan tribe paid the remaining$5.0 million with interest to GEM inFebruary 2010.T

56、he FireKeepers Casino commenced construction in May 2008 and opened on August 5,2009.The closest competition tothe FireKeepers Casino is located in Detroit,approximately 100 miles east of the Battle Creek area and the Four Winds Casinoin the New Buffalo,Michigan area which is approximately 100 miles

57、 to the Southwest.The Gun Lake Tribe has also begun acasino development in Wayland,Michigan,approximately a one hour drive northwest of our site.Litigation over the trust landfor the casino being developed by the Gun Lake Tribe was recently resolved in favor of the casino project and the Michigansta

58、te legislature in early February 2009 approved a gaming compact with the Gun Lake Tribe.The Gun Lake Tribe commencedconstruction of a casino in September 2009,however,it is unclear at this time when the Gun Lake project will be prepared tocommence gaming operations or how significant the impact may

59、be on casino revenues and our related management fees whenthe project ultimately commences gaming operations.Projects in DevelopmentNorthern Cheyenne Tribe Decker,MontanaIn light of changes to the Northern Cheyenne tribal leadership and the downward turn the general economy has taken,together with t

60、he Northern Cheyenne Tribe,we have withdrawn the management agreement from consideration by the NIGCallowing for revisions to the development plan.In April 2007,the tribe extended the existing gaming Compact with the State ofMontana for its Charging Horse Casino,while continuing negotiations on a ne

61、w Class III Gaming Compact for the site of ourproject.Since the existing Compact does not apply to our site,if the Northern Cheyenne Tribe is not able to successfullynegotiate a Class III Gaming Compact with the State of Montana for our site,we will be unable to develop the proposed casinoand recove

62、r the expenses we have already incurred in pursuing this project.The recent economic recession and resulting impact on credit availability has significantly decreased the likelihood thatfinancing could be obtained on favorable terms,if at all,for the Montana project in the foreseeable future.The com

63、pany intendsto continue working with the Northern Cheyenne Nation to pursue the development of a casino near Lame Deer,Montana,however,based on current economic conditions management has determined that both the timing and feasibility of this projecthave become more difficult to determine.As a resul

64、t,we believe that the project assets are impaired and collectability isdoubtful and the fair value of the notes receivable originally valued at$0.6 million and contract rights originally valued at$0.1million related to the project were written down to zero value as of December 2009,which resulted in

65、 a$0.7 million impairmentloss.5Table of ContentsThe proposed site for this project is on land held in trust for the tribe,which was approved for gaming use by the Secretaryof the Interior on October 28,2008 and the Governor of Montana on July 30,2009,pursuant to the Indian Gaming RegulatoryAct.Our m

66、anagement agreements with the Michigan Tribe and the Northern Cheyenne Tribe and any future managementagreements we enter into with all Indian tribes are subject to approval by the NIGC.We previously requested NIGC approval ofthe management agreement,but have suspended the approval process pending a

67、greement with the tribe on the scope and timingof the project.While we are not obligated to fund the construction phase of our Northern Cheyenne project in Montana,our agreementswith the tribe require us to arrange on a best efforts basis up to$15.0 million in tribal financing for the project.InNove

68、mber 2008,the tribe held elections for its tribal council,which resulted in an entirely new council being seated.InJanuary 2009,we forwarded to the new council a revised proposal for the casino development taking into account the currentstatus and availability of financing for the development projec

69、t.As of December 31,2009,our advances to the NorthernCheyenne Tribe total$0.7 million.Discontinued ProjectsNamb Pueblo Indian Tribe Santa Fe,New MexicoIn the first quarter of 2008,we received notice that the Namb tribal council had effectively terminated the businessrelationship with Full House.As a

70、 result,the Company recorded an impairment loss of$207,534 related to capitalized contractrights during the fourth quarter of 2007.We are in discussions with the Namb Pueblo and the developer to determine themethod and timing of the reimbursement of our advances to date of$661,600.The development ag

71、reement between theCompany and the Namb Pueblo provides that the Company is entitled to recoup its advances from future gamingdevelopment,even if the Company does not ultimately develop the project.Management believes that the Namb Pueblo is inthe process of developing a small casino addition to the

72、ir existing travel center and will likely have the ability to repay theadvances from future cash flows of the project once open.During February 2010,we were advised that the Pueblo had located awilling financial source to fund the gaming development.Funding is expected during the first quarter of 20

73、10 with theexpected facility opening within seven months of receipt of funding.There can be no assurance that a facility will open or thatwe will receive all or any of our reimbursement.GOVERNMENT REGULATIONThe ownership,management,and operation of gaming facilities are subject to many federal,state

74、,provincial,tribal and/orlocal laws,regulations and ordinances,which are administered by the relevant regulatory agency or agencies in eachjurisdiction.These laws,regulations and ordinances are different in each jurisdiction,but primarily deal with the responsibility,financial stability and characte

75、r of the owners and managers of gaming operations as well as persons financially interested orinvolved in gaming operations.We may not own,manage or operate a gaming facility unless we obtain proper licenses,permits and approvals.Applications for a license,permit or approval may be denied for reason

76、able cause.Most regulatory authorities license,investigate,and determine the suitability of any person who has a material relationship with us.Persons having materialrelationships include officers,directors,employees,and security holders.Once obtained,licenses,permits,and approvals must be renewed f

77、rom time to time and generally are not transferable.Regulatory authorities may at any time revoke,suspend,condition,limit,or restrict a license for reasonable cause.Licenseholders may be fined and in some jurisdictions and under certain circumstances gaming operation revenues can be forfeited.Wemay

78、be unable to obtain any licenses,permits,or approvals,or if obtained,they may not be renewed or may be revoked in thefuture.In addition,a rejection or termination of a license,permit,or approval in one jurisdiction may have a negative effect inother jurisdictions.Some jurisdictions require gaming op

79、erators licensed in that state to receive their permission beforeconducting gaming in other jurisdictions.6Table of ContentsThe political and regulatory environment for gaming is dynamic and rapidly changing.The laws,regulations,andprocedures dealing with gaming are subject to the interpretation of

80、the regulatory authorities and may be amended.Anychanges in such laws,regulations,or their interpretations could have a negative effect on our operations and futuredevelopment of gaming opportunities.Certain specific provisions applicable to us are described below.Delaware Regulatory MattersAs the o

81、wner of at least 10%of the management company operating video lottery machines in Delaware,we are subject toapproval under the Delaware Video Lottery Code in order for our Delaware joint venture to maintain its license to manage thevideo lottery location of the Harrington Casino.That law authorized

82、the ownership and operation of video lottery machines,asdefined in the law and commonly known as slot machines,by the State Lottery Office through certain licensed agents,including our Delaware joint venture and starting in 2009,the accepting of bets on sporting contests,commonly known assports book

83、s.In January 2010,Delaware law was again changed to authorize live table games at the three licensed video lotteryoutlets which are expected to commence operations during 2010.The lottery director has discretion to adopt such rules and regulations as the lottery director deems necessary or desirable

84、for the efficient and economical operation and administration of the system,including:type and number of games permitted;pricing of games;numbers and sizes of prizes;manner of payment;value of bills,coins or tokens needed to play;requirements for licensing agents and service providers;standards for

85、advertising,marketing and promotional materials used by licensed agents;procedures for accounting and reporting;registration,kind,type,number and location of video lottery(slot)machines on a licensed agents premises;security arrangements for the video lottery system;and reporting and auditing of fin

86、ancial information of licensed agents.There are continuing licensure requirements for all officers,directors,key employees and persons who own directly orindirectly 10%or more of a licensed agent,which licensure requirements shall include the satisfaction of such security,fitnessand background stand

87、ards as the lottery director may deem necessary relating to competence,honesty and integrity,such that apersons reputation,habits and associations do not pose a threat to the public interest of the State or to the reputation of oreffective regulation and control of the video lottery;it being specifi

88、cally understood that any person convicted of any felony,acrime involving gambling,or a crime of moral turpitude within 10 years prior to applying for a license or at any time thereaftershall be deemed unfit.The lottery director may revoke or suspend the license of a licensed agent for“cause.”“Cause

89、”is broadly defined andcould potentially include falsifying any application for license or report required by the rules and regulations,the failure toreport any information required by the rules and regulations,the material violation of any rules and regulations promulgated bythe lottery director or

90、 any conduct by the licensee which undermines the public confidence in the video lottery system or servesthe interest of organized gambling or crime and criminals in any manner.A license may be revoked for an unintentionalviolation of any federal,state or local law,rule or regulation provided that t

