SECURITIES AND EXCHANGE COMMISSION Securities Title of each class of securities to which transaction applies: Aggregate number of securities to which transaction applies: Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): Proposed maximum aggregate value of transaction: Amount Previously Paid: Form, Schedule or Registration Statement No.: Filing Party: Date Filed: 23, 2013 23, 2013. . determined by the Company in its sole discretion, and a monthly travel and expense fee in the amount of $600. They are also entitled to participate in Lakes’ discretionary incentive compensation program and to receive other benefits provided by the Company to senior executives. Each employment agreement also contains customary confidentiality provisions and a two-year post-employment non-solicitation covenant. Each employment agreement also contains an arbitration clause. Name Lyle Berman Timothy J. Cope This option vests 20% each year, beginning on the first anniversary of the date of grant of September 22, 2010. For each This option vests one third each year beginning on the first anniversary of the date of grant of October 15, 2011. For each Named Executive Officer; Termination Event Lyle Berman — Disability — Involuntary Termination without Cause — Constructive Discharge — Voluntary Termination — For Cause Termination — Expiration of Term — Involuntary Termination after Change-in-Control Timothy J. Cope — Disability — Involuntary Termination without Cause — Constructive Discharge — Voluntary Termination — For Cause Termination — Expiration of Term — Involuntary Termination after Change-in-Control Name Age Position(s) with Lakes Entertainment Name Neil I. Sell Ray Moberg Larry C. Barenbaum Richard D. White shareholder may communicate it to any one of the independent directors in care of our Secretary at our corporate office address. All such shareholder communications will be forwarded to the applicable director(s). 2012. 2012. 2005. Board of Directors. shareholders. Four) Audit Fees(1) Audit-Related Fees Tax Fees All Other Fees Total Fees Name and Address Lyle Berman(1) Timothy J. Cope(2) Larry C. Barenbaum(3) Ray M. Moberg(4) Neil I. Sell(5) Richard D. White(6) Dimensional Fund Advisors LP, Palisades West, Building One, 6300 Bee Cave Road, Austin, Texas 78746(7) All Lakes Entertainment, Inc. Directors and Executive Officers as a Group (6 people including the foregoing)(8) to pursue. 2012. 24, 2013.þR¨£þ£ Preliminary Proxy Statement £ ¨Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) ¨Definitive Proxy Statement ¨Definitive Additional Materials ¨£ Soliciting Material Pursuant to §240.14a-12 LAKES ENTERTAINMENT, INC.(Name of Registrant as Specified In Its Charter)(Name of Person(s) Filing Proxy Statement, if other than the Registrant)Payment of Filing Fee (Check the appropriate box):þR No fee required. ¨£ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. (1) (2) (3) (4) (5) Total fee paid: ¨£ Fee paid previously with preliminary materials. ¨£ Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) (2) (3) (4) May 30, 2012corporate office of Lakes Entertainment, Inc., 130 Cheshire Lane, Minnetonka, Minnesota 55305Rocky Gap Casino Resort, 16701 Lakeview Rd. NE, Flintstone, Maryland 21530 at 3:00 p.m. local time on May 30, 2012,June 5, 2013, or at any adjournment or postponements of the Annual Meeting, for the purpose of considering and taking appropriate action with respect to the following: 1. The election of sixfive directors to our Board of Directors; 2. The approvalA non-binding advisory vote to approve the compensation of an amendment toour named executive officers disclosed in the Articles of Incorporation relating to gaming authority requirements of shareholders and our right to redeem the shares of disqualified holders;attached proxy statement; 3. A non-binding advisory vote on the frequency of an advisory vote on executive compensation; 4. The ratification of the appointment of Piercy Bowler Taylor & Kern, Certified Public Accountants, as our independent registered public accounting firm for the 20122013 fiscal year; and 4.5.The transaction of any other business as may properly come before the Annual Meeting or any adjournments or postponements of the Annual Meeting. 5, 2012,10, 2013, will be entitled to notice of, and to vote at, the Annual Meeting or any adjournments or postponements of the Annual Meeting.By Order of the Board of Directors 20, 2012May 30, 2012corporate office of the Company, 130 Cheshire Lane, Minnetonka, Minnesota 55305Rocky Gap Casino Resort, 16701 Lakeview Rd. NE, Flintstone, Maryland 21530 at 3:00 p.m. local time on Wednesday, May 30, 2012,June 5, 2013, for the purpose of considering and taking appropriate action with respect to the following: 1. The election of sixfive directors to our Board of Directors; 2. The approvalan amendment toour named executive officers disclosed in the Articles“Executive Compensation” section of Incorporation relating to gaming authority requirements of shareholders and our right to redeem the shares of disqualified holders;this proxy statement (“Say on Pay Proposal”); 3. 4. The ratification of the appointment of Piercy Bowler Taylor & Kern, Certified Public Accountants, as our independent registered public accounting firm for the 20122013 fiscal year; and 4.5.The transaction of any other business as may properly come before the Annual Meeting or any adjournments or postponements of the Annual Meeting. 20, 2012.5, 201210, 2013 (“Record Date”)for the Annual Meeting will be entitled to notice of, and to vote at, the Annual Meeting or any adjournments or postponements of the Annual Meeting. There were 26,440,936 shares of our common stock outstanding on the Record Date, which is the only class of our capital stock entitled to vote at the Annual Meeting. Each share of common stock is entitled to one vote upon each matter to be presented at the Annual Meeting. A quorum, consisting of a majority of the outstanding shares of our common stock entitled to vote at the Annual Meeting, must be present in person or represented by proxy before action may be taken at the Annual Meeting.20112012 Annual Report online. Shareholders who have received the Notice will not be sent a printed copy of our proxy materials in the mail, unless they request to receive one.May 30, 2012:June 5, 2013: This Proxy Statement and our 20112012 Annual Report are available atwww.lakesentertainment.com/proxy1sixfive nominees who receive the highest number of affirmative votes will be elected as directors. Proposals Two and Three requireProposal Four requires the affirmative vote of the holders of a majority of the shares of common stock present in person or represented by proxy and entitled to vote at the Annual Meeting. The votes on the Say on Pay Proposal (Proposal Two) and the Say on Frequency Proposal (Proposal Three) are non-binding advisory votes. The Board of Directors will consider our executive compensation to have been approved by shareholders if the Say on Pay Proposal receives more votes “For” than “Against”. The Board