Lakes Entertainment, Inc. (NASDAQ: LACO) today announced results for the three months and six months ended July 4, 2010.

Second Quarter ResultsNet earnings for the second quarter of 2010 were $3.9 million, compared to $2.8 million in the second quarter of 2009. The loss from operations was $3.5 million for the second quarter of 2010, compared to earnings from operations of $1.5 million for the second quarter of 2009. Basic and diluted earnings were $0.15 per share for the second quarter of 2010 compared to $0.11 per share for the second quarter of 2009.

Lakes Entertainment reported second quarter 2010 revenues of $4.8 million, compared to prior-year second quarter revenues of $7.1 million. This decrease was primarily related to a reduction in management fees earned from the Four Winds Casino Resort due in part to an unusually low table games hold during the second quarter of 2010 and also due to new competition that entered the Four Winds Casino Resort market during the third quarter of 2009. Also contributing to the decline in Lakes’ second quarter 2010 revenues were a decrease in management fees earned related to the Cimarron Casino project, due to the termination of that agreement in May 2010 and a decrease in management fees from the Red Hawk Casino.

For the second quarter of 2010, Lakes’ selling, general and administrative expenses were $3.3 million compared to $3.8 million in the second quarter of 2009. Selling, general and administrative expenses consisted primarily of payroll and related expenses, travel expenses and professional fees, all of which decreased compared to the prior year’s second quarter.

Net unrealized gains (losses) on notes receivable relate to the Company’s notes receivable from Indian tribes for casino projects that are not yet open, which are adjusted to estimated fair value based upon the current status of the related tribal casino projects and evolving market conditions. In the second quarter of 2010, net unrealized losses on notes receivable were $1.5 million, compared to net unrealized gains of $2.5 million in the prior year period. The net unrealized losses in the second quarter of 2010 consisted of losses related to the Jamul Indian Village (“Jamul Tribe”) near San Diego, California due primarily to ongoing issues in the credit markets. The net unrealized gains in the second quarter of 2009 were related to the project with the Jamul Tribe and the Iowa Tribe of Oklahoma (“Iowa Tribe”) due primarily to improvements in the credit markets during that quarter.