91、he violation is not cured within a reasonable time asdetermined by the lottery director.A hearing officers decision revoking or suspending the license shall be appealable to theDelaware Superior Court under the provisions of the Administrative Procedures Act.All existing or new officers,directors,ke

92、yemployees and owners of a licensed agent are subject to background investigation.Failure to satisfy the backgroundinvestigation may constitute cause for suspension or revocation of the license.7Table of ContentsThe license of our Delaware joint venture may also be revoked or suspended in the event

93、that we do not maintain ourapproval to own at least 10%of the joint venture.The same standard of“cause”defined above applies to our approval.Currently,our officers have filed the required application forms and have been found suitable by the Delaware State Police,which is empowered to conduct the se

94、curity,fitness and background checks required by the lottery director.Nevada Regulatory MattersIn order to acquire and own Stockmans Casino or any other gaming operation in Nevada,we are subject to the NevadaGaming Control Act and to the licensing and regulatory control of the Nevada State Gaming Co

95、ntrol Board,the NevadaGaming Commission,and various local,city and county regulatory agencies.The laws,regulations and supervisory procedures of the Nevada gaming authorities are based upon declarations of publicpolicy which are concerned with,among other things:the character of persons having any d

96、irect or indirect involvement with gaming to prevent unsavory or unsuitablepersons from having a direct or indirect involvement with gaming at any time or in any capacity;application of appropriate accounting practices and procedures;maintenance of effective control over the financial practices and

97、financial stability of licensees,including proceduresfor internal controls and the safeguarding of assets and revenues;record-keeping and reporting to the Nevada gaming authorities;fair operation of games;and the raising of revenues through taxation and licensing fees.In May 2006,we applied for regi

98、stration with the Nevada Gaming Commission as a publicly traded corporation,which wasgranted on January 25,2007.The registration is not transferable and requires periodic payment of fees.The Nevada gamingauthorities may limit,condition,suspend or revoke a license,registration,approval or finding of

99、suitability for any causedeemed reasonable by the licensing agency.If a Nevada gaming authority determines that we violated gaming laws,then theapprovals and licenses we hold could be limited,conditioned,suspended or revoked,and we,and the individuals involved,could be subject to substantial fines f

100、or each separate violation of the gaming laws at the discretion of the Nevada GamingCommission.Each type of gaming device,slot game,slot game operating system,table game or associated equipmentmanufactured,distributed,leased,licensed or sold in Nevada must first be approved by the Nevada State Gamin

101、g Control Boardand,in some cases,the Nevada Gaming Commission.We must regularly submit detailed financial and operating reports to theNevada State Gaming Control Board.Certain loans,leases,sales of securities and similar financing transactions must also bereported to or approved by the Nevada Gaming

102、 Commission.Certain of our officers,directors and key employees are required to be,and have been,found suitable by the NevadaGaming Commission and employees associated with gaming must obtain work permits which are subject to immediatesuspension under certain circumstances.An application for suitabi

103、lity may be denied for any cause deemed reasonable by theNevada Gaming Commission.Changes in specified key positions must be reported to the Nevada Gaming Commission.Inaddition to its authority to deny an application for a license,the Nevada Gaming Commission has jurisdiction to disapprove achange i

104、n position by an officer,director or key employee.The Nevada Gaming Commission has the power to require licensedgaming companies to suspend or dismiss officers,directors or other key employees and to sever relationships with other personswho refuse to file appropriate applications or whom the author

105、ities find unsuitable to act in such capacities.8Table of ContentsThe Nevada Gaming Commission may also require anyone having a material relationship or involvement with us to befound suitable or licensed,in which case those persons are required to pay the costs and fees of the Nevada State GamingCo

106、ntrol Board in connection with the investigation.Any person who acquires more than 5%of our voting securities must reportthe acquisition to the Nevada Gaming Commission;any person who becomes a beneficial owner of 10%or more of our votingsecurities is required to apply for a finding of suitability.U

107、nder certain circumstances,an“institutional investor,”as such termis defined in the regulations of the Nevada Gaming Commission,which acquires more than 10%but not more than 15%of ourvoting securities,may apply to the Nevada Gaming Commission for a waiver of such finding of suitability requirements,

108、provided the institutional investor holds the voting securities for investment purposes only.The Nevada Gaming Commissionhas amended its regulations pertaining to institutional investors to temporarily allow an institutional investor to beneficiallyown more than 15%,but not more than 19%,if the owne

109、rship percentage results from a stock repurchase program.Theseinstitutional investors may not acquire any additional shares and must reduce their holdings within one year from constructivenotice of exceeding 15%,or must file a suitability application.An institutional investor will be deemed to hold

110、votingsecurities for investment purposes only if the voting securities were acquired and are held in the ordinary course of business asan institutional investor and not for the purpose of causing,directly or indirectly,the election of a majority of our board ofdirectors,any change in our corporate c

111、harter,bylaws,management,policies or operations,or any of our gaming affiliates,orany other action which the Nevada Gaming Commission finds to be inconsistent with holding our voting securities forinvestment purposes only.Any person who fails or refuses to apply for a finding of suitability or a lic

112、ense within 30 days after being ordered to do soby the Nevada Gaming Commission may be found unsuitable based solely on such failure or refusal.The same restrictionsapply to a record owner if the record owner,when requested,fails to identify the beneficial owner.Any security holder foundunsuitable a

113、nd who holds,directly or indirectly,any beneficial ownership of the common stock beyond such period of time asmay be prescribed by the Nevada Gaming Commission may be guilty of a gross misdemeanor.We are subject to disciplinaryaction if,after we receive notice that a person is unsuitable to be a sec

114、urity holder or to have any other relationship with us,we:pay that person any dividend or interest upon our voting securities;allow that person to exercise,directly or indirectly,any voting right conferred through securities held by that person;or give remuneration in any form to that person.If a se

115、curity holder is found unsuitable,then we may be found unsuitable if we fail to pursue all lawful efforts to requiresuch unsuitable person to relinquish his or her voting securities for cash at fair market value.The Nevada Gaming Commission may also,in its discretion,require any other holders of our

116、 debt or equity securities tofile applications,be investigated and be found suitable to own the debt or equity securities.The applicant security holder isrequired to pay all costs of such investigation.If the Nevada Gaming Commission determines that a person is unsuitable to ownsuch security,then pu

117、rsuant to the regulations of the Nevada Gaming Commission,we may be sanctioned,including the loss ofour approvals,if,without the prior approval of the Nevada Gaming Commission,we:pay to the unsuitable person any dividends,interest or any distribution whatsoever;recognize any voting right by such uns

118、uitable person in connection with such securities;pay the unsuitable person remuneration in any form;or make any payment to the unsuitable person by way of principal,redemption,conversion;exchange,liquidation orsimilar transaction.We are required to maintain a current stock ledger in Nevada which ma

119、y be examined by the Nevada Gaming Commissionat any time,and to file with the Nevada Gaming Commission,at least annually,a list of our stockholders.The Nevada GamingCommission will have the power to require our stock certificates to bear a legend indicating that the securities are subject to theNeva

120、da Gaming Control Act and the regulations of the Nevada Gaming Commission.9Table of ContentsAs a licensee or registrant,we may not make certain public offerings of our securities without the prior approval of theNevada Gaming Commission.Also,changes in control of us through merger,consolidation,acqu

121、isition of assets,managementor consulting agreements or any form of takeover cannot occur without prior investigation by the Nevada State Gaming ControlBoard and approval by the Nevada Gaming Commission.The Nevada legislature has declared that some repurchases of voting securities,corporate acquisit

122、ions opposed bymanagement,and corporate defense tactics affecting Nevada gaming licensees,and registered companies that are affiliated withthose operations,may be harmful to stable and productive corporate gaming.The Nevada Gaming Commission has establisheda regulatory scheme to reduce the potential

123、ly adverse effects of these business practices upon Nevadas gaming industry and tofurther Nevadas policy to:assure the financial stability of corporate gaming licensees and their affiliates;preserve the beneficial aspects of conducting business in the corporate form;and promote a neutral environment

124、 for the orderly governance of corporate affairs.Because we are a registered company,approvals may be required from the Nevada Gaming Commission before we canmake exceptional repurchases of voting securities above their current market price and before a corporate acquisition opposedby management can

125、 be consummated.The Nevada Gaming Control Act also requires prior approval of a plan of recapitalizationproposed by a registered companys board of directors in response to a tender offer made directly to its stockholders for thepurpose of acquiring control.Any person who is licensed,required to be l

126、icensed,registered,required to be registered,or who is under common controlwith those persons,collectively,“licensees,”and who proposes to become involved in a gaming venture outside of Nevada,isrequired to deposit with the Nevada Gaming Control Board,and thereafter maintain,a revolving fund in the