of Directors will consider shareholders to have selected the Say on Frequency that receives the greatest number of votes. Each shareholder who signs and returns a proxy in the form enclosed with this proxy statement has the unconditional right to revoke the proxy at any time prior to its use at the Annual Meeting. A shareholder can change his or her proxy or vote in one of three ways: (1) send a signed notice of revocation to our Secretary to revoke the previously given proxy; (2) send a completed proxy card bearing a later date than the previously given proxy to our Secretary indicating the change in your vote; or (3) attend the Annual Meeting and vote in person, which will automatically cancel any proxy previously given, or the shareholder may revoke his or her proxy in person, but a shareholder’s attendance alone at the Annual Meeting will not revoke any proxy that the shareholder has previously given. If a shareholder chooses either of the first two methods, the shareholder must take the described action prior to the start of the Annual Meeting. Once voting on a particular matter is completed at the Annual Meeting, a shareholder will not be able to revoke his or her proxy or to change his or her vote as to that matter. Unless a shareholder’s proxy is so revoked or changed, the shares of common stock represented by each proxy received by the Company will be voted at the Annual Meeting and at any adjournments or postponements thereof. If a shareholder’s shares of common stock are held in street name by a broker, bank or other financial institution, such shareholder must contact it to change his or her vote.approval ofSay on Pay Proposal, for a one year frequency on the amendment to the Articles of IncorporationSay on Frequency Proposal, and for the ratification of the appointment of Piercy Bowler Taylor & Kern, Certified Public Accountants, (“PBTK”PBTK”) as the Company’s independent registered public accounting firm for the 20122013 fiscal year, unless a contrary choice is specified. If any nominee should withdraw or otherwise become unavailable for reasons not presently known, the proxies that would have otherwise been voted for such nominee will be voted for such substitute nominee as may be selected by the Board of Directors. A “withheld” vote will be counted for purposes of determining whether there is a quorum, but will not be voted in favor of the nominee with respect to whom authority has been withheld. A proxy voted “abstain” with respect to Proposals Two and Three will not be voted, although it will be considered present and entitled to vote, and thus for Proposal Four, an abstention has the same effect as a negative vote. A broker non-vote is treated as present for purposes of determining a quorum, but will not be counted as shares entitled to vote and will have no effect on the result of the vote.amendment of the Articles of IncorporationSay on Frequency Proposal (Proposal Two)Three), no votes will be cast on your behalf in that proposal. Your bank or broker will, however, continue to have discretion to vote any uninstructed shares on the ratification of the appointment of the Company’s independent registered public accounting firm (Proposal Three)Four). If you are a shareholder of record and you do not cast your vote, no votes will be cast on your behalf on any of the items of business at the Annual Meeting.amendment ofSay on Pay Proposal; “ONE YEAR” for the Articles of Incorporation;Say on Frequency Proposal; and “FOR” the ratification of the appointment of PBTK as our independent registered public accounting firm for the 20122013 fiscal year.directors. All of the currentdirectors, including one director (Richard D. White) who is not standing for re-election. The remaining directors have been nominated for election by the Board of Directors. If elected, each nominee will hold office until the next Annual Meeting of the shareholders, or until his successor is elected and shall have been qualified. All nominees have consented to be named and have indicated their intention to serve as members of the Board of Directors, if elected. The number of members constituting our Board of Directors has been previously set by shareholders at seven. The existing vacancy on the Board of Directors results from a prior resignation of a director. Notwithstanding the existing vacancyvacancies on the Board of Directors, proxies cannot be voted for more than sixfive individuals, which number represents the number of nominees named by the Board of Directors. 7071 Chairman of the Board and Chief Executive Officer of Lakes Entertainment, Inc. since June 1998 and Chairman of the Board of Directors of Grand Casinos, Inc. (the predecessor to Lakes) from October 1991 through December 1998. Mr. Berman served as President of Lakes from November 1999 until May 2003. Mr. Berman has also served as the Executive Chairman of the Board of WPT Enterprises, Inc. (now known as VoyagerEmerald Oil, & Gas, Inc.) from its inception in February 2002, and had served as its Chief Executive Officer from February 25, 2005 until April 1, 2005. Mr. Berman has also been Chairman of the Board of PokerTek, Inc. since January 2005. Mr. Berman also served as Chief Executive Officer of Rainforest Café, Inc. from February 1993 until December 2000. We believe Mr. Berman’s qualifications to sit on our Board of Directors include his over 30 years of experience in the casino industry, including serving as our Chairman and Chief Executive Officer since 1998, his extensive executive experience running large national companies, and his particular strengths in strategic operations and strategy, food and beverage, and retail sales. 1998 6061 President of Lakes Entertainment, Inc. since May 2003 and Chief Financial Officer, Treasurer, and a director of Lakes Entertainment since June 1998. Mr. Cope served as a director of WPT Enterprises, Inc. (now known as VoyagerEmerald Oil, & Gas, Inc.) from March 2002 through May 2009. Mr. Cope served as Secretary of Lakes Entertainment, Inc. from June 1998 through December 2007. Mr. Cope served as an Executive Vice President of Lakes Entertainment, Inc. from June 1998 until May 2003. Mr. Cope held the positions of Executive Vice President, Chief Financial Officer and Director of Grand Casinos, Inc. from 1993 through 1998. We believe Mr. Cope’s qualifications to sit on our Board of Directors include over 30 years of experience in the casino industry, including more than 1314 years as an officer of our company. He also has extensive experience in corporate finance, strategic planning, public company financial reporting and gaming operations. 1998 7071 Director of Lakes Entertainment, Inc. since June 1998. Since 1968, Mr. Sell has been engaged in the practice of law in Minneapolis, Minnesota with the firm of Maslon Edelman Borman & Brand, LLP, which in the past, had rendered legal services to Lakes. We believe Mr. Sell’s qualifications to sit on our Board of Directors include his over 40 years of practicing law combined with his extensive experience in corporate legal and corporate governance matters. 