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Lakes Entertainment, Inc. Announces Transaction With Penn Ventures, LLC

Lakes Entertainment, Inc. (NASDAQ: LACO) announced today that on July 13, 2010, it entered into a Termination Agreement with Penn Ventures, LLC, a subsidiary of Penn National Gaming, Inc. (“ Penn”) whereby in exchange for a $25 million payment from Penn to Lakes, Lakes agreed to relinquish all right, title and interest it had in the casino projects in Columbus, Ohio and Toledo, Ohio which are proposed to be developed by Penn. As previously announced, on October 28, 2009, Lakes and Penn entered into a Funding and Option Agreement whereby, in return for a corresponding equity stake up to 10% in the potential casinos in Columbus and Toledo, Lakes (1) agreed to fund 10% of Penn’s costs of the Issue 3 referendum and (2) had the option, but not the obligation, to fund up to 10% of equity required to develop such casinos. Lakes had funded approximately $1.9 million under the Funding and Option Agreement. The Termination Agreement does not affect Lakes’s investment with Rock Ohio Ventures, LLC and its proposed casino developments in Cincinnati and Cleveland.

“Although we believe the Toledo and Columbus casinos will be very successful, receiving $25 million now is a good return on our investment with Penn,” said Lyle Berman, Chairman and CEO of Lakes. “We have enjoyed our relationship with Penn and wish them much success with these casinos,” added Berman.

About Lakes Entertainment

Lakes Entertainment, Inc. currently has development and management or financing agreements with three separate Tribes for casino operations in Michigan and California, for a total of three separate casino sites. Lakes is currently managing the Four Winds Casino Resort for the Pokagon Band of Potawatomi Indians and the Red Hawk Casino for the Shingle Springs Band of Miwok Indians. Lakes is also involved in other business activities, including the licensing of table games to Tribal and non-Tribal casinos.

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