127、amount of$10,000to pay the expenses of investigation by the Nevada Gaming Control Board of the licensees participation in foreign gaming.Wecurrently comply with this requirement.The revolving fund is subject to increase or decrease at the discretion of the NevadaGaming Commission.Licensees are requi

128、red to comply with the reporting requirements imposed by the Nevada GamingControl Act.A licensee is also subject to disciplinary action by the Nevada Gaming Commission if it:knowingly violates any laws of the foreign jurisdiction pertaining to the foreign gaming operation;fails to conduct the foreig

129、n gaming operation in accordance with the standards of honesty and integrity required ofNevada gaming operations;engages in any activity or enters into any association that is unsuitable because it poses an unreasonable threat to thecontrol of gaming in Nevada,reflects or tends to reflect,discredit

130、or disrepute upon the State of Nevada or gaming inNevada,or is contrary to the gaming policies of Nevada;engages in activities or enters into associations that are harmful to the State of Nevada or its ability to collect gamingtaxes and fees;or employs,contracts with or associates with a person in t

131、he foreign operation who has been denied a license or a findingof suitability in Nevada on the ground of unsuitability.In May 2006,we adopted a compliance plan and appointed a compliance committee which currently consists of Companydirectors and officers,Ken Adams(Chair),Carl Braunlich(Director),Kat

132、hleen Caracciolo(Director)and Mark Miller(CFO andCOO),in accordance with Nevada Gaming Commission requirements.Our compliance committee meets quarterly and isresponsible for implementing and monitoring our compliance with Nevada regulatory matters.This committee will also reviewinformation and repor

133、ts regarding the suitability of potential key employees or other parties who may be involved in materialtransactions or relationships with us.10Table of ContentsIndian GamingGaming on Indian Lands(lands over which Indian tribes have jurisdiction and which meet the definition of Indian Landsunder the

134、 Indian Gaming Regulatory Act of 1988,(the“Regulatory Act)is regulated by federal,state and tribal governments.The regulatory environment regarding Indian gaming is always changing.Changes in federal,state or tribal law or regulationsmay limit or otherwise affect Indian gaming or may be applied retr

135、oactively and could then have a negative effect on ouroperations.The terms and conditions of management agreements or other agreements,and the operation of casinos on Indian Land,aresubject to the Regulatory Act,which is implemented by the NIGC.The contracts also are subject to the provisions of sta

136、tutesrelating to contracts with Indian tribes,which are supervised by the Department of the Interior.The Regulatory Act isinterpreted by the Department of the Interior and the NIGC and may be clarified or amended by the judiciary or legislature.Under the Regulatory Act,the NIGC has the power to:insp

137、ect and examine certain Indian gaming facilities;perform background checks on persons associated with Indian gaming;inspect,copy and audit all records of Indian gaming facilities;hold hearings,issue subpoenas,take depositions,and adopt regulations;and penalize violators of the Regulatory Act.Penalti

138、es for violations of the Regulatory Act include fines,and possible temporary or permanent closing of gamingfacilities.The Department of Justice may also impose federal criminal sanctions for illegal gaming on Indian Lands and for theftfrom Indian gaming facilities.The Regulatory Act also requires th

139、at the NIGC review tribal gaming ordinances.Such ordinances are approved only ifthey meet certain requirements relating to:ownership;security;personnel background;record keeping and auditing of the tribes gaming enterprises;use of the revenues from gaming;and protection of the environment and the pu

140、blic health and safety.11Table of ContentsThe Regulatory Act also regulates Indian gaming and management agreements.The NIGC must approve managementagreements and collateral agreements,including agreements like promissory notes,loan agreements and security agreements.Amanagement agreement can be app

141、roved only after determining that the contract provides for:adequate accounting procedures and verifiable financial reports,copies of which must be furnished to the tribe;tribal access to the daily operations of the gaming enterprise,including the right to verify gross revenues and income;minimum gu

142、aranteed payments to the tribe,which must have priority over the retirement of development andconstruction costs;a ceiling on the repayment of such development and construction costs;and a contract term not exceeding five years and a management fee not exceeding 30%of profits and a determination byt

143、he chairman of the NIGC that the fee is reasonable considering the circumstances;provided that the NIGC mayapprove up to a seven year term and a management fee not to exceed 40%of net revenues if the NIGC is satisfied thatthe capital investment required or the income projections for the particular g

144、aming activity justify the larger profitallocation and longer term.Under the Regulatory Act,we must provide the NIGC with background information,including financial statements andgaming experience,on:each person with management responsibility for a management agreement;each of our directors;and the

145、ten persons who have the greatest direct or indirect financial interest in a management agreement to which we are aparty.The NIGC will not approve a management company and may void an existing management agreement if a director,keyemployee or an interested person of the management company:is an elec

146、ted member of the Indian tribal government that owns the facility being managed;has been or is convicted of a felony or misdemeanor gaming offense;has knowingly and willfully provided materially false information to the NIGC or a tribe;has refused to respond to questions from the NIGC;is a person wh

147、ose prior history,reputation and associations pose a threat to the public interest or to effective gamingregulation and control,or create or enhance the chance of unsuitable,unfair or illegal activities in gaming or thebusiness and financial arrangements incidental thereto;or has tried to influence

148、any decision or process of tribal government relating to gaming.Contracts may also be voided if:the management company has materially breached the terms of the management agreement,or the tribes gamingordinance;or a trustee,exercising the skill and diligence to which a trustee is commonly held,would

149、 not approve such managementagreement.The Regulatory Act divides games that may be played on Indian Land into three categories.Class I Gaming includestraditional Indian games and private social games and is not regulated under the Regulatory Act.Class II Gaming includesbingo,pull tabs,lotto,punch bo

150、ards,tip jars,instant bingo,and other games similar to bingo,if those games are played at alocation where bingo is played.Class III Gaming includes all other commercial forms of gaming,such as video casino games(e.g.,video slots,video blackjack),so-called“table games”(e.g.,blackjack,craps,roulette),

151、and other commercial gaming(e.g.,sports betting and pari-mutuel wagering).12Table of ContentsClass II Gaming is allowed on Indian Land if performed according to a tribal ordinance which has been approved by theNIGC and if the state in which the Indian Land is located allows such gaming for any purpo

152、se.Class II Gaming also mustcomply with several other requirements,including a requirement that key management officials and employees be licensed bythe tribe.Class III Gaming is permitted on Indian Land if the same conditions that apply to Class II Gaming are met and if thegaming is performed accor

153、ding to the terms of a written gaming compact between the tribe and the host state.The RegulatoryAct requires states to negotiate in good faith with Indian tribes that seek to enter into tribal-state compacts.Should the state notnegotiate in good faith,regulations of the Department of Interior allow

154、 the Secretary of the Interior to impose the terms of agaming compact on the state.The negotiation and adoption of tribal-state compacts is vulnerable to legal and political changes that may affect ourfuture revenues and securities prices.Accordingly,we cannot predict:which additional states,if any,

155、will approve casino gaming on Indian Land;the timing of any such approval;the types of gaming permitted by each tribal-state compact;any limits on the number of gaming machines allowed per facility;or whether states will attempt to renegotiate or take other steps that may affect existing compacts.Un

156、der the Regulatory Act,Indian tribal governments have primary regulatory authority over gaming on Indian Landwithin the tribes jurisdiction unless a tribal-state compact has delegated this authority.Therefore,persons engaged in gamingactivities,including us,are subject to the provisions of tribal or

157、dinances and regulations on gaming.Tribal-State compacts have been litigated in several states,including Michigan.In addition,many bills have beenintroduced in Congress that would amend the Regulatory Act,including bills introduced in 2005 that seek to limit“offreservation”gaming by Indian tribes.Al

158、though this legislative attempt was rejected,the Department of the Interior under theBush administration in January 2008 issued a“guidance memorandum”immediately followed by a series of decisions whichgave effect to the defeated legislation,placing limitations on the distance a tribal casino could b

159、e from the tribes reservation.Ifthe Regulatory Act were amended or this department policy remain in effect,then the governmental structure and requirementsby which Indian tribes may conduct gaming could be significantly changed,which could have an impact on our futureoperations and development of tr

160、ibal gaming opportunities.Furthermore,in 2009,the United States Supreme Court issued adecision which interpreted the Indian Reorganization Act,enacted in 1934,and found that the Secretary of the Interior was onlyauthorized to take land into trust for Indian Tribes recognized as of the date of that A