1998 3Name and Age ofDirector Principal Occupation, Business ExperienceFor Past Five Years and Directorships of Public Companies DirectorSince6364 Director of Lakes Entertainment, Inc. since December 2003. Mr. Moberg retired from Ernst & Young in 2003 after serving for 33 years, including as managing partner of its Reno office from 1987 until his retirement. Mr. Moberg also served as a director of WPT Enterprises, Inc. (now known as VoyagerEmerald Oil, & Gas, Inc.) until April 2010. We believe Mr. Moberg’s qualifications to sit on our Board of Directors include his financial expertise and his years of experience providing strategic advisory services to complex organizations. 2003 6566 Director of Lakes Entertainment, Inc. since February 2006. Mr. Barenbaum served as Chief Executive Officer of Christopher & Banks Corporation, a publicly held national specialty retailer of women’s apparel, from January 2011 until February 2012. Mr. Barenbaum served on the Christopher & Banks Corporation Board from March 1992 until February 2012. Since November 1991, Mr. Barenbaum has been engaged in investment activities and has provided consulting services to various companies in the specialty retail and services industry. We believe Mr. Barenbaum’s qualifications to sit on our Board of Directors include his extensive experience in the sales and marketing area. 2006 Richard D. White Age 58Director of Lakes Entertainment, Inc. since December 2006. Mr. White has been a Managing Director and head of the Private Equity and Special Products Department of Oppenheimer & Co. Inc. since June 2004. From 2002 to June 2004, he served as President of Aeolus Capital Group LLC, a private equity and investment management firm. From 1985 until 2002, he was a Managing Director at CIBC Capital Partners, an affiliate of CIBC World Markets, and its predecessor firm, Oppenheimer & Co., Inc. During that time, Mr. White worked in both the Investment Banking and Private Equity Investing departments. Mr. White is a director of Escalade Inc., a manufacturer of sporting goods and office products; and G-III Apparel Group, Ltd. Mr. White also serves as Chairman of the Board of Mercury Energy, Inc., a solar energy systems integration company. From 2003 to 2008, Mr. White served as a director for ActivIdentity Corp. We believe Mr. White’s qualifications to sit on our Board of Directors include his investment banking experience, his managerial experience and his expertise in corporate finance and strategic planning.2006January 1,December 30, 2012, referred to asfiscal 20112012, the principal components of compensation for our only two named executive officers, Lyle Berman (Chief Executive Officer), and Timothy J. Cope (President) (“Named Executive Officers”), included base salary, annual incentive bonus compensation and long term equity incentives.2011.2012. We use base salary to recognize the experience, skills, knowledge and responsibilities required of our named executive officersNamed Executive Officers in their roles. The Compensation Committee (“Committee”) reviews each named executive officer’sNamed Executive Officer’s salary and makes adjustments, as appropriate. The Committee also considers a number of factors including market data taken from the public filings of public companies in the gaming industry, internal review of the executive’s compensation (both individually and relative to other executives), level of the executive’s responsibility, and individual performance of the executive. Consistent with fiscal 20102011 base salaries, the base salaries of the named executive officersNamed Executive Officers continued to be the biggestlargest portion of the name executives’Name Executive Officers’ compensation in fiscal 2011.2012.4named executive officersNamed Executive Officers for fiscal 20112012 were at acceptable market rates.named executive officer’sNamed Executive Officer’s base salary. The bonuses are determined on a discretionary basis by the Committee based on the performance of the Company and the named executive officerNamed Executive Officer for the completed fiscal year. The annual incentive cash bonus awards made to named executive officersNamed Executive Officers in March 20122013 for performance in fiscal 20112012 are reflected in the Summary Compensation Table. The Committee approved these discretionary annual incentive cash bonuses due to achievement of strategic fiscal 20112012 corporate goals. The annual incentive bonus program is reviewed annually by the Committee to determine whether it is achieving its intended purpose. We and the Committee believe it achieved its purpose in 2011.2012.named executive officersNamed Executive Officers to increase long-term shareholder value. The Committee will consider providing other forms of equity-based compensation awards to named executive officersNamed Executive Officers under the 2007 plan,Stock Option and Compensation Plan, referred to as the 2007 Plan, which may be subject to performance goals, rather than just in the form of stock option grants. Grants of equity-based awards to named executive officersNamed Executive Officers under the 2007 planPlan are made from time to time at regularly scheduled meetings of the Committee in line with our past practices. In 2009, the Committee granted restricted stock units to named executive officersNamed Executive Officers in addition to stock options. Awards may not necessarily be made each year if the Committee decides that the Company’s strategic and financial performance does not merit awards or the Committee believes that the named executive officerNamed Executive Officer has received a sufficient amount of equity-based awards. In anticipation of the expected future requirements under the Dodd-Frank Act, the option grants since October 2010 include a recoupment or “claw back” provision.20112012 and (ii) our only other individual who served as an executive officer of the Company during and at the end of fiscal 2011.2012. The Chief Executive Officer and the other executive officer listed below are collectively referred to in this proxy statement as thenamed executive officers. Named Executive Officers.Name and Principal PositionYearSalary($)(1)Bonus($)StockAwards($)(2)OptionAwards($)(2)All OtherCompensation($)Total($)Lyle Berman, Chairman of the Board, Chief Executive Officer20112010500,000500,000100,000100,000———129,600199,049209,574(3)799,049939,174Timothy J. Cope, President, Chief Financial Officer and Treasurer20112010350,000350,00070,00070,000———129,60023,41122,721(4)443,411572,321Name and Principal Position Year 2012 500,000 100,000 — — 83,328 (2) 683,328 Chairman of the Board, Chief Executive Officer 2011 500,000 100,000 — — 199,049 799,049 2012 350,000 70,000 — — 23,885 (3) 443,885 President, Chief Financial Officer and Treasurer 2011 350,000 70,000 — — 23,411 443,411 (1) Includes cash compensation deferred at the election of the executive officer under the terms of the Company’s 401(k) Savings Incentive Plan. (2) Includes full grant date fair value of each award under FASB Accounting Standards Codification Topic 718. The full grant date fair value is the amount the Company will expense over the awards’ vesting period. The amounts do not reflect the actual amounts that may be realized by the executive officers. A discussion of the assumptions used in calculating the stock option award amounts may be found in note 10,Share-Based Compensation, to the audited financial statements in our Annual Report on Form 10-K for the fiscal year ended January 1, 2012. Fiscal 2010 includes the October 15, 2010 grant of options to purchase 80,000 shares granted to each of Mr. Berman and Mr. Cope. The exercise price of these options is $1.89 per share and the options vest one-third on the first through third anniversaries of the date of grant.