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Lakes Entertainment Announces Results For Fourth Quarter And Full Year 2011

Further commenting, Lyle Berman, Chief Executive Officer of Lakes stated, “We are continuing with our investment in Rock Ohio Ventures, LLC and its casino developments in Cincinnati and Cleveland and we look forward to the opening of both of these projects.” Mr. Berman continued, “We look forward to the decision by the State of Maryland Video Lottery Facility Location Commission related to our response to a request for proposal for a video lottery operation license in Allegany County, Maryland. We currently expect the State to make a decision in the second quarter of 2012. The license will allow the operation of a video lottery operation at the Rocky Gap Lodge and Golf Resort in Cumberland, Maryland. We also continue to focus on operating as efficiently as possible from a corporate standpoint as we remain committed to increasing shareholder value.”

About Lakes Entertainment

Lakes Entertainment, Inc. is currently managing the Red Hawk Casino for the Shingle Springs Band of Miwok Indians. Lakes has an investment in Rock Ohio Ventures, LLC for their planned casino developments in Cincinnati and Cleveland, Ohio. Lakes has also submitted a response to a request for proposal to own and manage a casino project in Maryland.

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. Certain information included in this press release (as well as information included in oral statements or other written statements made or to be made by Lakes Entertainment, Inc.) contains statements that are forward-looking, such as statements relating to plans for future expansion and other business development activities as well as other capital spending, financing sources and the effects of regulation (including gaming and tax regulation) and competition. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results may differ from those expressed in any forward-looking statements made by or on behalf of the company. These risks and uncertainties include, but are not limited to, need for potential future financing to meet Lakes’ development needs; those relating to the inability to complete or possible delays in completion of Lakes' casino projects, including various regulatory approvals and numerous other conditions which must be satisfied before completion of these projects; possible termination or adverse modification of management or development contracts; Lakes operates in a highly competitive industry; possible changes in regulations; reliance on continued positive relationships with Indian tribes and repayment of amounts owed to Lakes by Indian tribes; possible need for future financing to meet Lakes' expansion goals; risks of entry into new businesses; and reliance on Lakes' management. For more information, review the company's filings with the Securities and Exchange Commission.

Condensed Consolidated Balance Sheets
(In thousands)
      January 1, 2012     January 2, 2011
Current assets:
Cash and cash equivalents $ 38,557 $ 45,233
Accounts receivable 117 1,696
Current portion of notes receivable from Indian casino projects 1,076 2,405
Deposits 2,250 -
Income taxes receivable 3,472 -
Other       1,013       1,983
Total current assets       46,485       51,317
Property and equipment, net       5,063       5,103
Long-term assets related to Indian casino projects:
Notes and interest receivable, net of current portion and allowance 34,160 31,192
Notes receivable at fair value - 11,129
Intangible assets 4,184 15,873
Management fees receivable and other       8,275       6,155
Total long-term assets related to Indian casino projects       46,619       64,349
Other assets:
Investment in unconsolidated investee 15,706 2,367
Land held for development 170 3,470
Land held for sale 1,729 -
Other       228       40
Total other assets       17,833       5,877
Total assets     $ 116,000     $ 126,646
Liabilities and shareholders' equity
Current liabilities:
Current portion of contract acquisition costs payable, net $ 1,055 $ 1,326
Income taxes payable - 7,822
Other       1,288       1,683
Total current liabilities 2,343 10,831
Long-term contract acquisition costs payable, net       4,568       5,830
Total liabilities       6,911       16,661
Total Lakes Entertainment shareholders' equity 108,739 109,985
Noncontrolling interest       350       -
Total equity       109,089       109,985
Total liabilities and shareholders' equity     $ 116,000     $ 126,646
Condensed Consolidated Statements of operations
(In thousands, except per share data)
Three months ended Twelve months ended
January 1, 2012     January 2, 2011 January 1, 2012     January 2, 2011
Management fees $ 1,255 $ 4,654 $ 35,397 $ 24,530
License fees and other       18         20     176         72  
Total revenues       1,273         4,674     35,573         24,602  
Costs and expenses:
Selling, general and administrative 1,979 2,341 9,458 11,766
Loss on convertible note receivable - - 4,000 -
Impairment charge on notes receivable - 20,975 - 20,975
Impairments and other losses 5,938 18,832 8,549 22,834
Amortization of intangible assets related to operating casinos 264 2,784 11,688 11,139
Depreciation       57         64     297         260  
Total costs and expenses       8,238         44,996     33,992         66,974  
Net unrealized gains (losses) on notes receivable       (9,801 )       836     (11,892 )       1,598  
Loss from operations       (16,766 )       (39,486 )   (10,311 )       (40,774 )
Other income (expense):
Gain on divestiture of cost method investment - - - 23,100
Interest income 1,517 1,271 5,937 7,047
Interest expense (267 ) (329 ) (1,182 ) (2,007 )
Equity in loss of unconsolidated investee - - - (64 )
Other       81         36     440         16  
Total other income, net       1,331         978     5,195         28,092  
Loss before income taxes (15,435 ) (38,508 ) (5,116 ) (12,682 )
Income taxes (benefit)       (2,744 )       (10,394 )   (3,234 )       1,154  
Net loss including noncontrolling interest (12,691 ) (28,114 ) (1,882 ) (13,836 )
Net loss attributable to noncontrolling interest       19         -     37         -  
Net loss attributable to Lakes Entertainment, Inc.     $ (12,672 )     $ (28,114 ) $ (1,845 )     $ (13,836 )
Weighted-average common shares outstanding
Basic 26,406 26,369 26,403 26,370
Diluted       26,406         26,369     26,403         26,370  
Loss per share
Basic $ (0.48 ) $ (1.07 ) $ (0.07 ) $ (0.52 )
Diluted $ (0.48 ) $ (1.07 ) $ (0.07 ) $ (0.52 )

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