161、ct.Thus,an indian tribe receiving federalrecognition after 1934 was not allowed to have land taken into trust for its benefit.While the decision was entered after theNottawaseppi Huron Band of Potawatomis Firekeepers Casino site was taken into trust by the Secretary of the Interior,nojudicial action

162、 has been brought and no ruling has been made as to the retroactive effect of the United States Supreme Courtdecision.Huron Tribal Gaming CommissionThe Michigan Tribe has adopted a gaming ordinance to regulate gaming at the FireKeepers Casino.Part of the gamingordinance establishes and authorizes a

163、Gaming Commission to oversee the regulation of gaming at FireKeepers Casino.TheGaming Commission shall license the management contractor,(which is GEM),all gaming employees,gaming equipmentvendors and others,pursuant to the standards of the ordinance(which are substantially similar to those containe

164、d in IndianGaming Regulatory Act,“IGRA”and NIGC regulation),including a review of the honesty and integrity of the applicant and itsfinancial stability.13Table of ContentsIn conjunction with the issuance of the license to GEM,we were approved by the Huron Tribal Gaming Commission onApril 4,2008.This

165、 license is renewable annually.We were granted a license renewal in 2009 and we have submitted therequisite renewal application for 2010.The Gaming Commission is also responsible for the regulation of gaming operations,including oversight and audits to ensure compliance with minimum internal control

166、s established to ensure patron safety and thesafeguarding of income and assets.Violations of internal controls and Gaming Commission imposed standards can result inpenalties,fines,loss of employment and loss or denial of gaming licenses.Costs and Effects of Compliance with Environmental LawsIn order

167、 to have land taken into trust or otherwise be approved for use by an Indian tribe for gaming purposes by the federalBureau of Indian Affairs(BIA),as a federal agency,the BIA is required to comply with the National Environmental Policy Act(NEPA).Likewise,in order for the NIGC to approve a management

168、 agreement for us to manage an Indian gaming casino asrequired by the Indian Gaming Regulatory Act,the NIGC,as a federal agency,is required to comply with NEPA.For thesepurposes NEPA requires a federal agency to consider the effect on the human,physical and natural environment of adevelopment projec

169、t as part of its approval process.Compliance with NEPA begins with conducting an environmentalassessment,which considers the factors identified in NEPA,as implemented by the Council on Environmental Quality,anddetermines whether the development will cause a significant impact on the environment.If n

170、ot,the federal agency may issue afinding of no significant impact(“FONSI”).If the federal agency determines the development project may cause a significantimpact on the environment,then it will conduct a further study resulting in an environmental impact statement,which considersall impacts on the e

171、nvironment and what can be done to mitigate those impacts.Since this constitutes action by a federalagency,any of these determinations can be the subject of litigation.Appropriate environmental reviews were conducted by the BIA and NIGC reviewing the impacts caused by the FirekeepersCasino project i

172、n Michigan as part of their approval process.The land was taken into trust in 2007 and the managementagreement was approved in December 2007 and an amendment was approved in April 2008.During 2005 and 2006,we also funded environmental assessments related to the casino development project for theNamb

173、 Pueblo and for the Northern Cheyenne Tribe.The environmental assessment related to the Northern Cheyenne Tribe ison behalf of the BIA in conjunction with its approval of the land chosen by the tribe for its casino site for use for gaming.TheSecretary of the Interior acting for the BIA approved the

174、land for gaming use in October 2008,subject to the concurrence of theGovernor of the State of Montana,which was granted in 2009.COMPETITIONThe gaming industry is highly competitive.Gaming activities include traditional land-based casinos;river boat anddockside gaming,casino gaming on Indian land,sta

175、te-sponsored lotteries,video poker in restaurants,bars and hotels,pari-mutuel betting on horse racing,dog racing and jai alai,sports bookmaking,card rooms,and casinos at racetracks.TheFireKeepers Casino and the Indian-owned casinos that we are developing and plan to manage compete with all these for

176、ms ofgaming,and will compete with any new forms of gaming that may be legalized in additional jurisdictions,as well as with othertypes of entertainment.Some of our competitors have more personnel and greater financial or other resources.Stockmans is located on the west side of Fallon on Highway 50,a

177、pproximately 60 miles east of Reno,Nevada,and is thelargest of several casinos in the Churchill County area.The countys population is roughly 25,000 with a nearby naval air basewhich has a significant economic impact on our business.Of the nine casinos currently operating in the Fallon,Nevada market

178、,our major competitors are three other casinos that are smaller than Stockmans in size and the number of gaming machines.AtDecember 31,2009,Stockmans share of the slot units in the Churchill County market was approximately 23.6%and our shareof slot revenues for 2009 was approximately 36.9%.While we

179、are not aware of any planned expansion to gaming capacity inthe Churchill County area,additional competition may adversely affect our financial condition or results of operations.The closest competition to the FireKeepers Casino is located in Detroit,approximately 100 miles east of the Battle Creeka

180、rea and the Four Winds Casino in the New Buffalo,Michigan area approximately 100 miles to the southwest.The Gun LakeTribe has commenced building a casino development in Wayland,Michigan,approximately a one hour drive northwest of oursite.Litigation over the trust land for the casino being developed

181、by the Gun Lake Tribe was recently resolved in favor of thecasino project and the Michigan state legislature in early February 2009 approved a gaming compact with the Gun Lake tribe.Although the Gun Lake tribe commenced construction efforts in September 2009,it is unclear at this time exactly when t

182、he GunLake project will be prepared to commence gaming operations or how significant the impact may be on casino revenues and ourrelated management fees when the project ultimately commences gaming operations.14Table of ContentsThe Harrington Casino is one of three facilities currently operating in

183、Delaware.The facility draws a significant number ofcustomers from Maryland and we believe that competitive gaming in Maryland will have a negative impact on the facility.Themagnitude will depend on both the form of gaming that is authorized,and the locations of competing facilities.During 2008,the M

184、aryland legislature approved casino-type gaming in certain designated counties of the State.Recently,bids were submitted to the State for authorization by private contractors to conduct gaming in Maryland.While we can expectthere to be an adverse impact on the revenues of Harrington Casino from this

185、 added competition,as well as the currenteconomic climate,we expect to be insulated from the effect of such competitive and economic factors by the guaranteedminimum payment paid to us,which guarantees us a 5%increase,except for 2008 when the increase was 8%over 2007,in themanagement fees we receive

186、 from the operation over those received in the previous year.The annual growth rate in 2009through the expiration of the GED management contract in August 2011 will be 5%per year.Additionally,during 2009,Delaware authorized its three licensed casinos to operate sports books for the taking of bets on

187、sporting events.A federal court ruled that such bets must be parlay or multiple-contest bets and not bets on individual contests.This ruling is being appealed.Then,in January 2010,the legislature authorized live table games at the three licensed Delawarecasinos,which are expected to commence operati

188、ons during 2010.Neither form of wagering is permitted in Maryland.Whileincreased types of wagering are expected to enhance revenues,the impact of these additional forms of legalized wagering hasyet to be determined.In 2004,the Pennsylvania legislature passed a law authorizing gambling.Included in th

189、e authorized types of games areslot machines similar to those operated in Delaware to be conducted at racetracks,selected stand-alone facilities and selectedresort hotel sites.During 2006 and in January 2007,the Pennsylvania Gaming Control Board issued licenses for operators andgaming equipment supp

190、liers.Several of the“racino”licensed facilities and casinos have subsequently opened.HarringtonRaceway is located the furthest south of the three authorized gaming locations in Delaware and does not attract a substantialpatronage from Pennsylvania.We have not seen and do not anticipate that the comm

191、encement of gaming operations inPennsylvania has or will have a material adverse effect on our operations.Additionally,we are in constant competition withother companies in the industry to acquire other legal gaming sites and for opportunities to develop and manage casinos onIndian land.Many of our

192、competitors are larger in terms of potential resources and personnel.Competition in the gamingindustry could adversely affect our ability to attract customers and thus,adversely affect future operating results.In addition,further expansion of gaming into new jurisdictions could also adversely affect

193、 our business by diverting customers from ourmanaged casinos to competitors in those jurisdictions.EMPLOYEESAs of March 1,2010,we have twelve full-time corporate employees,four of whom are executive officers and an additionaltwo are senior management.Our Stockmans Casino has approximately 98 full-ti

194、me employees and our Delaware joint ventureand FireKeepers management contracts oversees approximately 516 and 1,339 full-time employees,respectively at theHarrington Casino and FireKeepers Casino,none of which are direct employees of the Company.Management believes that itsrelationship with its emp