(3)Amount primarily represents the incremental cost to the Company arising from Mr. Berman’s personal use of the Company’s corporate jet of $125,871. This amount also includes payment by the Company of term life and executive disability insurance premiums of approximately $56,178,$66,328, matching contributions by the Company under the Company’s 401(k) Savings Incentive Plan of $9,800, and travel and expense allowance of $7,200.(4)(3)Amount includes matching contributions by the Company under the Company’s 401(k) Savings Incentive Plan of $9,800, payment by the Company of term life and executive disability insurance premiums of approximately $6,411$6,885 and travel and expense allowance of $7,200.named executive officersNamed Executive Officers are required to perform such duties as may be designated by the Company’s Board of Directors from time to time. Each agreement had an initial term of 36 months and both agreements were amended in 2009 for an additional 36 month term, which commenced February 15, 2009. The term of each agreement automatically extends for successive one-year periods unless at least 60 days prior to the end of a term, the Company or the named executive officerNamed Executive Officer gives notice to the other of an election to terminate the agreement at the end of the current term. Each agreement was automatically extended until February 15, 2013.2014. In addition, the agreement may be terminated (a) upon the death or disability (as defined in the agreement) of the named executive officer;Named Executive Officer; (b) by the Company for cause (as defined in the agreement); (c) by the Company without cause; (d) as a result of a constructive termination (as defined in the agreement); or (e) by the named executive officerNamed Executive Officer at any time upon providing 60 days advance written notice to the Company. Under the terms of the agreements, Mr. Berman and Mr. Cope receive a base salary of $500,000 and $350,000, respectively, or such other amount as may be620112012 for each named executive officer.Named Executive Officer. Option Awards Stock Awards Number of
Securities
Underlying
Unexercised Options
(#)
Exercisable Number of
Securities
Underlying
Unexercised Options
(#)
Unexercisable Option Exercise
Price
($) Option Expiration
Date Number of
Shares or Units
of Stock That
Have Not
Vested (#) Market Value
of Shares or
Units of Stock
That Have
Not Vested
($)(1) 20,000 10,000 (2) 3.25 1/28/2019 10,000 (3) 18,500 234,809 — 3.40 9/22/2019 — — 7,466 11,201 (4) 3.40 9/22/2019 — — 26,667 53,333 (5) 1.89 10/15/2020 — — 20,000 10,000 (2) 3.25 1/28/2019 10,000 (3) 18,500 117,404 — 3.40 9/22/2019 — — 7,466 11,201 (4) 3.40 9/22/2019 — — 26,667 53,333 (5) 1.89 10/15/2020 — — Option Awards Name 30,000 — 3.25 1/28/2019 234,809 — 3.40 9/22/2019 11,200 7,467 (1) 3.40 9/22/2019 53,333 26,667 (2) 1.89 10/15/2020 30,000 — 3.25 1/28/2019 117,404 — 3.40 9/22/2019 11,200 7,467 (1) 3.40 9/22/2019 53,333 26,667 (2) 1.89 10/15/2020 (1) This market value is based on the share closing price of $1.85 on December 30, 2011 (the last business day of the fiscal year).(2)This option vests one third each year, beginning on the first anniversary of the date of grant of January 28, 2010. For each named executive officer, options to purchase 10,000 shares vested on January 28, 2012.(3)This award reflects restricted stock units that vest one third each year beginning on the first anniversary of the date of grant of January 28, 2010. For each named executive officer, 10,000 restricted stock units vested on January 28, 2012.(4)named executive officer,Named Executive Officer, options to purchase 3,733 shares will vest on September 22,nd in 2012, 2013 and options to purchase 3,734 shares will vest on September 22, 2014.(5)(2)named executive officer,Named Executive Officer, options to purchase 26,66626,667 shares will vest on October 15,th of 2012 and 2013.7named executive officersNamed Executive Officers who have employment agreements with the Company upon termination of employment due to disability, by the Company without cause, due to a constructive discharge, due to the named executive officer’sNamed Executive Officer’s voluntary resignation, by the Company with cause, expiration of the initial or renewal term of the named executive officer’sNamed Executive Officer’s employment agreement, and involuntary termination within two years following a change-in-control. The amounts shown in the table assume that such termination was effective as of January 1,December 30, 2012 and includes all amounts earned through that date and are estimates of the amounts that would be paid out to the named executive officersNamed Executive Officers upon their termination of employment. The actual amounts to be paid out can only be determined at the time a named executive officerNamed Executive Officer in fact terminates employment with the Company. Cash
Severance
Payment
($) Continuation of
Medical and
Dental Benefits
(Present Value)
($) Acceleration
and
Continuation of
Options
(unamortized
expense as of
1/1/2012)
($) Excise Tax
Gross-Up
($) Total
Termination
Benefits
($) 250,000 8,658 106,077 80,848 445,583 600,000 17,316 106,077 285,489 1,008,882 600,000 17,316 106,077 285,489 1,008,882 — — 106,077 — 106,077 — — 106,077 — 106,077 — — 106,077 — 106,077 1,359,000 — 106,077 761,619 2,226,696 175,000 15,600 106,077 99,626 396,303 420,000 31,200 106,077 302,613 859,890 420,000 31,200 106,077 302,613 859,890 — — 106,077 — 106,077 — — 106,077 — 106,077 — — 106,077 — 106,077 948,000 — 106,077 697,893 1,751,970 Lyle Berman 250,000 9,078 49,811 87,509 396,398 600,000 18,156 49,811 308,385 976,352 600,000 18,156 49,811 308,385 976,352 — — 49,811 — 49,811 — — 49,811 — 49,811 — — 49,811 — 49,811 — Involuntary Termination after Change-in-Control 1,381,000 — 49,811 908,248 2,339,059 Timothy J. Cope 175,000 15,036 49,811 103,313 343,160 420,000 30,072 49,811 341,608 841,491 420,000 30,072 49,811 341,608 841,491 — — 49,811 — 49,811 — — 49,811 — 49,811 — — 49,811 — 49,811 — Involuntary Termination after Change-in-Control 947,000 — 49,811 834,648 1,831,459 named executive officersNamed Executive Officers to any payments or benefits that are not available to salaried employees generally.89January 1,December 30, 2012: 7071 See Proposal One (Election of Directors) above. 6061 See Proposal One (Election of Directors) above. 20112012 awarded to or earned by each of our directors who is not also a named executive officer.Named Executive Officer. Fees Earned