195、loyees is good.None of our employees are currently represented by a labor union,although suchrepresentation could occur in the future.Item 1A.Risk Factors.As a smaller reporting company,the Company is not required to provide the information required by this item.Item 1B.Unresolved Staff Comments.As

196、a smaller reporting company,the Company is not required to provide the information required by this item.15Table of ContentsItem 2.Properties.On August 5,2009,the FireKeepers Casino,which is managed by GEM on behalf of the Michigan tribe,commencedoperations.FireKeepers Casino is located at Exit 104

197、directly off Interstate 94 in Battle Creek,Michigan.FireKeepers has a107,000 square foot gaming floor with 2,680 slot machines,78 table games,a 120-seat poker room and a bingo hall.Inaddition,the property features five restaurants,including a 70-seat fine dining signature restaurant,a 300-seat buffe

198、t and 150-seat 24-hour cafe,as well as approximately 3,000 parking spaces including an enclosed 2,080-space parking garage attached tothe casino.Stockmans,a wholly-owned subsidiary,owns the site on which Stockmans Casino operates in Fallon,Nevada.Stockmans has approximately 8,400 square feet of gami

199、ng space with approximately 265 slot machines,four table games andkeno.There is also a bar,a fine dining restaurant and a coffee shop.Until February 20,2008,the facility included a Holiday InnExpress,which had 98 guest rooms,indoor and outdoor pools,sauna,a fitness center and meeting room.The hotel

200、wassubsequently sold.Management considers Stockmans Casino to be in good condition and well maintained.The loan revolveris guaranteed by Stockmans and is secured by a pledge of the stock and the assets of Stockmans.The Company owned a 12-acre parcel in McKinley County,New Mexico,which was previously

201、 intended to be a futuregaming development site for the Navajo Nation project.Since this project has been discontinued,the land was sold onOctober 15,2009.The land held for the development of this project was included in assets held for sale and valued at$45,000as of December 31,2008.We lease the of

202、fice space in Las Vegas,Nevada pursuant to the amended lease agreement dated November 1,2009.Weoccupy approximately 2,569 square feet of office space in the same location we have occupied for the past several years.Thelease agreement expires September 31,2013.Item 3.Legal Proceedings.On June 19,2009

203、,Harrington Raceway,Inc.filed a demand for arbitration,disputing the formula for computing theminimum payment of our share of the management fee pursuant to the Management Reorganization Agreement dated June 18,2007.Harrington Raceways demand would require the Company to refund$1.5 million in manage

204、ment fees.We have appearedin the matter and intend to vigorously defend the proceeding.A hearing date was held on February 15 and 16,2010 and adecision is not expected until sometime in April.Management believes that it is more likely than not that the Company willprevail in the arbitration,but we c

205、annot guarantee that the arbitrator will not rule in favor of HRI based on the record.As of theMarch 23,2010 filing date,the arbitrators decision was not yet received.On October 20,2008,the Company was served with a complaint in the Second Judicial District Court of Nevada in and forWashoe County by

206、 RAM and Robert A.Mathewson alleging breach of contract and other claims related to the resolution ofclaims by GEC,a consolidated investee of the Company,against the Torres-Martinez Tribe of California.Certain officers werenamed as individual defendants as well.Following a mediation session,the laws

207、uit was settled by the company agreeing to paya total of$0.5 million to the plaintiffs(included in impairment and settlement losses),payable$0.2 million on execution of thesettlement documents and$0.3 million within 30 days of the opening of the FireKeepers Casino but no later than December 15,2009.

208、All claims against the individuals were dismissed outright and the claims against the company were dismissed.As ofDecember 31,2009,$0.5 million was paid to the plaintiffs in this case.From time to time,in the ordinary course of business,we receive notices of claims which are not material or are with

209、outmerit.We investigate and review each claim and vigorously defend all meritless claims.Item 4.Submission of Matters to a Vote of Security Holders.No matters were submitted to a vote of our security holders during the fourth quarter of 2009.16Table of ContentsPART IIItem 5.Market for Registrants Co

210、mmon Equity,Related Stockholder Matters and Issuer Purchases of Equity Securities.Our stock trades on the NYSE Amex under the symbol FLL.Set forth below are the high and low sales prices of thecommon stock as reported on the American Stock Exchange and the NYSE Amex for the periods indicated.High Lo

211、w Year Ended December 31,2009 First Quarter$1.22$0.90 Second Quarter 2.80 1.15 Third Quarter 2.98 2.10 Fourth Quarter 3.98 2.25 Year Ended December 31,2008 First Quarter$2.80$1.26 Second Quarter 2.59 1.44 Third Quarter 2.13 1.35 Fourth Quarter 1.55 0.95 On March 23,2010,the last sale price of the Co

212、mmon Stock as reported by the NYSE Amex Exchange was$3.07.As of December 31,2009,we had 137 holders of record of our common stock.We believe that there are over 1,000beneficial owners.We intend to retain future earnings,if any,to provide funds for the operation of our business,retirement of our debt

213、 andpursue acquisitions and,accordingly,do not anticipate paying any cash dividends on our common stock in the near future.Item 6.Selected Financial Data.As a smaller reporting company,the Company is not required to provide the information required by this item.Item 7.Managements Discussion and Anal

214、ysis of Financial Condition and Results of Operations.Forward Looking StatementsThis Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 21E of theSecurities Exchange Act of 1934,as amended,relating to our financial condition,profitability,liquidity,resources

215、,businessoutlook,market forces,corporate strategies,contractual commitments,legal matters,capital requirements and other matters.ThePrivate Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements.We note that manyfactors could cause our actual results and exper

216、ience to change significantly from the anticipated results or expectationsexpressed in our forward-looking statements.When words and expressions such as:“believes,”“expects,”“anticipates,”“estimates,”“plans,”“intends,”“objectives,”“goals,”“aims,”“projects,”“forecasts,”“possible,”“seeks,”“may,”“could

217、,”“should,”“might,”“likely,”“enable,”or similar words or expressions are used in this Form 10-K,as well as statementscontaining phrases such as“in our view,”“there can be no assurance,”“although no assurance can be given,”or“there is noway to anticipate with certainty,”forward-looking statements are

218、 being made.17Table of ContentsIn addition to the risks discussed in Item 1“Factors That May Affect Our Future Performance,”various other risks anduncertainties may affect the operation,performance,development and results of our business and could cause future outcomesto change significantly from th

219、ose set forth in our forward-looking statements,including the following factors:our growth strategies;our development and potential acquisition of new facilities;risks related to development and construction activities;anticipated trends in the gaming industries;patron demographics;general market an

220、d economic conditions;access to capital and credit,including our ability to finance future business requirements;the availability of adequate levels of insurance;changes in federal,state,and local laws and regulations,including environmental and gaming license legislation andregulations and taxes;re

221、gulatory approvals;competitive environment;risks,uncertainties and other factors described from time to time in this and our other SEC filings and reports.We undertake no obligation to publicly update or revise any forward-looking statements as a result of futuredevelopments,events or conditions.New

222、 risk factors emerge from time to time and it is not possible for us to predict all suchrisk factors,nor can we assess the impact of all such risk factors on its business or the extent to which any factor,or combinationof factors,may cause actual results to differ significantly from those forecast i

223、n any forward-looking statements.OverviewWe own,manage and/or invest in gaming-related opportunities.The Company continues to actively investigate,individually and with partners,new business opportunities.We own and operate Stockmans Casino in Fallon,Nevada.We alsoown 50%of Gaming Entertainment Mich

224、igan,LLC(“GEM”),a joint venture with RAM Entertainment,LLC(“RAM”),wherewe are the primary beneficiary and,therefore,consolidate in our consolidated financial statements.RAM is a privately-heldinvestment company.GEM has a 7-year management agreement with the Nottawaseppi Huron Band of Potawatomi Indi

225、ans forthe development and management of the FireKeepers Casino near Battle Creek,Michigan.The FireKeepers Casino commencedconstruction in May 2008 and opened on August 5,2009,which triggered the commencement of the 7-year managementagreement term.We are also a non-controlling 50%-investor in Gaming

226、 Entertainment Delaware,LLC(“GED”),a joint venturewith Harrington Raceway Inc.(“HRI”).GED has a management contract through August 2011 with Harrington Casino at theDelaware State Fairgrounds in Harrington,Delaware.Critical Accounting Estimates and PoliciesAlthough our financial statements necessari

227、ly make use of certain accounting estimates by management,we believe thatno matters that are the subject of such estimates are so highly uncertain or susceptible to change as to present a significant riskof a material impact on our financial condition or operating performance,except as discussed in