or Paid in
Cash
($)(1) Stock
Awards
($) Option
Awards
($) All Other
Compensation
($) Total
($) 64,000 — — — 64,000 75,000 — — — 75,000 68,000 — — — 68,000 68,000 — — — 68,000 Name 69,000 — — — �� 69,000 85,000 — — — 85,000 77,000 — — — 77,000 77,000 — — — 77,000 (1) sixfive members identified under Proposal One (Proposal for Election of Directors)., and Richard D. White, who is not standing for re-election. The following current directors, which constitute a majority of the Board of Directors, are “independent directors” as such term is defined in The NASDAQ Stock Market’s listing standards, referred to asNasdaq listing standards: Larry C. Barenbaum, Ray M. Moberg, Neil I. Sell and Richard D. White. The independent directors meetmet without management present at substantially all meetings of the Board of Directors.1015 meetings during fiscal 2011.2012. None of our directors attended fewer than 75 percent of the aggregate of (i) the total number of meetings of the Board of Directors held during fiscal 2011,2012, and (ii) the total number of meetings held by all committees of the Board of Directors on which such director served.10A total of sixAll of our directors attended the Company’s 20112012 annual meeting of shareholders.Board’s 2011, and a copy of this charter was attached as Appendix A to the proxy statement for the meeting held on June 1, 2011. The primary functions of the Audit Committee are (i) to serve as an independent and objective party to monitor our financial reporting process and internal control system, (ii) to review and appraise the audit efforts of our independent auditors, and (iii) to provide an open avenue of communication among the independent auditors, financial and senior management and the Board of Directors. The charter also requires that the Audit Committee (or designated members of the Audit Committee) review and pre-approve the performance of all audit and non-audit accounting services to be performed by our independent registered public accounting firm (auditors), other than certain de minimus exceptions permitted by Section 202 of the Sarbanes-Oxley Act of 2002. The Audit Committee held six meetings during fiscal year 2011.2012. The Audit Committee also held executive sessions on several occasions during the year where Company management was not present.20112012 and discussed them with management.112011.122011.Officer.Officer and President. Contemporaneously with the interview process, the Corporate Governance Committee will conduct a comprehensive conflicts-of-interest assessment of the candidate. The Corporate Governance Committee will consider reports of the interviews and the conflicts-of-interest assessment to determine whether to recommend the candidate to the full Board of Directors. The Corporate Governance Committee will also take into consideration the candidate’s personal attributes, including, without limitation, personal integrity, loyalty to us and concern for our success and welfare, willingness to apply sound and independent business judgment, awareness of a director’s vital part in good corporate citizenship and image, time available for meetings and consultation on Company matters and willingness to assume broad, fiduciary responsibility. The Corporate Governance Committee operates under a written charter adopted by the Board of Directors on April 25, 2005, and a copy of this charter was attached as Appendix B to the proxy statement for the meeting held on June 1, 2011.132011, and a copy of this charter was attached as Appendix C to the proxy statement for the meeting held on June 1, 2011. The Compensation Committee reviews our remuneration policies and practices, makes recommendations to the full Board of Directors in connection with all compensation matters affecting us and administers our incentive compensation plans.named executive officerNamed Executive Officer compensation. The Compensation Committee also has the sole authority to approve the consultant’s fees and other retention terms. The Compensation Committee also has the authority, to the extent it deems necessary or appropriate, to retain other advisors. The Company will provide appropriate funding, as determined by the Compensation Committee, for payment of compensation to any consulting firm or other advisors hired by the Compensation Committee. During the first quarter of 20122013 the Company President and Human Resources Department performed a review of all Lakes employee salary levels by position. The review utilized various independent sources. A report was presentedsources and the review findings were reported to the Compensation Committee.Board.2011,2012, the Compensation Committee met on two occasions. The committee members participated in each of those meetings and, where appropriate, management was also present at the meetings. The recommendations of the Compensation Committee for named executive officerNamed Executive Officer compensation for fiscal 20112012 were made to the Board of Directors, which subsequently adopted the Compensation Committee’s recommendations without modifications. The Chief Executive Officer does not participate in deliberations concerning, or vote on, the compensation arrangements for himself. Additional information regarding the Compensation Committee’s processes and procedures for establishing and overseeing executive compensation is disclosed under the heading “Executive Compensation — Elements of Compensation.”14PROPOSAL TO AMEND THE ARTICLES OF INCORPORATIONRELATING TO GAMING AUTHORITY REQUIREMENTSOF SHAREHOLDERS AND THE COMPANY’S RIGHTTO REDEEM THE SHARES OF DISQUALIFIED HOLDERSBackgroundThis summaryqualifiednon-binding, the Board of Directors and the Compensation Committee will review and consider the voting results when making future decisions regarding our executive compensation programs.its entiretyachieving our compensation objectives.textadvisory vote on executive compensation discussed in Proposal Two, Section 14A of the proposed amendmentSecurities Exchange Act requires that, at least once every six years, we present our shareholders the opportunity to vote, on an advisory basis, on the frequency with which we should conduct future advisory votes on executive compensation. By voting on this proposal, you have an opportunity to vote on whether you would prefer that we conduct future advisory votes on executive compensation once every year, once every two years or once every three years. Shareholders may, if they wish, abstain from casting a vote on this proposal.Article 8Directors has determined that an annual advisory vote on executive compensation will allow our shareholders to provide timely and direct input on our executive compensation philosophy, policies and practices as disclosed in the proxy statement each year. The Board of Directors