228、the following paragraphs.The significant accounting estimates inherent in the preparation of our financial statements primarily includemanagements fair value estimates related to notes receivable from tribal governments,and the related evaluation of therecoverability of our investments in contract r

229、ights.Various assumptions,principally affecting the timing and,to a lesser extent,the probability of completing our various projects under development and getting them open for business with successfuloperations,and other factors underlie the determination of these significant estimates.The process

230、of determining significantestimates is fact-and project-specific and takes into account factors such as historical experience and current and expected legal,regulatory and economic conditions.We regularly evaluate these estimates and assumptions,particularly in areas,if any,wherechanges in such esti

231、mates and assumptions could have a material impact on our results of operations,financial position and,generally to a lesser extent,cash flows.Where recoverability of these assets or planned investments are contingent upon thesuccessful development and management of a project,we evaluate the likelih

232、ood that the project will be completed,theprospective market dynamics and how the proposed facilities should compete in that setting in order to forecast future cashflows necessary to recover the recorded value of the assets or planned investment.In most cases,we engage independentvaluation consulta

233、nts to assist management in preparing and periodically updating market and/or feasibility studies for use inthe preparation of forecasted cash flows.We review our conclusions as warranted by changing conditions.18Table of ContentsLong-term assets related to Indian casino projectsWe account for the a

234、dvances made to tribes as in-substance structured notes at estimated fair value in accordance with theguidance contained in Financial Accounting Standards Board(“FASB”)Accounting Standards Codification(“ASC”)Topic320,“Investments-Debt and Equity Securities”and Topic 820,“Fair Value Measurements and

235、Disclosures.”Because our right to recover our advances and development costs with respect to Indian gaming projects is limited to,andcontingent upon,the future net revenues of the proposed gaming facilities,we evaluate the financial opportunity of eachpotential service arrangement before entering in

236、to an agreement to provide financial support for the development of an Indianproject.This process includes(1)determining the financial feasibility of the project assuming the project is built,(2)assessingthe likelihood that the project will receive the necessary regulatory approvals and funding for

237、construction and operations tocommence,and(3)estimating the expected timing of the various elements of the project including commencement ofoperations.When we enter into a service or lending arrangement,management has concluded,based on feasibility analyses andlegal reviews,that there is a high prob

238、ability that the project will be completed and that the probable future economic benefit issufficient to compensate us for our efforts in relation to the perceived financial risks.In arriving at our initial conclusion ofprobability,we consider both positive and negative evidence.Positive evidence or

239、dinarily consists not only of project-specificadvancement or progress,but the advancement of similar projects in the same and other jurisdictions,while negative evidenceordinarily consists primarily of unexpected,unfavorable legal,regulatory or political developments such as adverse actions bylegisl

240、ators,regulators or courts.Such positive and negative evidence is reconsidered at least quarterly.No asset,including notesreceivable or contract rights,related to an Indian casino project is recorded on our books unless it is considered probable thatthe project will be built and will result in an ec

241、onomic benefit sufficient for us to recover the asset.In initially determining the financial feasibility of the project,we analyze the proposed facilities and their location inrelation to market conditions,including customer demographics and existing and proposed competition for the project.Typicall

242、y,independent consultants are also hired to prepare market and financial feasibility reports.These reports are reviewedby management and updated periodically as conditions change.In assessing the probability of completing the project,we also consider the status of the regulatory approval processincl

243、uding whether:the federal Bureau of Indian Affairs,or BIA,recognizes the tribe;the tribe has the right to acquire land to be used as a casino site;the Department of the Interior has put the land into trust as a casino site;the tribe has a gaming compact with the state government;the NIGC has approve

244、d a proposed management agreement;and other legal or political obstacles exist or are likely to occur.The development phase of each relationship commences with the signing of the respective agreements and continues untilthe casino is open for business.Thereafter,the management phase of the relations

245、hip,governed by the management contract,typically continues for a period of between five to seven years.Seven years is the maximum allowed under federal law.Wemake advances to the tribes,recorded as notes receivable,primarily to fund certain portions of the projects,which bear nointerest or below ma

246、rket interest until operations commence.Repayment of the notes receivable and accrued interest is onlyrequired if the casino is successfully opened and distributable profits are available from the casino operations.Under themanagement agreement,we typically earn a management fee calculated as a perc

247、entage of the net income of the gaming facility.In addition,repayment of the loans and our management fees are subordinated to certain other financial obligations of therespective operations.Generally,the order of priority of payments from the casinos cash flows is as follows:a certain minimum month

248、ly priority payment to the tribe;repayment of various senior debt associated with construction and equipping of the casino with interest accruedthereon;repayment of various debt with interest accrued thereon due to us;management fee to us;other obligations;and the remaining funds distributed to the

249、tribe.19Table of ContentsNotes receivableWe account for and present our notes receivable from and management agreements with the tribes as separate assets.Underthe contractual terms,the notes do not become due and payable unless and until the projects are completed and operational.However,if our dev

250、elopment activity is terminated prior to completion,we generally would retain the right to collect on ournotes receivable in the event a casino project is completed by another developer.Because we ordinarily do not consider thestated rate of interest on the notes receivable to be commensurate with t

251、he risk inherent in these projects(prior tocommencement of operations),the estimated fair value of the notes receivable is generally less than the amount advanced.Atthe date of each advance,the difference between the estimated fair value of the note receivable and the actual amount advancedis record

252、ed as either an intangible asset(contract rights)or if the rights were acquired in a separate,unbundled transaction,expensed as period costs of retaining such rights.Subsequent to its effective initial recording at estimated fair value using“Level 3 inputs,”which are defined in ASC Topic820,“Fair Va

253、lue Measurements and Disclosures”(“Topic 820”)as unobservable inputs that reflect managements estimatesabout the assumptions that market participants would use in pricing an asset or liability,the note receivable portion of theadvance is adjusted to its current estimated fair value at each balance s

254、heet date,also using Level 3 inputs.We do not adjust notes receivable to an estimated fair value that exceeds the face value of the note plus accrued interest,ifany.Due to the uncertainties surrounding the projects,no interest income is recognized in the consolidated financial statementsduring the d

255、evelopment period,but changes in estimated fair value of the notes receivable are recorded as unrealized gains orlosses in our statement of operations.Upon opening of the casino,the difference,if any,between the then-recorded estimated fair value of the notes receivable,subject to any appropriate im

256、pairment adjustments made pursuant to ASC Topic 310,“Receivables,”and the amountcontractually due under the notes is amortized into income using the effective interest method over the remaining term of thenote.Contract rightsContract rights are recognized as intangible assets related to the acquisit

257、ion of the management agreements andperiodically evaluated for impairment based on the estimated cash flows from the management contract on an undiscountedbasis and amortized using the straight-line method over the lesser of seven years or contractual lives of the agreements,typically beginning upon

258、 commencement of casino operations.In the event the carrying value of the intangible assets were toexceed the undiscounted cash flow,the difference between the estimated fair value and carrying value of the assets would becharged to operations.The cash flow estimates for each project were developed

259、based upon published and other information gathered pertainingto the applicable markets.We have many years of experience in making these estimates and also utilize independent appraisersand feasibility consultants to assist management in developing our estimates.The cash flow estimates are initially

260、 prepared(andperiodically updated)primarily for business planning purposes with the tribes and are secondarily used in connection with ourimpairment analysis of the carrying value of contract rights,land held for development,and other capitalized costs,if any,associated with our tribal casino projec

261、ts.The primary assumptions used in estimating the undiscounted cash flow from theprojects include the expected number of Class III gaming devices,table games,and poker tables,and the related estimated winper unit per day(“WPUD”).Generally,within reasonably possible operating ranges,our impairment de

262、cisions are notparticularly sensitive to changes in these assumptions because estimated cash flows greatly exceed the carrying value of therelated intangibles and other capitalized costs.We believe that the primary competitors to our Michigan project are the FourWinds Casino in southwestern Michigan

263、,five northern Indiana riverboats and three downtown Detroit casinos.The Detroitcasinos published WPUD has consistently averaged above the$255 used in our undiscounted cash flow analysis.In addition,our market analysis assumes the development of another Native American casino of approximately equal

264、size by the Gun LakeTribe approximately 1 hour to the northwest of our facility.However,the facility currently under development by Gun Lake issubstantially smaller than originally anticipated with only 700 machines.Our Michigan project is located approximately 100miles west of Detroit and approxima

265、tely 100 driving miles northeast of Four Winds Casino,which opened in August 2007 nearNew Buffalo,Michigan.20Table of ContentsSummary of assets related to Indian casino projectsAt December 31,2009 and 2008,assets associated with tribal casino projects are summarized as follows,with notesreceivable p