believes that an annual vote is therefore consistent with the Company’s efforts to engage in an ongoing dialogue with our shareholders on executive compensation and corporate governance matters. The Company recognizes that the shareholders may have different views on this issue, and therefore we look forward to hearing from our shareholders as to their preferences on the frequency of an advisory vote on executive compensation.Appendix A, which you are urged to read in its entirety. Capitalized terms used hereinthe proxy statement should be every year, every two years or every three years.defined herein are as defined in the proposed amendment.Article 8 of the Company’s current Articles of Incorporation requires any Beneficial Owner of five percent (5%)binding on us or more of the Company’s capital stock to provide information and respond to requests from a Gaming Authority and to consent to any required background investigations. Article 8 further provides the Company the right to redeem the shares of a Disqualified Holder. The redemption price in the existing provisions is determined by reference to the Closing Price of the Company’s shares as traded in the public market over the last 45 trading days or, if they aren’t traded, by the Board of Directors in good faith.A Disqualified Holder is any Beneficial Owner who, in the judgment ofway. However, the Board of Directors and the Compensation Committee will take into account the outcome of the vote when considering the frequency of future advisory votes on executive compensation. The Board of Directors may either jeopardize the Company’s contracts to manage gaming operations or resultdecide that it is in the failure to obtain or the loss or non-reinstatementbest interests of a license from a governmental agency held by the Company relating to the conduct of its business.The Company operates in the highly regulated gaming industry which is subject to information requestsour shareholders and background investigations. Further, a Gaming Authority may refuse to license the Company for gaming in the event that they deem any of the Beneficial Owners (or officers or directors) to be unsuitable or if such individuals refuse to provide information and submit to background investigations. As a result, it is important for the Company to havehold an advisory vote on executive compensation more or less frequently than the ability to remove such individuals who could jeopardizefrequency receiving the Company’s ability to conduct its business.As the regulatory environment has evolved in the gaming industry, gaming authorities have sometimes begun to require information and background investigation of Beneficial Owners who own less than five percent (5%) of the Company’s capital stock. As a result, the existing provisions are inadequate in that they fail to require all Beneficial Owners to provide information and submit to a background investigation if requestedmost votes cast by a Gaming Authority. Furthermore, given the volatility in public equity markets and limited trading volume that can exist with respect to the Company’s shares, the current provisions for determining the price at which shares of capital stock of a Disqualified Holder can be redeemed by the Company may not accurately reflect their value or provide the Company appropriate leverage to enforce compliance with regulatory requirements imposed by a Gaming Authority.ProposalThe proposed amendment to the Company’s Articles of Incorporation would alter the provisions of Article 8 in the following ways:Requiring all Beneficial Owners (not just those owning five percent (5%)) to agree to submit information requested by, respond to inquiries of, and consent to the performance of background investigations by a Gaming Authority.Changing the price at which the Company has the right to redeem shares of a Disqualified Holder from the average Closing Price over the 45 most recent trading days to the price, if any, required by a Gaming Authority or, if there is no such required price, as determined by the Company’s Board of Directors in its sole discretion.15Requiring a Disqualified Holder to indemnify the Company for damages occurring as a result of the Disqualified Holder’s ownership or failure to divest.Broadening the definition of Gaming Authority to include all domestic, foreign, federal, state, local or tribal regulatory or licensing body regulating any form of gaming that has jurisdiction over the Company.The effect of the proposed amendment will be to subject Beneficial Owners of the Company’s capital stock to requirements relating to providing information and submitting to background investigations, which is not currently a requirement of Beneficial Owners who hold less than five percent (5%) of the Company’s capital stock. Further, the price at which shares of a Disqualified Holder may be redeemed is no longer fixed to the Closing Price of the Company’s shares and, instead, will be as determined by the Board of Directors. The proposed amendment will also create exposure for losses incurred by the Company as a result of the ownership or failure to divest by a Disqualified Holder.As a result of the proposed amendment, the Board of Directors will have additional means to require compliance with applicable licensure obligations and/or redeem the shares of a Disqualified Holder whose ownership may otherwise jeopardize the Company’s ability to conduct its business. The indemnity obligations should provide further protection for the Company in the event that the ownership or failure to divest of the Company’s stock causes the Company harm.The following resolution is submitted for shareholder approval:RESOLVED, that the Lakes Entertainment, Inc. shareholders approve the amendment to Article 8 of our Articles of Incorporation as reflected in Appendix A to the Company’s proxy statement of April 20, 2012.16Three)20122013 fiscal year. Although it is not required to do so, the Audit Committee and the full Board of Directors wishes to submit the appointment of PBTK for shareholder ratification at the Annual Meeting. Representatives of PBTK are expected to be present at the Annual Meeting to answer your questions and to make a statement if they desire to do so.20112012 and fiscal 2010.2011. Fees for 2011 Fees for 2010 $ 205,655 $ 214,328 — — — — — — $ 205,655 $ 214,328 Fees for 2012 Fees for 2011 $ 210,922 $ 205,655 — — — — — — $ 210,922 $ 205,655 (1) Audit Feesfees consisted principally of quarterly reviews and annual audits of the Company’s consolidated financial statements. This amount also includes the issuance of consents and review of documents filed with the SEC.20112012 and, after consideration, has determined that the receipt of these fees by PBTK is compatible with the provision of independent audit services. The Audit Committee discussed these services and fees with PBTK and our management to determine that they are permitted under the rules and regulations concerning auditor independence promulgated by the SEC, including those designed to implement