266、resented at their estimated fair value:2009 2008 FireKeepers:Notes receivable,tribal governments$4,682,420$4,097,002 Contract rights,net 15,617,016 16,636,358$20,299,436$20,733,360 Other projects:Notes receivable,tribal governments$430,467$1,017,765 Contract rights,net 159,194 430,467 1,176,959$20,7

267、29,903$21,910,319 As previously noted,the FireKeepers project comprises the majority of long-term assets related to Indian casino projects.We have an approved management agreement with the FireKeepers Development Authority,(the“Authority”)for thedevelopment and operation of the FireKeepers Casino,wh

268、ich provides that we will receive,only from the operations andfinancing of the project,reimbursement for all advances we have made to the Authority and a management fee,after certaindistributions to the Tribe,equal to 26%of the net revenues of the casino(defined effectively as net income prior to ma

269、nagementfees)for a period of seven years commencing upon opening.The terms of an amended management agreement were approvedby the NIGC in April 2008.In May 2008,in connection with the project financing,$9.3 million of the notes receivable wasrepaid,which resulted in an increase in the estimated fair

270、 value of the notes receivable of approximately$1.8 million,whichwas recorded as an unrealized gain in the first quarter of 2008.The remaining$5.0 million of the note receivable was repaid inFebruary 2010.As of December 31,2009 GEM has earned approximately$10.0 million in management fee income relat

271、ed toAugust through December 2009 FireKeepers Casino earnings.We are not obligated to fund the construction phase of our Northern Cheyenne project in Montana.The recent economicrecession and resulting impact on credit availability has significantly decreased the likelihood that financing could be ob

272、tainedon favorable terms if at all for the Montana project in the foreseeable future.The company intends to continue working with theNorthern Cheyenne Nation to pursue the development of a casino near Lame Deer,Montana,however,based on currenteconomic conditions the company has determined that both

273、the timing and feasibility of this project has become more difficultto determine.As a result,we believe that the project assets are impaired and collectability is doubtful and the notes receivableoriginally valued at$0.6 million and contract rights originally valued at$0.1 million related to the pro

274、ject were written downto zero value as of December,2009,which resulted in an$0.7 million impairment loss.On March 19,2008,we announced that we are no longer pursuing the Namb Pueblo project.As of December 31,2009,wehave advanced$0.7 million for the development of the project,all of which is expected

275、 to be reimbursed by the Pueblo throughrevenues from future gaming operations,if developed.The estimated fair value of the receivable from the Pueblo is now basedon the assumption that the Pueblo will develop a smaller scope project(“Travel Center”)and will repay the advances over afive-year period

276、after the project opens with interest at prime plus 2%as per our agreement.However,the collectabilityultimately depends on the successful development and operation of the project,which we have no influence over,andaccordingly,we have discounted the payment stream using a 23%discount rate.Accordingly

277、,management believes that theNamb Pueblo has the intent and will likely have the ability to repay the advances from future cash flows of the project onceopen.During February 2010,we were advised that the Pueblo had located a willing financial source to fund the gamingdevelopment.Funding is expected

278、during the first quarter of 2010 with the expected facility opening within seven months ofreceipt of funding.There can be no assurance that a facility will open or that we will receive all or part of the reimbursement.21Table of ContentsDue to the absence of observable market quotes on our notes rec

279、eivable from tribal governments,management developsinputs based on the best information available,including internally-developed data,such as estimates of future interest rates,discount rates and casino opening dates as discussed below.The estimated fair value of our notes receivable related to trib

280、al casino projects make up approximately 9%of our totalassets,and are the only assets in our financial statements that are reported at estimated fair value.Changes in the estimated fairvalue of our notes receivable are reported as unrealized gains(losses),which affect reported net income,but do not

281、affect cashflows.The key assumptions and information used to estimate the fair value of the notes receivable for all projects at December 31,2008 included a total aggregate face amount of the note receivable of$6.3 million.The estimated years until opening anddiscount rates of the FireKeepers and Mo

282、ntana projects were.75 and 1.75 years and 17%and 23%,respectively.As ofDecember 31,2009,the fair value of the$5.0 million face amount FireKeepers notes receivable,plus interest at prime plus 1%,accrued from the opening date of August 5,2009,was estimated assuming a 19%discount rate and payment date

283、ofFebruary 2010.Also as of December 31,2009,the fair value of the$0.6 million face amount Montana notes receivable,originally valued at$0.6 million and estimated assuming an opening date of 1.5 years and a 27%discount rate,was writtendown to zero value as we believe that the project assets are impai

284、red and collectability is doubtful.Also as of December 31,2009,the fair value of the$0.7 million face amount Namb notes receivable was estimated assuming an opening date of.75 years and a 23%discount rate.For the portion of the notes not repaid prior to the commencement of operations,management esti

285、mates that the statedinterest rates during the loan repayment terms will be commensurate with the inherent risk at that time.The estimatedprobability rates have been re-evaluated and modified accordingly,based on project-specific risks such as delays of regulatoryapprovals for the projects and revie

286、w of the financing environment.The estimated casino opening dates used in the valuationstake into account project-specific circumstances such as ongoing litigation,the status of required regulatory approvals,construction periods and other factors.Factors that we consider in arriving at a discount ra

287、te include discount rates typically used by gaming industry investorsand appraisers to value individual casino properties outside of Nevada and discount rates produced by the widely acceptedCapital Asset Pricing Model,or CAPM,using the following key assumptions:S&P 500,10 and 15-year average benchma

288、rk investment returns(medium-term horizon risk premiums);Risk-free investment return equal to the trailing 10-year average for 90-day Treasury Bills;Investment beta factor equal to the unlevered five-year average for the hotel/gaming industry;and Project-specific adjustments based on typical size pr

289、emiums for“micro-cap”and“low-cap”companies using 10and 15-year averages,and the status of outstanding required regulatory approvals and/or litigation,if any.Management believes that under the circumstances,essentially three critical dates and events that impact the projectspecific discount rate adju

290、stment when using CAPM are:(1)the date that management completes its feasibility assessment anddecides to invest in the opportunity;(2)the date that construction financing has been obtained after all legal obstacles havebeen removed;and(3)the date that operations commence.Amortizations of contract r

291、ights are on a straight-line basis over the contractual lives of the assets.The contractual livesmay include,or not begin until after,a development period and/or the term of the subsequent management agreement.Prior to2007,the Company acquired an interest in contract rights,related to three joint ve

292、nture projects for$1.8 million,of which$1.1 million was allocated to the Michigan project for control of the development processes.Accordingly,amortization of theserights commenced immediately with revisions to the development/amortization period accounted for prospectively as changesin estimates.Ef

293、fective August,2009,the remaining contract rights have been amortized on a straight-line basis over the sevenyear term of the GEM management contract.The FireKeepers casino opened on August 5,2009,and as a result,the$16.2 million of contract rights associated with the FireKeepers project began being

294、 amortized on August 5,2009 on a straight-line basis over the seven year term of the GEM management agreement.Due to the financing and development arrangement forthe Michigan project through GEM,a 50%-owned joint venture,we believe we were exposed to the majority of risk ofeconomic loss from the joi

295、nt ventures development activities.Therefore,in accordance with ASC Topic 810,Consolidation,we consider the joint venture to be a variable interest entity that requires consolidation in our financial statements.22Table of ContentsRecently Issued Accounting PronouncementsNo recently issued accounting

296、 pronouncements not yet adopted are expected to have a material impact on the Companysfuture financial position,results of operations or cash flows.Results of OperationsA significant portion of our revenue is generated from our management agreements with the Harrington Casino in Delawareand the Fire

297、Keepers Casino in Michigan.The Delaware contract ends in August 2011 and the Michigan contract ends inAugust 2016.There can be no assurance that either contract will be extended.Year Ended December 31,2009 Compared to Year Ended December 31,2008Operating revenues from continuing operations.For 2009,

298、total operating revenues from continuing operationsincreased$9.3 million or 96.6%,as compared to 2008,primarily due to the$10.0 million of management fees recognized in2009,related to the operations of FireKeepers Casino,which opened in August 2009.The increase in operating revenues wasoffset by a d

299、ecrease in casino and food and beverage revenues of$0.6 million or 6.4%We believe the decline in revenues atStockmans is consistent with and results primarily from the general economic weakness in Churchill County,Nevada,since ourmarket share of slot win increased from 33.9%in 2008 to 36.9%in 2009.O

300、perating costs and expenses from continuing operations.For 2009,total operating costs and expenses increased$0.7 million,or 5.5%as compared to 2008,primarily due to an increase in contract rights amortization of$0.9 million or 72.2%related to FireKeepers beginning in August 2009,offset by a decrease

301、 in Stockmans casino and food and beverage expenses of$0.5 million or 10.2%due to the decline in sales volume and general cost control efforts.Project development costs.For 2009,project development costs increased$67,233 or 44.5%,as compared to 2008,primarily due to an increase of$0.2 million relate

302、d to new business development,offset by lower project development expensesrelated to GEM of$0.1 million,or 68.2%due to the opening of the project,FireKeepers Casino.Selling,general and administrative expense.For 2009,selling,general and administrative expenses increased$0.2 million,or 3.4%,as compar

303、ed to 2008 mainly due to increased cash incentive compensation expense at the corporate levelof$0.7 million,offset by reduced stock compensation of$0.5 million.The increase in cash incentive compensation expense isdue to the successful opening of the FireKeepers project and subsequent achievement of

304、 management fee targets.Operating gains(losses).For 2009,operating gains decreased by$3.7 million,or 58.7%.The decrease is primarily due tothe$2.1 million GEM Member agreement modification signed in October 7,2009.In September 2009,payables due from GEMto each member were adjusted to reflect a total

305、 payable due to RAM of$8.5 million,including$2.7 million reported as equity,and a total payable due to the Company of$11.9 million,including$2.7 million reported as equity,resulting in the recognitionof a net pre-tax gain of$1.4 million.The net pre-tax gain is distributed gross on the statements of

306、operations for the periodended December 31,2009,as a$2.1 million charge characterized as a member agreement modification offset by a$3.5 millioncredit attributable to the non-controlling interest.Also operating gains decreased due to lower unrealized gain on notesreceivables by$1.5 million,primarily

307、 due to a$1.6 million gain for GEM in the prior year related to the repayment of$9.3 million of the tribal receivable.23Table of ContentsOther income(expense).For 2009,other income increased by$0.6 million,or 159.7%consisting of an increase of interestand other income of$0.2 million or 126.2%,relate

308、d to the accrued interest on the$5.0 million receivable from FireKeepers.Interest expense decreased$0.4 million,or 67.4%due to the reduction in interest expense related to the reduction ofoutstanding debt on the Companys revolving line of credit and the pay off of the promissory note to Peters Famil

309、y Trust.Income taxes.For 2009,the effective income tax rate is approximately 40%,compared to 45%for the same period in2008.The decrease in the effective tax rate from 2008 is primarily due to equity compensation deductions,along with a reducedproportion of state taxable income when compared to total

310、 taxable income.There is no valuation allowance on the deferred taxasset of$136,126 as of December 31,2009 and management believes the deferred tax asset is fully realizable.Non-controlling interest.For 2009,the income attributable to non-controlling interest in consolidated joint ventureincreased b

311、y$0.5 million or 130.9%.The increase is attributable to RAMs share of the increased net income in GEM of$1.0 million as compared to 2008.The GEM increased net income was due primarily to the approximately$10.0 million inmanagement fee income earned,related to the FireKeepers Casino.Liquidity and Cap

312、ital ResourcesThe United States has experienced a widespread and severe recession accompanied by,among other things,weakness inthe commercial and investment banking systems resulting in reduced credit and capital financing availability,and highlycurtailed gaming and other recreational activities and

313、 general discretionary consumer spending,and is also engaged in war,allof which have far-reaching effects on economic conditions in the country for an indeterminate period.The effects and durationof these conditions and related risks and uncertainties on the Companys future operations and cash flows

314、,including its accessto capital or credit financing,cannot be estimated at this time,but may likely be significant.Harrington Raceway and Casino,FireKeepers Casino and Stockmans Casino are currently our primary sources of recurringincome and significant positive cash flow.Our management agreement fo

315、r the Harrington Casino in Delaware ends inAugust 2011 and our management agreement for the FireKeepers Casino in Michigan end in August 2016.There can be noassurance that either agreement will be extended.Under the management agreement for FireKeepers Casino,certaindistributions must be paid from n

316、et revenue prior to the payment of the management fee to us.In addition,although the timingof completion is currently unclear,the Gun Lake Tribe has commenced construction of a casino approximately a one hour drivenorthwest of FireKeepers Casino,which,when completed,may affect the revenues of FireKe

317、epers Casino and ultimately ourmanagement fee.GEM began earning management fees from FireKeepers Casino in the third quarter of 2009,with the first payments madein September.Distributions from the Delaware operation are governed by the terms of the applicable joint venture agreementand management re

318、organization agreement.The total amount distributed from the Delaware operations for the year endedDecember 31,2009 and 2008 to us was$4.8 million and$4.6 million,respectively,which is a 6.2%increase from prior year.Weexpect to continue receiving management fees as currently prescribed under the joi

319、nt venture agreement,with a minimumguaranteed growth factor over the prior year of 5.0%in years 2010 through August 2011.The cash distributions increased 6.2%in 2009,as compared to the 5.0%minimum guaranteed growth factor as prescribed under the joint venture agreement,due tothe fact that the 5.0%gr

320、owth factor represents cash distributed for the year earned and the 6.2%represents the cash distributedduring the year,reflecting timing differences.On a consolidated basis,for 2009,cash provided by operations increased$9.4 million over prior year primarily due to theFireKeepers management fees.Cash

321、 provided by investing activities decreased$13.9 million from the prior year primarily dueto cash proceeds generated from the sale of the Holiday Inn Express in February 2008 of$7.0 million and the repayment oftribal advances related to the FireKeepers project of$9.3 million in May 2008.In the prior

322、-year period,the primary use of cashfor investing activities related to the purchases of contract rights.Cash used in financing activities decreased$11.1 millionprimarily due to decreased repayments of long-term debt.As of December 31,2009,the Company had approximately$9.2 million in cash and availa

323、bility on its revolving credit facility of$8.5 million.24Table of ContentsOur future cash requirements include selling,general and administrative expenses,capital expenditures primarily atStockmans and debt service.Subject to the economic uncertainties discussed above,we believe that adequate financ

324、ialresources will be available to execute our current growth plan from a combination of operating cash flows and external debt andequity financing.However,continued downward pressure on cash flow from operations due to,among other reasons,the adverseeffects of the current economic environment and/or

325、 the lack of available funding sources due to,among other reasons,the recentunprecedented global contraction in available credit increases uncertainty with respect to our development and growth plans.Long-term debt includes a reducing revolving loan from Nevada State Bank.The maximum committed amoun

326、t under theRevolver was increased from$8.1 million to$8.9 million,based upon the amendment to the Revolver dated June 25,2009 andthe repayment terms were amended(as discussed below).The maximum amount permitted to be outstanding under the Revolverdecreased$312,000 on July 1,2009.Effective January 1,

327、2010,based upon the amendment to the Revolver,the maximumamount permitted to be outstanding decreases$329,000 semiannually on January 1 and July 1 of each year and anyoutstanding amounts above such reduced maximum must be repaid on each such date.The reducing revolving loan is payableover 15 years a

328、t a variable interest rate based on the five-year LIBOR/Swap rate plus 2.1%.This rate,which was 7.24%perannum as of December 31,2009 and 7.39%per annum as of December 31,2008,adjusts annually based on the funded debt toEBITDA ratio of Stockmans,with adjustments based on the five-year LIBOR/Swap rate

329、 occurring every five years.With thesale of the Holiday Inn Express in February 2008,the balance on the loan was reduced from$10.9 million to$3.9 million,andthe Companys availability under the facility increased to approximately$5.3 million.In addition,periodic paymentrequirements were reduced on a

330、pro-rata basis.On October 23,2008,the Company paid additional principal of$0.6 million.InMarch,2009,the Company made$2.3 million of voluntary principal payments on its revolving credit line,increasing theavailability under the line to$7.9 million.The remaining balance of$0.2 million was paid on Nove

331、mber 23,2009,and the lineof credit availability as of December 31,2009 was$8.5 million.The loan agreement with Nevada State Bank also contains customary financial representations and warranties and requiresthat Stockmans maintain specified financial covenants,including a fixed charge coverage ratio,

332、a funded debt to EBITDA ratioand a minimum tangible net worth.In addition,the loan agreement limits the amount of distributions from and capitalexpenditures by Stockmans.The loan agreement also provides for customary events of default including payment defaults andcovenant defaults.The Company is in

333、 technical default of a loan covenant that requires Stockmans to maintain a minimumtangible net worth based on an annually increasing calculation and has applied for a waiver,which management expects to beapproved based on Stockman Casinos performance,our cash balance and the fact that we have fully repaid the Nevada StateBank loan.The technical default does not affect our line of credit availabil