the Sarbanes-Oxley Act of 2002, as well as by the American Institute of Certified Public Accountants.17(other (other than with respect to de minimus exceptions permitted by the Sarbanes-Oxley Act of 2002), and not to engage the independent registered public accounting firm to provide any non-audit services prohibited by law or regulation. For administrative convenience, the Audit Committee may delegate pre-approval authority to Audit Committee members who are also independent members of the Board of Directors, but any decision by such a member on pre-approval must be reported to the full Audit Committee at its next regularly scheduled meeting.5, 2012,10, 2013, the Record Date, there were 26,440,936 shares of our common stock issued and outstanding, which is the only class of capital stock entitled to vote at the Annual Meeting. Each share of our common stock is entitled to one vote on all matters put to a vote of shareholders.named executive officer,Named Executive Officer, and (iv) all directors and executive officers as a group, in each case based upon beneficial ownership reporting of our common stock as of such date. Except as otherwise indicated, the information is given as of the Record Date, the mailing address of each shareholder is 130 Cheshire Lane, Minnetonka, Minnesota 55305, and each shareholder has sole voting and investment power with respect to the shares beneficially owned. Shares of Lakes
Common Stock
Beneficially Owned Percentage of Common
Stock Outstanding(9) 4,706,414 17.8 % 309,179 1.2 15,738 * 47,020 * 2,308,960 8.7 16,306 * 1,704,368 6.4 7,403,617 28.0 Name 4,736,814 17.7 % 339,579 1.3 21,108 * 49,661 * 2,543,451 9.6 21,960 * 7,712,573 28.5 * Less than one percent. (1) Includes 422,806 shares held by Berman Consulting Corporation, a corporation wholly owned by Mr. Berman, 323,000 shares owned by Mr. Berman through a Berman Consulting Corporation profit sharing plan, 3,661,666 shares owned by Lyle A. Berman Revocable Trust and options to purchase 298,942329,342 shares.(2) Includes options to purchase 181,537211,937 shares and 10,000 shares owned by Mr. Cope’s spouse.(3) Includes options to purchase 10,73816,108 shares.(4) Includes options to purchase 42,02044,661 shares.(5) Includes an aggregate of 2,278,5412,510,391 shares held by four irrevocable trusts for the benefit of Lyle Berman’s children with respect to which Mr. Sell has shared voting and dispositive powers as a co-trustee. Mr. Sell has disclaimed beneficial ownership of such shares. Also includes options to purchase 17,02119,662 shares.(6) Includes options to purchase 11,30616,960 shares.(7) Based solely upon Schedule 13G dated December 31, 2011 on file with the SEC. Dimensional Fund Advisors LP has the sole power to vote 1,665,849 of these shares.18(8)Includes shares held by corporations controlled by such officers and directors and shares held by trusts of which such officers and directors are trustees. Also includes options to purchase 561,564638,670 shares.(9)(8)Shares of our common stock not outstanding but deemed beneficially owned because the respective person or group has the right to acquire them as of the Record Date, or within 60 days of such date, are treated as outstanding for purposes of calculating the percentage of common stock outstanding for such person or group. Family Partnership Interest in Contract Obligation Third PartyIn conjunction with the opening of the Four Winds Casino Resort in 2007, we incurred an obligation to pay an aggregate of approximately $11 million to an unrelated third party during the term of our management contract with the Pokagon Band of Potawatomi Indians. During 2006, the Lyle Berman Family Partnership, referred to as thepartnership, purchased a portion of the unrelated third party receivable and received approximately $0.3 million per year of this obligation during the five-year term of the management contract for the Four Winds Casino Resort. The partnership received a final payment of $0.4 million during the second quarter of 2011 which represented the remaining obligation. Lyle Berman, our Chairman and Chief Executive Officer, doesa $250,000 secured note from an unrelated third party company in exchange for a cash payment of $150,000 from Mr. Berman. The secured note was in default and related to a fiscal 2012 potential business development opportunity that the Company decided not have an ownership or other beneficial interest in the partnership. Neil I. Sell, a member of our Board, is one of the trustees of the irrevocable trusts for the benefit of Lyle Berman’s children that are the partners in the partnership.Policy. The Audit Committee is responsible for reviewing and approving (with the concurrence of a majority of the disinterested members of the Board of Directors) any related party and affiliated party transactions as provided in the Amended and Restated Audit Committee Charter adopted by the Board of Directors of the Company on April 11, 2010.2011. In addition, the rules of The Nasdaq Stock Market provide that all related party transactions must be reviewed for conflicts of interest by the Audit Committee. In accordance with policies adopted by the Audit Committee, the following transactions must be presented to the Audit Committee for its review and approval:Procedure.Procedure. In addition to the Company’s Board of Directors complying with the requirements of Minnesota Statutes, Section 302A.255 with respect to any proposed transaction with a potential director’s conflict of interest, all proposed transactions covered by the policy must be approved in advance by a majority of the members of the Audit Committee, along with the concurrence of a majority of the disinterested directors of the Board of Directors. If a proposed transaction covered by the policy involves a member of the Audit Committee, such member may not participate in the Audit Committee’s deliberations concerning, or vote on, such proposed transaction.192011.20132014 annual meeting of shareholders pursuant to Rule 14a-8 under the Exchange Act, we must receive the shareholder proposal on or before December 17, 2012.1, 20137, 2014 (90 days before May 30, 2013,June 5, 2014, the anniversary of our 20122013 Annual Meeting) or, if the 20132014 Annual Meeting date is more than 30 days before or after May 30, 2013,June 5, 2014, advance notice of the proposal must be received not less than 90 days before such annual meeting or, if later, within 10 days after the first public announcement of the date of the 20132014 Annual Meeting. Any shareholder proposal notice must comply with the content and other requirements for such notices specified in our bylaws. In addition, we may exercise our discretion in voting for any proposal not submitted in accordance with our advance notice bylaws that is presented at the shareholders meeting. All written proposals should be submitted to Timothy J. Cope, President, Chief Financial Officer and Treasurer, 130 Cheshire Lane, Minnetonka, Minnesota 55305.2021By Order of the Board of Directors LAKES ENTERTAINMENT, INC.
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APPENDIX A
ARTICLE 8
OBLIGATIONS OF CERTAIN BENEFICIAL
OWNERS; RIGHTS OF REDEMPTION
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ANNUAL MEETING OF SHAREHOLDERS |
Lakes Entertainment, Inc. Rocky Gap Casino Resort 16701 Lakeview Rd. NE Flintstone, Maryland |
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“Affiliate” and “Associate” shall have the respective meanings ascribed to such terms in Rule 12b-2 under the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the “Act”). The term “registrant” as used in said Rule 12b-2 shall mean the Corporation.
“Beneficial Owner” shall mean any person who, singly or together with any of such person’s Affiliates or Associates, directly or indirectly, has “beneficial ownership” of Capital Stock (as determined pursuant to Rule 13d-3 of the Act).
“Capital Stock” shall mean any common stock, preferred stock, special stock, or any other class or series of stock of the Corporation.
“Disqualified Holder” shall mean anybeneficialBeneficial Owner of shares of Capital Stock of the Corporation or any of its Subsidiaries, whose holding of shares of Capital Stock may result or, when taken together with the holding of shares of Capital Stock by any other beneficial Holder, may result, in the judgment of the Board of Directors, in (i) the disapproval, modification, or non-renewal of any contract under which the Corporation or any of its Subsidiaries has sole or shared authority to manage any gaming operations, or (ii) the failure to obtain or the loss or non-reinstatement of any license or franchise from any governmental agency held by the Corporation or any Subsidiary to conduct any portion of the business of the Corporation or any Subsidiary, which license or franchise is conditioned upon some or all of the holders of Capital Stock meeting certain criteria.
“Fair Market Value” of a share of Capital Stock shall mean the average Closing Price for such a share for each of the 45 most recent days during which shares of stock of such class or series shall have been traded preceding the day on which notice of redemption shall have been given pursuant to Paragraph (4) of section B or Article 8; provided, however, that if shares of stock of such class or series are not traded on any securities exchange or in the over-the-counter market,“Fair Market Value” shall be determined by the Board of Directors in good faith; and provided, further, however, that“Fair Market Value” as to any stockholder who purchases any stock subject to redemption within 120 days prior to a Redemption Date need not (unless otherwise determined by the Board of Directors) exceed the purchase price paid for such shares.“Closing Price” on any day means the reported closing sales price or, in case no such sale takes place, the average of the reported closing bid and asked price on the composite tape for the New York Stock Exchange-listed stocks, or, if stock of the class or series in question is not quoted on such composite tape on the New York StockExchange, or, if such stock is not listed on such exchange, on the principal United States Securities Exchange registered under the Act on which such stock is listed, or, if such stock is not listed on any such exchange, the highest closing sales price or bid quotation for such stock on the National Association of Securities Dealers, Inc., Automated Quotation System (including the National Market Systems) or any system then in use, or, if no such prices or quotations are available, the fair market value on the day in question as determined by the Board of Directors in good faith.Gaming Authority” shall mean any domestic, foreign, federal, state, local or tribal regulatory or licensingbodies regulating any form of gaming that has jurisdiction over the Corporation or its Subsidiaries.
“Gaming Authorities” shall mean the National Indian Gaming Commission, the Mississippi Gaming Commission organized pursuant to the Mississippi Gaming Control Act and any successors thereto, or any other tribal or governmentalauthority regulating any form of gaming that has jurisdiction over the Corporation or its Subsidiaries.
“Person” shall mean any natural person, corporation, firm, partnership, association, government, governmental agency, or any other entity, whether acting in an individual, fiduciary, or any other capacity.
“Redemption Date” shall mean the date fixed by the Board of Directors for the redemption of any shares of stock of the Corporation pursuant to section B of this Article 8.
“Redemption Securities” shall mean any debt or equity securities of the Corporation, any Subsidiary or any other corporation, or any combination hereof, having such terms and conditions as shall be approved
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by the Board of Directors and which, together with any cash to be paid as part of the redemption price,in the opinion of any nationally recognized investment banking firm selected by the Board of Directors (which may be a firm which provides other investment banking, brokerage or other services to the Corporation),has a value, at the time notice of redemption is given pursuant to Paragraph (4), section B of Article 8, at least equal to theFair Market Value of the shares to be redeemed pursuant to section B of Article 8 (assuming, in the case of Redemption Securities to be publicly traded, such Redemption Securitieswere fully distributed and subject only to normal trading activity).value determined pursuant to Paragraph (1), Section B of Article 8.
“Subsidiary” shall mean any company of which a majority of any class of equity security is beneficially owned by the Corporation.
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4 and “ONE YEAR” for Item 3.
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TO VOTE BY MAIL AS THE BOARD OF DIRECTORS RECOMMENDS ON ALL ITEMS BELOW,
SIMPLY SIGN, DATE, AND RETURN THIS PROXY CARD.
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The Board of Directors unanimously recommends that you vote “FOR” the election of all nominees for the Board of Directors named in this proxy statement, “FOR” the amendment of the Articles of Incorporation, and “FOR” the ratification of the appointment of PBTK as our independent registered public accounting firm for the 2012 fiscal year.
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THIS PROXY, WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL.