Jacobs Entertainment 10-K 2011 FY Annual report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (“Act”)

For the fiscal year ended December 31, 2011

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 333-88242

JACOBS ENTERTAINMENT, INC.

(Exact name of Registrant as specified in its charter)

Delaware	34-1959351
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

17301 West Colfax, Suite 250,

Golden, Colorado 80401

(Address of principal executive offices) (Zip code)

(303) 215-5200

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

None.

Securities registered pursuant to Section 12(g) of the Act:

None.

Indicate by check mark if the registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act.

Yes  ¨    No  x

Indicate by check mark if the issuer is not required to file reports pursuant to Section 13 or 15(d) of the Act.    Yes  x    No  ¨

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	x  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ¨    No  x

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter: No market exists for the common stock of the registrant; as of March 30, 2012 all of its outstanding shares of common stock are held by its parent corporation.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date:

Class	Outstanding at March 30, 2012
Class A Common Stock, $0.01 par value	1,320 shares
Class B Common Stock, $0.01 par value	180 shares

DOCUMENTS INCORPORATED BY REFERENCE:

See the exhibit index which appears on page E-1 which is incorporated by reference into Item 15 of Part IV hereof.

JACOBS ENTERTAINMENT, INC.

2011 ANNUAL REPORT ON FORM 10-K

Table of Contents

Item	Description	Page
Item 1.	Business		1
Item 1A.	Risk Factors		24
Item 1B.	Unresolved Staff Comments		34
Item 2.	Properties		34
Item 3.	Legal Proceedings		34
Item 4.	Mine Safety Disclosures		34
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		34
Item 6.	Selected Financial Data		35
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		36
Item 7A.	Quantitative and Qualitative Disclosure about Market Risk		54
Item 8.	Financial Statements and Supplementary Data		55
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		55
Item 9A.	Controls and Procedures		55
Item 9B.	Other Information		56
Item 10.	Directors, Executive Officers and Corporate Governance		56
Item 11.	Executive Compensation		58
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		62
Item 13.	Certain Relationships and Related Transactions, and Director Independence		62
Item 14.	Principal Accounting Fees and Services		65
Item 15.	Exhibits, Financial Statement Schedules		65

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

We make statements in this report that relate to matters that are not historical facts that we refer to as “forward-looking statements” regarding, among other things, our business strategy, our prospects and our financial results and financial position. These statements may be identified by the use of forward-looking terminology such as “believes,” “estimates,” “expects,” “intends,” “may,” “should” or “anticipates” or the negative or other variation of these or similar words, or by discussion of strategy or risks and uncertainties. Forward-looking statements in this report include, among other things, statements concerning:

• projections of future results of operations or financial condition;

• expectations for our casino, video poker truck stop and horse racing properties; and

• expectations of the availability of capital resources.

Any forward-looking statement made by us necessarily is based upon a number of estimates and assumptions that, while considered reasonable by us, are inherently subject to significant business, economic, regulatory and competitive uncertainties and contingencies, many of which are beyond our control, and are subject to change. Actual results of our operations may vary materially from any forward-looking statement made by us or on our behalf. Forward-looking statements should not be regarded as representations by us or any other person that the forward-looking statements will be achieved. Undue reliance should not be placed on any forward-looking statements. The contingencies and uncertainties to which any forward-looking statement contained herein is subject to include, but are not limited to, the following:

• Our substantial indebtedness could adversely affect our financial results and prevent us from fulfilling our debt obligations.

• We will require a significant amount of cash to service our indebtedness. Our ability to generate cash depends on many factors beyond our control.

• Our indebtedness imposes restrictive covenants on us and our ability to refinance our debt in the foreseeable future may be problematic given the continuing turmoil in the credit markets.

• We may experience a loss of market share due to intense competition in all venues in which we operate and the possible introduction of slot machines at Colorado racetracks.

• We face extensive regulation from gaming and other government authorities and the possibility that legislative changes may prohibit or limit our gaming activities.

• Changes to applicable tax laws could have a material adverse effect on our operations and financial condition.

• Our operations could be adversely affected due to the potential adoption of anti-smoking regulations in Nevada and Louisiana.

• We depend upon the services of our key employees and certain members of our management.

• The single member of our board of directors and his family trusts indirectly own or control the issued and outstanding shares of Jacobs Entertainment, Inc. and could have interests that conflict with our creditors and others.

• We rely on the maintenance of agreements with horsemen at our horse racing facility in Virginia.

• Our business relies heavily on certain markets and a further economic downturn in these markets could have a material adverse effect on our future results of operations.

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• Our intention to expand our gaming activities into foreign markets may cause us to face new and significant regulatory, financial and political risks.

• The expansion of our activities to include acquisition and operation of a broad, diversified portfolio of residential and commercial properties may increase our financial and operational risks over those associated with our traditional gaming operations.

• Seasonality and weather conditions have and may in the future adversely affect our results of operations.

All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements included in this report. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this report might not occur.

NON-GAAP FINANCIAL MEASURES

Consolidated and property level EBITDA and the related ratios presented in this report are supplemental measures of our performance that are not required by, or presented in accordance with, generally accepted accounting principles. EBITDA is not a measurement of our financial performance under generally accepted accounting principles and should not be considered as an alternative to net income, operating income or any other performance measures derived in accordance with generally accepted accounting principles, or as an alternative to cash flow from operating activities as a measure of our liquidity.

EBITDA consists of net income or loss plus depreciation and amortization, interest, net of capitalized interest, and income taxes. EBITDA is presented because it is used by our management as a supplemental performance measure to analyze the performance of our business and because it is frequently used by securities analysts, investors and others in their evaluation of companies in our industry, substantially all of whom present EBITDA when reporting their results.

Our bank credit agreement and our senior note indenture use EBITDA, subject to certain adjustments, to measure our compliance with debt covenants. We also use EBITDA to evaluate and price potential acquisition candidates. We believe EBITDA facilitates operating performance comparisons from period to period and company to company by removing potential differences caused by variations in capital structures (affecting relative interest expense), tax positions (such as the impact on periods or type of companies of changes in effective tax rates or net operating losses) and the age and book depreciation of facilities and equipment (affecting relative depreciation expense).

EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under generally accepted accounting principles. Some of these limitations are:

• EBITDA does not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments;

• EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

• EBITDA does not reflect the cash requirements necessary to service interest or principal payments, on our debts;

• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements; and

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• other companies in our industry may calculate EBITDA differently than we do, limiting its usefulness as a comparative measure.

Because of these limitations, EBITDA should not be considered as a measure of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our results under generally accepted accounting principles and using EBITDA only supplementally. See our consolidated financial statements and the notes to those statements included elsewhere in this report.

INDUSTRY AND MARKET DATA

This report includes market and industry data that we obtained from our own research, studies conducted by third party sources that we believe to be reliable and industry and general publications by third parties and, in some cases, management estimates based on industry and other knowledge. We have not independently verified any of the data from third party sources, and we make no representation as to the accuracy of such information. While we believe internal company estimates are reliable and market definitions are appropriate, they have not been verified by any independent sources. Actual results could differ from those estimates.

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PART I

Item 1.Business.

Introduction

Jacobs Entertainment, Inc. (“Jacobs Entertainment,” “JEI,” the “Company,” “us,” “our” or “we”) was formed as a Delaware corporation on April 17, 2001. We are a developer, owner and operator of gaming, pari-mutuel wagering, leisure and entertainment facilities throughout the United States, with properties located in Colorado, Nevada, Louisiana and Virginia. We develop and acquire real estate assets, including commercial and multi-family residential properties, and add value by integrating amenities concentrating on entertainment and gaming. As of March 30, 2012, we own and operate five land-based casinos, 21 video poker truck stops (six of which are leased) and a horse racing track with ten satellite wagering facilities (four of which are leased and one of which is temporarily closed). In addition, we are party to an agreement that entitles us to a portion of the gaming revenue from an additional video poker truck stop.

All of our gaming facilities target local customers and emphasize revenues from slot machine play or video gaming, or both. For the year ended December 31, 2011, our net revenues, net loss and EBITDA were approximately $379.9 million, $5.6 million and $42.0 million, respectively. See Note 13 to our consolidated financial statements for information concerning the operational performance of the segments of our business.

The following table sets forth certain information and property level EBITDA (excluding corporate overhead and other) of our properties:

			As of December 31, 2011								Year Ended December 31, 2011
Property	Location	Facility Type	Approximate Gaming Square Footage		Gaming Machines		Table Games		Hotel Rooms		Property Level EBITDA (1)
											(in thousands)
The Lodge Casino	Black Hawk, Colorado	Land-based casino		28,000		985		36		50	$	27,776
Gilpin Casino	Black Hawk, Colorado	Land-based casino		11,000		379		6		0		4,477
Gold Dust West-Reno	Reno, Nevada	Land-based casino		17,500		483		0		27		5,721
Gold Dust West-Carson City	Carson City, Nevada	Land-based casino		12,000		390		6		142		(10,737	)
Gold Dust West-Elko	Elko, Nevada	Land-based casino		13,000		349		6		0		2,480
Video Poker Truck Stops	Louisiana (22 various locations)	Video poker gaming		35,700		1,098		0		0		21,286
Colonial Downs Racetrack and satellite wagering facilities	Virginia (10 various locations)	Horse racing and pari-mutuel wagering		N/A		N/A		N/A		N/A		875
Total				117,200		3,684		54		219	$	51,878

(1) Property Level EBITDA excludes corporate overhead and other of $9.8 million.

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The following is a reconciliation of our property level EBITDA to our net loss (in thousands):

	Year Ended December 31,  2011
Total Property Level EBITDA	$	51,878
Corporate overhead and other		(9,833	)
Total EBITDA		42,045
Depreciation and amortization		(21,498	)
Interest expense, net		(26,142	)
Net loss	$	(5,595	)

Our Business Strategy

Our business strategy is to develop, acquire and operate a broad, geographically diversified portfolio of residential, commercial, gaming, pari-mutuel wagering, leisure and entertainment properties that seek to provide our customers with an enjoyable entertainment experience, and in turn, to generate significant customer loyalty and repeat business. We believe that there are opportunities for growth and operational efficiencies in the markets in which we operate as well as opportunities to expand into new markets.

Generate Repeat Business by Catering to Local Gaming Patrons. We focus on attracting and fostering repeat business from local gaming patrons at all of our properties. Our strategy for establishing a strong presence with local residents or patrons is to provide a user-friendly gaming environment featuring convenient locations, high quality food at affordable prices and promotional incentives that reward frequent play. In order to maximize exposure to the local and surrounding communities in the most cost-effective manner, we utilize computerized slot data tracking systems that allow us to track individual play and payouts and develop mailing lists for special events, contest play and promotions.

Pursue Opportunistic Development and Acquisitions Opportunities. We believe our experience and management team uniquely positions us to capitalize on expansion into underdeveloped domestic and perhaps international markets or to pursue opportunistic acquisitions of strategic or distressed assets. We believe our operating expertise and network synergies enable us to create value above and beyond what other operators can provide. Our geographically broad-based experience gives us a superior understanding of a property’s revenue potential and enables us to be the optimal partner or purchaser for select assets. Further, we believe that we can develop and improve acquired properties by including a mix of entertainment and leisure amenities that complement and highlight the gaming facility.

Expand Louisiana Video Poker Truck Stop Business. Our strategy of expanding our presence in the Louisiana video poker truck stop market is driven by: (i) the consistent revenue each facility generates, (ii) the high return on investment associated with operating the video poker truck stops, and (iii) the relatively low capital expenditures necessary to maintain the facilities.

Strong Emphasis on Slot and Video Gaming Revenues. All of our gaming facilities emphasize slot machine or video gaming play, or both. We believe slot machine play to be the fastest growing, most consistently profitable and lowest risk segment of the gaming entertainment business. We offer a wide variety of games to attract customers and encourage them to play for longer periods of time, thereby promoting the stability of our gaming revenue. We intend to maximize slot and video gaming revenue by continuing to invest in state-of-the art equipment and systems and replacing older models with the most current product offerings in appropriate markets.

Maximize Our Core Business Profitability Upon a Rebound in Net Revenues. We operate businesses that have inherently low variable costs such that positive change in revenues should drive relatively large improvements in EBITDA. In addition to the inherently high variable margin nature of our businesses, we have and will continue to dedicate significant efforts towards positioning our business and cost structure to ensure we generate the

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maximum incremental profitability when core industry revenue growth returns. When revenue trends improve, we anticipate that our margins will improve compared to our previous periods of similar revenue levels due to the combination of our reduced cost structure and generally high margins. However, this trend may not continue and our margins may not improve at all.

Capitalize on the Growth of EZ Horseplay, Our Proprietary Internet Account Wagering Platform, at Colonial Downs. Advanced deposit account wagering, primarily over the internet, is the fastest growing segment of the pari-mutuel wagering industry. We have developed and operate our own account wagering platform called EZ Horseplay. In addition to capitalizing on our unique dirt and turf track facilities for live racing, hosting marquee racing events, and expanding our off-track wagering facility network under appropriate circumstances, we intend to expand EZ Horseplay wagering handle with both traditional customers and customers in non-traditional venues using technology specifically developed for EZ Horseplay. We may license our EZ Horseplay technology platform to operators in other jurisdictions as well.

Our Competitive Strengths

Broad Geographic and Asset Diversification. We believe that because of our geographic and asset diversification, we are less dependent on results at a specific property or in a specific market to generate our cash flow. This geographic diversity helps mitigate our susceptibility to regional economic downturns or weather conditions.

Significant Barriers to Entry. There are significant regulatory and other barriers to entry in each of the markets in which we operate. The gaming industry in each of our markets is governed by a state gaming commission. In order to enter the gaming industry in any of our markets, a potential new entrant must work through a costly and lengthy regulatory process, which could last anywhere from 12 to 18 months depending on jurisdiction and type of gaming. Beyond the regulatory barriers, the need for significant investments of time and capital also restricts potential new entrants. The discussion that follows provides a sample of the specific barriers to entry in each of our markets.

In the Black Hawk, Colorado market, barriers to entry include: (i) the scarcity of land available for development within the approved gaming district, which is defined in the state constitution, the Gaming Commission’s regulations and the City of Black Hawk’s ordinances, and (ii) the high cost of acquiring land and constructing new gaming facilities.

There are stringent licensing requirements and substantial licensing and compliance expenses attendant to commencing and conducting gaming operations in Nevada.

In Louisiana, effective June 1, 2010, no new licenses for video poker truck stops will be granted for locations within one mile of any residential property and certain other structures. This legislation has significantly reduced the number of new video poker truck stop licenses being issued. Furthermore, additional barriers to entry include restrictions that require video poker truck stops to meet specified minimum levels of diesel and total fuel sales, have a specified minimum site acreage and conduct restaurant operations not fewer than 12 hours per day and to keep a convenience store open 24 hours per day. These restrictions also prohibit the operation of more than 50 video poker machines at any location and require video poker truck stops to be located only in those parishes that voted to continue video gaming during a one-time statewide referendum in 1996. Additional barriers to entry are disclosed below in “Gaming Regulation and Licensing—Louisiana.”

In Virginia, in all but the county in which we operate and one additional county, any potential operator of any competing horse racing track would need to secure passage of a referendum in the locale in which the track is to be operated. In addition, an unlimited racetrack owner’s and operator’s license is required in order to have off-track wagering facilities. Off-track wagering facilities can be opened only in the current jurisdictions in which we operate without passage of additional referendums. The number of off-track wagering facilities is limited by statute to a statewide total of ten and we currently operate ten (one of which is temporarily closed). The high cost of building a new racetrack in Virginia presents an additional barrier in that state.

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Strong, Experienced Management Team.Our senior management team is an experienced group of industry veterans. Jeffrey P. Jacobs, our Chairman and Chief Executive Officer, has been Black Hawk Gaming’s Chief Executive Officer since November 1996 and the Chief Executive Officer of Colonial Holdings, Inc. (“Colonial”), our wholly owned subsidiary, since March 1997. Stephen R. Roark, our President, has been Black Hawk Gaming’s President since September 1995 and was its Chief Financial Officer from 1993 to 2006. Ian M. Stewart, our President of Pari-Mutuel Wagering Operations, has been President of Colonial since November 1998 and its Chief Financial Officer since June 1997. Michael T. Shubic, our Chief Operating Officer, has over 35 years of experience in the gaming industry. Brett A. Kramer, our Chief Financial Officer, has over 15 years experience with us in various financial capacities. Stanley Politano, our Executive Vice President, also has over 15 years of experience in the gaming industry. The five general managers of our casinos have numerous years of casino management experience and report to Mr. Shubic. The Vice President of Louisiana Operations oversees our video poker truck stop operations, has over 15 years of experience in video poker truck stops and also reports directly to Mr. Shubic. We believe the expertise and experience of our management team enables us to enhance the operation of our existing properties and any properties we may acquire in the future.

Our Properties and Operations

Colorado

The Lodge Casino—Black Hawk, Colorado. The Lodge Casino in Black Hawk, Colorado, which commenced operations in June 1998, is one of 18 casinos located in the gaming district of Black Hawk. The Lodge serves the greater Denver metropolitan area, which is located 40 miles east of Black Hawk and has a population of approximately 2.4 million, as well as customers from nearby communities such as Boulder and Fort Collins, Colorado and Cheyenne, Wyoming. As of December 31, 2011, the Black Hawk market had approximately 8,400 slot machines and approximately 200 table games generating $551 million in revenues for the year then ended. The Lodge is one of the largest gaming facilities in the market.

The Lodge is located on a 2.5 acre site that abuts State Highway 119, with approximately 28,000 square feet of gaming space on three floors containing 985 slot machines and 36 table games (including 21 poker tables, 11 black jack tables, 2 roulette tables and 2 craps tables), 50 hotel rooms, four restaurants, three bars and on-site parking for approximately 600 vehicles. Our property includes The White Buffalo Grille, Seasons Buffet, Jake’s Deli and Java and Crème’s.

We utilize computerized slot data tracking systems that allow us to track individual play and payouts and develop mailing lists for special events, contest play and promotions. The Lodge participates in busing programs with unaffiliated transportation companies who transport patrons to Black Hawk/Central City from the market areas described above. Black Hawk Gaming has obtained an exemption as a common carrier from the Colorado Public Utilities Commission and may elect to operate its own busing program in the future.

During 2008, we provided financial support for a proposed constitutional amendment (“Colorado Amendment 50”) to increase the types of table games, wagering limits and hours of operation at Colorado casinos. For the year ended December 31, 2008, we funded a total of $1.4 million in support of this amendment. Colorado residents approved the proposed constitutional amendment on November 4, 2008. The amendment was subsequently voted upon and approved by the residents of each of the three gaming towns in Colorado (Black Hawk, Central City and Cripple Creek). The new gaming regulation, which became effective on July 2, 2009 at Colorado casinos, allowed for the introduction of craps and roulette, increased the maximum wager limit to one hundred dollars, allows 24-hour gaming operations, and set a maximum gaming tax rate of 20%. For further discussion, see Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

The Gilpin Casino—Black Hawk, Colorado. The Gilpin Casino, which commenced operations in October 1992, is located on a one-acre site in the central Black Hawk gaming district. We were one of the first casinos opened in Colorado following the legalization of casino gaming in 1991. We offer 379 slot machines and 6 table games, including 4 black jack tables, 1 roulette table and 1 craps table. On March 15, 2010, we closed the Gilpin poker room. The Gilpin has one restaurant, Lucille’s, and two bars. The Gilpin utilizes busing and other promotional programs, similar to those of The Lodge. We have available to our customers approximately 200 surface parking spaces in the heart of historic Black Hawk.

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Nevada

Gold Dust West-Reno—Reno, Nevada. Gold Dust West-Reno, which we acquired in 2001, is located on 4.6 owned and leased acres in Reno’s central downtown gaming district and has been operating since 1978. Gold Dust West-Reno caters to residents of Reno and surrounding areas and has approximately 17,500 square feet of gaming space, which offers 483 slot machines. Gold Dust West-Reno also features The Grille Restaurant and has parking for 365 vehicles. The property currently offers 27 hotel rooms.

Gold Dust West-Carson City—Carson City, Nevada. Gold Dust West-Carson City, which commenced operations in 1995 prior to our acquisition in 2006, is a 146,000 square foot facility located on approximately 18 acres of land we lease from an unaffiliated party pursuant to a triple net ground lease. Gold Dust West-Carson City offers 390 slot machines and six table games, two restaurants, a snack bar and three bars. It has a slot club that offers various promotional packages. Gold Dust West-Carson City offers 142 hotel rooms and a 32 lane bowling center. It also owns and operates a 47 space RV park as part of the resort. There are approximately 875 parking spaces for Gold Dust West-Carson City’s casino patrons and hotel guests. On April 1, 2010, we opened a new Mexican restaurant, Olé Olé.

Gold Dust West-Elko—Elko, Nevada. On November 14, 2005, we entered into a triple net lease with an unaffiliated party for the lease of a 37,000 square foot building and approximately six acres of land in Elko, Nevada. Effective November 1, 2010, we entered into the first of three possible five-year renewals of our lease. Annual rent expense is approximately $500,000. We have the right to buy the land and the building any time through October 2015 for $5.4 million.

We renovated and upgraded the building and installed slot machines, table games and appropriate food and beverage offerings. We commenced renovation during the third quarter of 2006 and opened the casino on March 5, 2007. Gold Dust West-Elko has approximately 13,000 square feet of gaming space, and offers 349 slot machines and six table games. Gold Dust West-Elko also has two restaurants, one bar and has parking for 400 vehicles.

Louisiana

Louisiana Video Poker Truck Stop Properties.Our Louisiana operations consist of 21 video poker truck stops located in Louisiana (of which six are leased). We are also party to an agreement that entitles us to a portion of the gaming revenues from an additional video poker truck stop (Cash’s Truck Plaza and Casino in Lobdell). Each video poker truck stop features a 24 hour per day convenience store, fueling operations, a restaurant operating not fewer than 12 hours per day, and up to 50 video poker devices in the casino depending on the level of fuel sales and available space. At December 31, 2011, our video poker truck stops had a combined total of 1,098 video gaming devices.

The Louisiana video poker truck stops’ revenues are comprised of: (i) revenue from video poker gaming machines; (ii) sales of gasoline and diesel fuel; (iii) sales of groceries, trucker supplies and various items through their convenience stores; (iv) sales of food and beverages in their restaurants and bars; and (v) miscellaneous commissions on ATMs, pay phones and lottery sales.

The Louisiana video poker industry consists of video poker in 31 of Louisiana’s 64 parishes. The industry is highly regulated and video poker machines can only be placed in qualifying bars, restaurants, hotels, satellite wagering facilities and video poker truck stops. In order to qualify for video poker, a video poker truck stop must offer diesel fuel, gasoline, a convenience store, a restaurant and a place for truck drivers to shower and sleep. Our video poker machines are located in a separate gaming room that is designed to provide a pleasant casino-like atmosphere. As of December 31, 2011, Louisiana had 200 licensed video poker truck stops.

The Louisiana video poker truck stop market caters primarily to local residents, whom we believe contribute to the vast majority of video poker gaming revenue. We believe that most of our video poker customers live within a five-mile radius of our properties.

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Virginia

Colonial Downs—New Kent, Virginia. Colonial Downs, which opened in 1997, is our racetrack in New Kent, Virginia, which primarily conducts pari-mutuel wagering on thoroughbred and harness racing. The outside grandstand area, located on the first floor of the track facility, has an occupancy capacity of approximately 4,000 patrons. Also located on the first floor of the track facility are simulcast television seating areas, two covered patio areas, two bars, a large concession food court, gift shop, game room and wagering locations with 68 tellers. The Jockey Club, which is in the main grandstand area located on the third floor of the track facility, includes a full-service dining area with a seating capacity of 548 patrons, two separate lounge areas, and additional wagering locations with 20 tellers. On the fourth floor is the Turf Club with seating for full service dining for 125 along with 10 luxury suites with skybox seating and a wagering location with eight tellers. In addition, there is a ballroom with seating for 250 patrons for special events. The dirt track at Colonial Downs is one and one-quarter miles in length and is one of the largest tracks in the United States. Based on our knowledge of the industry, we believe the 180-foot wide turf track is the widest turf track in the country, thereby establishing the track as one of the major turf racing facilities in the Mid-Atlantic region. In addition to our racetrack, we presently operate ten satellite wagering facilities throughout Virginia (four are leased and one more is temporarily closed). Our satellite wagering facilities are located in Alberta, Chesapeake, Hampton, Henrico, Martinsville, Weber City, Vinton, and three in Richmond.

Account Wagering and EZ Horseplay. Each year, the Virginia Racing Commission licenses advance deposit account wagering providers, including us, to accept wagers over the telephone or through the internet via the provider’s advanced deposit wagering system. For 2011 and 2012, only four providers (including us) have been licensed. Because of our position as the only racetrack in Virginia, we receive a statutory source market fee equal to 10% of all wagers placed by Virginians through these account wagering service providers. We share the source market fee equally with the recognized majority horsemen’s groups.

Since 2004, we have operated an internet account wagering platform in Virginia called EZ Horseplay. In early 2009, we developed a custom built account wagering support kiosk that allows a customer to remotely open a wagering account, fund the account with cash, take a cash withdrawal from their account and print a race track program. The first kiosks, along with a touch screen version of the EZ Horseplay internet account wagering platform, were deployed in September 2009. As of December 31, 2011, we have deployed approximately 70 kiosks in private clubs, bars and restaurants in Virginia. We intend to expand EZ Horseplay wagering handle with both traditional customers and customers in non-traditional venues using technology specifically developed for EZ Horseplay. Additionally, we may license our EZ Horseplay technology platform to operators in jurisdictions outside Virginia as well.

Our Future

Development Projects

We plan to grow our company through the strategic real estate development projects. Our strategy is to acquire real estate or existing gaming properties in strategic locations and use our development expertise to create mixed use entertainment complexes with amenities that supplement and emphasize the gaming component of the project. Furthermore, we plan to use added value development techniques to maximize the benefits of our existing properties and improve any properties we choose to acquire. For our casinos, particularly those that cater to local players, we believe building entertainment districts that includes gaming, retail and perhaps a multi-family residential component shifts traffic flow and increases population density near our property enhancing our gaming product.

We are continuously looking for opportunities, both domestically and globally to further diversify our geographic footprint and increase shareholder value. Some of the areas in which we are considering expansion include, but are not limited to:

The Gulf Coast – We have assembled a development parcel just south of I-10 in Diamondhead, Mississippi. Subject to gaming and zoning approvals, we hope to develop a casino, hotel, retail and entertainment complex with a town center concept.

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Colorado – We own or control a significant area of developable property within the gaming district in Black Hawk, Colorado. We may develop this property to possibly build a new casino, expand one of our existing casinos or add amenities like hotel rooms, entertainment venues or parking that will complement our existing casinos.

In addition, we have assets that we may develop into gaming or other leisure and entertainment venues and complementary uses. In New Kent County, Virginia we own over 600 acres surrounding our race track. This land can be used to expand our facility at Colonial Downs (especially if the Commonwealth of Virginia permits casino gambling at our facility, the only licensed racetrack in Virginia). We have also assembled a 24-acre development site in the heart of downtown Cleveland, Ohio on the west bank of the Cuyahoga River. While the long-term plan for these sites is to expand or create additional gaming facilities, we anticipate exploiting market opportunities to maximize the existing permitted highest and best use for the property we own in order to minimize carrying costs or maximize value.

Seasonality and Weather Conditions

Seasonality and weather conditions can affect our results of operations. Winter travel conditions can adversely affect patronage and revenues at our Colorado and Nevada casinos. Although casino business is not seasonal, levels of gaming activity increase significantly during weekends and holidays, especially holiday weekends. Hurricanes Katrina and Rita temporarily affected our video poker truck stop operations in late 2005, while Hurricanes Gustav and Ike temporarily affected our video poker truck stop operations in late 2008. Similar hurricanes could have a material adverse effect on our Louisiana operations in future years. Our pari-mutuel wagering revenues are higher during scheduled live racing than at other times of the year. Adverse weather conditions can cause cancellation of or curtail attendance at outdoor races, thereby reducing wagering and our revenues. Attendance and wagering at both outdoor races and satellite wagering facilities can be harmed by holidays and other competing seasonal activities.

Competition

General. We face intense competition in each of the markets in which we operate. Our existing gaming facilities compete directly with other gaming properties and activities in and near Colorado, Nevada, Louisiana and Virginia. We expect this competition to increase as new gaming operators enter our markets, existing competitors expand their operations, gaming activities expand in existing jurisdictions and gaming is legalized in new jurisdictions. Several of our competitors have significantly better name recognition and more marketing and financial resources than we do. We cannot predict with any certainty the effects of existing and future competition on our operating results.

We compete with other forms of gaming and entertainment such as bingo, pull-tab games, card parlors, sports books, pari-mutuel or telephonic betting on horse racing and dog racing, state-sponsored lotteries, video lottery terminals, and video poker terminals. We may compete with gaming from other venues including internet gaming, although its legality is presently unclear.

We also compete with gaming operators in other gaming jurisdictions such as Las Vegas, Nevada, and Atlantic City, New Jersey. Our competition includes casinos located on Native American reservations throughout the United States, which have the advantage of being exempt from certain state and federal taxes. Some Native American tribes are either establishing or are considering the establishment of gaming at additional locations. Expansion of existing gaming jurisdictions and the development of new gaming jurisdictions and casinos on Native American-owned lands would increase competition for our existing and future operations. In addition, increased competition could limit new opportunities for us or result in the saturation of certain gaming markets. See Item 1A “Risk Factors—Competition” below.

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Casino Properties. We believe the primary competitive factors in the Black Hawk, Colorado, market are location, availability and convenience of parking; number and types of slot machines and gaming tables; types and pricing of amenities, including food; name recognition; overall atmosphere; and customer service. We believe our Colorado casinos generally compete favorably based on these factors.

Our Colorado casinos are on opposite sides of Main Street in Black Hawk. Because of their proximity, our Black Hawk casinos compete for some of the same customers. Further, there were 16 other casinos operating in Black Hawk on December 31, 2011. There were approximately 8,600 total gaming devices (slot machines, poker, black jack, craps and roulette tables) in Black Hawk as of December 31, 2011.

Competition in the Black Hawk gaming market, which is the primary gaming market in Colorado, is intense. Large, well-financed companies have entered the Black Hawk and other Colorado markets through the purchase or expansion of existing facilities and others may continue to do so, all of which could materially harm our business, financial condition and results of operations. Ameristar Black Hawk (owned by Ameristar Casinos, Inc.) is directly across Highway 119 from The Lodge and operates approximately 1,550 total gaming devices with new slot product, a new parking garage and refurbished and rebranded dining venues. Ameristar completed construction of a 33 story, 536-room hotel, a convention center and other amenities and facilities in 2009. Mardi Gras Casino, Golden Gates Casino and Golden Gulch Casino — all, next to The Lodge, were acquired by Affinity Gaming, LLC in September 2011 and Riviera Black Hawk was acquired by Monarch Casino and Resort, Inc. Each of these operators can be expected to reinvest in their properties and make continuous improvements in their marketing efforts.

Central City is located adjacent to Black Hawk and provides the most direct competition to the gaming establishments in Black Hawk. There were eight casinos operating in Central City with approximately 2,300 total gaming devices as of December 31, 2011. Motorists driving from the Denver metropolitan area have the option of choosing to go either to Black Hawk or Central City without having to drive through the other town.

Our Gold Dust West Casino-Reno encounters strong competition from large hotel and casino facilities and smaller casinos similar in size to our Gold Dust West-Reno in the Reno area, which includes Sparks, Nevada. There is also competition from gaming establishments in other towns and cities in Nevada and from Native American gaming facilities located near Sacramento, California. Our Gold Dust West-Carson City and Gold Dust West-Elko, Nevada casinos face competition from several casinos in those cities and many other venues in Nevada.

Video Poker Truck Stop Operations. Our Louisiana video poker truck stop operations face competition from land-based and riverboat casinos throughout Louisiana and on the Mississippi Gulf Coast, casinos on Native American lands and other non-casino gaming opportunities within Louisiana. The Louisiana Riverboat Economic Development and Gaming Control Act limits the number of gaming casinos in Louisiana to 15 riverboat casinos statewide and one land-based casino in New Orleans. All 15 available riverboat licenses are issued, however, only 13 are currently operational. The remaining two riverboat casino licenses are held by Pinnacle Entertainment, Inc. (“Pinnacle”) and Creative Casinos, LLC (“Creative Casinos”). Pinnacle is developing a $357 million casino project in Baton Rouge tentatively scheduled to open the third quarter of 2012. In March 2012, Ameristar Casinos, Inc. entered into an agreement to acquire Creative Casinos and its license and is proposing a $500 million project in Lake Charles tentatively scheduled to open in mid-2014.

Our video poker operations also face competition from other video poker truck stops located in surrounding areas, as well as competition from Louisiana horse racing facilities, some of which have been authorized to operate video gaming machines, and restaurants and bars with video gaming machines. As of December 31, 2011, there were 200 video poker truck stops in Louisiana licensed to operate video poker devices.

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Horse Racing and Pari-Mutuel Wagering Operations. We compete with racetracks located outside Virginia (including several in Delaware, Maryland, New Jersey, New York, Pennsylvania, and West Virginia, all of which augment their purses with slot machine or other gaming revenues) and other forms of gaming, such as land-based casinos, including those in Atlantic City, and statewide lotteries in Virginia and neighboring states. The possible legalization of other forms of gaming in Virginia, such as Native American or riverboat casinos, could have an adverse effect on our performance. Although bills for the creation of riverboat casinos have failed in the Virginia legislature, proponents of riverboat gaming and other forms of gaming in Virginia may continue to seek legislative approval, in particular to offset anticipated budget deficits. Additionally, certain Native American tribes are seeking federal recognition (through legislation currently pending in the U.S. Senate) which, if successful, could result in additional gaming venues. Similarly, the expansion of other forms of gaming in neighboring states, such as table games in West Virginia and slot machines in Maryland, could have an adverse effect on our performance.

We have competed and will compete for wagering dollars and simulcast fees with live racing and races simulcast from racetracks in other states, particularly racetracks in neighboring states such as Charles Town in West Virginia, Pimlico Race Course and Laurel Park in Maryland, and Delaware Park in Delaware. We believe that our existing agreements will continue to promote coordination of thoroughbred events between Maryland and Virginia. However, if the Virginia or Maryland Racing Commissions do not approve either party’s proposed racing days, or if the Virginia-Maryland thoroughbred racing circuit is otherwise unsuccessful, our track may have to compete directly with Pimlico Race Course and Laurel Park in Maryland.

We also compete for wagering dollars with account wagering companies operating both legally and illegally in Virginia. These companies take wagers from Virginians both over the phone and the internet. We believe legislation which went into effect January 1, 2010 provides us with fair compensation for the activities of licensed providers. Unlicensed account wagering companies have lower costs than Colonial and thus are able to attract customers in Virginia with large wagering rebates.

Employees and Labor Relations

As of December 31, 2011, we had approximately 1,100 full-time and part-time employees at our facilities in Black Hawk, Colorado, and Reno, Carson City, and Elko, Nevada, 300 year-round and 400 seasonal employees at our facilities in Virginia and 400 employees at our facilities in Louisiana. Employees include cashiers, dealers, food and beverage service personnel, facilities maintenance, security, valet, accounting, marketing, and personnel services. We consider relations with our employees to be good.

None of our employees are presently represented by any union or other labor organization. See “Risk Factors” under Item 1A below.

Regulation

Gaming Regulation and Licensing—Colorado

The State of Colorado created the Colorado Division of Gaming within the Department of Revenue to license, implement, regulate and supervise the conduct of limited stakes gaming. The Division, under the supervision of the Gaming Commission, has been granted broad power to ensure compliance with Colorado law and regulations adopted thereunder (collectively, the “Colorado Regulations”). The Division may inspect, without notice, premises where gaming is being conducted; may seize, impound or remove any gaming device; may examine and copy all of a licensee’s records; may investigate the background and conduct of licensees and their employees; and may bring disciplinary actions against licensees and their employees. For cause, the Division may suspend or revoke any license. The Division may also conduct detailed background checks of persons who lend money to or invest money in a licensee.

It is illegal to operate a gaming facility without a license issued by the Gaming Commission. The Gaming Commission is empowered to issue five types of gaming and gaming-related licenses. The licenses are revocable and nontransferable. Our failure or inability to obtain and maintain necessary gaming licenses would have a material adverse effect on its gaming operations.

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The Colorado casinos were granted retail/operator licenses concurrently with their openings. The licenses are subject to continued satisfaction of suitability requirements and must be renewed biyearly. The current licenses for both Colorado casinos were renewed on April 21, 2011. There can be no assurance that the Colorado casinos can successfully renew their licenses in a timely manner every other year.

All persons employed by us in Colorado who are involved, directly or indirectly, in gaming operations in Colorado also are required to obtain various forms of gaming licenses. Key licenses are issued to “key employees,” which include any executive, employee or agent of a licensee having the power to exercise a significant influence over decisions concerning any part of the operations of a licensee. At least one key license holder must be on the premises of each Colorado casino at all times that a casino is open for business.

The Gaming Commission closely regulates the suitability of persons owning or seeking to renew an interest in a gaming license, and the suitability of a licensee can be adversely affected by persons associated with the licensee. Additionally, any person or entity having any direct interest in our subsidiary Black Hawk Gaming & Development Company, Inc. (“Black Hawk Gaming”) or any casino directly or indirectly owned by Black Hawk Gaming may be subject to administrative action, including personal history and background investigations. The actions of persons associated with Jacobs Entertainment, Inc., such as its shareholders, its officers, directors, management or employees, could jeopardize any licenses held by Black Hawk Gaming. All of Black Hawk Gaming’s directors are required to be found suitable as associated persons.

As a general rule, under the Colorado Regulations, it is a criminal violation for any person to have a legal, beneficial, voting or equitable interest, or right to receive profits in more than three retail/operator gaming licenses in Colorado. Black Hawk Gaming has an interest in two such licenses. Any expansion opportunities that we may have in Colorado are limited to one more license.

The Colorado Division of Gaming may require any person having an interest in a licensee or an applicant for a license to provide background information, information on sources of funding, and a sworn statement that the interested person or applicant is not holding that interest for another party. The Gaming Commission may, at its discretion, require any person having an interest in a licensee to undergo a full background investigation and to pay for that investigation in the same manner as an applicant for a license. A background investigation includes an examination of one’s personal history, financial associations, character, record, and reputation, as well as the people with whom a person has associated.

The Gaming Commission has the right to request information from any person directly or indirectly interested in, or employed by, a licensee, and to investigate the moral character, honesty, integrity, prior activities, criminal record, reputation, habits and associations of (i) all persons licensed pursuant to the Colorado Limited Gaming Act, (ii) all officers, directors and stockholders of a licensed privately held corporation, (iii) all officers, directors and stockholders holding either a 5% or greater interest or a controlling interest in a licensed publicly traded corporation, (iv) any person who as agent, consultant, advisor or otherwise, exercises a significant influence upon the management or affairs of a publicly traded corporation, (v) all general partners and all limited partners of a licensed partnership, (vi) all persons that have a relationship similar to that of an officer, director or stockholder of a corporation (such as members and managers of a limited liability company), (vii) all persons supplying financing or lending money to any licensee connected with the establishment or operation of limited gaming, and (viii) all persons having a contract, lease or ongoing financial or business arrangement with any licensee, if such contract, lease or arrangement relates to limited gaming operations, equipment, devices or premises.

If the Gaming Commission determines that a person or entity is not suitable to own a direct or indirect voting interest in Black Hawk Gaming or Jacobs Entertainment, Black Hawk Gaming or Jacobs Entertainment may be sanctioned unless the person or entity disposes of its voting interest. Sanctions may include the loss of the casino licenses and financial penalties. In addition, the Colorado Regulations prohibit a licensee or any affiliate of a licensee from paying dividends, interest or other remuneration to any person found to be unsuitable, or recognizing the exercise of any voting rights by any person found to be unsuitable. The Colorado Regulations require an operating casino licensee to include in its corporate charter provisions that permit the repurchase of the voting interests of any person found to be unsuitable. Black Hawk Gaming’s Articles of Incorporation include the required provisions.

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The Gaming Commission also has the power to require Black Hawk Gaming to suspend or dismiss its officers, directors and other key employees or sever relationships with other persons who refuse to file appropriate applications or who are found to be unsuitable to act in such capacities. The Commission or the Director of the Division of Gaming may review a licensee’s gaming contracts, require changes in the contract before the licensee’s application is approved or participation in the contract is allowed, and require a licensee to terminate its participation in any gaming contract.

The Gaming Commission has enacted Rule 4.5, which imposes requirements on publicly traded corporations holding gaming licenses in Colorado and on gaming licenses owned directly or indirectly by a publicly traded corporation, whether through a subsidiary or intermediary company. The term “publicly traded corporation” includes corporations, firms, limited liability companies, trusts, partnerships and other forms of business organizations. Such requirements automatically apply to any ownership interest held by a publicly traded corporation, holding company or intermediary company thereof, when the ownership interest directly or indirectly is, or will be upon approval of the Gaming Commission, 5% or more of the entire licensee. In any event, if the Gaming Commission determines that a publicly traded corporation, or a subsidiary, intermediary company or holding company has the actual ability to exercise influence over a licensee, regardless of the percentage of ownership possessed by that entity, the Gaming Commission may require the entity to comply with the disclosure regulations contained in Rule 4.5.

Under Rule 4.5, gaming licensees, affiliated companies and controlling persons commencing a public offering of voting securities must notify the Gaming Commission no later than ten business days after the initial filing of a registration statement with the Securities and Exchange Commission. Licensed publicly traded corporations are also required to send proxy statements to the Division of Gaming within five days after their distribution. Licensees to whom Rule 4.5 applies must include in their charter documents provisions that: restrict the rights of the licensees to issue voting interests or securities except in accordance with the Colorado Gaming Act and the Colorado Regulations; void the transfer of voting securities or other voting interests issued in violation of the Colorado Gaming Act and the Colorado Regulations until the issuer ceases to be subject to the jurisdiction of the Gaming Commission or until the Gaming Commission, by affirmative act, validates the transfer; and provide that holders of voting interests or securities of licensees found unsuitable by the Gaming Commission may, within 60 days of such finding of unsuitability, be required to sell their interests or securities back to the issuer at the lesser of the cash equivalent of the holders’ investment or the market price as of the date of the finding of unsuitability. Alternatively, the holders may, within 60 days after the finding of unsuitability, transfer the voting interests or securities to a person suitable to the Gaming Commission. Until the voting interests or securities are held by suitable persons, the issuer may not pay dividends or interest, the securities may not be voted, they may not be included in the voting or securities of the issuer, and the issuer may not pay any remuneration in any form to the holders of the securities.

Notification must be given to the Division of Gaming of the acquisition of direct or indirect beneficial ownership of:

• 5% or more of any class of voting securities of a publicly traded corporation that is required to include in its articles of organization the Rule 4.5 charter language provisions; or

• 5% or more of the beneficial interest in a gaming licensee directly or indirectly through any class of voting securities of any holding company or intermediary company of a licensee, referred to as qualifying persons.

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Owners of any such interests, whether owned individually or in association with others, are subject to a finding of suitability. Notification must be made by persons acquiring these interests. Such persons must submit all requested information to the Division of Gaming, are subject to a finding of suitability as required by the Division of Gaming or the Gaming Commission, and must be informed of these requirements by the licensee. A person other than an institutional investor whose interest equals 10% or more of a publicly traded corporation or a 10% beneficial interest in a gaming licensee must apply to the Gaming Commission for a finding of suitability within 45 days after acquiring such securities.

An institutional investor who, individually or in association with others, acquires, directly or indirectly, the beneficial ownership of 15% or more of any class of voting securities or 15% of the beneficial interest in a gaming licensee must apply to the Gaming Commission for a finding of suitability within 45 days after acquiring such interests.

Licensees must also notify any qualifying persons of these requirements. Whether or not so notified, qualifying persons are responsible for complying with these requirements.

The Colorado Regulations also provide for exemption from the requirements for a finding of suitability when the Gaming Commission finds such action to be consistent with the purposes of the Colorado Gaming Control Act. The Gaming Commission may determine that anyone with a material relationship to, or material involvement with, a licensee or an affiliated company must apply for a finding of suitability or must apply for a key employee license.

Pursuant to Rule 4.5, persons found unsuitable by the Gaming Commission must be removed immediately from any position as an officer, director, or employee of a licensee, or of a holding or intermediary company. Such unsuitable persons also are prohibited from any beneficial ownership of the voting securities of any such entities. Licensees, or affiliated entities of licensees, are subject to sanctions for paying dividends or distributions to persons found unsuitable by the Gaming Commission, or for recognizing voting rights of, or paying a salary or any remuneration for services to, unsuitable persons. Licensees or their affiliated entities also may be sanctioned for failing to pursue efforts to require unsuitable persons to relinquish their interests. The Gaming Commission must provide prior approval of any sale, lease, purchase, conveyance, or acquisition of an interest in a casino licensee, except as provided in Rule 4.5 relating to publicly traded corporations.

Prior to July 2, 2009, Colorado casinos could operate only between 8:00 a.m. and 2:00 a.m. Slot machines, black jack, poker and other approved variations of those games and video poker were the only permitted games, with a maximum single wager of $5. On November 4, 2008, Colorado Amendment 50 was approved by Colorado voters and was subsequently voted upon and approved by each of the three gaming towns in Colorado (Black Hawk, Central City and Cripple Creek). The new gaming rules, which became effective on July 2, 2009 at Colorado casinos, allowed for the introduction of craps and roulette, increased the maximum single wager limit to $100, allows 24-hour gaming operations, and prohibit changes in existing tax levels (currently, a series of graduated tax rates, with a maximum gaming tax rate of 19% on adjusted gross proceeds over $13 million) unless such changes are approved by a statewide vote. For further discussion, see Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

The 2009 amendment did not affect constitutional restrictions on the percentage of space a casino may use for gaming – 50% of any floor and 35% of the overall square footage of the building in which the casino is located. Also, it did not change the age-related restrictions for casinos, namely, that only individuals who are 21 years or older may gamble or consume alcohol on the casino premises. Finally, Colorado casinos may not extend credit to any gaming patrons.

Gaming Regulation and Licensing—Nevada

The ownership and operation of casino gaming facilities in Nevada, including the Nevada casino operated by Jacobs Entertainment’s direct and indirect subsidiaries Gold Dust West Casino, Inc. (“Gold Dust West”), Jacobs Piñon Plaza Entertainment, Inc. (“Piñon Plaza”) and Jacobs Elko Entertainment, Inc. (“Elko”) (collectively, the “Nevada Gaming Subsidiaries”), are subject to the Nevada Gaming Control Act and the regulations promulgated thereunder (the “Nevada Act”) and to the licensing and regulatory control of the Nevada Gaming Commission (the

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“Nevada Commission”), the Nevada State Gaming Control Board (the “Nevada Board”), and various local ordinances and regulations, including, without limitation, those of the cities of Reno, Carson City and Elko, Nevada (collectively, the “Nevada Gaming Authorities”).

The laws, regulations and supervisory procedures of the Nevada Gaming Authorities are based upon declarations of public policy which are concerned with, among other things: (i) the prevention of unsavory or unsuitable persons from having a direct or indirect involvement with gaming at any time or in any capacity; (ii) the establishment and maintenance of responsible accounting practices and procedures; (iii) the maintenance of effective controls over the financial practices of licensees, including the establishment of minimum procedures for internal fiscal affairs and the safeguarding of assets and revenues, providing reliable record keeping and filing periodic reports with the Nevada Gaming Authorities; (iv) the prevention of cheating and fraudulent practices; and (v) providing a source of state and local revenues through taxation and licensing fees. Change in such laws, regulations and procedures could have an adverse effect on Jacobs Entertainment’s Nevada gaming operations.

The Nevada Gaming Subsidiaries have been licensed by the Nevada Gaming Authorities as corporate licensees. Gaming licenses require the periodic payment of fees and taxes and are not transferable. Jacobs Entertainment’s parent company, Jacobs Investments, Inc. (“Jacobs Investments” or “JII”), has been registered by the Nevada Commission as a holding company and has been found suitable to own Jacobs Entertainment’s stock. Black Hawk Gaming has been registered by the Nevada Commission as an intermediary company and has been found suitable to own the stock of Gold Dust West. Jacobs Entertainment has been registered by the Nevada Commission as a publicly traded corporation (a “Registered Corporation”) and has been found suitable as the sole shareholder of Black Hawk Gaming, Piñon Plaza and Elko. Registered Corporations, registered intermediary companies, and corporate licensees are required periodically to submit detailed financial and operating reports to the Nevada Commission and furnish any other information that the Nevada Commission may require. Substantially all material loans, leases, sales of securities and similar financing transactions by Jacobs Investments, Jacobs Entertainment, Black Hawk Gaming, and the Nevada Gaming Subsidiaries must be reported to or approved by the Nevada Commission. No person may become a more than 5% stockholder of, or holder of a more than 5% interest in, or receive any percentage of profits from a corporate licensee without first obtaining licenses and approvals from the Nevada Gaming Authorities. No person may become a 5% or less stockholder or interest holder in a corporate licensee without registering with the Nevada Gaming Authorities. The controlling shareholders, directors and certain officers of Jacobs Investments, Jacobs Entertainment, Black Hawk Gaming, and the Nevada Gaming Subsidiaries have obtained from the Nevada Gaming Authorities the various registrations, findings of suitability, approvals, permits and licenses that are required in order to engage in gaming activities in Reno, Carson City and Elko, Nevada.

The Nevada Gaming Authorities may investigate any person who has a material relationship to, or material involvement with, Jacobs Investments, Jacobs Entertainment, Black Hawk Gaming, or the Nevada Gaming Subsidiaries in order to determine whether that individual is suitable or should be licensed as a business associate of a gaming licensee. The officers, directors and shareholders of Jacobs Investments and Jacobs Entertainment must file applications with and be licensed or found suitable by the Nevada Gaming Authorities. The officers, directors and certain key employees of the Nevada Gaming Subsidiaries must file applications with and may be required to be licensed or found suitable by the Nevada Gaming Authorities. The officers, directors and key employees of Jacobs Investments, Jacobs Entertainment and Black Hawk Gaming who are actively and directly involved in the gaming activities of the Nevada Gaming Subsidiaries may be required to be licensed or found suitable by the Nevada Gaming Authorities. The Nevada Gaming Authorities may deny an application for licensing for any cause that they deem reasonable. A finding of suitability is comparable to licensing, and both require submission of detailed personal and financial information followed by a thorough investigation. The applicant for licensing or a finding of suitability must pay all the costs of the investigation. Changes in licensed positions must be reported to the Nevada Gaming Authorities and, in addition to their authority to deny an application for a finding of suitability or licensure, the Nevada Gaming Authorities have jurisdiction to disapprove a change in a corporate position.

If the Nevada Gaming Authorities were to find an officer, director or key employee unsuitable for licensing or unsuitable to continue having a relationship with Jacobs Investments, Jacobs Entertainment, Black Hawk Gaming or the Nevada Gaming Subsidiaries, the companies involved would have to sever all relationships with that person. In addition, the Nevada Commission may require Jacobs Investments, Jacobs Entertainment, Black Hawk Gaming or the Nevada Gaming Subsidiaries to terminate the employment of any person who refuses to file appropriate applications. Determinations of suitability or of questions pertaining to licensing are not subject to judicial review in Nevada.

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Jacobs Investments, Jacobs Entertainment, Black Hawk Gaming and the Nevada Gaming Subsidiaries are required periodically to submit detailed financial and operating reports to the Nevada Commission and furnish any other information that the Nevada Commission may require. Substantially material loans, leases, sales of securities and similar financing transactions of Jacobs Investments, Jacobs Entertainment, Black Hawk Gaming and the Nevada Gaming Subsidiaries must be reported to or approved by the Nevada Commission.

If it were determined that the Nevada Act was violated by Jacobs Investments, Jacobs Entertainment, Black Hawk Gaming Jacobs Investments, Jacobs Entertainment, Black Hawk Gaming or the Nevada Gaming Subsidiaries, the registrations or gaming licenses that Jacobs Investments, Jacobs Entertainment, Black Hawk Gaming Jacobs Investments, Jacobs Entertainment, Black Hawk Gaming and the Nevada Gaming Subsidiaries hold could be limited, conditioned, suspended or revoked, subject to compliance with certain statutory and regulatory procedures. In addition, Jacobs Investments, Jacobs Entertainment, Black Hawk Gaming, or the Nevada Gaming Subsidiaries and the persons involved could be subject to substantial fines for each separate violation of the Nevada Act at the discretion of the Nevada Commission. Further, a supervisor could be appointed by the Nevada Commission to operate the casinos operated by the Nevada Gaming Subsidiaries and, under certain circumstances, earnings generated during the supervisor’s appointment (except for reasonable rental value of the casino) could be forfeited to the State of Nevada. Limitation, conditioning or suspension of the gaming licenses of the Nevada Gaming Subsidiaries or the appointment of a supervisor could (and revocation of any gaming license would) have a material adverse effect on the gaming operations, financial condition and results of operations of Jacobs Entertainment.

The Nevada Act requires any person who acquires beneficial ownership of more than 5% of a Registered Corporation’s voting securities to report the acquisition to the Nevada Commission. The Nevada Act requires that beneficial owners of more than 10% of a Registered Corporation’s voting securities apply to the Nevada Commission for a finding of suitability within 30 days after the Chairman of the Nevada Board mails the written notice requiring such filing. However, an “institutional investor,” as defined in the Nevada Act, that beneficially owns more than 10% but not more than 11% of a Registered Corporation’s voting securities as a result of a stock repurchase by the Registered Corporation may not be required to file such an application. Further, an institutional investor that acquires more than 10% but not more than 25% of a Registered Corporation’s voting securities may apply to the Nevada Commission for a waiver of a finding of suitability if that institutional investor holds the voting securities for investment purposes only. An institutional investor that has obtained a waiver may hold more than 25% but not more than 29% of a Registered Corporation’s voting securities and maintain the waiver where the additional ownership results from a stock repurchase by the Registered Corporation. An institutional investor will not be deemed to hold voting securities for investment purposes unless the voting securities were acquired and are held in the ordinary course of business as an institutional investor and not for the purpose of causing, directly or indirectly, the election of a majority of the members of the Registered Corporation’s board of directors, any change in the Registered Corporation’s corporate charter, bylaws, management, policies or operations, or of any of its gaming affiliates, or any other action that the Nevada Commission finds to be inconsistent with holding the Registered Corporation’s voting securities for investment purposes only. Activities which are not deemed to be inconsistent with holding voting securities for investment purposes only include: (i) voting on all matters voted on by stockholders; (ii) making financial and other inquiries of management of the type normally made by securities analysts for informational purposes and not to cause a change in management, policies or operations; and (iii) such other activities as the Nevada Commission may determine to be consistent with such investment intent. If the beneficial holder of voting securities who must be found suitable is a corporation, partnership or trust, it must submit detailed business and financial information, including a list of beneficial owners. The applicant is required to pay all costs of investigation.

Any officer, director or stockholder of a licensed or registered company who fails or refuses to apply for a finding of suitability or a license within 30 days after being directed to do so by the Nevada Commission or the Chairman of the Nevada Board may be found unsuitable. The same restrictions apply to a record owner of stock if the record owner, after request, fails to identify the beneficial owner. Any stockholder found unsuitable who holds, directly or indirectly, any beneficial ownership of the stock of a licensed or registered company beyond such period of time as may be prescribed by the Nevada Commission may be guilty of a criminal offense. A Registered Corporation is subject to disciplinary action if, after it receives notice that a person is unsuitable to be a stockholder

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or to have any other relationship with the Registered Corporation, the Registered Corporation (i) pays that person any dividend or interest, (ii) allows that person to exercise, directly or indirectly, any voting right conferred through securities held by that person, (iii) pays remuneration in any form to that person for services rendered or otherwise, or (iv) fails to pursue all lawful efforts to require that unsuitable person to relinquish its voting securities including, if necessary, the immediate purchase of the voting securities for cash at fair market value. Additionally, the Cities of Reno, Carson City and Elko, Nevada have the authority to approve all persons owning or controlling the stock of any corporation controlling a gaming licensee operating in those cities.

The Nevada Commission may, in its discretion, require the holder of any of the debt or similar securities of a Registered Corporation to file applications, be investigated and be found suitable to own such debt securities if the Nevada Commission has reason to believe that such ownership would otherwise be inconsistent with the declared policies of the State of Nevada. If the Nevada Commission determines that a person is unsuitable to own those securities, then pursuant to the Nevada Act, a Registered Corporation can be sanctioned, including by revocation of its approvals and those of its affiliates, if without the prior approval of the Nevada Commission, the Registered Corporation (i) pays to the unsuitable person any dividend, interest, or any distribution whatsoever; (ii) recognizes any voting right by the unsuitable person in connection with the Registered Corporation’s securities; (iii) pays the unsuitable person remuneration in any form; or (iv) makes any payment to the unsuitable person by way of principal, redemption, conversion, exchange, liquidation, or similar transaction.

Jacobs Investments, Jacobs Entertainment, Black Hawk Gaming and the Nevada Gaming Subsidiaries are required to maintain current stock ledgers in Nevada that may be examined by the Nevada Gaming Authorities at any time. If any securities are held in trust by an agent or by a nominee, the record holder may be required to disclose the identity of the beneficial owner to the Nevada Gaming Authorities. A failure to make the required disclosure may be grounds for finding the record holder unsuitable. Licensed and registered companies are also required to render maximum assistance in determining the identity of beneficial owners of their securities. The Nevada Commission has the power to require Jacobs Entertainment’s stock certificates to bear a legend indicating that the securities are subject to the Nevada Act. To date, the Nevada Commission has not imposed such a requirement.

Jacobs Investments, Jacobs Entertainment and Black Hawk Gaming may not make a public offering without the prior approval of the Nevada Commission if the proceeds from the offering are intended to be used to construct, acquire or finance gaming facilities in Nevada, or to retire or extend obligations incurred for those purposes or for similar transactions. On September 22, 2011, the Nevada Commission granted Jacobs Entertainment prior approval to make public offerings for a period of two years, subject to certain conditions (the “Shelf Approval”). The Shelf Approval also applies to any affiliated company wholly owned by Jacobs Entertainment which is a publicly traded corporation or would become a publicly traded corporation pursuant to a public offering. The Shelf Approval may be rescinded for good cause without prior notice upon the issuance of an interlocutory stop order by the Chairman of the Nevada Board. The Shelf Approval does not constitute a finding, recommendation or approval by any of the Nevada Gaming Authorities as to the accuracy or adequacy of the offering memorandum or the investment merits of the securities. Any representation to the contrary is unlawful.

Changes in control of a Registered Corporation through merger, consolidation, stock or asset acquisitions, management or consulting agreements, or any act or conduct by a person by which it obtains control of a Registered Corporation, may not occur without the prior approval of the Nevada Commission. Entities seeking to acquire control of a Registered Corporation must satisfy the Nevada Board and Nevada Commission on a variety of stringent standards prior to assuming such control. The Nevada Commission may also require controlling stockholders, officers, directors and other persons having a material relationship or involvement with the entity proposing to acquire control, to be investigated and licensed as part of the approval process relating to the transaction.

The Nevada legislature has declared that some corporate acquisitions opposed by management, repurchases of voting securities, and corporate defense tactics affecting Nevada corporate gaming licensees may be injurious to stable and productive corporate gaming. Regulations of the Nevada Gaming Commission provide that control of a Registered Corporation cannot be acquired through a tender offer, merger, consolidation, acquisition of assets, management or consulting agreements or any form of takeover whatsoever without the prior approval of the Nevada Gaming Commission. The Nevada Commission has established a regulatory scheme to ameliorate the potentially

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adverse effects of these business practices on Nevada’s gaming industry and to further Nevada’s policy to: (i) assure the financial stability of corporate gaming licensees and their affiliates; (ii) preserve the beneficial aspects of conducting business in the corporate form; and (iii) promote a neutral environment for the orderly governance of corporate affairs. Approvals are, in certain circumstances, required from the Nevada Commission before a Registered Corporation can make exceptional repurchases of voting securities above the current market price thereof and before a corporate acquisition opposed by management can be consummated. The Nevada Act also requires prior approval of a plan of recapitalization proposed by a Registered Corporation in response to a tender offer made directly to its stockholders for the purposes of acquiring control of the Registered Corporation.

License fees and taxes, computed in various ways depending on the type of gaming or activity involved, are payable to the State of Nevada and to the counties and cities in which the Nevada Gaming Subsidiaries’ operations are conducted. Depending on the particular fee or tax involved, these fees and taxes are payable either monthly, quarterly or annually and are based on either (i) a percentage of the gross revenues received; (ii) the number of gaming devices operated; or (iii) the number of table games operated. A live entertainment tax is also paid by gaming establishments where live entertainment is furnished in connection with an admission fee or the selling or serving of food, refreshments or merchandise.

Any person who is licensed, required to be licensed, registered, or required to be registered, or is under common control with any such person (collectively, “Licensees”), and who is or proposes to become involved in a gaming venture outside of Nevada, is required to deposit with the Nevada Board, and thereafter maintain, a revolving fund in the amount of $10,000 to pay the expenses of investigation by the Nevada Board for its participation in that foreign gaming. The revolving fund is subject to increase or decrease in the discretion of the Nevada Commission. Thereafter, foreign Licensees are required to comply with certain reporting requirements imposed by the Nevada Act. The Licensees are also subject to disciplinary action by the Nevada Commission if they knowingly violate any laws of the foreign jurisdiction pertaining to the foreign gaming operation, fail to conduct the foreign gaming operation in accordance with the standards of honesty and integrity required of Nevada gaming operations, engage in activities or enter into associations that are harmful to the State of Nevada or its ability to collect gaming taxes and fees, or employ, contract with or associate with a person in the foreign operation who has been denied a license or finding of suitability in Nevada on the grounds of personal unsuitability.

Gaming Regulation and Licensing—Louisiana

Video gaming in Louisiana is regulated by the Louisiana Gaming Control Board, which is part of the Department of Public Safety and Corrections. The enforcement arm thereof in charge of licensing and criminal investigations is the Video Gaming Division of the Louisiana State Police, likewise a part of the Department of Public Safety and Corrections. The Gaming Section of the Attorney General’s Office provides all legal counsel and representation with respect to all matters involving licensing actions and any other litigation issue relative to gaming and involving either the Louisiana Gaming Control Board (hereinafter the “Board”) or the Video Gaming Division of the Louisiana State Police (hereinafter the “Division”).

The Video Draw Poker Devices Control Law, which governs our operations in Louisiana, is contained within the Louisiana Revised Statutes at Title 27:301 et seq. (the “act”) with accompanying regulations being promulgated by the Board pursuant to the statutory authority contained within the act. The video draw poker regulations are in Title 42 of the Louisiana Administrative Code at Sections 2401 et seq.

The act gives the Board broad authority and discretion in the licensing of persons for video draw poker operations within the State of Louisiana. Generally, a person may not be licensed for video draw poker if he has been convicted in any jurisdiction of any of the following offenses within ten years prior to the date of the application for a video draw poker license or less than ten years has elapsed between the date of application for a video draw poker license and the successful completion or service of any sentence, deferred adjudication, or period of probation or parole for any such offense: (i) any offense punishable by imprisonment for more than one year; (ii) theft or any crime involving false statements or declarations; or (iii) gambling, as defined by the laws or ordinances of any municipality, any parish, any state, or the United States. The act and its corresponding regulations further provide that an application for a video draw poker license may be denied if it contains any material omission of information. An applicant must also not be delinquent in state or federal income taxes, penalties or interest or delinquent in the payment of any sales taxes, penalties, or interest to either the state or any local governing authority of the parish or municipality in which the establishment is located.

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There are several general suitability requirements for licensure. Specifically, the law requires that an applicant for a video draw poker license be: (i) a person of good character, honesty, and integrity; (ii) a person whose prior activities, arrest or criminal record if any, reputation, habits, and associations do not pose a threat to the public interest of Louisiana or to the effective regulation of video draw poker, and do not create or enhance the dangers of unsuitable, unfair, or illegal practices, methods, and operations in the activities authorized by the act and financial arrangements incidental thereto; and (iii) a person who is likely to conduct business as authorized by the act in complete compliance with the act.

The suitability standards must be met by every person who has or controls directly or indirectly more than a 5% ownership, income, or profit interest in an entity that has or applies for a license in accordance with the act, or who receives more than a 5% revenue interest in the form of a commission, finder’s fee, loan repayment, or any other business expense related to the gaming operation, or who has the ability, in the opinion of the Division, to exercise a significant influence over the activities of a licensee authorized or to be authorized by the act. For the purposes of the act, all gaming-related associations, outstanding loans, promissory notes, leases, or other financial indebtedness of an applicant or licensee must be revealed to the Division for the purposes of determining significant influence and suitability. While significant influence is determined on a case-by-case basis, it has generally been interpreted to include any person who is an officer or director of any juridical entity that is an applicant for a video draw poker license as well as the spouse of any person having more than a 5% ownership, income, or profit interest in an applicant as well as the spouse of any officer or director of any juridical entity applicant. As of the middle of 2007, the Louisiana State Police made a policy decision that generally removed spouses from the list of parties required to file suitability documentation related to video draw poker establishment licenses. However, the companion legislation was not approved nor sent to the governor for signature during the corresponding legislative session.

The suitability criteria law makes an exception for institutional investors. An institutional investor of any applicant otherwise required to be found suitable or qualified pursuant to the act is presumed suitable or qualified upon submitting documentation to the Board and the Division sufficient to establish qualifications as an institutional investor as described below, and upon certifying that: (i) it owns, holds, or controls publicly traded securities issued by a licensee or permittee or a holding, intermediate, or parent company of a licensee or permittee in the ordinary course of business for investment purposes only; (ii) it does not exercise influence over the affairs of the issuer of the securities or over any licensed or permitted subsidiary of the issuer of the securities; and (iii) it does not intend to exercise influence over the affairs of the issuer of the securities, or over any licensed or permitted subsidiary of the issuer of the securities, in the future, and that it agrees to notify the Board in writing within 30 days if that intent should change.

The exercise of voting privileges with regard to publicly traded securities is not deemed to constitute the exercise of influence over the affairs of a licensee. The act also provides that this exception is not to be construed to preclude the Board or the Division from investigating the suitability or qualifications of an institutional investor should the Board or Division become aware of facts or information which may result in such institutional investor being found unsuitable or disqualified.

An institutional investor is defined in the act as: (i) a plan or trust established and maintained by the United States Government, a state, or a political subdivision of a state for the benefit of their respective employees; (ii) an investment company that is registered under the Investment Company Act of 1940; (iii) a collective investment trust organized by a bank under Part Nine of the Rules of the Comptroller of the Currency; (iv) a closed end investment trust that is registered with the United States Securities and Exchange Commission; (v) a mutual fund; (vi) a life insurance company or property and casualty company; (vii) a federal or state bank; or (viii) an investment advisor registered under the Investment Advisers Act of 1940.

If any person required to be found qualified or suitable fails to provide all or part of the documents or information required by the Board or the Division, and if, as a result, any person holding a license issued pursuant to the act is not or may no longer be qualified or suitable, the Board will issue, under penalty of revocation of the license, a condition naming the person who failed to provide all or part of the documents or information required by

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the Board or the Division, and declaring that such person may not: (i) receive dividends or interest on securities of a corporation holding a license, if the person has or controls directly or indirectly more than a 5% ownership, income, or profit interest in such corporation; (ii) exercise directly, or through a trustee or nominee, a right conferred by securities of a corporation holding a license, if the person has or controls directly or indirectly more than a five percent ownership, income, or profit interest in such corporation; (iii) receive remuneration or other economic benefit from any person holding a license issued pursuant to the provisions of the act; (iv) exercise significant influence over the activities of a person holding a license issued pursuant to the provisions of the act; or (v) continue owning or holding a security of a corporation holding a license if the person has or controls directly or indirectly more than a 5% ownership, income, or profit interest in such corporation.

Operating video draw poker devices at video poker truck stops in Louisiana requires both an establishment license and a device owner license. The establishment license permits the placement by a licensed device owner of video draw poker devices on the licensed premises. A device owner license permits the licensed entity to place and operate video draw poker devices at licensed establishments. In many cases, an establishment licensed for the placement of video draw poker devices will contract with a licensed device owner for video draw poker device placement services for a percentage of the video draw poker revenues. A licensed establishment may also, however, be a licensed device owner. A licensed device owner entity must be majority-owned by a person or persons who have resided within the State of Louisiana for a period of two years.

Licensed establishments in Louisiana may be a restaurant, bar, motel or hotel, a Louisiana State Racing Commission licensed pari-mutuel wagering facility, a Louisiana State Racing Commission licensed satellite wagering facility, or a qualified video poker truck stop. Generally, a licensed establishment pays to a device owner a percentage of the net device revenues generated by video draw poker devices placed at its business premises. There is no law that governs the minimum amount that a device owner must be compensated for its services.

Restaurants and bars may contain up to three video draw poker devices and a hotel or motel may have three video draw poker devices in each of its lounges and restaurants licensed to sell alcoholic beverages, up to a total of twelve for each hotel or motel. A pari-mutuel wagering facility and a licensed satellite wagering facility may have an unlimited number of video draw poker devices. A video poker truck stop may have up to fifty video draw poker devices, with the number being determined by the amount of fuel sales of the video poker truck stop.

A restaurant, bar, motel or hotel, pari-mutuel wagering facility, and satellite wagering facility pays an initial non-refundable licensing and processing fee of $1,100. A video poker truck stop pays an initial licensing and processing fee of $10,100. A license must be renewed every five years but a renewal fee is required each year. The non-refundable annual renewal and processing fee for a restaurant, bar, motel or hotel, pari-mutuel wagering facility, and satellite wagering facility is $200. The non-refundable annual renewal and processing fee for a video poker truck stop is $1,100.

In addition to the licensing fee, the device owner collects all funds deposited in each video draw poker device and is required to remit to the State of Louisiana on a bi-weekly basis a franchise payment in an amount equal to a percentage of the net device revenue derived from the operation of each video draw poker device owned by him. The amount of the percentage is based on the type of licensed establishment authorized by the Board for the placement of video draw poker devices, as follows: (i) a restaurant, bar, tavern, cocktail lounge, club, motel, or hotel—26%; (ii) a qualified video poker truck stop—32.5%; and (iii) a pari-mutuel wagering facility or satellite wagering facility—22.5%.

The number of video draw poker devices permissible in a qualified video poker truck stop is based on average monthly fuel sales, as follows: (i) 100,000 gallons of fuel, of which at least 40,000 gallons are diesel—not more than 50 devices; (ii) 75,000 gallons of fuel, of which at least 30,000 gallons are diesel—not more than 40 devices; and (iii) 50,000 gallons of fuel, of which at least 10,000 are diesel—not more than 35 devices. Compliance with the foregoing thresholds is measured quarterly for the first year of operation and, thereafter, is measured annually. Once licensed, if a video poker truck stop sells less than an average of 50,000 gallons per month but more than 25,000 gallons per month in any calendar year, the video poker truck stop will not be permitted to operate any video draw poker devices in the following calendar year. A qualified video poker truck stop that sells less than an average of 25,000 gallons per month in any calendar year will be subject to revocation of its video draw poker license. Bulk sales or transfers may not be used to calculate monthly averages. Fuel facilities may, however, offer

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fuel for sale at a lower price (a) when motor fuel is sold upon the final liquidation of a business; (b) when motor fuel is advertised, offered for sale, or sold by any fiduciary or other officer under the order or direction of any court; (c) when motor fuel is sold for promotional purposes limited to a grand opening, an annual anniversary, or an annual customer appreciation day sale, each of which does not exceed three consecutive days; and (d) when motor fuel is sold in a good faith effort to meet the legal price of a competitor. Louisiana law creates a presumption that a fuel facility will not violate the price requirement when it sells fuel below the required price to meet the price of a competitor if it makes a bona fide effort to determine the legality of the price of such competitor and determines in good faith that the competitor’s price is a legal price.

In addition, under the act, a qualified video poker truck stop is required to have at least five developed contiguous acres and sell fuel, lubricating oil, and other vehicular merchandise, such as batteries, tires, or vehicle parts for eighteen-wheel tractor-trailers, and also meet all of the following criteria: (i) it must be located adjacent to a major state or interstate highway, as defined by the Board (within 2,000 feet of a major state highway or U.S. interstate highway); (ii) it must have an on-site restaurant with all of the following features: (a) provides seating for at least 50 patrons; (b) provides full table service for sit-down meals; (c) is open 12 hours a day; (d) offers a varied menu; and (e) operates a fully equipped kitchen which includes, but is not limited to, a range oven and refrigerated storage appliances used for the preparation of foods for on-premises or immediate consumption; (iii) it must have parking areas with each of the following: (a) a stable parking area for at least 50 18-wheel tractor-trailer motor vehicles, either paved or concrete (or otherwise certified and approved), to support 18-wheel tractor- trailer motor vehicles and their loads, constructed according to industry specifications, subject to approval by the Board and the Division; (b) parking of sufficient size is allowed for safe ingress and egress; and (c) parking areas for other vehicles around business entrance ways and exits shall not constitute parking areas for 18-wheel tractor-trailer motor vehicles; (iv) it must sell diesel and gasoline fuel; (v) it must have on-site repair service facilities for 18-wheel tractor-trailer motor vehicles which facility may be in the form of a contract services business which regularly performs this type of service; (vi) it must have at least four of the following amenities: (a) a separate truckers’ television lounge; (b) a full service laundry facility located in a convenient area for truckers’ use; (c) private showers for men and women, not located in an area open to general public restroom facilities; (d) a travel store with items commonly referred to as truckers’ supplies (items commonly used only by commercial motor vehicles); (e) truck scales; (f) separate truckers’ telephones; and (g) permanent storage facilities for fuel; (vii) it must have an area separated for adult patronage only; and (viii) it must have, if available, a Class A—General retail permit or a Class A—Restaurant permit, as defined in Part II of Chapter 1 or Part II of Chapter 2 of Title 26 of the Louisiana Revised Statutes of 1950, to serve or sell alcoholic beverages for on-premises consumption and be owned and leased by a person who meets all personal qualifications for such permit. In light of Hurricane Katrina and other recent events, the Louisiana legislature put in place exceptions to the amenities requirements and fuel requirements that allow qualified video poker truck stop licensees to operate casinos with a previously approved number of gaming devices, notwithstanding certain non-compliance with the amenities or fuel requirements. The exceptions may apply, depending on the circumstances and as determined by the Division, if the non-compliance is caused by force majeure, expropriation by political subdivision, road construction or other non-commercial circumstances that directly affect compliance. An owner or lessor of a qualified video poker truck stop may lease or sublease any restaurant, convenience store, fuel facility, or any other business operation located on the premises of the qualified video poker truck stop to another person, provided that such person executes a written lease which contains a requirement that the lessee or sublessee comply with the laws and regulations which govern the operation of video draw poker devices. If such lease or sublease is granted, the owner or lessor of such qualified video poker truck stop shall maintain ultimate supervision and control of that entire video poker truck stop premises.

Additionally, no license can be granted to any video poker truck stop located, at the time application is made for a license to operate video draw poker devices, within five hundred feet of any property that is on the National Historic Registry, any public playground, or a building used exclusively as a church, synagogue, public library or school. In addition, no license shall be issued for any video poker truck stop unless previously applied for or licensed as of January 1, 2008, located, at the time application is made for a license to operate video draw poker devices, within two thousand five hundred feet of any property that is on the National Historic Registry, any public playground, or a building used exclusively as a church, synagogue, public library, or school unless the applicant for the license has applied prior to January 1, 2008, with the local governing authority of the parish where the video poker truck stop is located for a certificate of compliance with applicable zoning ordinances and building codes and a statement of approval for the operation of video draw poker devices at a video poker truck stop or has applied with the appropriate authority for a building permit prior to January 1, 2008. Moreover, no license shall be issued for any

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video poker truck stop unless previously applied for or licensed as of June 1, 2010, for facilities located, at the time of application, within one mile of any residential property or any property that is on the National Historic Registry, any public playground, or a building used exclusively as a church, synagogue, public library or school unless the applicant for the license has applied prior to June 1, 2010 with the local governing authority of the parish where the video poker truck stop is located for a certificate of compliance with applicable zoning ordinances and building codes and statement of approval for the operation of video draw poker devices at the location or has applied with the appropriate authority for a building permit prior to June 1, 2010. In such instance, residential property is any property wholly or partly used for or intended to be used for living or sleeping with one or more rooms, including a bathroom and complete kitchen facilities, and includes mobile home or manufactured housing, provided that such mobile home or manufactured housing has been in its present location for at least 60 days.

All suitability information and applications required to be submitted with respect to the 21 Louisiana video poker truck stops currently owned by us, as well as the video poker truck stop in which we share in the revenue, have been submitted to the Board and the Division. All applications submitted have been approved and none are currently pending. However, because the Board and the Division conduct a new suitability investigation in connection with each acquisition of a facility at which video gaming devices are to be operated, regardless of prior approvals, there can be no guarantee that a suitability approval will ultimately result with respect to the video poker truck stops that we propose to acquire.

Gaming Regulation and Licensing—Virginia

Colonial’s success is dependent upon continued government and public acceptance of horse racing as a form of legalized gaming. Although Colonial believes that pari-mutuel wagering on horse racing will continue to be legal in Virginia, gaming has come under increasing scrutiny nationally and locally.

Opposition to the Virginia Racing Act has been unsuccessfully introduced in the Virginia legislature in the past, but additional legislative opposition may arise in the future. Any repeal or material amendment of the Virginia Racing Act could have a material adverse effect on Colonial’s business of pari-mutuel wagering.

Under the Virginia Racing Act, the Virginia Racing Commission is vested with control over all aspects of horse racing with pari-mutuel wagering and the power to prescribe regulations and conditions under which such racing and wagering are conducted. The Virginia Racing Commission is responsible for, among other things, (i) conducting a review annually of Colonial’s track and satellite wagering facility licenses, (ii) annually approving Colonial’s proposed schedule of racing days, (iii) approving new or modified types of pari-mutuel wagering pools requested by Colonial, (iv) issuing permits to all officers, directors, racing officials, and other employees of Colonial, and (v) approving simulcast schedules at the track and at the satellite wagering facilities. The Virginia Racing Commission also has the authority to promulgate regulations pertaining to Colonial’s track facilities, equipment, safety and security measures, and controls the issuing of licenses and permits for participants in pari-mutuel racing, including Colonial employees at the track and at the satellite wagering facilities. In addition, the Virginia Racing Commission must approve any acquisition or continuing ownership of a 5% or greater interest in Colonial. Action by the Virginia Racing Commission that is inconsistent with the Colonial’s business plan could have a material adverse effect on Colonial.

During the 2000 session of the Virginia General Assembly, an amendment to the Racing Act was passed that requires Colonial to enter into contracts with each representative horsemen’s group and provides for it to contribute to the purse account of the respective breed a minimum of 5% of the first $75 million of simulcast amounts wagered (“handle”), 6% of the next $75 million and 7% of all handle over $150 million. The amendment also provides for the breakage generated by pari-mutuel wagering to be allocated 70% to capital expenditures and 30% to backstretch benevolent activities. Prior to this amendment, Colonial received all breakage. The Virginia Racing Act requires that, after July 1, 2000, we enter into contracts with each representative horsemen’s group that provide for us to contribute, by breed of horse, a minimum of 5% of the first $75 million of handle, 6% of the next $75 million of handle and 7% of all handle over $150 million to the purse account of the respective breed. Finally, the amendment empowers the Commission to summarily suspend Colonial’s licenses if it believes the Racing Act or the regulations have been violated. In addition, the Interstate Horse Racing Act also requires that we secure the consent of the Virginia Horsemen’s Benevolence and Protective Association (the “VaHBPA”) and the Virginia Harness Horse Association (“VHHA”) to the export simulcasting of races. These consents are usually contained in the agreement between each group and Colonial.

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The licenses issued by the Virginia Racing Commission to Colonial for the racetrack and its satellite wagering facilities are for a period of not less than 20 years, but are subject to annual review by the Virginia Racing Commission. It is possible that such licenses will not be renewed or that such licenses could be suspended or revoked by the Virginia Racing Commission for violations of the Virginia Racing Act or Virginia Racing Commission rules. We also hold an advance deposit account wagering license that is renewable annually. Our current advance deposit account wagering license expires December 31, 2012.

We have an agreement with the VHHA that expires December 31, 2014 and an agreement with the VaHBPA that expires December 31, 2012.

Colonial, the track and the satellite wagering facilities are also subject to a variety of other laws and regulations, including zoning, construction, and land-use laws and the regulations of the Virginia Alcoholic Beverage Control Board. Such laws and regulations may affect the selection of satellite wagering facility sites because of parking, traffic flow, and other similar considerations. Any interruption or termination of Colonial’s ability, or that of its concessionaires, to serve alcoholic beverages could have a material adverse effect on Colonial.

Gaming Regulation—Federal

Colonial’s interstate simulcast operations are subject to the Federal Interstate Horse Racing Act, which regulates interstate satellite wagering. In order to conduct wagering on import simulcasting at the track or any racing center, the Interstate Horse Racing Act requires Colonial to obtain the consent of the Virginia Racing Commission, the consent of the racing commission of the state where the horse racing meet originates, and the consent of the representative horsemen groups in the origination state. To conduct export simulcasting, Colonial must obtain the consent of the Virginia Horseman’s Benevolent and Protective Association or the Virginia Harness Horse Association, and the Virginia Racing Commission. Also, in the case of satellite wagering to be conducted at any of Colonial’s satellite wagering facilities, the Interstate Horse Racing Act requires Colonial to obtain the approval of all currently operating horse racetracks within 60 miles of the satellite wagering facilities or if there are no currently operating tracks within 60 miles, the approval of the closest operating horse racetrack, if any, in an adjoining state. Significant delay in obtaining or failure to obtain these consents or approvals could have a material adverse effect on Colonial.

Liquor Regulation

The sale of alcoholic beverages in Colorado is subject to licensing, control and regulation by certain Colorado state and local agencies (the “Liquor Agencies”). Subject to certain exceptions, all persons who directly or indirectly own 5% or more of a company or its casino must file applications with and are subject to investigation by the Liquor Agencies. The Liquor Agencies also may investigate persons who, directly or indirectly, lend money to liquor licensees. All liquor licenses are renewable, are revocable and are not transferable. The Liquor Agencies have broad powers to limit, condition, suspend or revoke any liquor license. Any disciplinary action by the Liquor Agencies or any failure to renew or other revocation of any of our liquor licenses would have a material adverse effect on our operations and Black Hawk Gaming’s Colorado casinos.

Under Colorado law, it is a criminal violation for any person or entity to own a direct or indirect interest in more than one type of alcoholic beverage license or more than three gaming tavern liquor licenses. Black Hawk Gaming’s Colorado casinos have gaming tavern liquor licenses. Accordingly, our expansion and diversification opportunities in Colorado are limited by these licensing restrictions.

While gaming operations may now be conducted twenty-four hours a day, Colorado’s liquor laws still limit service of patrons to the hours of 7:00 a.m. to 2:00 a.m. This limitation is contained in Colorado statute and could be changed only by the state legislature with the approval of the governor.

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The sale of alcoholic beverages in the cities of Reno, Carson City and Elko, Nevada, is subject to licensing, control and regulation by those cities. All licenses are revocable and are not transferable. The agencies involved have full power to limit, condition, suspend or revoke any such license, and any such disciplinary action could (and revocation would) have a material adverse effect on the operations of one or more of our Gold Dust West casinos in Nevada.

Alcohol regulation within the State of Louisiana is performed primarily by the Office of Alcohol and Tobacco Control (the “Board”). The Commissioner of the Board is given broad discretion in the granting and denial of state alcohol permits. While permits are issued on a state level, the local municipality is also permitted to provide for concurrent local licensing. The state alcohol regulatory scheme is contained at Title 26:1 of the Louisiana Revised Statutes (hereinafter referred to as the “act”). Generally, no permit may be issued if the applicable premises is located three hundred feet or less, as fixed and determined by the local municipal ordinance, of a public playground or of a building used exclusively as a church or synagogue, public library, school, full-time daycare center or corrections facility housing inmates, including but not limited to, a halfway house. Louisiana parishes may enact ordinances extending the distance between the applicable premises and the property line of such locations to 500 feet. Local municipalities are also permitted to regulate the opening and closing hours of permitted businesses as well as to prohibit the sale of alcoholic beverages altogether by referendum vote of the people within the municipality. A local municipality may also regulate via zoning designations the permissibility or prohibition of the permitting of businesses that sell alcoholic beverages within that municipality. All of our video poker truck stops are currently licensed by the applicable state and local alcohol licensing authorities.

The sale of alcoholic beverages in Virginia is subject to licensing, control and regulation by the Virginia Department of Alcoholic Beverage Control (the “Virginia ABC Board”), a Virginia state agency. The Virginia ABC Board issues licenses based upon the type of beverage, type of establishment or place of consumption. Virginia ABC laws include the responsibility of the licensee to maintain complete and accurate records, certain restrictions on advertising and certain food sale requirements.

Before receiving a Virginia ABC license, an applicant must satisfy several requirements. The Virginia ABC Board conducts an extensive background investigation (to include a criminal history review as well as contacts with the local governing body of each license application) and contacts local officials, residents and business people in the vicinity of the establishment to ascertain if any objections exist. The background investigation is completed for all principal owners of the proposed licensee. Administrative hearings are available to afford all interested parties the opportunity to present any concerns with respect to an application.

A licensee is required to maintain financial responsibility for its business, including timely payment of all taxes, creditor obligations and other bills, and must keep accurate records of all such transactions. Mixed beverage licensees must record sales and purchases of all mixed beverages, food and non-alcoholic beverages. Mixed beverage licensees must submit annual review reports to the Virginia ABC Board showing all purchases and sales of alcoholic beverages during the year as well as an accurate inventory. Finally, the Virginia ABC Board imposes certain restrictions and limitations on advertising, the use of advertising materials and promotions.

If Virginia ABC agents discover license violations, a disciplinary hearing will typically be conducted with a Virginia ABC hearing officer. Any aggrieved localities and members of the community may attend the hearing and present any additional or relevant objections or complaints concerning the license. The Virginia ABC Board has broad power to limit, condition, suspend or revoke any license granted on discovery of any violation. Any disciplinary action by the Virginia ABC Board or any failure to renew or any revocation of a liquor license would likely have a material adverse effect on the operation of Colonial’s track and satellite wagering facilities.

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Taxation

Gaming operators in Colorado are subject to state and local taxes and fees in addition to ordinary federal and state income taxes. The City of Black Hawk has imposed an annual license fee, currently $750, for each gaming device installed in a casino. In addition, Colorado has a tax on gross gaming revenue (also called “adjusted gross proceeds”) being generally defined as the total amount wagered less the total amount paid out in prizes. The following tax structure has been in effect since July 1, 2011:

Tax as Percentage of	Annual Amount of Adjusted
Adjusted Gross Proceeds	Gross Proceeds
0.2375%	$	0	—	2,000,000
1.90%		2,000,001	—	5,000,000
8.55%		5,000,001	—	8,000,000
10.45%		8,000,001	—	10,000,000
15.20%		10,000,001	—	13,000,000
19.00%		13,000,001		and above

Both of JEI’s Colorado casinos are subject to the maximum rate. Neither the Colorado Constitution nor the gaming statutes require that gaming tax rates be graduated, as they currently are. However, with the passage of Colorado Amendment 50, gaming tax levels can only be increased (by means of either an increase in the applicable marginal tax rate(s) or a decrease in the applicable dollar threshold(s) at which particular rates become effective) with prior voter approval.

In Nevada, license fees and taxes, computed in various ways depending on the type of gaming or activity involved, are payable to the State of Nevada, Washoe, Carson City, and Elko Counties and the Cities of Reno, Carson City, and Elko. Depending upon the particular fee or tax involved, these fees and taxes are payable either monthly, quarterly or annually and are based upon either: (i) a percentage of the gross revenues received; (ii) the number of gaming devices operated; or (iii) the number of table games operated. A live entertainment tax is also paid by casino operations where entertainment is furnished in connection with an admissions charge or the selling or serving of food or refreshments or the selling of merchandise. Presently the state tax in Nevada on adjusted gross revenue from gaming is 6.75% on gross revenues in excess of $134,000.

In March 2008, the Nevada Supreme Court ruled that food and non-alcoholic beverages purchased for use in providing complimentary meals to customers and to employees were exempt from use tax. Recently, the Nevada Department of Taxation has asserted that gaming companies should pay sales tax on customer complimentary meals and employee meals on a prospective basis. This position stems from a recent Nevada Tax Commission decision which states that complimentary meals provided to customers are subject to sales tax at the retail value of the meal and employee meals are subject to sales tax at the cost of the meal. A petition for judicial review of the Nevada Tax Commission decision has been filed in Clark County District Court. We are currently evaluating whether or not to accrue tax prospectively as it disagrees with the position asserted by the Nevada Department of Taxation. The resolution of this matter is not expected to have a material impact on our consolidated financial statements.

Video gaming operators in video poker truck stops in Louisiana are subject to state and local taxes and fees in addition to ordinary federal and state income taxes. The state of Louisiana has imposed a “gaming franchise fee” of 32.5% of the net device revenue from each video gaming device located at a video poker truck stop. The net device revenue is the amount remaining after all winnings have been paid. This franchise fee is collected twice per month by the Louisiana state police based on the data that is provided directly to them from the devices. There is also an annual state establishment license fee of $1,100. In addition, the state imposes a device operation fee of $1,000 per year per device, which is paid quarterly, and each parish imposes an annual occupational license tax of approximately $50 per device.

Colonial is subject to a number of federal, state and local taxes and fees. These include fees to support the Virginia Breeders Fund, taxes payable to the Commonwealth of Virginia, taxes and admission charges payable to New Kent County, where the track is located, and taxes payable to localities in which satellite wagering facilities are located based upon attendance and the amount of monies wagered both at the track and at the satellite wagering

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facilities. Colonial believes that the public acceptance of pari-mutuel wagering on horse races, as well as other forms of gaming, is based, in part, on the governmental revenues it generates from taxes and fees on such activities. It is possible that gaming activities, including horse racing, may become a target for additional federal, state, or local taxes and fees. A significant increase in such taxes or fees or the creation of significant additional taxes or fees could have a material adverse effect on us.

Item 1A.Risk Factors.

To inform readers of our future plans and business strategies, this report contains statements concerning our future performance, intentions, objectives, plans and expectations that are or may be deemed to be “forward-looking statements.” Our ability to do this has been fostered by the Private Securities Litigation Reform Act of 1995, which provides a “safe harbor” for forward-looking statements to encourage companies to provide prospective information so long as those statements are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those discussed in the statements. All known material risk factors are disclosed. Such factors affecting us include, but are not limited to, the following:

Risks Related to Our Indebtedness

Our substantial indebtedness could adversely affect our financial health and prevent us from fulfilling our obligations under our debt agreements.

We have a significant amount of indebtedness. As of December 31, 2011, we had total indebtedness of $284.7 million, excluding accounts payable, accrued expenses and other noncurrent liabilities, and total equity of $16.0 million. Our substantial indebtedness could have considerable consequences. For example, it could:

• increase our vulnerability to general adverse economic and industry conditions;

• require us to dedicate a substantial portion of our cash flow from operations to debt service, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, and other general corporate purposes;

• limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;

• limit our ability to fund a required regulatory redemption or a change of control offer;

• place us at a competitive disadvantage to our competitors that have less debt; and

• limit, along with the financial and other restrictive covenants in our debt agreements, among other things, our ability to borrow additional funds. A failure to comply with those covenants could result in an event of default which, if not cured or waived, could have a significant adverse effect on us.

The occurrence of any one of these events could have a material adverse effect on our business, financial condition, results of operations, prospects and ability to satisfy our obligations under our debt agreements.

Our debt agreements impose many restrictive covenants on us.

Our debt agreements contain covenants that, among other things, restrict our ability to:

• expand our business through material acquisitions;

• incur more debt;

• issue stock of subsidiaries;

• make investments;

• repurchase stock;

• create liens;

• enter into transactions with affiliates;

• enter into sale-leaseback transactions;

• merge or consolidate; and

• transfer and sell assets.

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In addition, our senior credit facility contains many restrictive covenants similar to the covenants of our indenture but the covenants in our senior credit facility are generally more restrictive than those contained in our indenture. Our senior credit facility also requires us to maintain specified consolidated financial ratios and satisfy certain consolidated financial tests. Our ability to meet those financial ratios and financial tests may be affected by events beyond our control, and we may not be able to continue to meet those tests. If we fail to meet those tests or breach any of the covenants, the lenders under our senior credit facility could declare all amounts outstanding thereunder, together with the accrued interest, to be immediately due and payable. Our assets may not be sufficient to repay in full such indebtedness or any other indebtedness, including $210 million of our senior unsecured notes issued under our indenture. Further, any other agreements we may enter into in the future governing our indebtedness may impose additional restrictions on us, any of which may adversely affect our ability to finance our future operations or capital needs or to pursue available business opportunities. Our failure to pay interest, repay our indebtedness when due, or maintain compliance with our debt covenants would result in an event of default under both our senior credit facility and our note indenture.

Complying with these covenants could materially limit our financial and operating flexibility and could cause us to take actions that we otherwise would not take or cause us not to take actions that we otherwise would take.

Despite current indebtedness levels, we may still be able to incur substantially more debt, which could exacerbate the risks described above.

Subject to debt covenant restrictions, we and our subsidiaries may be able to incur substantial additional indebtedness in the future. The indenture governing our senior unsecured notes and our senior credit facility do not fully prohibit us or our subsidiaries from doing so. If new debt is added to our and our subsidiaries’ current debt levels, the related risks that we and they now face could intensify.

To service our indebtedness, we will require a significant amount of cash, the availability of which depends on many factors beyond our control.

Our ability to make payments on and to refinance our indebtedness and to fund our operations will depend on our ability to generate cash. This, to an extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. Our business may not generate sufficient cash flow from operations and future borrowings may not be available to us in amounts sufficient to enable us to pay our indebtedness, or to fund our other liquidity needs. In addition, if we consummate significant acquisitions in the future, our cash requirements may increase significantly. If we are unable to generate sufficient cash flow and are unable to refinance or extend outstanding borrowings, we may have to:

• reduce or delay planned expansion and capital expenditures;

• sell assets;

• restructure debt; or

• raise additional capital.

Our debt becomes due at various times between 2013 and 2014. We intend to refinance all of our debt on or before maturity. We cannot assure you that we will be able to refinance any of our debt on commercially reasonable terms or at all. See Note 5 to our Consolidated Financial Statements.

Our senior notes are not secured by any of our assets and senior noteholders’ rights to enforce remedies will be limited to the rights of holders of unsecured debt.

Our senior notes are not secured by any of our assets. Our obligations under our senior credit facility are secured by liens on substantially all of our assets. If we become insolvent or are liquidated, or if payments under our senior credit facility are accelerated, the lenders under our senior credit facility will be entitled to exercise the remedies available to a secured lender under applicable law and our senior credit facility. Accordingly, such lenders will have a prior claim with respect to our assets and there may not be sufficient assets remaining to pay amounts due on our senior unsecured notes then outstanding.

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We are a holding company and will depend on the business of our subsidiaries to satisfy our obligations under our indebtedness.

We are a holding company. Substantially all of the operations necessary to fund payment on our indebtedness are conducted by our subsidiaries. Our ability to make payments on our indebtedness will depend on our subsidiaries’ cash flow and their payment of funds to us. Our subsidiaries’ ability to make payments to us will depend on their earnings, the terms of their indebtedness, business and tax considerations, legal and regulatory restrictions and economic conditions.

We may not have the ability to raise the funds necessary to finance the change of control offer required by our indebtedness.

Upon the occurrence of certain change of control events, we will be required to offer to repurchase all outstanding senior unsecured notes at a purchase price equal to 101% of their principal amount. Moreover, a change of control constitutes a default under our senior credit facility. However, it is likely that we will not have sufficient funds at the time of such a change of control to make the required repurchase of our notes or repay the indebtedness under our senior credit facility. The change of control provisions may not protect you in a transaction in which we incur a large amount of debt, including a reorganization, restructuring, merger or other similar transaction, because that kind of transaction may not involve any shift in voting power or beneficial ownership, or may not involve a shift large enough to trigger a change of control as defined in our debt agreements.

Federal and state statutes allow courts, under specific circumstances, to void guarantees, subordinate claims in respect of indebtedness and require debt holders to return payments received from guarantors.

Under the federal bankruptcy law and comparable provisions of state fraudulent transfer laws, a court could void a guarantee of one or more of our subsidiaries or claims related to our senior unsecured notes or subordinate a subsidiary’s guarantee to all of our other debts or all other debts of the guarantor if, among other things, we or the guarantor, at the time we or it incurred the indebtedness evidenced by its guarantee:

• received less than reasonably equivalent value or fair consideration for the incurrence of that indebtedness; and

• we were or the guarantor was insolvent or rendered insolvent by reason of that incurrence;

• we were or the guarantor was engaged in a business or transaction for which our or the guarantor’s remaining assets constituted unreasonably small capital; or

• we or the guarantor intended to incur, or believed that we or it would incur, debts beyond our or its ability to pay those debts as they mature.

In addition, a court could void any payment by us or the guarantor pursuant to our senior unsecured notes or a guarantee and require that payment to be returned to us or the guarantor, or to a fund for the benefit of our creditors or the creditors of the guarantor.

The measures of insolvency for purposes of these fraudulent transfer laws will vary depending upon the law applied in any proceeding to determine whether a fraudulent transfer has occurred. Generally, however, a guarantor would be considered insolvent if:

• the sum of its debts, including contingent liabilities, were greater than the fair saleable value of all of its assets,

• the present fair saleable value of its assets were less than the amount that would be required to pay its probable liability on its existing debts, including contingent liabilities, as they become absolute and mature, or

• it could not pay its debts as they become due.

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We believe that we and the guarantors have received reasonably equivalent value and fair consideration for the incurrence of the indebtedness and obligations represented by our senior unsecured notes and the guarantees. On the basis of historical financial information, recent operating history and other factors, we believe that we and each subsidiary guarantor, after giving effect to its guarantee of our senior unsecured notes, are not insolvent, do not have unreasonably small capital for the business in which we are or it is engaged and have not incurred debts beyond our or its ability to pay such debts as they mature. However, a court might disagree with any or all of our conclusions in this regard and it could apply different legal standards.

Holders of our senior unsecured notes may be required to comply with registration, licensing, qualification or other requirements under gaming laws or dispose of their securities.

The gaming authorities of any jurisdiction in which we currently or in the future conduct or propose to conduct gaming, either through our subsidiaries or a joint venture, may require that a holder or beneficial owner of our senior unsecured notes be registered, licensed, qualified or found suitable, or comply with any other requirement under applicable gaming laws. If you have an interest in our senior unsecured notes, by the terms of the indenture, you will be deemed to agree to comply with all of these requirements, including your agreement to register or apply for and maintain in full force and effect a license, qualification or a finding or suitability, or comply with any other requirement, within the required time period, as provided by the relevant gaming authority. If you fail to apply to be, or fail to become, registered, licensed or qualified or such registration, license or qualification is suspended or revoked or not maintained, or you are found unsuitable or fail to comply with any other requirement of a gaming authority, then we will have the right, at our option, to:

• require you to sell your senior unsecured notes or beneficial interest in the senior unsecured notes in accordance with applicable gaming requirements within 30 days after you receive notice of our election, or by any earlier date that the relevant gaming authority may request or prescribe; or

• redeem your senior unsecured notes (possibly within less than 30 days following the notice of redemption if requested or prescribed by the gaming authority) at a redemption price equal to the lesser of:

• your cost;

• 100% of the principal amount of the senior unsecured notes, plus accrued and unpaid interest, if any, to the redemption date or the date of the first to occur of any (i) failure to become or continue to be registered, licensed or qualified, (ii) failure to be found or continue to be suitable, (iii) failure to comply with relevant gaming authority requirements or (iv) receipt of notice from the relevant gaming authority that you will not be registered, licensed or qualified; and

• any other amount required by applicable law or by order of any gaming authority.

If we elect, in our sole discretion, to redeem your senior unsecured notes, we will notify the indenture trustee in writing of any redemption as soon as practicable. We will not be responsible for any costs or expenses you may incur in connection with your registration, application for a license, qualification or a finding of suitability, or your renewal or continuation of the foregoing or compliance with any other requirement of a gaming authority. The indenture also provides that as soon as you are required to sell your senior unsecured notes as a result of a gaming authority action, you will, to the extent required by the applicable gaming authority, have no further right:

• to exercise, directly or indirectly, any right conferred by the senior unsecured notes; or

• to receive from us any interest or any other distributions or payments, or any remuneration in any form, relating to the senior unsecured notes, except the redemption price we refer to above.

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Risks Related to Our Business

We face significant competition.

The gaming industry is characterized by a high degree of competition among a large number of participants, many of which have financial and other resources that are greater than our resources. Competitive gaming activities include casinos, pari-mutuel wagering, video lottery terminals and other gaming devices, and other forms of legalized gaming. New or expanded operations by other persons can be expected to increase competition for our gaming operations and could have a material adverse impact on us.

Casino Operations. Our casino operations are conducted in Black Hawk, Colorado, and Reno, Carson City, and Elko, Nevada. Competition in the Black Hawk gaming market, which is the primary gaming market in Colorado, is intense. In addition, large, well-financed companies have entered the Black Hawk and other Colorado markets through the purchase or expansion of existing facilities and others may continue to do so, all of which could materially harm our business, financial condition and results of operations. For example:

• the market deterioration at Colorado’s horse track and three dog tracks has reinvigorated efforts to authorize video lottery terminals, slot machines, so-called “instant racing machines” or other types of gaming at these venues and at the state’s off-track betting facilities. A bill introduced in the Colorado legislature in February 2012 proposes the placement of up to 2,500 video lottery terminals at each of three tracks – one on the Front Range, one near Pueblo and one on the Western Slope. The pressure on Colorado state government to generate non-tax revenue to help offset continuing state revenue declines is substantial, and policy makers view gaming expansion as a source of such added tax revenue. If authorization of any form of expanded gambling is granted by the Colorado Lottery Division, the Colorado state legislature, or the voters, it would have a material adverse effect on gaming revenues in Black Hawk and at The Lodge and Gilpin casinos;

• Ameristar Black Hawk, owned by Ameristar Casinos, Inc. (“Ameristar”), is directly across Highway 119 from The Lodge and operates approximately 1,550 total gaming devices with new slot product, a new parking garage and refurbished and rebranded dining venues. Ameristar completed construction of a 33 story, 536-room hotel, a convention center and other amenities and facilities in 2009. In all respects, Ameristar is a fierce competitor in gaming markets in which it operates;

• Mardi Gras Casino, Golden Gates Casino and Golden Gulch Casino, all next to The Lodge, were acquired by Affinity Gaming, LLC in September 2011 and Riviera Black Hawk was acquired by Monarch Casino and Resort, Inc. We expect the new owners to improve their respective properties and implement new marketing programs;

• Isle of Capri Casinos, Inc. owns Lady Luck Casino Black Hawk, across the street from its existing facility, and in 2005 completed a major renovation and expansion project physically linking the two properties. The combined casinos are the largest in Black Hawk with approximately 1,650 total gaming devices, 402 hotel rooms and 2,300 parking spaces; and

• in the past, the Cheyenne and Arapahoe Indian tribes have claimed significant treaty rights to land in Colorado have pursued a plan to exchange those rights for land east of the Denver metropolitan area on which to build and operate a large casino gaming facility. This project appears to be dormant at present. If it is renewed, or if another tribe seeks approval from the United States Department of Interior to secure other land in the state on which it does not now reside and to which it does not now have legal title, and if any such effort obtains all necessary federal, state, and local governmental approvals, it could have a material adverse effect on gaming revenues in Black Hawk and at The Lodge and Gilpin casinos.

In addition to competing with other gaming facilities in Colorado as described above, we compete for both customers and potential future gaming sites, with gaming companies nationwide, including casinos in Nevada and several other states, and casinos on Native American lands in several states, many of which have substantially greater financial resources and experience in the gaming business. The expansion of legalized casino gaming to new jurisdictions throughout the United States may also affect competitive conditions.

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The Gold Dust West casino in Reno, Nevada, encounters strong competition from large hotel and casino facilities and smaller casinos similar in size to the Gold Dust West casino in the Reno area, which includes Sparks, Nevada. There is also competition from gaming establishments in other towns and cities in Nevada and from Native American gaming facilities located near Sacramento, California. Our Carson City and Elko, Nevada Gold Dust West casinos face competition from several casinos in those cities and other venues in Nevada.

In addition, we believe that the introduction of casino gaming, or the expansion of presently conducted gaming activities (particularly at Native American establishments) in areas in or close to Nevada, such as California, Oregon, Washington, Arizona and western Canada, could materially harm our operations at our Nevada operations.

Louisiana Video Poker Truck Stop Operations. Our video poker truck stops compete with other video poker truck stops located in Louisiana and other forms of gaming, such as land-based, riverboat and Native American casinos, as well as slot machines located at horseracing tracks and video poker machines located in bars, restaurants, hotels, off-track wagering facilities and bingo parlors. There were 200 licensed video poker truck stops in Louisiana at December 31, 2011, which is a 1.5% increase over December 31, 2010.

Pari-Mutuel Wagering Operations. We operate a racetrack in New Kent, Virginia, and ten off-track wagering facilities located in Alberta, Chesapeake, Hampton, Henrico, Martinsville, Weber City, Vinton, and three in Richmond, Virginia. Similarly, the expansion of other forms of gaming in neighboring states, such as table games in West Virginia and slot machines in Maryland, could have an adverse effect on our performance.

We compete with racetracks located outside Virginia (including several in Delaware, Maryland, New Jersey, New York, Pennsylvania, and West Virginia, all of which augment their purses with slot machine or other gaming revenues) and other forms of gaming, such as land-based casinos, including those in Atlantic City, New Jersey, and statewide lotteries in Virginia and neighboring states. We also face competition from a wide range of entertainment options, including live and televised sporting events and other recreational activities such as theme parks (Kings Dominion to the northwest and Busch Gardens to the southeast).

We compete for wagering dollars and simulcast fees with live racing and races simulcast from racetracks in other states, particularly racetracks in neighboring states such as Charles Town in West Virginia, Pimlico Race Course and Laurel Park in Maryland, and Delaware Park in Delaware. We also compete for wagering dollars with account wagering companies operating both legally and illegally in Virginia. These companies take wagers from Virginians both over the phone and the internet. We believe legislation which went into effect January 1, 2010 provides us with fair compensation for the activities of licensed providers. Unlicensed account wagering companies have lower costs than Colonial Downs and thus are able to attract customers in Virginia with large wagering rebates.

We face extensive regulation from gaming authorities.

Licensing Requirements.As owners and operators of gaming and pari-mutuel wagering facilities, we are subject to extensive state and local and some federal regulation. State and local authorities require us and our subsidiaries to demonstrate suitability to obtain and retain various licenses and require that we have registrations, permits and approvals to conduct gaming and wagering operations. Various regulatory authorities, including the Colorado Limited Gaming Control Commission, the Nevada Gaming Commission, the Nevada State Gaming Control Board, the Louisiana Gaming Control Board and the Virginia Racing Commission may, for any reason set forth in the applicable legislation, limit, condition, suspend or revoke a license or registration to conduct gaming or wagering operations or prevent us from owning the securities of any of our gaming or wagering subsidiaries. Like all gaming and wagering operators in the jurisdictions in which we operate, we will need to apply periodically to renew our licenses or registrations. We cannot assure you that we will be able to obtain such renewals. Regulatory authorities may also levy substantial fines against us or seize our assets or those of our subsidiaries or of the people involved in violating gaming laws or regulations. Any of these events could materially harm our business, financial condition and results of operations. Gaming authorities in the United Sates can generally require that any beneficial owner of our securities, including holders of our debt, file an application for a finding of suitability.

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Potential Changes in Regulatory Environment.From time to time, legislators and special interest groups have proposed legislation that would expand, restrict or prevent gaming or wagering operations in the jurisdictions in which we operate. Any expansion of gaming or wagering or restriction on or prohibition of our gaming or wagering operations could materially harm our business, financial condition and results of operations. In particular in Colorado, there have been repeated attempts to expand gambling beyond Black Hawk, Central City and Cripple Creek to other towns, racetracks, bingo halls, and tribal gaming through legislation, ballot initiatives, and administrative action by state or local agencies and this is a continued competitive threat to us. Periodic changes to the membership of the Colorado Limited Gaming Control Commission (including the July 2011 removal and replacement of all of the Colorado Limited Gaming Control Commission’s Commissioners by the Colorado Governor) and turnover in the office of the governor of Colorado (the appointing authority for both the members of the Gaming Commission and the executive director of the Department of Revenue which oversees the Gaming Commission) could also affect our operations.

Taxation.We believe that the prospect of significant additional revenue is one of the primary reasons that jurisdictions permit legalized gaming and wagering. As a result, gaming and wagering companies are typically subject to significant taxes and fees in addition to normal federal, state, local and provincial income taxes, and such taxes and fees are subject to increase at any time. We pay substantial taxes and fees with respect to all of our operations. From time to time, federal, state and local legislators and officials have proposed changes in tax laws, or in the administration of such laws, affecting the gaming and wagering industry. It is not possible to predict the likelihood of changes in tax laws or in the administration of such laws. Similarly, special improvement districts, now in existence or those that may be formed in the future, may impose assessments in the form of additional taxes or fees that will finance infrastructure improvements that enhance the attractiveness or accessibility of casinos with which we compete and/or add to our costs of doing business, either of which can negatively affect the competitive position of our Lodge and Gilpin casinos. Such changes, if adopted, could materially harm our business, financial condition and results of operations.

Compliance with Other Laws.We are also subject to a variety of other rules and regulations, including zoning, environmental, construction and land-use laws and regulations governing the serving of alcoholic beverages.

We depend on our key personnel, particularly Jeffrey P. Jacobs.

We are highly dependent on the services of Jeffrey P. Jacobs (one of our indirect owners and our Chief Executive Officer) and other officers and key employees. The loss of the services of any of these individuals could materially harm our business, financial condition and results of operations. The loss of their experience and familiarity with our operations could have negative effects on management’s efficiency and could cause us to incur costs to find qualified replacements.

Our Chief Executive Officer and his family trusts own a controlling beneficial interest in our capital stock and may significantly influence our affairs or may pursue other activities that compete with us.

All of our equity securities are presently owned by Jacobs Investments, Inc. (“JII”). Jeffrey P. Jacobs, our Chairman and Chief Executive Officer, and his family trusts own all of JII’s equity securities. JII has the ability to significantly influence our affairs, including the election of our directors and transactions including mergers, consolidations or sales of assets. Although Mr. Jacobs has agreed not to pursue any U.S. casino or gaming activities while our senior notes are outstanding except through us (excepting investments in publicly traded companies and his involvement therein), he is allowed to purchase and own additional video poker truck stops in Louisiana which we have the right to buy. Any such activities by him could be competitive with our operations in that state.

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We need to invest in capital expenditures to compete effectively.

Capital expenditures, amenity upgrades and new gaming equipment are necessary from time to time to preserve the competitiveness of our properties. The gaming industry is very competitive and is expected to become more competitive in the future. If cash from our operations is insufficient to provide for needed levels of capital expenditures, our competitive position could deteriorate if we are unable to borrow funds for such purposes.

Acts of terrorism and war, natural and man-made disasters, economic conditions, seasonality and weather conditions could affect our operations.

Terrorist attacks and other acts of war or hostility have created many economic and political uncertainties. We cannot predict the extent to which terrorism, security alerts or war, or hostilities in Iraq and Afghanistan and other countries throughout the world will continue to directly or indirectly impact our business and operating results. As a consequence of the threat of terrorist attacks and other acts of war or hostility in the future, premiums for a variety of insurance products have increased, and some types of insurance are no longer available. Given current conditions in the global insurance markets, we are substantially uninsured for losses and interruptions caused by terrorist acts and acts of war. If any such event were to affect our properties, we would likely be adversely impacted.

Our business, financial condition and results of operations may be harmed by general and local economic conditions. If the U.S. economy or the local economy in a market in which we operate suffers a downturn, or if there is a global economic or financial crisis, our properties could be harmed as the disposable income of consumers or their willingness to patronize our operations declines, resulting in a decrease in the number of patrons at our properties or a decrease in the amount that patrons are willing to wager.

In addition, seasonality and weather conditions can affect our results of operations. Winter travel conditions can adversely affect patronage and revenues at our Colorado and Nevada casinos. Although casino business is not seasonal, levels of gaming activity increase significantly during weekends and holidays, especially holiday weekends. Hurricanes Katrina and Rita temporarily affected our video poker truck stop operations in late 2005, while Hurricanes Gustav and Ike temporarily affected our video poker truck stop operations in late 2008. Similar hurricanes could have a material adverse effect on our Louisiana operations in future years. Our pari-mutuel wagering revenues are higher during scheduled live racing than at other times of the year. Adverse weather conditions can cause cancellation of or curtail attendance at outdoor races, thereby reducing wagering and our revenues. Attendance and wagering at both outdoor races and satellite wagering facilities can be harmed by holidays and other competing seasonal activities.

We depend on agreements with Colonial’s horsemen to operate our racing and wagering business.

The Federal Interstate Horseracing Act and the Virginia Racing Act require Colonial to have written agreements with representative Virginia horsemen’s groups in order to simulcast races. We have an agreement with the VHHA that expires December 31, 2014 and an agreement with the VaHBPA that expires December 31, 2012.

Energy price increases may adversely affect our costs and our revenues.

Our casino and horse racing and pari-mutuel wagering operations use significant amounts of electricity and other forms of energy. Any substantial increase in the cost of the forms of energy we use may negatively affect our results of operations. In addition, consumer energy or gasoline price increases may reduce the disposable income of our potential customers or their willingness to patronize our operations and correspondingly reduce our patronage and revenues. Furthermore, a fuel price increase may impact fuel sales in Louisiana, making it more difficult to meet minimum fuel sale requirements which in turn could limit (or eliminate entirely) the number of video gaming devices we can operate at any given video poker truck stop.

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Our business, financial condition, and results of operations may be harmed by union efforts to organize our employees.

Our employees are not covered by collective bargaining agreements. If a union seeks to organize any of our employees, we could experience disruption in our business and incur significant costs, both of which could have a material adverse effect on our results of operation and financial condition. If a union were successful in organizing any of our employees, we could experience significant increases in our labor costs which could also have a material adverse effect on our business, financial condition, and results of operations.

We are subject to potential exposure to environmental liabilities.

Generally, we are subject to various federal, state and local governmental laws and regulations relating to the use, storage, discharge, emission and disposal of hazardous materials. Failure to comply could result in the imposition of severe penalties or restrictions on our operations by governmental agencies or courts. We are not aware of any such exposure at our properties.

Black Hawk, Colorado is located within a 400-square mile area that in 1983 was designated as the Clear Creek Central/City National Priorities List Site Study Area under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended. Although our Colorado casinos are not within any of the specific areas currently identified for investigation or remediation under that statute, environmental problems may subsequently be discovered, including in connection with any future construction on our property. Furthermore, governmental authorities could broaden their investigations and identify areas of concern within the site, we could be identified as a “potentially responsible party” and any related liability could have a material adverse effect on us. We do not have insurance to cover environmental liabilities, if we incur any.

We operate video poker truck stops in Louisiana and handle large volumes of gasoline and diesel fuel, including the dispensing of fuel and storage in underground storage tanks. Failure to operate properly, accidents or casualties could lead to material environmental liability and may adversely affect our financial condition.

Failure to complete any future construction or development projects on budget and on time could adversely affect our financial condition.

Any future construction or expansion projects will be subject to significant risks, any of which could cause unanticipated cost increases and delays. These include, among others, the following:

• shortages of material and skilled laborers;

• labor disputes and work stoppages;

• weather interference or delays;

• engineering problems;

• environmental problems;

• regulatory problems;

• changes to plans or specifications;

• fire, earthquake, flood and other natural disasters; and

• geological, construction, excavation and equipment problems.

Our expansion projects may not be completed within our budget, our construction activities may disrupt our operations and our new operations may not open on schedule. We have limited experience in developing properties and cannot predict all of the risks that any particular construction or remodeling project might face. In addition, we have experienced delays that adversely affected our business during similar remodeling and expansion projects. Failure to complete a construction or expansion project on time or within our budget may cause us to devote additional resources to the project, which could divert our time and attention away from the operation of our other businesses and could cause our business to suffer.

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If we are unable to finance our expansion and renovation projects as well as capital expenditures through cash flow, borrowings under our senior credit facility and additional financings, our expansion and renovation efforts will be jeopardized.

We intend to finance our current and future expansion and renovation projects primarily with cash flow from operations and borrowings under our senior credit facility. If we are unable to finance our current or future expansion projects, we will have to adopt one or more alternatives, such as reducing or delaying planned expansion, development and renovation projects as well as capital expenditures, selling assets, restructuring debt, or obtaining additional equity financing or joint venture partners, or modifying our senior credit facility. These sources of funds may not be sufficient to finance our expansion, and other financing may not be available on acceptable terms in a timely manner or at all. In addition, our existing indebtedness contains certain restrictions on our ability to incur additional indebtedness. If we are unable to secure additional financing, we could be forced to limit or suspend expansion, development and renovation projects, which may adversely affect our business, financial condition and results of operations.

The concentration and evolution of the slot machine manufacturing industry could impose additional costs on us.

A majority of our revenues are attributable to slot machines operated by us at our gaming facilities. It is important, for competitive reasons, that we offer the most popular and up to date slot machine games with the latest technology to our customers.

We believe that a substantial majority of the slot machines sold in the U.S. in 2011 were manufactured by a few select companies. In addition, we believe that one company in particular provided a majority of all slot machines sold in the U.S. in 2011.

In recent years, the prices of new slot machines have escalated faster than the rate of inflation. Furthermore, in recent years, slot machine manufacturers have frequently refused to sell slot machines featuring the most popular games, instead requiring participation lease arrangements in order to acquire the machines. Participation slot machine leasing arrangements typically require the payment of a fixed daily rental. Such agreements may also include a percentage payment of coin-in or net win. Generally, a participation lease is substantially more expensive over the long term than the cost to purchase a new machine.

For competitive reasons, we may be forced to purchase new slot machines or enter into participation lease arrangements that are more expensive than our current costs associated with the continued operation of our existing slot machines. If the new slot machines do not result in sufficient incremental revenues to offset the increased investment and participation lease costs, it could hurt our profitability.

Our operations could be adversely affected due to the adoption of certain anti-smoking regulations.

In November 2006, a ballot initiative listed as Question 5 and entitled the “Nevada Clean Indoor Air Act” (the “Question 5”) was approved by a majority of Nevada voters. Question 5 restricts smoking in all indoor public places of employment with certain exceptions. Among the exceptions enumerated in Question 5 were the gaming areas of casinos and “stand alone” bars, taverns and saloons that do not serve meals. In 2011, the Nevada Legislature relaxed the requirements of Question 5 with Assembly Bill 271 in which the types of bars in which smoking is allowed was expanded to include those with food service. If future ballot initiatives or anti-smoking legislation are passed in Nevada removing or restricting these exceptions to Question 5, there could be a resulting material adverse effect on our business.

In 2009, a bill was introduced in the Louisiana state legislature that would ban smoking in bars and casinos in Louisiana. The bill failed by a large margin. A similar bill banning smoking in certain free-standing casinos, riverboat casinos and racetrack slot parlors, but excluded video poker truck stops, was introduced in the Louisiana state legislature in 2010, but died in committee. In 2011, the Louisiana legislature rejected a bill to ban smoking in bars. If anti-smoking legislation is passed in Louisiana, there could be a resulting material adverse effect on our business.

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Item 1B.Unresolved Staff Comments.

None.

Item 2.Properties.

See “Our Properties and Operations” in Item 1 above for a description of the location and general character of our principal properties. Each of our properties is subject to liens and encumbrances securing our senior credit facility. See Note 5 to our Consolidated Financial Statements included elsewhere herein.

Item 3.Legal Proceedings.

We are involved in routine litigation arising in the ordinary course of our business pertaining to workers’ compensation claims, equal opportunity employment issues, or guest injury claims. All such claims are routinely turned over to our insurance providers. None of the claims is expected to have a material impact on our financial position, results of operations or cash flows. We believe these matters are covered by appropriate insurance policies. See Note 8 to our Consolidated Financial Statements.

Item 4.Mine Safety Disclosures.

Not applicable.

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Effective January 31, 2007, all of our outstanding common stock became held by Jacobs Investments, Inc., a private holding company and, accordingly, there is no established trading market for our common stock. We are a Qualified Subchapter S-Corporation Subsidiary under the Internal Revenue Code of 1986. Under those provisions, the owner of our common stock pays taxes on our taxable income. Our ability to make distributions to our stockholder is limited by the terms of the credit agreement and indenture related to our indebtedness.

We have no equity compensation, stock option or similar plans relating to our equity securities.

We made no repurchases of our equity securities during the fourth quarter of the fiscal year covered by this report.

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Item 6.Selected Financial Data.

The following selected consolidated financial data should be read in conjunction with our management’s discussion and analysis of financial condition and results of operations and our consolidated financial statements and related notes thereto appearing elsewhere in this report. The consolidated statements of operations data and the consolidated balance sheet data are derived from our consolidated financial statements. The selected financial data provided below is not necessarily indicative of our future results of operations or financial performance. The consolidated financial statements and the accompanying management’s discussion and analysis of financial condition and results of operations presented in this Form 10-K have been retroactively adjusted to include the operations of Flats Development, Inc. from the earliest period presented. See Note 4 to our Consolidated Financial Statements.

	As of and for the Year Ended December 31,
	2011			2010 (As adjusted, see Note 4 of Financial Statements)			2009 (As adjusted, see Note 4 of Financial Statements)			2008 (As adjusted)			2007 (As adjusted)
	(Dollars In Thousands, except Distributions per Common Share)
Statements of Operations Data:(1)
Net revenues	$	379,945		$	351,956		$	336,572		$	393,328		$	375,187
Total costs and expenses		359,398			323,172			311,744			369,950			347,534
Operating income		20,547			28,784			24,828			23,378			27,653
Interest expense, net		(26,142	)		(26,832	)		(26,355	)		(28,945	)		(30,095	)
Net (loss) income	$	(5,595	)	$	1,952		$	(1,527	)	$	(5,567	)	$	(2,442	)
Balance Sheet Data (end of period):(1)
Current assets	$	37,531		$	38,762		$	38,327		$	36,064		$	38,449
Total assets		329,822			349,338			360,553			368,189			383,566
Current liabilities		40,177			49,003			46,704			49,207			40,781
Long-term debt, capital lease obligations and other liabilities		273,674			282,806			295,360			296,406			315,218
Equity		15,971			17,529			18,489			22,576			27,567
Financial Data
Ratio of earnings to fixed charges(2)		0.80	x		1.07	x		0.95	x		0.82	x		0.92	x
Distributions Declared per Common Share	$	11,303		$	2,533		$	2,163		$	1,203		$	10,962

(1) See a discussion of our recent acquisition activities in Note 4 and our debt issuances in Note 5 to our Consolidated Financial Statements.

(2) The ratio of earnings to fixed charges is computed by dividing earnings by fixed charges. Earnings consist of income (loss) before income taxes and noncontrolling interest, plus fixed charges and amortization of capitalized interest, less interest capitalized during the period. Fixed charges consist of interest on indebtedness (whether expensed or capitalized), amortization of deferred financing costs, discounts and premiums and that portion of rental expense that we believe is representative of interest. For the years ended December 31, 2011, 2009, 2008 and 2007, we had a deficiency of $5,520, $1,462, $5,492 and $2,526, respectively, in earnings to fixed charges.

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Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This section discusses the results of our operations on a historical basis for the years indicated. You should read the following discussion and analysis in conjunction with the audited consolidated financial statements that are included elsewhere in this Form 10-K. Certain statements contained in this Management’s Discussion and Analysis of Financial Condition and Results of Operations constitute “forward-looking statements,” which statements involve risks and uncertainties described elsewhere in this report.

Our historical information may not necessarily be meaningful when making year-to-year comparisons, as our cost structure, debt structure, capitalization, and the overall composition of our company following the transactions discussed herein have significantly changed. Further, the historical information should not necessarily be taken as a reliable indication of our future performance.

TABLE OF CONTENTS:

Description of item
A.	Company background	36
B.	Significant transactions occurring during the year ended December 31, 2011	36
C.	Subsequent events	37
D.	Overview and discussion of our operations	38
E.	Comparison of our operations for the year ended December 31, 2011 to the year ended December 31, 2010	42
F.	Comparison of our operations for the year ended December 31, 2010 to the year ended December 31, 2009	44
G.	Segment information for the three years ended December 31, 2011	46
H.	Liquidity and capital resources—December 31, 2011	50
I.	Critical accounting policies and estimates	53

A. Company background

We are a developer, owner and operator of gaming, pari-mutuel wagering, leisure and entertainment facilities throughout the United States, with properties located in Colorado, Nevada, Louisiana and Virginia. We own and operate two casinos in Colorado and three casinos in Nevada, 21 video poker truck stops in Louisiana and a horse racing track with ten satellite wagering facilities in Virginia (one of which is temporarily closed). In addition, we are party to an agreement that entitles us to a portion of the gaming revenues from an additional video poker truck stop.

We are a wholly-owned subsidiary of Jacobs Investments, Inc. (“JII”) and a Qualified Subchapter S-Corporation Subsidiary under the Internal Revenue Code of 1986, as amended. Under those provisions, the owner of our company pays income taxes on our taxable income. Jeffrey P. Jacobs, our Chief Executive Officer (“CEO”), and his family trusts own 100% of JII’s outstanding Class A and Class B shares.

B. Significant transactions occurring during the year ended December 31, 2011

Acquisitions – Nautica Properties

On January 18, 2011, we acquired a Nautica Properties based parking lot business and its related assets referred to as “Nautica Phase 2” for $1.25 million. Our Chief Executive Officer (“CEO”) controlled the business. The acquisition of this business has been accounted for as a combination of entities under common control. The portion of Nautica Phase 2 acquired from our CEO has been recorded at the historical cost bases in the assets and liabilities transferred and the portion of Nautica Phase 2 acquired from third parties has been recorded at fair value at the acquisition date using the acquisition method of accounting. See Note 4 to our Consolidated Financial Statements.

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On October 3, 2011, we acquired a Nautica Properties based parking lot business and its related assets referred to as “Sycamore & Main” for $1.1 million. Our CEO controlled the business. The acquisition of Sycamore & Main and its parking lot business was accounted for as a combination of entities under common control. Therefore, the acquisition has been recorded at the historical cost bases in the assets and liabilities transferred. See Note 4 to our Consolidated Financial Statements.

On October 28, 2011, we acquired a Nautica Properties based parking lot business and its related assets referred to as “Nautica Peninsula Land” for $1.0 million. Our CEO controlled the business. The acquisition of this business has been accounted for as a combination of entities under common control. The portion of Nautica Peninsula Land acquired from our CEO has been recorded at the historical cost bases in the assets and liabilities transferred and the portion of Nautica Peninsula Land acquired from third parties has been recorded at fair value at the acquisition date using the acquisition method of accounting. See Note 4 to our Consolidated Financial Statements.

Acquisitions – Video Poker Truck Stops

On January 31, 2011, we acquired two video poker truck stops in Louisiana, Cash Magic Springhill, LLC (“Springhill”) and Cash Magic Vivian, LLC (“Vivian”), for $5.5 million and $4.9 million, respectively, which were previously wholly owned by another JII subsidiary, Gameco Holdings, Inc. (“Gameco”), an entity under common control and with common management. On March 31, 2011, we acquired one additional video poker truck stop in Louisiana, Jalou Forest Gold, LLC (“Forest Gold”), for $3.0 million, which was also previously wholly owned by Gameco. The acquisitions of these video poker truck stops have been accounted for as combinations of entities under common control. Accordingly, the accompanying consolidated financial statements and the accompanying management’s discussion and analysis of financial condition and results of operations presented in this Form 10-K have been retroactively adjusted to include the operations of these businesses, along with the Nautica Property acquisitions, from January 1, 2009. See Note 4 to our Consolidated Financial Statements.

C. Subsequent events

Amendment to Credit Agreement

On February 23, 2012, we entered into a second amendment and restatement agreement to our credit facility (the “Restated Credit Agreement”). The Restated Credit Agreement extended the maturity of $45 million of our term loans and $37 million of our revolving loan commitments to December 16, 2013, among other minor amendments. In addition, we increased our revolver capacity to $40 million. We are required to pay down $11.75 million of term loans on or before the June 16, 2012 maturity date. We also have the right to borrow an additional $12 million of term loans under the Restated Credit Agreement if we choose, so long as the total indebtedness under the Restated Credit Agreement does not exceed $96.75 million.

As a result of the Restated Credit Agreement, our interest rate will increase by 0.25% on the loans that mature on December 16, 2013. As such, the interest rate on the drawn revolving loan balance will increase by 0.25%, the interest rate on the $11.75 million of term loans that mature June 16, 2012 will remain 3% above LIBOR, and the $45 million of term loans that mature December 16, 2013 will have an interest rate of 3.25% above LIBOR. See Note 5 to our Consolidated Financial Statements.

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Black Hawk, Colorado

On February 24, 2012, we entered into a real estate sales contract with Dakota Blackhawk, LLC and Miner’s Mesa Development, LLC wherein we agreed to purchase approximately 45 acres of land located in the City of Black Hawk, Colorado (with approximately 1 acre within the casino gaming district) for an aggregate purchase price of $7.5 million. The transaction is expected to close on or before January 31, 2013.

D. Overview and discussion of our operations

Our CEO is our chief operating decision maker. As of December 31, 2011, we had four segments representing the geographic regions of our operations: Colorado, Nevada, Louisiana and Virginia. Each segment is managed separately because of the unique characteristics of its revenue stream and customer base. We have aggregated our operations into these four segments based on similarities in the nature of the properties’ businesses, customers and regulatory environment in which each property operates. The Colorado segment consists of The Lodge and Gilpin casinos. Our Nevada segment includes the Gold Dust West-Reno, Gold Dust West-Carson City and Gold Dust West-Elko casinos. The Louisiana operations consist of video poker truck stops, and the Virginia segment consists of Colonial’s pari-mutuel operations and satellite wagering facilities.

When we analyze and manage our segments, we focus on several measurements that we believe provide us with the necessary ratios and key performance indicators for us to determine how we are performing versus our competition and against our own internal goals and budgets. We confer monthly and discuss and analyze significant variances in an effort to identify trends and changes in our business. We focus on EBITDA (earnings before interest, income taxes, depreciation and amortization) as one of the primary measurements of reviewing and analyzing the operating results of each segment. While we recognize that EBITDA is not a generally accepted accounting principle (i.e. it is a non-GAAP financial measure), we nonetheless believe it is useful because it allows holders of our debt and management to evaluate and compare operating results from continuing operations from period to period in a meaningful and consistent manner in addition to standard GAAP financial measures. Additionally, most financial analysts following the gaming industry utilize EBITDA as a financial measurement, and when our debt holders (both secured and unsecured) inquire and discuss our operational performance with us, they consistently inquire about our EBITDA performance levels versus the prior year as well as our EBITDA margins versus our competitors. Finally, EBITDA is a key component of certain financial covenants contained in our debt agreements, among other things, and as such it is a critical ingredient that we must watch in order to ensure compliance with our bank credit agreement and our note indenture covenants, measure our historical operating performance, and determine our ability to achieve future growth and/or financing.

In addition to the above performance measurements, we pay particular attention to our monthly and annual cash flow. Our business is sensitive to shifts in volumes and levels of activity and we find it necessary to monitor our cash levels closely. Every six months (June 15 and December 15) we have a cash interest payment due on our $210 million senior unsecured notes amounting to $10.2 million. Additionally, we currently have $56.8 million outstanding on our senior secured credit facility with interest due at varying intervals. As of December 31, 2011, $14.9 million was outstanding on the $40 million senior secured revolving credit facility we have with a bank group on which we can draw as needed in order to augment the cash flow we generate from operations. This is generally a function of the timing of generating cash from operations coupled with the amount of cash we need to run the business—i.e., our cash inventory. Presently, we estimate that we require approximately $15 million of cash inventory to operate our properties. See also Section H, “Liquidity and Capital Resources.”

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Colorado

Our Colorado operations consist of The Lodge Casino at Black Hawk (“The Lodge”) and the Gilpin Casino (“Gilpin”), both of which are located in Black Hawk, Colorado. The competitive aspects of the market in Black Hawk continue to be a significant factor in our operations. At December 31, 2011, there were approximately 8,400 slot machines in the city of Black Hawk. We had 1,364 slot machines in this market (985 at The Lodge and 379 at the Gilpin), which represented approximately 16% of the total slot machines in Black Hawk. Additionally, there were 195 table games in the city of Black Hawk. We had 42 table games in this market (36 at The Lodge and 6 at the Gilpin), which represented approximately 22% of the total table games in Black Hawk. On March 15, 2010, we closed the Gilpin poker room.

For the year ended December 31, 2011, our gross gaming revenues at The Lodge and the Gilpin totaled $108.0 million, which represented 20% of the total gaming revenues in Black Hawk. The overall Black Hawk market gross gaming revenues decreased by 1.5% in 2011 over 2010. However, total slot devices in Black Hawk increased by 3% while table games increased by 5%. We achieved 120% efficiencies (our percentage of the gross gaming revenues divided by our percentage of the gaming devices) within the market for 2011. We follow our efficiency level very closely as we believe this is a useful measure of how well we are performing within the market.

We expect some of our previous and existing market share to be lost due to increased competition. As more properties continue to compete for their share of the market, our personnel costs, marketing costs, and other costs will likely increase as we attempt to keep our market share.

Nevada

Our Nevada operations consist of Gold Dust West-Reno, located in Reno, Nevada, which was acquired on January 5, 2001; Gold Dust West-Carson City, located in Carson City, Nevada, which was acquired on June 25, 2006; and Gold Dust West-Elko, located in Elko, Nevada, which we developed and opened on March 5, 2007. As in Colorado, our Nevada casinos operate in highly competitive markets. As a result of the added competition from Indian Gaming in California, many Northern Nevada casinos advertise themselves as “locals’ casinos.”

At December 31, 2011, Reno had approximately 11,600 gaming devices, of which Gold Dust West-Reno had 483 devices, or 4% of the market. For the year ended December 31, 2011, our gross gaming revenues were 4% of the Reno market, with an efficiency rate of 99.7%.

Since its acquisition in June 2006, Gold Dust West-Carson City, has undergone major renovations and changes to the operations. The Carson City area (state capital) is 30 miles south of Reno and services the areas of Dayton, Gardnerville and Minden surrounding it with a total population base of 60,000 plus. The area had approximately 4,300 gaming devices of which Gold Dust West-Carson City had 396 (9% of total devices). For the year ended December 31, 2011, our efficiency rate was 92%.

At December 31, 2011, Gold Dust West-Elko had 355 gaming devices, representing approximately 12% of the total devices in the market. For the year ended December 31, 2011, our gross gaming revenues were 12% of the Elko market, with an efficiency rate of 125%.

Louisiana

As of December 31, 2011, our Louisiana operations consist of 21 video poker truck stops located in Louisiana and a share in the gaming revenues from an additional video poker truck stop. Each video poker truck stop features a convenience store, fueling operations, a restaurant and up to 50 video poker devices in the casino depending on the level of fuel sales and available space. At December 31, 2011, our video poker truck stops had a combined total of 1,098 video gaming devices.

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The Louisiana video poker truck stops’ revenues are comprised of: (i) revenue from video poker gaming machines; (ii) sales of gasoline and diesel fuel; (iii) sales of groceries, trucker supplies and various items through their convenience stores; (iv) sales of food and beverages in their restaurants and bars; and (v) miscellaneous commissions on ATMs, pay phones and lottery sales.

All video poker activity is reported via a computer phone line directly to the Louisiana State Police. The Louisiana video poker truck stops’ revenues are dependent on meeting the minimum gallons of fuel sales requirements necessary to operate video poker gaming machines in Louisiana. The fuel sales requirements must be complied with on an annual basis (except for the first year of operations during which it must be complied with on a quarterly basis) and in the event of noncompliance, the Louisiana State Police will turn off a portion of the video poker machines until the minimum fuel sales requirements are met. Management of the Louisiana video poker truck stops believes that they will continue to meet the fuel sales requirements necessary to operate video poker gaming machines in Louisiana at current levels, however, we can give no assurance in this regard.

The Louisiana video poker truck stop market caters primarily to local residents, whom we believe contribute to the vast majority of video poker gaming revenue. We believe that most of our video poker customers live within a five-mile radius of our properties.

Virginia

Colonial’s revenues are comprised of: (i) pari-mutuel commissions from wagering on races broadcast from out-of-state racetracks to Colonial’s satellite wagering facilities and the track using import simulcasting; (ii) wagering at the track and Colonial’s satellite wagering facilities on its live races; (iii) commissions from advance deposit account wagering by telephone and over the internet; (iv) admission fees, program and racing form sales, and certain other ancillary deposit account activities; and (v) net income from food and beverage sales and concessions.

Colonial’s revenues are heavily dependent on the operations of its satellite wagering facilities. Revenues from the satellite wagering facilities help support live racing at the track. The amount of revenue Colonial earns from each wager depends on where the race is run. Revenues from import simulcasting of out-of-state races and from wagering at the track and at the satellite wagering facilities on races run at the track consist of the total amount wagered at Colonial’s facilities, less the amount paid as winning wagers. The percentage of each dollar wagered on horse races that must be returned to the public as winning wagers (typically about 79%) is legislated by the state in which a race takes place. Revenues from export simulcasting consist of amounts payable to Colonial by the out-of-state racetracks and their simulcast facilities with respect to wagering on races run at the track.

As of December 31, 2011, we operated nine satellite wagering facilities in Virginia (one of which is temporarily closed). Additionally, in February 2012, Colonial Downs received a license for a tenth satellite wagering facility. The facility is located in downtown Richmond and operates within an existing restaurant.

Since 2004, Colonial Downs has operated an internet account wagering platform in Virginia called EZ Horseplay. In early 2009, Colonial Downs developed a custom built account wagering support kiosk that allows a customer to remotely open a wagering account, fund the account with cash, take a cash withdrawal from their account and print a race track program. The first kiosks, along with a touch screen version of the EZ Horseplay internet account wagering platform, were deployed in September 2009. As of December 31, 2011, we have deployed approximately 70 kiosks in private clubs, bars and restaurants in Virginia.

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Summary of Consolidated Operating Results

Our results of operations reflect the consolidated operations of all our subsidiaries. A summary of our consolidated operating results for the years ended December 31, 2011, 2010 and 2009 is as follows:

	Year Ended December 31,
	2011			2010 (As adjusted, see Note 4 of Financial Statements)			2009 (As adjusted, see Note 4 of Financial Statements)
	(Dollars in Thousands)
REVENUES
Gaming:
Casino	$	143,895		$	140,265		$	139,766
Truck stop		72,388			70,142			72,309
Pari-mutuel		27,920			27,669			32,276
Food and beverage		28,895			29,896			31,447
Convenience store—fuel		119,253			95,480			70,510
Other		24,416			24,107			25,349
Less: promotional allowances		(36,822	)		(35,603	)		(35,085	)
Total net revenues		379,945			351,956			336,572
COSTS AND EXPENSES
Gaming:
Casino		49,672			48,871			47,348
Truck stop		42,964			42,732			44,590
Pari-mutuel		22,374			21,757			26,077
Food and beverage		14,338			14,846			15,085
Convenience store—fuel		113,163			89,871			66,552
Other		19,938			18,191			19,079
Marketing, general and administrative		65,255			64,234			67,102
Unrealized loss (gain) on change in fair value of investment in equity securities		131			(594	)		309
Impairment of long-lived assets		10,065			—			—
Goodwill impairment		—			836			3,064
Depreciation and amortization		21,498			22,428			22,538
Total costs and expenses		359,398			323,172			311,744
OPERATING INCOME		20,547			28,784			24,828
Interest expense, net		(26,142	)		(26,832	)		(26,355	)
NET (LOSS) INCOME		(5,595	)		1,952			(1,527	)
Net income of subsidiaries attributable to the noncontrolling interest		(26	)		(42	)		(63	)
NET (LOSS) INCOME ATTRIBUTABLE TO JEI	$	(5,621	)	$	1,910		$	(1,590	)

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E. Comparison of our operations for the year ended December 31, 2011 to the year ended December 31, 2010

All comparisons below begin with the 2011 results followed by the 2010 results.

Casino revenues increased $3.6 million or 3% to $143.9 million from $140.3 million. The increase in casino revenues is due to increases at The Lodge of $0.8 million or 1%, at the Gilpin of $1.9 million or 9%, at Gold Dust West-Reno of $0.4 million or 3% and at Gold Dust West-Elko of $1.1 million or 11%, somewhat offset by a decrease at Gold Dust West-Carson City of $0.6 million or 7%. Revenues at The Lodge increased primarily due to an increase in slot revenues, somewhat offset by decreases in player banked poker and table games. The increase in revenues at the Gilpin was primarily due to an increase in slot coin-in attributable to a new marketing program, somewhat offset by a $0.1 million reduction in player banked poker revenues attributable to the March 2010 closure of the poker room. The increase in revenues at Gold Dust West-Elko is consistent with the strong market results.

Video poker truck stop revenues increased $2.3 million or 3% to $72.4 million from $70.1 million. The increase in revenues exceeded the statewide video poker truck stop revenue increase of 1% resulting from the installation of new video poker gaming devices and the remodeling of certain locations.

Pari-mutuel revenues increased $0.2 million or 1% to $27.9 million from $27.7 million. The increase in revenues is attributable to a $1.8 million increase in account wagering revenues, partially offset by a $1.6 million decrease in wagering revenues at the off track wagering facilities and racetrack primarily due to an overall decrease in attendance in 2011 compared to 2010.

Food and beverage revenues decreased $1.0 million or 3% to $28.9 million from $29.9 million. This decrease is primarily attributable to decreases of $0.9 million at the video poker truck stops, of which $0.6 million is the result of outsourcing the food and beverage operations at Springhill and Vivian in 2011, and decreases of $0.2 million at Colonial and $0.2 million at Gold Dust West-Carson City, somewhat offset by an increase of $0.3 million at Gold Dust West-Elko.

Convenience store-fuel revenues increased $23.8 million or 25% to $119.3 million from $95.5 million. The increase was primarily due to an increase in the average selling price of fuel to $3.54 per gallon in 2011 from $2.73 per gallon in 2010, somewhat offset by a 4% decrease in volume.

Other revenues increased $0.3 million or 1% to $24.4 million from $24.1 million and were primarily attributable to a $0.8 million increase in convenience store revenues at the video poker truck stops combined with a $0.1 million increase in hotel and other revenues at the casinos, somewhat offset by a one-time oil and gas royalty received in April 2010 totaling $0.5 million and a decrease of $0.1 million at Colonial.

Promotional allowances increased $1.2 million or 3% to $36.8 million from $35.6 million. Promotional allowances increased by $1.8 million at the Gilpin associated to a new marketing program and $0.4 million at the video poker truck stops, somewhat offset by decreases of $0.6 million at The Lodge and $0.4 million at Gold Dust West-Carson City.

Casino expenses increased $0.8 million or 2% to $49.7 million from $48.9 million primarily due to increases of $0.1 million at The Lodge, $0.1 million at the Gilpin, $0.2 million at Gold Dust West-Reno, $0.1 million at Gold Dust West-Carson City and $0.3 million at Gold Dust West-Elko. The increases directly correspond to the increases in casino revenues and increased labor costs.

Video poker truck stop expenses increased $0.3 million or less than 1% to $43.0 million from $42.7 million and is primarily due to direct costs associated with increased video poker truck stop revenues.

Pari-mutuel costs and expenses increased $0.6 million or 3% to $22.4 million from $21.8 million. The increase is attributable to an increase of $0.8 million in account wagering, facility and simulcast costs and expenses, partially offset by a $0.2 million decrease in purse expense.

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Food and beverage costs and expenses decreased $0.5 million or 3% to $14.3 million from $14.8 million, and is due to a decrease of $1.1 million at the video poker truck stops, of which $0.7 million is the result of outsourcing the food and beverage operations at Springhill and Vivian in 2011, combined with a $0.1 million decrease at the Gilpin, somewhat offset by increases of $0.3 million at The Lodge, $0.1 million at Gold Dust West-Reno, $0.1 million at Gold Dust West-Carson City and $0.2 million at Gold Dust West-Elko.

Convenience store-fuel expenses increased $23.3 million or 26% to $113.2 million from $89.9 million. The increase was primarily due to an increase in the average cost of fuel to $3.35 per gallon in 2011 from $2.57 per gallon in 2010, somewhat offset by a decrease in volume as discussed in convenience store-fuel revenues above. Additionally, in January 2010, we collected $0.4 million in accounts receivable that had been fully reserved in 2008.

Other costs and expenses increased $1.7 million or 10% to $19.9 million from $18.2 million, and were attributable to an increase in convenience store expenses at the video poker truck stops which correlates to the increase in convenience store revenues combined with an increase in labor costs.

Marketing, general and administrative expenses increased $1.0 million or 2% to $65.3 million from $64.3 million. This increase is primarily the result of increases of $0.8 million at the video poker truck stops, $0.2 million at The Lodge, $0.3 million at Gold Dust West-Elko and $0.2 million at corporate. These increases were somewhat offset by decreases of $0.1 million at the Gilpin, $0.2 million at Gold Dust West-Carson City and $0.2 million at Colonial. The increase at corporate was primarily due to increases in payroll and consulting costs, somewhat offset by a reduction in legal and license costs and campaign contributions.

We account for our investment in MTR Gaming Group, Inc. (“MTR”) under the fair value option permitted by FASB ASC Topic 825,Financial Instruments (“ASC Topic 825”). A decrease in MTR’s stock price during 2011 resulted in an unrealized loss on the change in fair value of investment in equity securities totaling $0.1 million. An increase in MTR’s stock price during 2010 resulted in an unrealized gain totaling $0.6 million.

At Gold Dust West-Carson City, we recorded an impairment of long-lived assets totaling $10.1 million during 2011. In 2011, we assessed our ability to recover the recorded cost of the Gold Dust West-Carson City and Virginia long-lived assets. We prepared a cash flow analysis based on management’s best estimates in an effort to assess the likelihood of recovering the cost of these assets. Based on these projections and the related underlying assumptions for Gold Dust West-Carson City, as well as our knowledge of the Carson City market, we believe that we will not be able to fully recover the carrying cost of these assets, and therefore, Gold Dust West-Carson City recorded an impairment of long-lived assets totaling $10.1 million in 2011. No comparable transaction occurred during 2010.

At one of our video poker truck stops, we recorded a goodwill impairment totaling $0.8 million during 2010. No comparable transaction occurred during 2011. See Note 3 to our Consolidated Financial Statements.

Depreciation and amortization expense decreased $0.9 million or 4% to $21.5 million from $22.4 million and is primarily due to decreases of $0.6 million at Gold Dust West-Carson City due to the asset impairment discussed above, $0.1 million at The Lodge, $0.3 million at the video poker truck stops and $0.2 million at corporate, somewhat offset by increases of $0.1 million at Gold Dust West-Elko and $0.2 million at Colonial.

Net interest expense decreased by $0.7 million or 3% to $26.1 million from $26.8 million and is attributable to a decrease in debt outstanding, somewhat offset by higher effective interest rates on our variable rate bank debt.

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F. Comparison of our operations for the year ended December 31, 2010 to the year ended December 31, 2009

All comparisons below begin with the 2010 results followed by the 2009 results.

Casino revenues increased $0.5 million or less than 1% to $140.3 million from $139.8 million. Increases in casino revenues at The Lodge of $3.7 million or 5% were offset by decreases at the Gilpin of $0.7 million or 4%, Gold Dust West-Reno of $2.2 million or 12%, Gold Dust West-Carson City of $0.1 million or 1% and Gold Dust West-Elko of $0.2 million or 2%. Revenues at The Lodge increased primarily due to Amendment 50 becoming effective July 2, 2009. Amendment 50 is benefiting the larger casino properties in Black Hawk. Overall, the City of Black Hawk casino win increased 6% during 2010 compared to 2009. Gold Dust West-Reno continues to be negatively impacted by continued declines in our market area.

Video poker truck stop revenues decreased $2.2 million or 3% to $70.1 million from $72.3 million. The decrease in revenues was experienced at nearly all of our video poker truck stop locations and is consistent with the statewide video poker truck stop revenue decline of 2% resulting from the continued general economic conditions, including higher unemployment and decreased disposable income for 2010 compared to 2009.

Pari-mutuel revenues decreased $4.6 million or 14% to $27.7 million from $32.3 million. The decrease in revenues is attributable to a $3.7 million decrease in wagering revenues at the racetrack and off track wagering facilities primarily due to an overall decrease in attendance in 2010 compared to 2009, combined with a $0.9 million decrease in account wagering revenues primarily due to a decrease in commission revenue resulting from revised profit sharing agreements with horsemen’s groups as compared to the prior year.

Food and beverage revenues decreased $1.5 million or 5% to $29.9 million from $31.4 million. This decrease is primarily attributable to decreases of $2.0 million at the video poker truck stops, $0.2 million at the Gilpin and $0.5 million at Colonial which correspond to the decreases in gaming revenues. These decreases were somewhat offset by increases of $0.7 million at The Lodge, $0.1 million at the Gold Dust West-Reno, $0.2 million at Gold Dust West-Carson City and $0.2 million at Gold Dust West-Elko.

Convenience store-fuel revenues increased $25.0 million or 35% to $95.5 million from $70.5 million. The increase was primarily due to an increase in the average selling price of fuel to $2.73 per gallon in 2010 from $2.26 per gallon in 2009, combined with an 17% increase in volume. In December 2009, JEI entered into a fuel supply agreement with CITGO Petroleum Corporation (“CITGO”). To help JEI reach the fuel sale volume necessary to qualify for the reduced pricing structure under the CITGO contract, JEI entered into an agreement with Gameco to provide gasoline and diesel fuel at cost for its fuel operations. The increase in fuel sales volume for this period was primarily due to the new agreement with Gameco, resulting in an increase in fuel sales revenues totaling $4.5 million in 2010.

Other revenues decreased $1.2 million or 5% to $24.1 million from $25.3 million and were primarily attributable to a $1.4 million decrease in convenience store revenues at the video poker truck stops and receipt of $0.3 million in 2009 of insurance proceeds in excess of hurricane losses incurred during late 2008 at our video poker truck stops, somewhat offset by a one-time oil and gas royalty received in April 2010 totaling $0.5 million and an increase in hotel revenues totaling $0.2 million at The Lodge. Additionally, other revenues at Colonial and our Nautica Properties decreased by a combined $0.3 million.

Promotional allowances increased $0.5 million or 1% to $35.6 million from $35.1 million. Increases in promotional allowances of $2.4 million at The Lodge and $0.1 million at the video poker truck stops were somewhat offset by decreases of $1.8 million at Gold Dust West-Reno, $0.1 million at the Gilpin and $0.1 million at Gold Dust West-Elko.

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Casino expenses increased $1.6 million or 3% to $48.9 million from $47.3 million. Increases of $2.1 million at The Lodge and $0.1 million at Gold Dust West-Carson City were somewhat offset by decreases of $0.4 million at the Gilpin and $0.2 million at Gold Dust West-Elko. The increase at The Lodge was primarily due to additional staffing for the table games and extended hours combined with increased gaming taxes resulting from increased casino revenues.

Video poker truck stop expenses decreased $1.9 million or 4% to $42.7 million from $44.6 million and is primarily due to direct costs associated with decreased video poker truck stop revenues.

Pari-mutuel costs and expenses decreased $4.3 million or 17% to $21.8 million from $26.1 million. The decrease is attributable to a $2.7 million decrease in direct costs resulting from decreased pari-mutuel revenues primarily as a result of an overall decrease in attendance as compared to the prior year, combined with a $1.6 million decrease in costs associated with account wagering resulting from revised profit sharing agreements with horsemen’s groups.

Food and beverage costs and expenses decreased $0.3 million or 2% to $14.8 million from $15.1 million. Decreases of $1.4 million at the video poker truck stops and $0.2 million at Colonial, were offset by increases of $0.5 million at The Lodge, $0.1 million at the Gilpin, $0.1 million at Gold Dust West-Reno, $0.4 million at Gold Dust West-Carson City and $0.2 million at Gold Dust West-Elko.

Convenience store-fuel expenses increased $23.3 million or 35% to $89.9 million from $66.6 million. The increase was primarily due to an increase in the average cost of fuel to $2.57 per gallon in 2010 from $2.13 per gallon in 2009, combined with an increase in volume as discussed in convenience store-fuel revenues above. In January 2010, we also collected $0.4 million in accounts receivable that had been fully reserved in December 2008. The increase in fuel costs associated with the new affiliate agreements was $4.5 million in 2010.

Other costs and expenses decreased $0.9 million or 5% to $18.2 million from $19.1 million, and were attributable to a $0.8 million decrease in convenience store expenses at the video poker truck stops which correlates to the decrease in convenience store revenues combined with a $0.1 million decrease in hotel expenses at The Lodge.

Marketing, general and administrative expenses decreased $2.9 million or 4% to $64.2 million from $67.1 million. This decrease is primarily the result of a net decrease of $1.9 million at corporate which is comprised of the following: (a) during 2009, we made political contributions in Ohio totaling $2.3 million which did not recur in 2010, combined with decreases of: (b) $0.5 million in professional accounting fees, (c) $0.1 million in legal expenses and (d) $0.4 million in other miscellaneous expenses; somewhat offset by increases of: (e) $0.5 million of costs incurred during 2010 related to the amendment to our credit agreement, (f) $0.5 million for corporate payroll, (g) $0.1 million for travel expenses at corporate and (h) $0.3 million for various political contributions made in 2010. Additionally, we had decreases of $0.2 million at Gold Dust West-Reno, $0.2 million at Gold Dust West-Carson City, $0.6 million at Colonial and $0.5 million at the video poker truck stops. These decreases were somewhat offset by increases of $0.2 million at The Lodge, $0.2 million at the Gilpin and $0.1 million combined at the Nautica Properties.

An increase in MTR’s stock price resulted in an unrealized gain on the change in fair value of investment in equity securities totaling $0.6 million during the year ended December 31, 2010. A decrease in the stock price resulted in an unrealized loss on the change in fair value of investment in equity securities totaling $0.3 million during the year ended December 31, 2009.

Our annual goodwill impairment test included an analysis of the gaming industry overall as well as an analysis of the specific locations in which we operate. We determined the fair values for each of these reporting units using both the market approach (recent comparable transactions from which we derived an applicable valuation multiple) and the income approach (net present value of our anticipated future cash flows). These fair values were then compared to the carrying values for the respective reporting unit. In 2010 and 2009, prior to our acquisition from a related party, we determined the carrying value of the goodwill at one of our video poker truck stops was impaired, and therefore, we recorded goodwill impairment charges totaling $0.8 million during 2010 compared to $3.1 million in 2009.

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Depreciation and amortization expense decreased $0.1 million or less than 1% to $22.4 million from $22.5 million.

Net interest expense increased by $0.5 million or 2% to $26.8 million from $26.3 million and is attributable to higher effective interest rates on our variable rate bank debt, somewhat offset by a decrease in debt outstanding during the year ended December 31, 2010 compared to the year ended December 31, 2009.

G. Segment information for the three years ended December 31, 2011

As discussed above, we have four segments representing the geographic regions of our operations: Colorado, Nevada, Louisiana and Virginia. Each segment is managed separately because of the unique characteristics of its revenue stream, regulatory environment and customer base.

The information presented is by each segment in which we have operations and also presents our EBITDA (earnings before interest, income taxes, depreciation and amortization) for each segment. We believe that the presentation of a non-GAAP financial measure such as EBITDA is useful because it allows holders of our debt and management to evaluate and compare our operating results from continuing operations from period to period in a meaningful and consistent manner in addition to standard GAAP financial measures. Management internally evaluates the performance of our segments using EBITDA measures as do most analysts following the gaming industry. EBITDA is an element of certain key financial covenants in our debt agreements and, as such, is a critical component that we closely watch in order to determine our ability to achieve future growth and to ensure we are in compliance with our debt agreements. We present EBITDA in the tables below to provide further discussion and analysis of our operating results. EBITDA can be reconciled directly to our consolidated net income (loss) by adding the amounts shown for depreciation and amortization, interest and income taxes to net income (loss). This information should not be considered as an alternative to any measure of performance as promulgated under accounting principles generally accepted in the United States of America, such as net income (loss), nor should it be considered as an indicator of our overall financial performance. Our calculation of EBITDA may be different from the calculation used by other companies and comparability may be limited.

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The following is a summary of the components of EBITDA, for the three years ended December 31, 2011, 2010 and 2009 (dollars in thousands):

	For the Years Ended December 31,
	2011			2010 (As adjusted, see Note 4 of Financial Statements)			2009 (As adjusted, see Note 4 of Financial Statements)
NET REVENUES
Colorado:
The Lodge	$	79,916		$	78,449		$	76,129
Gilpin		18,089			18,076			18,917
Total Colorado		98,005			96,525			95,046
Nevada:
Gold Dust West-Reno		18,111			17,604			17,968
Gold Dust West-Carson City		12,216			12,621			12,627
Gold Dust West-Elko		12,372			10,911			10,824
Total Nevada		42,699			41,136			41,419
Louisiana		207,332			182,252			162,670
Virginia		31,180			31,285			36,512
Corporate and other		729			758			925
Total Net Revenues		379,945			351,956			336,572
COSTS AND EXPENSES
Colorado:
The Lodge		52,140			51,591			48,917
Gilpin		13,612			13,713			13,804
Total Colorado		65,752			65,304			62,721
Nevada:
Gold Dust West-Reno		12,390			12,090			12,257
Gold Dust West-Carson City (1)		22,953			12,899			12,591
Gold Dust West-Elko		9,892			9,028			8,995
Total Nevada		45,235			34,017			33,843
Louisiana (3)		186,046			161,918			145,289
Virginia		30,305			29,802			34,965
Corporate overhead and other (2) (4) (5)		10,562			9,703			12,388
Total Costs and Expenses		337,900			300,744			289,206
EBITDA
Colorado:
The Lodge		27,776			26,858			27,212
Gilpin		4,477			4,363			5,113
Total Colorado		32,253			31,221			32,325
Nevada:
Gold Dust West-Reno		5,721			5,514			5,711
Gold Dust West-Carson City (1)		(10,737	)		(278	)		36
Gold Dust West-Elko		2,480			1,883			1,829
Total Nevada		(2,536	)		7,119			7,576
Louisiana (3)		21,286			20,334			17,381
Virginia		875			1,483			1,547
Corporate overhead and other (2) (4) (5)		(9,833	)		(8,945	)		(11,463	)
Total EBITDA	$	42,045		$	51,212		$	47,366

See Notes on page 50.

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General

See sections E and F above which provide explanations regarding the fluctuations in our revenues and costs and expenses by property and segment.

The Lodge

Net revenues at The Lodge increased by $1.5 million or 2% for the year ended December 31, 2011 compared to the same period of 2010, primarily in slots revenues and decreased promotional allowances, somewhat offset by a decrease in player banked poker and table games revenues. Labor costs and food and beverage costs were also higher than the prior year. EBITDA increased 3% in 2011 compared to 2010. For the year ended December 31, 2010 compared to the year ended December 31, 2009, EBITDA decreased 1%.

Gilpin

EBITDA at the Gilpin increased $0.1 million or 3% for the year ended December 31, 2011 compared to the same period of 2010. Slots revenues increased during 2011 primarily due to a new marketing program which also increased promotional allowances. The Gilpin experienced a decrease in player banked poker due to the March 2010 closure of its poker room. Gaming taxes were also higher in 2011 as a result of increased gaming revenues. For the year ended December 31, 2010 compared to the same period of 2009, net revenues at the Gilpin decreased 4% and EBITDA decreased 15%. Year-over-year, the Gilpin experienced a decrease in slots and other revenues due to general economic conditions and the 2010 closure of its poker room, somewhat offset by an increase in table games revenues resulting from the 2009 gaming legislation. Marketing costs were higher during 2010 than 2009.

Gold Dust West-Reno

Slots revenues at Gold Dust West-Reno increased by 3% during 2011 compared to 2010. Labor costs were also higher year-over-year. EBITDA at Gold Dust West-Reno increased 4% for the year ended December 31, 2011 compared to the same period of 2010. EBITDA decreased 3% for the year ended December 31, 2010 compared to 2009 primarily due to a decrease in slot revenues resulting from the local and general economic conditions, substantially offset by a decrease in promotional allowances.

Gold Dust West-Carson City

Excluding the impact of the 2011 impairment of long-lived assets totaling $10.1 million, EBITDA at Gold Dust West-Carson City decreased $0.4 million for the year ended December 31, 2011 compared to the same period of 2010, primarily due to a decrease in slots and other revenues resulting from local economic conditions, somewhat offset by a decrease in promotional allowances. EBITDA decreased $0.3 million in 2010 from 2009. On April 1, 2010, we opened a new restaurant resulting in additional labor, food and beverage and other start-up costs.

Gold Dust West-Elko

EBITDA at Gold Dust West-Elko increased $0.6 million or 32% for the year ended December 31, 2011 compared to the same period of 2010. Net revenues increased $1.5 million, while costs and expenses increased $0.9 million. The increase in EBITDA was primarily due to a 10% increase in slot revenues, combined with increases in table games and food and beverage revenues, somewhat offset by increases in direct costs attributable to the increases in revenues. For the year ended December 31, 2010 compared to the same period of 2009, EBITDA increased less than $0.1 million primarily due to a decrease in promotional allowances, somewhat offset by lower slot revenues.

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Louisiana

Excluding the impacts of the goodwill impairment charges of $0.8 million and $3.1 million recorded in 2010 and 2009, respectively, EBITDA at the Louisiana video poker truck stops increased $0.1 million or 1% for the year ended December 31, 2011 compared to the same period of 2010 and 4% for 2010 compared to 2009, primarily due to increases in fuel prices and gross profit per gallon. Gaming revenues in 2011 returned to levels similar to 2009, rebounding from a 3% decline in 2010 from 2009 resulting from general economic conditions. Additionally, during 2010, we received a one-time oil and gas royalty totaling $0.5 million and collected $0.4 million in accounts receivable that had been fully reserved in 2008.

Virginia

EBITDA at our pari-mutuel operations in Virginia decreased $0.6 million for the year ended December 31, 2011 compared to the same period of 2010. The year-over-year decrease is primarily attributable to an overall decrease in revenues totaling $0.1 million and increased pari-mutuel account wagering costs totaling $0.6 million, somewhat offset by a $0.2 million decrease in management, general and administrative costs. EBITDA decreased less than $0.1 million for the year ended December 31, 2010 compared to the same period of 2009.

Corporate Overhead and Other

The EBITDA loss at corporate increased $0.9 million for the year ended December 31, 2011 compared to the same period of 2010 and decreased $2.5 million for the year ended December 31, 2010 compared to the same period of 2009. These fluctuations are somewhat due to the variability in the stock price of our investment in MTR as follows: a $0.1 million loss in 2011, a $0.6 million gain in 2010 and a $0.3 million loss in 2009. Additionally, we expended $0.5 million during 2010 for general and administrative costs for the amendment to our credit agreement and $2.3 million during 2009 for campaign costs in Ohio. After adjusting for these non-core items, the EBITDA loss increased 7% in 2011 compared to 2010, primarily due to increases in payroll, consulting and legal costs, somewhat offset by a reduction in campaign contributions, and increased 2% in 2010 compared to 2009.

Reconciliation of EBITDA to Net Income (Loss)

The following table sets forth a reconciliation of our EBITDA, a non-GAAP financial measure, to our net income (loss), a GAAP financial measure (dollars in thousands):

Year Ended December 31, 2011 (As adjusted, see Note 4 of Financial Statements)	EBITDA			Depreciation and Amortization		Interest Expense, net		Noncontrolling Interest			Net Income (Loss)
Colorado:
The Lodge	$	27,776		$	4,910	$	6,725				$	16,141
Gilpin		4,477			1,686		1,904					887
Total Colorado		32,253			6,596		8,629					17,028
Nevada:
Gold Dust West-Reno		5,721			1,635		2,612					1,474
Gold Dust West-Carson City (1)		(10,737	)		1,607		1,534					(13,878	)
Gold Dust West-Elko		2,480			2,652		951					(1,123	)
Total Nevada		(2,536	)		5,894		5,097					(13,527	)
Louisiana		21,286			5,793		4,603					10,890
Virginia		875			2,459		501					(2,085	)
Corporate overhead and other (2)		(9,833	)		756		7,312	$	(26	)		(17,927	)
TOTAL	$	42,045		$	21,498	$	26,142	$	(26	)	$	(5,621	)

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Year Ended December 31, 2010 (As adjusted, see Note 4 of Financial Statements)	EBITDA			Depreciation and Amortization		Interest Expense, net		Noncontrolling Interest			Net Income (Loss)
Colorado:
The Lodge	$	26,858		$	5,028	$	6,664				$	15,166
Gilpin		4,363			1,764		1,899					700
Total Colorado		31,221			6,792		8,563					15,866
Nevada:
Gold Dust West-Reno		5,514			1,558		2,619					1,337
Gold Dust West-Carson City		(278	)		2,270		1,534					(4,082	)
Gold Dust West-Elko		1,883			2,518		1,070					(1,705	)
Total Nevada		7,119			6,346		5,223					(4,450	)
Louisiana (3)		20,334			6,076		5,377					8,881
Virginia		1,483			2,261		532					(1,310	)
Corporate overhead and other (4)		(8,945	)		953		7,137	$	(42	)		(17,077	)
TOTAL	$	51,212		$	22,428	$	26,832	$	(42	)	$	1,910

Year Ended December 31, 2009 (As adjusted, see Note 4 of Financial Statements)	EBITDA			Depreciation and Amortization		Interest Expense, net		Noncontrolling Interest			Net Income (Loss)
Colorado:
The Lodge	$	27,212		$	5,148	$	6,782				$	15,282
Gilpin		5,113			1,939		1,904					1,270
Total Colorado		32,325			7,087		8,686					16,552
Nevada:
Gold Dust West-Reno		5,711			1,598		2,618					1,495
Gold Dust West-Carson City		36			1,948		1,534					(3,446	)
Gold Dust West-Elko		1,829			2,438		932					(1,541	)
Total Nevada		7,576			5,984		5,084					(3,492	)
Louisiana (3)		17,381			6,337		5,122					5,922
Virginia		1,547			2,124		577					(1,154	)
Corporate overhead and other (5)		(11,463	)		1,006		6,886	$	(63	)		(19,418	)
TOTAL	$	47,366		$	22,538	$	26,355	$	(63	)	$	(1,590	)

(1) Included in Gold Dust West-Carson City for 2011 is an impairment charge of long-lived assets totaling $10.1 million.

(2) Included in corporate overhead and other for 2011 is a $0.1 million loss on the change in fair value of investment in equity securities.

(3) Included in Louisiana is a goodwill impairment charge totaling $0.8 million in 2010 and $3.1 million in 2009.

(4) Included in corporate overhead and other for 2010 is a $0.6 million gain on the change in fair value of investment in equity securities and general and administrative costs incurred related to the amendment to our credit agreement totaling $0.5 million.

(5) Included in corporate overhead and other for 2009 is a $0.3 million loss on the change in fair value of investment in equity securities and $2.3 million we expended in opposition of a constitutional amendment in Ohio.

H. Liquidity and capital resources—December 31, 2011

As of December 31, 2011, we had cash and cash equivalents of $25.2 million compared to $24.7 million as of December 31, 2010. The increase of $0.5 million is the result of $29.4 million cash provided by operating activities, $13.9 million cash used in investing activities, and $15.0 million used in financing activities, which is

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further discussed below. Our primary sources of liquidity are cash provided by operating activities and external borrowings. Our primary uses of cash are for debt service, capital improvements, development and acquisitions. Cash flows provided by operating activities increased $1.3 million for the year ended December 31, 2011 compared to the same period of 2010 and increased $5.0 million for the year ended December 31, 2010 compared to 2009. The year-over-year increase in operating cash flows from 2010 to 2011 is primarily due to an increase in operating income after adjusting for non-cash transactions combined with a greater increase in accrued expenses and other noncurrent liabilities, somewhat offset by routine fluctuations in accounts payable resulting from cash management activities . The year-over-year increase in operating cash flows from 2009 to 2010 is primarily due to routine fluctuations in accounts payable and other current liabilities resulting from cash management activities.

Cash used in investing activities during 2011 was the result of property and equipment and device rights additions totaling $14.0 million, for ongoing capital investments at our existing properties, somewhat offset by $0.1 million of proceeds from the sale of equipment. The cash used in investing activities during 2010 was the result of property and equipment and device rights additions totaling $12.6 million for ongoing capital investments at our existing properties, somewhat offset by $0.3 million of proceeds from the sale of equipment. The cash used in investing activities during 2009 was the result of property and equipment and device rights additions totaling $14.6 million for ongoing capital investments at our existing properties, $2.7 for the atrium expansion project at The Lodge, $0.3 million for Mississippi land purchase transactions, and $0.2 million to acquire the noncontrolling interest of Sugar Warehouse, offset by $0.4 million of proceeds from the sale of equipment.

The cash provided by or used in our financing activities varies significantly from year to year depending upon the cash provided by operations and investing activities, both of which are discussed above, as well as our cash position. The cash used in financing activities during 2011 was the result of payments on long-term debt totaling $1.5 million, $2.1 million to acquire the noncontrolling interests of Nautica Phase 2 and Nautica Peninsula Land and cash distributions to stockholder totaling $15.6 million, including $10.4 million for the purchase of Springhill and Vivian, $3.0 million for the purchase of Forest Gold and $1.2 million for the combined purchases of the three Nautica Properties, somewhat offset by net borrowings on the revolving senior credit facility totaling $3.4 million and $0.8 million for the issuance of debt at Sycamore & Main prior to our acquisition.

As of December 31, 2011, we had $22.1 million available on our $40 million revolving senior credit facility for acquisitions, capital expenditure programs and working capital. As of December 31, 2011, our total debt approximates $284.7 million. Our future liquidity, which includes our ability to make semi-annual interest payments on June 15 and December 15 of each year, depends upon our future operational success. Our failure to pay interest, repay our indebtedness when due, or maintain compliance with our debt covenants would result in an event of default under both our senior credit facility and our note indenture. At December 31, 2011, we were in compliance with our financial covenants. See Item 7C. above for information regarding our recent credit facility amendment.

While our owner has made capital contributions in the past to facilitate our various acquisitions from time to time, we can give no assurance that it will continue to do so in the future. Additionally, as we are a Qualified Subchapter S-Corporation Subsidiary, we may from time to time make distributions to our owner for any taxes due as a result of taxable income generated by us. Furthermore, annual distributions may be made to our owner in an aggregate amount not to exceed the greater of $1 million or 50% of consolidated net income as defined in our credit agreement and indenture.

We believe that our cash flow from operations, cash and cash equivalents and our senior revolving credit facility discussed above will be adequate to meet our debt service obligations and operational expenditures, as well as our capital expenditure requirements for the next twelve months. During 2012, we currently anticipate spending approximately $15 million for discretionary capital expenditures. While we believe these sources will provide us sufficient liquidity over the next twelve months, we can give no assurance that these sources of cash will be sufficient to enable us to do so. Further, in addition to our normal capital expenditure requirements, we anticipate that we will pursue the acquisition of other properties and continue to engage in the pursuit of new development opportunities. It is possible that we may need to enter into new financing arrangements and raise additional capital in the future if we are unable to generate sufficient cash to sustain expansion. Our ability to incur additional debt is further restricted by the terms and covenants of our senior secured bank credit facility and senior unsecured notes. We can give no assurance that we will be able to raise any capital or obtain the necessary sources of liquidity and financing on favorable terms, if at all. Additionally, any debt financing that we may incur in the future will increase the amount of our total outstanding indebtedness and our debt service requirements, and therefore heighten the related risks we currently face.

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We also face the risk that there could be further declines in the demand for our products and services, which would reduce our ability to generate funds from operations. Adverse national and local economic conditions could persist or worsen. While we believe our cash flows are geographically diverse, at present we do have a significant concentration of cash flows generated in the Black Hawk, Colorado and Louisiana markets. Should the Black Hawk or Louisiana markets decline or become saturated or should competition erode our market share, we would suffer a decline in available funds generated from operations. If this were to occur, there exists the possibility that our credit rating could be downgraded, which would further reduce our ability to access the capital markets and obtain additional or alternative financing. See the section “Risk Factors” in Item 1A above.

The following table provides disclosure concerning our obligations and commitments to make future payments under contracts, such as debt and lease agreements, and purchase and other long-term obligations as of December 31, 2011.

(In Thousands)	Total		Next 12 Months		1-3 Years		4-5 Years		After 5 Years
Long-term debt (1)	$	337,432	$	35,124	$	302,308	$	—	$	—
Capital lease obligations		6,696		474		1,715		698		3,809
Operating leases (2)		35,418		3,234		5,666		4,113		22,405
Purchase obligations (3)		166,711		57,176		109,535		—		—
Other long-term obligations (4)		21,937		2,383		4,115		3,164		12,275
Total contractual cash obligations	$	568,194	$	98,391	$	423,339	$	7,975	$	38,489

(1) Long-term debt includes principal and interest owing under the terms of our senior unsecured notes, our senior secured credit facility and capital leases. Interest on variable rate debt is computed based on rates outstanding at December 31, 2011.

(2) Operating leases include various land and building leases for certain properties in Nevada, Louisiana and Virginia; office space in Colorado, Louisiana, Virginia and Florida; and other equipment leases at all locations.

(3) Purchase obligations include five-year fuel supply agreements for gasoline and diesel fuel. Fuel volumes are specified in the contracts. The purchase price is a variable market-based price. The long-term obligations in this table were derived using the applicable contract prices for gasoline and diesel fuel at December 31, 2011 multiplied by the actual fuel volumes per the contracts.

(4) Other long-term obligations include a 20-year, $1.25 million per year management agreement with Jacobs Investments Management Co. Inc., an affiliated company, and our obligation to pay $0.90 per operating video poker machine per day to Jalou Device Owner, L.P., the related party owner of the video poker machines in order to maintain the machines used in our video poker truck stops. In addition, Colonial has entered into an agreement with a totalisator company, which provides wagering services and designs, programs, and manufactures totalisator systems for use in wagering applications. The amendment provides for a minimum charge per calendar year of $205,000. Other long-term obligations also include various surveillance and service agreements in Louisiana and at the corporate office.

Finally, beginning June 15, 2010, we can redeem all or part of our outstanding senior unsecured notes aggregating $210 million at the redemption prices set forth below, plus accrued and unpaid interest. The redemption prices, expressed as a percentage of the principal amount, for the 12-month period beginning on June 15 of the years indicated below are as follows:

Year	Percentage
2011		102.438	%
2012 and thereafter		100.000	%

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I. Critical accounting policies and estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. We periodically evaluate our policies and the estimates and assumptions related to these policies. All of our subsidiary companies operate in a highly regulated industry. Our Colorado, Nevada, Louisiana and Virginia operations are subject to regulations that describe and regulate operating and internal control procedures. The majority of our casino revenue is in the form of cash, personal checks, credit cards or gaming chips and tokens, which by their nature do not require complex estimations. We estimate certain liabilities with payment periods that extend for longer than several months. Such estimates include our slot club liabilities, outstanding gaming chip, token and pari-mutuel ticket liability, self-insured medical and workers compensation liabilities, and litigation costs. We believe that these estimates are reasonable based on our past experience with the business and based upon our assumptions related to possible outcomes in the future. Future actual results will likely differ from these estimates.

Property and equipment

We have a significant investment in long-lived property and equipment, representing approximately 69% of our total assets. We analyzed the undiscounted future cash flows expected to result from the use of the assets at Gold Dust West-Carson City and Virginia (see below). Any adverse change to the estimate of these undiscounted cash flows could necessitate an impairment charge that would adversely affect operating results. We review the carrying value of our property and equipment for potential impairment when events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use. Further, we assign lives to our assets based on our standard policy, which is established by management as representative of the useful life of each class of assets. Should the actual useful life of a class of assets differ from the estimated useful life, we would record an impairment charge. We review useful lives and obsolescence and assess the commercial viability of our assets periodically.

During 2011 and 2010, based on operating results, we were required, pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 360,Property, Plant and Equipment, to assess our ability to recover the recorded cost of the Gold Dust West-Carson City and Virginia long-lived assets. We prepared a cash flow analysis based on management’s best estimates in an effort to assess the likelihood of recovering the cost of these assets. Based on these projections and the related underlying assumptions for Gold Dust West-Carson City, as well as our knowledge of the Carson City market, we believe that we will not be able to fully recover the carrying cost of these assets, and therefore, Gold Dust West-Carson City recorded an impairment of long-lived assets totaling $10.1 million in 2011. Based on the cash flow projections and the related underlying assumptions for Virginia, as well as our knowledge of the Virginia market, we believe that we will be able to recover the carrying cost of these assets and no impairment currently exists. However, future events such as actual performance versus projected performance, continued market decline, increased and/or changing competitive forces, or other unforeseen events could change our estimates and cause us to recognize an additional impairment in the carrying value of the Gold Dust West-Carson City or Virginia long-lived assets in future periods. Such an impairment could be material to our financial position and results of operations.

Goodwill and other intangible assets

We have $48.7 million in goodwill recorded on our consolidated balance sheet resulting from the acquisition of businesses. We do not have any other nonamortizing intangible assets on our consolidated balance sheet. We annually review our goodwill for impairment. The annual evaluation of goodwill requires the use of estimates about future operating results of each reporting unit to determine its estimated fair value. Changes in forecasted operations can materially affect these estimates.

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Our reporting units with goodwill balances at December 31, 2011 are The Lodge ($4.2 million), Gilpin ($2.5 million), Gold Dust West-Reno ($8.8 million) and Louisiana ($33.2 million). There is no goodwill recorded in our Gold Dust West-Carson City, Gold Dust West-Elko or Virginia reporting units. We performed our most recent annual impairment test for these reporting units as of September 30, 2011. Our annual impairment test included an analysis of the gaming industry overall as well as an analysis of the specific locations in which we operate. We determined the fair values for each of these reporting units using both the market approach (recent comparable transactions from which we derived an applicable valuation multiple) and the income approach (net present value of our anticipated future cash flows). These fair values were then compared to the carrying values for the respective reporting unit. As of September 30, 2011, we believe the carrying value of the goodwill held in our reporting units was not impaired. Furthermore, if the fair value of any of our reporting units declined by 10%, no goodwill impairment would be required. However, as of September 30, 2010 and 2009, prior to our acquisition from a related party, we determined the carrying value of the goodwill at one of our video poker truck stops was impaired. Consequently, during 2010 and 2009, we recorded a goodwill impairment charge of $0.8 million and $3.1 million, respectively. There has been no change in the carrying amount of goodwill during 2011.

We have also reassessed the useful lives of our identifiable intangible assets without any change to the previously established amortization periods of such assets.

Item 7A.Quantitative and Qualitative Disclosure about Market Risk.

Market Risk

Market risk is the risk of loss arising from adverse changes in market rates and prices, such as commodity prices and interest rates. We purchase and sell fuel at market prices, subject to daily price changes.

We have issued $210 million of 9 ³/4% fixed rate senior unsecured notes due in 2014 and a $100 million variable rate senior secured credit facility consisting of: (i) a $40 million revolving credit facility, of which $3 million expired June 2011 and the remainder is due June 2012, (ii) a $40 million six-year term loan facility due June 2012, and (iii) a $20 million six-year delayed draw term loan due June 2012. As of December 31, 2011, $14.9 million was outstanding on the senior secured revolving credit facility and $56.8 million was outstanding on our senior secured term loan debt, bearing interest at a blended variable rate approximating 3.50%. As of December 31, 2011, $22.1 million was available on the revolving credit facility. On February 23, 2012, we amended and extended our credit facility. See discussion of the 2012 amendment to the credit agreement discussed above in Item 7C. – Subsequent Event.

If market interest rates increase, our cash requirements for interest on the senior secured credit facility balance would also increase. Conversely, if market interest rates decrease, our cash requirements for interest on the senior secured credit facility balance would also decrease. There would be an approximate change in our cash requirements of $0.3 million annually for interest should market rates increase or decrease by 10% compared to interest rate levels at December 31, 2011.

We currently do not use interest rate swaps or other similar investments to alter interest rate exposure.

JEI owns an investment in the publicly traded equity of MTR Gaming Group, Inc. Market prices for equity securities are subject to fluctuation. Fluctuation in the market price of such a security may result from perceived changes in the underlying economic characteristics of the investee, the relative price of alternative investments, and general market conditions. Consequently, the amount realized on any ultimate sale of this investment may significantly differ from the reported market value as of December 31, 2011.

The recent severe economic downturn and adverse conditions in the local, regional, national and global markets has negatively affected our operations, and may continue to negatively affect our operations in the future. During periods of economic contraction such as the current period, our revenues may decrease while some of our costs remain fixed or even increase, resulting in decreased earnings. Gaming and other leisure activities we offer represent discretionary expenditures and participation in such activities may decline during economic downturns, during which consumers generally earn less disposable income. Even an uncertain economic outlook may adversely

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affect consumer spending in our gaming operations and related facilities, as consumers spend less in anticipation of a potential economic downturn. Furthermore, other uncertainties, including national and global economic conditions, terrorist attacks or other global events, could adversely affect consumer spending, increase gasoline prices and adversely affect our operations.

We use significant amounts of electricity, natural gas and other forms of energy. While we have generally not experienced any major shortages of energy, any substantial increases in the cost of electricity and natural gas in the United States could negatively impact our operating results. The extent of any impact is subject to the magnitude and duration of the energy price increases and could be material.

Also, if gas prices rise, this may result in a reduction of automobile travel and a decrease in the number of patrons at our properties. Our business, assets, financial condition and results of operations could be adversely affected by a weakening of national economic conditions, high gasoline prices and/or adverse winter weather conditions. We currently do not use any financial instruments to hedge against fuel price exposure.

We are a highly levered company. While we intend to finance expansion and capital expenditures with existing cash, cash flow from operations and/or borrowings under our existing senior secured credit facilities, we may require additional financing to support our continued growth. However, due to the existing uncertainty in the capital and credit markets, our access to capital may not be available on terms acceptable to us or at all. Further, if adverse regional and national economic conditions persist or worsen, we could experience decreased revenues from our operations attributable to decreases in consumer spending levels and could fail to satisfy the financial and other restrictive covenants to which we are subject under our existing indebtedness.

Item 8.Financial Statements and Supplementary Data.

Reference is made to the financial statements, the notes, and the report of our independent registered public accounting firm commencing on page F-1 of this report.

Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A.Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of December 31, 2011. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of such date, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, evaluated and reported, as applicable, within the time periods specified in the rules and forms of the U.S. Securities and Exchange Commission, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely discussions regarding required disclosure.

Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act. Those rules define internal control over financial reporting as a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

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• Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

• Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

• Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisitions, use or disposition of our assets that could have a material effect on our financial statements.

Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2011. In making this assessment, our management used the criteria established inInternal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our assessment, we believe that, as of December 31, 2011, our internal control over financial reporting is effective based on those criteria.

This Annual Report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our independent registered public accounting firm pursuant to the rules of the Securities and Exchange Commission that permit us to provide only management’s report in this Annual Report.

Changes in Internal Control Over Financial Reporting

There were no changes that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B.Other Information.

There is no information we were required to report on Form 8-K during our fourth fiscal quarter of the year ended December 31, 2011 that was not so reported.

Item 10.Directors, Executive Officers and Corporate Governance.

The following table provides information regarding our directors and executive officers and key employees as of March 1, 2012

Name	Age	Position
Jeffrey P. Jacobs	58	Chief Executive Officer, Secretary, Treasurer and Chairman of the Board
Stephen R. Roark	64	President
Ian M. Stewart	57	President of Pari-Mutuel Wagering Operations
Michael T. Shubic	58	Chief Operating Officer
Brett A. Kramer	43	Chief Financial Officer
Stanley Politano	62	Executive Vice President
Emanuel J. Cotronakis	41	Executive Vice President, General Counsel and Assistant Secretary

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Jeffrey P. Jacobs is our Chairman, Chief Executive Officer, Secretary and Treasurer and sole director. He is also Chairman and Chief Executive Officer of Colonial, and Chairman and Chief Executive Officer of Black Hawk Gaming, two of our subsidiaries. From 1996 to 2007, he served as Chairman and Chief Executive Officer of Diversified Opportunities Group Ltd. (“Diversified”), a company co-founded by Mr. Jacobs and his father, Richard E. Jacobs, and based in Cleveland, Ohio, that had investments in gaming companies and other ventures. Jacobs Entertainment, Inc. acquired Diversified on February 22, 2002 and it was dissolved in 2007. Mr. Jacobs serves as the Chairman and Chief Executive Officer of Jacobs Investments, Inc., a company which owns all of our equity securities and which engages in a variety of private equity transactions and other investments. From 1975 to present, Mr. Jacobs has also served as the Chairman and Chief Executive Officer of Jacobs Investments Management Co., Inc., a company engaged in the development, construction and operations of various residential and commercial real estate projects in Ohio. Mr. Jacobs became a director of MTR Gaming Group, Inc. (“MTR”) on May 6, 2008 and became its chairman on October 31, 2008. In March 2010, Mr. Jacobs resigned from MTR’s Board of Directors. MTR has a class of equity securities registered under the Securities Exchange Act of 1934.

Stephen R. Roark was appointed as our President on December 5, 2006. During the five years prior to that, he was our Chief Financial Officer and President of Casino Operations. He was employed as Chief Financial Officer of Black Hawk Gaming since August 1993. Mr. Roark became a director of Black Hawk Gaming in 1994. He was elected President of Black Hawk Gaming in September 1995. Prior to that time he was an independent consultant in the Denver area rendering financial and accounting assistance to companies in the public marketplace. Mr. Roark has 17 years of public accounting experience, having served as a partner with a local accounting firm based in Denver and as a partner with a national accounting firm. Mr. Roark was with Hanifen, Imhoff and Prudential Securities, Inc. for three years and is a member of the American Institute of Certified Public Accountants and the Colorado Society of Certified Public Accountants. Mr. Roark obtained his B.S.B.A. in Accounting from the University of Denver in 1973.

Ian M. Stewart is currently our President of Pari-Mutuel Wagering Operations. He has served as President of Colonial since November 1998 and its Chief Financial Officer since June 1997. From January 1998 through November 1998, Mr. Stewart served as Chief Operating Officer of Colonial. From October 1994 to June 1997, Mr. Stewart served as a consultant and a temporary Chief Financial Officer for several Virginia-based businesses. From December 1989 to September 1994, Mr. Stewart was Vice President and CFO of Hat Brands, Inc. Mr. Stewart is a Certified Public Accountant and holds an M.B.A. degree from the University of Michigan.

Michael T. Shubic has been our Chief Operating Officer since July 1, 2006. From December 2, 2002 when he joined us until his appointment as our Chief Operating Officer, he served as our Vice President of Operations. From 2000 to 2002, Mr. Shubic was Vice President and General Manager of the Isle of Capri Black Hawk Casino in Black Hawk, Colorado. From 1997 to 2000, as a private individual, he explored and participated in various aspects of the golf industry, including education, sales and management. From 1984 to 1997, Mr. Shubic was employed by several gaming companies in Las Vegas and Reno, Nevada, Joliet, Illinois, and Nassau, Bahamas. His positions included general manager, casino administrator, customer analysis manager, casino credit manager and food and beverage manager. Mr. Shubic holds a B.S. degree in Hotel Administration from the University of Nevada.

Brett A. Kramer has been our Chief Financial Officer since December 5, 2006. He has been employed by us and certain of our predecessor subsidiaries since 1994. He was responsible for overseeing accounting managers and controllers of our multi-state operating subsidiaries, over 30 in all. He has also been involved in developing our system of internal controls in order to comply with various gaming regulations and provisions of the Sarbanes-Oxley Act of 2002. Mr. Kramer was a staff and senior accountant for five years with Deloitte & Touche, LLP. He graduated with a degree in accounting from the University of Colorado in 1990.

Stanley Politano is our Executive Vice President and has been with the Company and its predecessor, Black Hawk Gaming & Development Company, Inc. since 1994. He is a former officer and director of Black Hawk Gaming. He currently serves on our Company’s Nevada Compliance Committee and our Audit and Disclosure Committee. Mr. Politano received his B.S. degree in Business, majoring in finance, from the University of Colorado in 1972. He has 22 years of experience in the securities industry, in both retail and wholesale organizations. He has worked for Rauscher Pierce Securities Corporation and Prudential-Bache Securities, Inc. and was a vice president with E.F. Hutton & Company, Inc. and Hanifen Imhoff Securities Corporation.

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Emanuel J. Cotronakis is our Executive Vice President, General Counsel and Assistant Secretary having joined us on July 31, 2009. Prior to his employment with us, Mr. Cotronakis was a partner at the national law firm of Baker & Hostetler, LLP, where he practiced law in their Business Group beginning in 2000. While at Baker & Hostetler, Mr. Cotronakis’s practice focused on mergers and acquisitions, corporate finance and corporate governance, counseling a variety of clients including us beginning with our incorporation in 2001. Mr. Cotronakis graduated with a B.A. in economics from Case Western Reserve University in 1992 and earned his Juris Doctorate from the Georgetown University Law Center in 1998.

We are a company wholly owned by Jacobs Investments, Inc. (“JII”), which in turn is owned by Jeffrey P. Jacobs and his family trusts which collectively own 100% of JII’s outstanding Class A and Class B shares.

Our board of directors, currently consisting only of Jeffrey P. Jacobs, has no nominating, audit, compensation or other committees. Jeffrey P. Jacobs and Richard E. Jacobs had served as our directors since our formation in 2001. The board of directors is elected each year. The board has adopted a code of ethics policy which is applicable to our CEO, CFO and our employees. We rely on our employment procedures and system of internal controls and procedures, to deter wrongdoing and to promote honest and ethical conduct, full, fair and accurate disclosure in our reports, our compliance with governmental laws, rules and regulations, and internal reporting of violations of our policies.

Item 11.Executive Compensation.

Compensation Discussion and Analysis

The following discussion of our executive compensation policies and practices include:

• an overview of our board of directors’ philosophy as to executive compensation;

• a discussion of the overall objectives of our compensation program for executive officers; and

• a discussion of all material components of compensation, particularly for the seven named executive officers listed in the Summary Compensation table.

Overview and Objectives

As described in Item 12 immediately below, we are a wholly owned subsidiary of a privately-held company, hence we have no publicly traded securities, nor any option or other equity based incentive programs for our executives or employees. Our Chairman and Chief Executive Officer, Jeffrey P. Jacobs, and trusts that he has established, own the equity securities of Jacobs Investments, Inc., the company that owns all of our equity securities.

During 2011, the total cash compensation to Jeffrey P. Jacobs is limited to an aggregate of $1 million per year under our credit agreements. As a result, most elements of our compensation plans discussed below do not include our CEO, Jeffrey P. Jacobs. However, as also discussed below, our sole shareholder nonetheless is entitled under our credit agreements to certain tax distributions since, as a Qualified Subchapter S-Corporation Subsidiary, our taxable income flows through and is taxed to it. Finally and also as discussed in detail in Item 13 below, Mr. Jeffrey P. Jacobs has received certain direct dividends from us and constructive dividends resulting from the accounting treatment required of certain related party transactions.

Our Executive Compensation Program (Program) is designed to attract, motivate and retain high performing executives who are critical to our long-term success. The Program is structured to link executive compensation to how successfully we execute our business plans and meet a number of corporate, financial and operational goals. This design is intended to provide executives increased compensation when we do well and to provide less compensation when we do not.

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The design and effectiveness of compensation policies and programs are reviewed by our CEO periodically in light of general industry and peer trends, and recommendations for changes are made to the board of directors as deemed advisable by the CEO. The CEO reviews such compensation matters with our internal personnel. The role played by the CEO in this process is reasonable and appropriate because he is best suited to evaluate the performance of our executive personnel.

Our CEO reviews the philosophy, goals and objectives of the Program at least annually. In assessing their continued appropriateness, our CEO examines our success and the contributions of the individual executives in achieving our business plans. Our CEO considers the motivational impact of the Program as an incentive in attaining desired business results and in the continued ability to attract and retain high-quality executives. Key factors in judging whether the Program has met its goals are the Program’s relationship to our financial results, our future outlook and our ability to attract and retain key executive talent.

As a result of our corporate structure, the base compensation structure and amounts paid to all of our executive officers, except Jeffrey P. Jacobs, are determined after individual negotiations with each executive and approved by him. We formulate an annual cash incentive compensation plan for our named executive officers and selected middle management personnel based on our achievement of multi-year financial and growth objectives. Our discretionary annual bonus is paid in cash in an amount reviewed and approved by our CEO and traditionally has been paid in a single installment in the first quarter following the completion of a given fiscal year. The actual amount of discretionary bonus, which varies by individual, is determined by our CEO following a review of each executive’s individual performance and contribution to our strategic and financial goals. In support of his recommendations, Mr. Jacobs considers the desirability of maintaining a cohesive, long standing management and operating group and keeps himself informed of the salaries and benefits offered by competitors although he does not adhere to specific benchmarks, median placements, percentages or ranges of compensation paid by competitors or others.

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The following table sets forth information regarding the compensation paid by us to each of the following individuals for services rendered in all capacities for the years indicated:

Name and Principal Position(1)	Year		Salary		Bonus		Stock Awards	Option Awards	Non-Equity Incentive Plan Compensation	Change in Pension Value and  Non- Qualified Deferred Compensation Earnings	All  Other Compensation (2)(3)		Total
			($)		($)		($)	($)	($)	($)	($)		($)
Jeffrey P. Jacobs		2011 2010 2009		750,000 727,500 758,942		250,000 72,716 —						1,250,000 1,250,000 1,325,000		2,250,000 2,050,216 2,083,942
Stephen R. Roark		2011 2010 2009		466,634 465,407 485,571		135,000 50,000 —								601,634 515,407 485,571
Ian M. Stewart		2011 2010 2009		313,300 307,494 298,852		35,000 15,000 —								348,300 322,494 298,852
Michael T. Shubic		2011 2010 2009		368,449 357,381 361,175		100,000 40,000 —								468,449 397,381 361,175
Brett A. Kramer		2011 2010 2009		246,781 245,663 256,302		70,000 30,000 —								316,781 275,663 256,302
Stanley Politano		2011 2010 2009		174,034 173,764 181,226		49,000 22,577 —								223,034 196,341 181,226
Emanuel J. Cotronakis(4)		2011 2010 2009		437,115 410,096 188,077		75,000 40,000 —								512,115 450,096 188,077

(1) See Item 10 above which describes the principal positions of the named executives.

(2) See Item 13 below which describes consulting fees paid to Jacobs Investments Management Co., Inc., an affiliate of Mr. Jacobs.

(3) Also see Director Compensation and Item 13 below that describe distributions to our owner during 2011, which directly and indirectly benefited our Chief Executive Officer.

(4) Mr. Cotronakis assumed his positions effective July 31, 2009.

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Employment Agreements

As of December 31, 2011, three of our executive officers are a party to an Executive Employment Agreement as follows:

			Base Salary
Name	Title	Effective Date	Year One		Year Two		Year Three
Michael T. Shubic	Chief Operating Officer	July 1, 2009	$	350,000	$	360,500	$	371,315
Ian M. Stewart	President of Pari-Mutuel Wagering Operations	August 1, 2009		300,000		309,000		318,270
Emanuel J. Cotronakis	Executive Vice President, General Counsel and Assistant Secretary	July 31, 2009		400,000		425,000		450,000

All employment agreements are substantially identical except with respect to the amount of the executives’ respective salaries. Among the more important provisions of the agreements are the following:

(a) the term of each agreement is approximately three years from its effective date;

(b) the base salaries are set forth above; in addition, each executive is entitled to receive an annual bonus of up to 35% of his base salary if certain performance criteria (established each year) are met, and Mr. Cotronakis has a minimum annual bonus in an amount equal to 10% of his base salary;

(c) the agreements provide that if the executive is terminated without cause, he is entitled to a lump sum payment equal to six month’s salary and a prorated portion of his bonus. If the executive dies, his estate is entitled to a lump sum payment equal to one year’s salary and a prorated portion of his bonus. If there is a change in our control and the executive is not offered employment satisfactory to him, he is entitled to a lump sum payment equal to one and one-half year’s salary except in the case of Mr. Cotronakis who is entitled to a lump sum payment equal to three year’s salary; and

(d) each agreement contains customary provisions regarding vacations, benefits, insurance, indemnification and expense reimbursements.

Director Compensation

We have one director, Jeffrey P. Jacobs, who is also our CEO. Our director received no other compensation for his service as a director. During 2011, 2010 and 2009, no director’s fees were paid.

As explained in Item 13 below, our stockholder received compensation from us in 2011 as a result of amounts accounted for as distributions resulting from the sale of certain Nautica Properties. Additionally, annual distributions may be made to our owner in an aggregate amount not to exceed the greater of $1 million and 50% of consolidated net income as defined in our credit agreement and indenture. Distributions to our stockholder totaled $16,955,000 in 2011, including $5,462,000 for the purchase of Cash Magic Springhill, LLC, $4,913,000 for the purchase of Cash Magic Vivian, LLC, $3,025,000 for the purchase of Jalou Forest Gold, LLC, and $1,214,000 for the purchases of the three Nautica Properties.

Finally, under the terms of our bank credit agreement and note indenture, we are allowed to make a tax distribution to our stockholder to cover the tax on our income which is taxable to our stockholder because of our Qualified Subchapter S-Corporation Subsidiary status.

Our director has reviewed and discussed the foregoing Compensation Discussion and Analysis with management and based thereon, has recommended that it be included in this Annual Report on Form 10-K.

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During 2011, there were no interlocking relationships between any member of our board of directors and any of our executive officers that would be required to be disclosed under Item 407(e)(4) of Regulation S-K.

Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

As of March 1, 2012, there were 1,500 shares of our common stock outstanding divided into 1,320 Class A shares and 180 Class B shares. The shares are equal in all respects except that each Class B share entitles the holder to 50,000 votes on each matter required to be voted upon by our shareholders. We have no equity compensation, stock option or similar plans relating to our equity securities. All 1,500 shares (100%) of our issued and outstanding common stock are owned by Jacobs Investments, Inc., a Delaware corporation (“JII”).

The following table sets forth certain information regarding the beneficial ownership of JII’s common stock as of March 1, 2012, for each stockholder who is known by us to own beneficially more than 5% of JII’s common stock.

	Number of Shares				Percentage
Stockholders of JII	Class A		Class B		Class A			Class B
Jeffrey P. Jacobs(1) Golden Bear Plaza East Tower 1170 U.S. Highway One, Suite 600 North Palm Beach, Florida 33408		528		—		40	%		—
Jacobs Family Economic and Control Trusts(2) Hahn Loeser & Parks LLP 200 Public Square, Suite 2800 Cleveland, Ohio 44114		792		180		60	%		100	%
All executive officers and directors as a group		528		—		40	%		—

(1) Jeffrey P. Jacobs is our Chief Executive Officer, Secretary, Treasurer and Chairman of the Board.

(2) The Jacobs Family Economic Trust owns 792 Class A shares and the Jacobs Family Control Trust owns 180 Class B shares. Both trusts are dynasty trusts established by Jeffrey P. Jacobs for the benefit of his current and future heirs and place certain restrictions on the transfer of the shares by the trustee. The current trustee of both trusts is Stanley R. Gorom III, a partner in the Cleveland, Ohio law firm of Hahn Loeser  & Parks LLP. The trusts referred to herein are collectively referred to as the “Trusts.”

Item 13.Certain Relationships and Related Transactions, and Director Independence.

JIMCO Management Agreement

In order to assist us in our efforts to research, develop, perform due diligence on and possibly acquire new gaming opportunities, we have a consulting agreement with Jacobs Investments Management Co. Inc. (“JIMCO”), 82% of which is owned by Jeffrey P. Jacobs and the remaining 18% of which is owned in equal portions by two of his business associates. This agreement calls for payments of $1.25 million per year payable in two equal installments of $625,000 on January 1^st and July 1^st plus 2.5% of budgeted development costs for projects undertaken by us, if certain debt covenant ratios are met. Totals expenses incurred under this agreement with JIMCO were $1,250,000, $1,250,000 and $1,325,000 for the years ended December 31, 2011, 2010 and 2009, respectively.

Transactions with Affiliate Video Poker Truck Stops

We manage and provide administrative services and support to the video poker truck stop owned by Gameco Holdings, Inc. (“Gameco”), another wholly owned subsidiary of JII, in exchange for certain fees. We allocate management, accounting and overhead costs incurred by JEI to the video poker truck stop owned by

62

Gameco. These costs totaled $318,000, $291,000, and $240,000 for the years ended December 31, 2011, 2010 and 2009, respectively. We expect to continue to render management and accounting services to Gameco in the future. We believe the fees paid to us are no less favorable to us than those that would be paid to unaffiliated vendors. Additionally, beginning in December 2009, to help JEI reach the fuel sale volume necessary to qualify for the reduced pricing structure under the fuel supply agreements with CITGO Petroleum Corporation (see Note 8 to the financial statements), we entered into an agreement with Gameco to provide gasoline and diesel fuel at cost for its fuel operations, which totaled $5,564,000, $4,476,000 and $0 for the years ended December 31, 2011, 2010 and 2009.

Gameco owns and has the right to acquire additional video poker truck stops in Louisiana. We have the right to purchase any existing or future video poker truck stops acquired by Gameco at a price equal to (i) the lesser of (a) seven times trailing 12 months EBITDA, and (b) the sum of the consideration paid by the affiliated company plus or minus an adjustment for working capital and plus an amount equal to the trailing 12 months EBITDA, or (ii) an amount supported by a fairness opinion by a nationally recognized accounting, investment banking or appraisal firm; provided that after giving effect to each such acquisition and pro forma for contemplated expenditures, we must be in pro forma compliance with all financial covenants under our credit agreements. Any such acquisitions by us could result in significant profits to Gameco.

On January 31, 2011, we acquired two video poker truck stops in Louisiana, Cash Magic Springhill, LLC (“Springhill”) and Cash Magic Vivian, LLC (“Vivian”), for $5,461,797 and $4,912,718, respectively, which were previously wholly owned by Gameco. On March 31, 2011, we acquired one additional video poker truck stop in Louisiana, Jalou Forest Gold, LLC (“Forest Gold”), for $3,025,182, which was also previously wholly owned by Gameco. The acquisitions of these video poker truck stops were accounted for as combinations of entities under common control. See Note 4 of our Consolidated Financial Statements.

Jalou Device Owner, L.P.

Under Louisiana law, video poker machines must be owned by Louisiana residents. Through October 2009, the video poker truck stops paid a fee to the third party owner of the machines in order to maintain the machines used in our video poker truck stops, plus reimbursement for the owner’s licensing costs and various other expenses. Beginning in November 2009, the ownership of the video poker machines and the related repair parts inventory used in our video poker truck stops was transferred from the third party owner to a related party, Jalou Device Owner, L.P. (“Device Owner”), of which Gameco owns 49% and is the general partner. Two Louisiana residents own the remaining 51% of Device Owner and are the limited partners. Our video poker truck stops pay 90 cents per operating video poker machine per day to Device Owner, plus reimbursement for Device Owner’s licensing costs. Total expense under these arrangements was $1,510,000, $1,508,000 and $1,310,000 for the years ended December 31, 2011, 2010 and 2009, respectively.

Other Related Party Transactions

During 2009, we incurred expenses with the R.E. Jacobs Group for JEI-related airplane usage totaling $113,000. Additionally, prior to our acquisition, Nautica Phase 2 periodically provided working capital advances to JIMCO. These advances totaled $583,000 as of December 31, 2010 and are included in the balances due from affiliates discussed below. These working capital advances were settled at closing of the acquisition of Nautica Phase 2 by JEI during 2011.

Balances Due To/From Affiliates

Each of the above related party transactions results in either receivables from or payables to our affiliates. As of December 31, 2011 and 2010, these transactions resulted in net receivables from affiliates totaling $1,098,000 and $2,722,000, respectively. As of December 31, 2011 and 2010, these transactions resulted in net payables to affiliates totaling $1,203,000 and $1,251,000, respectively.

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Nautica Properties

During July 2006, we acquired from affiliated parties options to lease and options to purchase certain businesses and their related assets, including various parcels of land, buildings and related improvements, on the west bank of the Cuyahoga River in Cleveland, Ohio. We refer to these businesses and their related assets, covering an aggregate of approximately 624,000 square feet of land (14.4 acres) and a building comprised of 47,380 square feet of net rentable space, as the Nautica Properties. In 2011, we acquired substantially all of the remaining Nautica Properties under option as part of our process of assembling a developable site.

On January 18, 2011, we acquired a Nautica Properties based parking lot business and its related assets referred to as “Nautica Phase 2” for $1,250,000. Our CEO controlled the business. The acquisition of this business was accounted for as a combination of entities under common control. The portion of Nautica Phase 2 acquired from our CEO has been recorded at the historical cost bases in the assets and liabilities transferred and the portion of Nautica Phase 2 acquired from third parties has been recorded at fair value at the acquisition date using the acquisition method of accounting. See Note 4 to our Consolidated Financial Statements.

On October 3, 2011, we acquired the “Sycamore & Main” parking lot business and its related assets for $1,100,000. Our CEO controlled the business. The acquisition of Sycamore & Main and its parking lot business was accounted for as a combination of entities under common control. Therefore, the acquisition has been recorded at the historical cost bases in the assets and liabilities transferred. See Note 4 to our Consolidated Financial Statements.

On October 28, 2011, we acquired the “Nautica Peninsula Land” parking lot business and its related assets for $971,381. Our CEO controlled the business. The acquisition of this business was accounted for as a combination of entities under common control. The portion of Nautica Peninsula Land acquired from our CEO has been recorded at the historical cost bases in the assets and liabilities transferred and the portion of Nautica Peninsula Land acquired from third parties has been recorded at fair value at the acquisition date using the acquisition method of accounting. See Note 4 to our Consolidated Financial Statements.

Other Investments

We may invest up to $3 million per year in private or publicly traded securities of unaffiliated companies. These investments may be selected and managed by JII, provided that under our senior credit agreement our pro forma consolidated leverage ratio (ratio of our total pro forma debt to our pro forma EBITDA) must be 5.0 to 1.0 or less after giving effect to any such investment and provided that under our note indenture our fixed charge coverage ratio (ratio of our Consolidated EBITDA to our fixed charges, primarily interest) was at least 2.0 to 1.0 for the preceding four quarter period; and provided further that to the extent that less than $3.0 million in the aggregate of such investments are made in any fiscal year, the unused amount may be used in the succeeding fiscal year, subject to the pro forma leverage condition just discussed. Furthermore, we may invest an aggregate amount not to exceed $5.0 million at any time outstanding. At December 31, 2011, we had invested $7,943,000 (cost) in the securities of an unaffiliated public company; the market value of such securities at December 31, 2011 was $1,521,000.

Director Independence

We are a privately held company wholly owned by Jacobs Investments, Inc. which in turn is owned beneficially by our director, Jeffrey P. Jacobs, who is also our Chief Executive Officer and two trusts created by him. Therefore, our board of directors is not independent, nor are any independence standards applicable to us as a result of stock exchange or any other self-regulatory organization’s requirements. Mr. Jacobs approves all transactions required to be reported under this Item giving due regard to the covenants in our bank credit agreement and in our note indenture.

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Item 14.Principal Accountant Fees and Services.

Fees paid to our registered public accounting firm for the last two years were as follows:

	Year Ended
	December 31,
	2011		2010
Audit fees	$	1,110,000	$	1,107,000
Audit related fees*		31,000		25,000
Tax fees**		329,000		314,000
All other fees		21,000		160,000

* Audit-related fees are comprised of our 401(k) audits and fees.

** Tax fees are principally comprised of preparation of federal and state corporate income tax returns, various state tax returns, and research and related tax consultation services.

We have no audit committee. Our board of directors considered and determined that provision of the services described above and amounts paid for those services are compatible with maintaining our principal accountant’s independence.

Item 15.Exhibits and Financial Statement Schedules.

(a)Financial Statements and Financial Statement Schedules

(1) Financial Statements filed herewith are listed in the Index to Consolidated Financial Statements on page F-1 of this report.

(2) No Financial Statement Schedules are included herein because such schedules are not applicable, are not required, or because the required financial information is included in the Consolidated Financial Statements or notes thereto.

(b)Exhibits

A list of the exhibits filed, or incorporated by reference as part of this Annual Report on Form 10-K is set forth in the Exhibit Index which immediately precedes such exhibits and is incorporated herein by this reference.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

JACOBS ENTERTAINMENT, INC.
By:	/s/ JEFFREY P. JACOBS
	Jeffrey P. Jacobs
	Chief Executive Officer
By:	/s/ BRETT A. KRAMER
	Brett A. Kramer
	Chief Financial Officer

Date: March 30, 2012

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ JEFFREY P. JACOBS	Chairman of the Board of Directors and Chief	March 30, 2012
Jeffrey P. Jacobs	Executive Officer (Principal Executive Officer)
/s/ BRETT A. KRAMER	Chief Financial Officer	March 30, 2012
Brett A. Kramer	(Principal Financial and Accounting Officer)

66

Jacobs Entertainment, Inc.

Consolidated Financial Statements as of December 31, 2011 and 2010, and for the Years Ended December 31, 2011, 2010 and 2009, and Report of Independent Registered Public Accounting Firm

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholder

of Jacobs Entertainment, Inc.

Golden, Colorado

We have audited the accompanying consolidated balance sheets of Jacobs Entertainment, Inc. and subsidiaries (the “Company”) as of December 31, 2011 and 2010, and the related consolidated statements of operations, equity, and cash flows for each of the three years in the period ended December 31, 2011. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Jacobs Entertainment, Inc. and subsidiaries as of December 31, 2011 and 2010, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2011, in conformity with accounting principles generally accepted in the United States of America.

/s/ Deloitte & Touche LLP

Denver, Colorado

March 30, 2012

F-1

JACOBS ENTERTAINMENT, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2011 and 2010

(Dollars in thousands)

	2011			2010 (As adjusted, see Note 4)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	25,227		$	24,705
Restricted cash		1,212			1,226
Accounts receivable, net of allowance for doubtful accounts of $964 and $618, respectively		3,222			3,199
Due from affiliates		1,098			2,722
Inventory		3,860			3,901
Other current assets		2,912			3,009
Total current assets		37,531			38,762
PROPERTY, PLANT AND EQUIPMENT:
Land and improvements		66,777			66,063
Buildings and improvements		202,440			198,962
Equipment, furniture and fixtures		110,486			104,928
Leasehold improvements		3,232			3,213
Construction in progress		715			1,033
		383,650			374,199
Less accumulated depreciation		(154,967	)		(129,027	)
Property, plant and equipment, net		228,683			245,172
OTHER NONCURRENT ASSETS:
Goodwill		48,728			48,728
Identifiable intangible assets, net		8,509			8,274
Debt issue costs, net		2,826			5,016
Investment in equity securities		1,521			1,652
Other assets		2,024			1,734
Total other noncurrent assets		63,608			65,404
TOTAL	$	329,822		$	349,338
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable	$	8,277		$	8,533
Accrued expenses		18,418			16,883
Due to affiliates		1,203			1,251
Current portion of long-term debt and capital lease obligations		12,279			22,336
Total current liabilities		40,177			49,003
Long-term debt and capital lease obligations		272,463			281,692
Other noncurrent liabilities		1,211			1,114
Total liabilities		313,851			331,809
COMMITMENTS AND CONTINGENCIES (Note 8)
EQUITY:
Class A Common stock, $.01 par value; 1,800 shares authorized, 1,320 shares issued and outstanding as of December 31, 2011 and 2010		—			—
Class B Common stock, $.01 par value; 200 shares authorized, 180 shares issued and outstanding as of December 31, 2011 and 2010		—			—
Additional paid-in capital		37,914			32,522
Accumulated deficit		(21,943	)		(16,322	)
Total stockholder’s equity of Jacobs Entertainment, Inc.		15,971			16,200
Noncontrolling interest		—			1,329
Total equity		15,971			17,529
TOTAL	$	329,822		$	349,338

See notes to consolidated financial statements.

F-2

JACOBS ENTERTAINMENT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 and 2009

(Dollars in thousands)

	2011			2010 (As adjusted, see Note 4)			2009 (As adjusted, see Note 4)
REVENUES
Gaming:
Casino	$	143,895		$	140,265		$	139,766
Truck stop		72,388			70,142			72,309
Pari-mutuel		27,920			27,669			32,276
Food and beverage		28,895			29,896			31,447
Convenience store—fuel		119,253			95,480			70,510
Convenience store—other		14,583			13,739			15,146
Hotel		3,856			3,806			3,607
Other		5,977			6,562			6,596
Total revenues		416,767			387,559			371,657
Less: Promotional allowances		(36,822	)		(35,603	)		(35,085	)
Net revenues		379,945			351,956			336,572
COSTS AND EXPENSES
Gaming:
Casino		49,672			48,871			47,348
Truck stop		42,964			42,732			44,590
Pari-mutuel		22,374			21,757			26,077
Food and beverage		14,338			14,846			15,085
Convenience store—fuel		113,163			89,871			66,552
Convenience store—other		19,148			17,392			18,214
Hotel		790			799			865
Marketing, general and administrative		65,255			64,234			67,102
Unrealized loss (gain) on change in fair value of investment in equity securities		131			(594	)		309
Impairment of long-lived assets		10,065			—			—
Goodwill impairment		—			836			3,064
Depreciation and amortization		21,498			22,428			22,538
Total costs and expenses		359,398			323,172			311,744
OPERATING INCOME		20,547			28,784			24,828
Interest income		21			25			28
Interest expense		(26,163	)		(26,857	)		(26,383	)
NET (LOSS) INCOME		(5,595	)		1,952			(1,527	)
Net income of subsidiaries attributable to the noncontrolling interest		(26	)		(42	)		(63	)
NET (LOSS) INCOME ATTRIBUTABLE TO JACOBS ENTERTAINMENT, INC.	$	(5,621	)	$	1,910		$	(1,590	)

See notes to consolidated financial statements.

F-3

JACOBS ENTERTAINMENT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 and 2009

(Dollars in thousands)

	Jacobs Entertainment, Inc. Stockholder
	Common Stock*		Additional Paid-in Capital			(Accumulated Deficit) Retained Earnings			Noncontrolling Interest			Total
BALANCES, JANUARY 1, 2009 (As adjusted, see Note 4)	$	—	$	37,732		$	(16,642	)	$	1,486		$	22,576
Capital contribution				942									942
Distributions				(3,244	)					(46	)		(3,290	)
Acquisition of noncontrolling interest										(212	)		(212	)
Net (loss) income ** (As adjusted, see Note 4)							(1,590	)		63			(1,527	)
BALANCES, DECEMBER 31, 2009 (As adjusted, see Note 4)	$	—	$	35,430		$	(18,232	)	$	1,291		$	18,489
Capital contributions				892									892
Distributions				(3,800	)					(4	)		(3,804	)
Net income ** (As adjusted, see Note 4)							1,910			42			1,952
BALANCES, DECEMBER 31, 2010 (As adjusted, see Note 4)	$	—	$	32,522		$	(16,322	)	$	1,329		$	17,529
Capital contributions				22,347									22,347
Distributions				(16,955	)								(16,955	)
Acquisitions of noncontrolling interest										(1,355	)		(1,355	)
Net (loss) income **							(5,621	)		26			(5,595	)
BALANCES, DECEMBER 31, 2011	$	—	$	37,914		$	(21,943	)	$	—		$	15,971

* The par value amount of the Jacobs Entertainment, Inc. 1,320 shares of Class A common stock and 180 shares of Class B common stock outstanding for the periods presented is less than $500 and is therefore presented as $0 due to rounding.

** For the years ended December 31, 2011, 2010 and 2009, comprehensive income (loss) is equal to net income (loss).

See notes to consolidated financial statements.

F-4

JACOBS ENTERTAINMENT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 and 2009

(Dollars in thousands)

	2011			2010 (As adjusted, see  Note 4)				2009 (As adjusted, see  Note 4)
OPERATING ACTIVITIES:
Net (loss) income	$	(5,595	)	$	1,952			$	(1,527	)
Adjustments to reconcile net (loss) income to net cash provided by operating activities:							��
Depreciation and amortization		21,498			22,428				22,538
Impairment of long-lived assets		10,065			—				—
Goodwill impairment		—			836				3,064
Unrealized loss (gain) on change in fair value of investment in equity securities		131			(594	)			309
Loss on sale of equipment		46			25				213
Deferred financing cost amortization		2,190			2,179				1,668
Other		—			6				9
Changes in operating assets and liabilities, net of acquisitions:
Restricted cash		14			(90	)			302
Accounts receivable, net		(125	)		14				(102	)
Inventory		41			(427	)			(162	)
Other assets		(274	)		(413	)			121
Accounts payable		(684	)		1,602				(1,712	)
Accrued expenses and other noncurrent liabilities		2,389			422				(1,960	)
Due from/to affiliates		(345	)		142				302
Net cash provided by operating activities		29,351			28,082				23,063
INVESTING ACTIVITIES:
Additions to property, plant and equipment		(12,225	)		(11,752	)			(16,430	)
Proceeds from sale of equipment		145			338				389
Purchases of device rights		(1,756	)		(901	)			(1,124	)
Acquisition of noncontrolling interest		—			—				(212	)
Net cash used in investing activities		(13,836	)		(12,315	)			(17,377	)
FINANCING ACTIVITIES:
Payments to obtain financing		—			(1,500	)			(555	)
Proceeds from issuance of debt		800			—				—
Proceeds from revolving line of credit		40,800			24,000				29,463
Payments on long-term debt		(1,472	)		(2,914	)			(1,957	)
Payments on revolving line of credit		(37,400	)		(31,500	)			(27,000	)
Acquisition of noncontrolling interest		(2,107	)		—				—
Contribution from stockholder		—			25				—
Distributions to stockholder		(15,614	)		(3,804	)			(3,290	)
Net cash used in financing activities		(14,993	)		(15,693	)			(3,339	)
NET INCREASE IN CASH AND CASH EQUIVALENTS		522			74				2,347
CASH AND CASH EQUIVALENTS—Beginning of year		24,705			24,631				22,284
CASH AND CASH EQUIVALENTS—End of year	$	25,227		$	24,705			$	24,631
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	$	23,530		$	24,491			$	24,743
Non-cash investing and financing activities:
Capital contributions for liabilities paid by affiliate in connection with acquisitions (see Note 4)	$	22,347		$	867			$	942
Capital distributions for assets retained by affiliate in connection with acquisitions (see Note 4)	$	1,341		$	—			$	—
Non-cash additions to property	$	1,936		$	1,518			$	1,193
Acquisition of property under note payable agreement	$	—		$	120			$	—

See notes to consolidated financial statements.

F-5

JACOBS ENTERTAINMENT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2011 and 2010, AND FOR THE

YEARS ENDED DECEMBER 31, 2011, 2010 and 2009

(Dollars in thousands)

1. BUSINESS AND ORGANIZATION

Jacobs Entertainment, Inc. (“JEI,” the “Company,” “us,” “our,” or “we”) was formed on April 17, 2001 to become a geographically diversified gaming and pari-mutuel wagering company with properties in Colorado, Nevada, Louisiana and Virginia. We are a wholly-owned subsidiary of Jacobs Investments, Inc. (“JII”) and a Qualified Subchapter S-Corporation Subsidiary under the Internal Revenue Code of 1986, as amended. Jeffrey P. Jacobs, our Chief Executive Officer (“CEO”), and his family trusts own 100% of JII’s outstanding Class A and Class B shares. Our CEO and his affiliates are referred to herein as “Jacobs.”

As of March 30, 2012, we own and operate five casinos through wholly-owned subsidiaries. Our casinos include The Lodge Casino at Black Hawk (“The Lodge”) and the Gilpin Hotel Casino (“Gilpin”), both in Black Hawk, Colorado, the Gold Dust West in Reno, Nevada (“Gold Dust West-Reno”), the Gold Dust West in Carson City, Nevada (“Gold Dust West-Carson City”) and the Gold Dust West-Elko in Elko, Nevada (“Gold Dust West-Elko”). JEI also owns and operates 21 video poker truck stops in Louisiana, which are collectively referred to as “truck stops.” We also receive a percentage of gaming revenue from an additional video poker truck stop. Finally, JEI owns and operates a horse racing track with ten satellite wagering facilities (one of which is temporarily closed) in Virginia through a wholly-owned subsidiary, Colonial Holdings, Inc. (“Colonial”).

During 2011, we completed several related party acquisitions which were accounted for as combinations of entities under common control. Accordingly, the accompanying consolidated financial statements have been retroactively adjusted to include the operations of these businesses from January 1, 2009. See Note 4.

2. SIGNIFICANT ACCOUNTING POLICIES

Consolidation—The accompanying consolidated financial statements include the accounts of JEI and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. We have evaluated subsequent events through the date on which the financial statements are issued.

Cash and Cash Equivalents—We consider all demand deposits and time deposits with original maturities of three months or less to be cash equivalents.

Restricted Cash—Amounts due under agreements with the Virginia Horsemen’s Benevolent and Protective Association, Inc. and the Virginia Harness Horse Association are accrued based on the terms of the agreements. Funds for purses for future live race meets are held in restricted cash accounts.

Accounts Receivable—Our accounts receivable balances primarily consist of receivables from convenience store fuel sales on account. Generally, our receivables are collected within two months, and we have had minimal bad debt losses. We routinely assess the recoverability of all material receivables to determine their collectibility.

Inventory—Inventory consists of food, beverages, and uniforms at our casinos and fuel, convenience store, and restaurant items at our video poker truck stop operations, and is recorded at the lower of cost (first-in, first-out method) or market.

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Property, Plant, and Equipment—Property, plant, and equipment are stated at historical cost. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets. Leasehold improvements are depreciated, using the straight-line method, over the shorter of the lease term or the useful life of the asset. Estimated useful lives used are as follows:

Land improvements	20-40 years
Buildings and improvements	5-40 years
Equipment, furniture and fixtures	2-20 years
Leasehold improvements	5-25 years

Costs of major improvements are capitalized, while costs of normal repairs and maintenance are charged to expense as incurred. Gains or losses on disposal of assets are recognized as incurred. Depreciation expense recorded for the years ended December 31, 2011, 2010 and 2009 was $19,977, $20,661 and $20,276, respectively.

Goodwill—Goodwill represents the excess purchase price over the fair value of the net identifiable assets acquired related to third party acquisitions. See Note 3.

Identifiable Intangible Assets—Identifiable intangible assets are comprised of revenue rights, device use rights associated with video poker machines used at each video poker truck stop, and restriction agreements associated with certain video poker truck stop acquisitions. Revenue rights are amortized on a straight line basis over 50 years, representing the term of the related agreement. Device use rights are amortized on a straight line basis over five years, representing the terms of the related agreements. Restriction agreements are amortized on a straight line basis over five or ten years, representing the terms of the related agreements.

Debt Issue Costs—Costs that are incurred by us in connection with the issuance of debt are capitalized and amortized to interest expense, using the effective interest method, over the expected terms of the related debt agreements.

Investments in Equity Securities—Investments in equity securities are recorded at fair value and included in other noncurrent assets. See Note 6.

Slot Club Liability—Our casinos offer customers the ability to become members in their respective slot clubs. Once a member, the customer can insert a special card into slot and video poker machines while playing in our casinos to earn “points.” Based on their point totals, members receive various cash rewards and gift prizes. We accrue a liability based on the points earned by the members of the slot clubs with the associated reduction in revenues recorded to Promotional Allowances (see below). Redemptions are deducted from the accrued liability. The slot club liability is a component of accrued expenses in the accompanying consolidated balance sheets.

Outstanding Gaming Chip and Token Liability—When customers exchange cash for gaming chips and tokens, we have a liability as long as those chips and tokens are not redeemed or won by the house. That liability is established by determining the difference between the total chips and tokens placed in service and the actual inventory of chips and tokens in custody or under the control of the casinos. The chip and token liability is adjusted periodically to reflect an estimate of chips and tokens that will never be redeemed, such as chips and tokens that have been lost or taken as souvenirs and is reflected as a component of accrued expenses in the accompanying consolidated balance sheets.

Revenue—Casino—Casino revenues are the net winnings from gaming activities, which is the difference between gaming wins and losses. Jackpots, other than the incremental amount of progressive jackpots, are recognized at the time they are won by customers. We accrue the incremental amount of progressive jackpots as the progressive machine is played and the progressive jackpot amount increases, with a corresponding reduction of casino gaming revenues.

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Revenue—Video Poker Truck Stop—Video poker revenue is the net winnings from gaming activities of our video poker truck stops, which is the difference between gaming wins and losses.

Revenue—Pari-Mutuel—Pari-mutuel revenue includes our share of pari-mutuel wagering on live races after payments of amounts returned on winning wagers, and our share of wagering from import and export simulcasting at our racing centers.

Revenue—Food and Beverage—We recognize food and beverage revenue at the time that goods or services are rendered.

Revenue—Convenience Store—Fuel and Other—We recognize revenue at the time of sale for fuel and convenience store items.

Revenue—Hotel—We recognize hotel revenue at the time rooms are provided to customers.

Revenue—Other—Other revenue consists of ATM commissions, cash advance commissions, miscellaneous vending commissions, rental income, admission charges, and program and concession sales at Colonial’s live racing events. Other revenues are recognized at the time services are provided to patrons.

Promotional Allowances—Gross revenues include the retail amount of rooms, food and beverages, and other goods and services provided gratuitously to customers. When computing net revenues, the retail amount of rooms, food and beverages and coupons, as well as slot club player points earned, is deducted from gross revenues as promotional allowances. The estimated cost of such complimentary services in our casino operations for rooms, food, and beverages is charged to casino operations. The estimated cost of such complimentary services in our video poker truck stops related to video poker operations for food and beverages is charged to video poker truck stop operations. The estimated cost of such complimentary services in our video poker truck stops related to fuel operations for food and beverages is charged to convenience store operations. The estimated costs of such complimentary services charged to casino operations, video poker truck stop operations and convenience store operations, respectively, are as follows:

	Years Ended December 31
	2011		2010		2009
Casino operations	$	14,587	$	13,978	$	14,100
Video poker truck stop operations		2,542		2,410		2,421
Convenience store operations		404		453		274

Income Taxes—We have elected for income tax purposes to be treated as a Qualified Subchapter S-Corporation Subsidiary under the Internal Revenue Code of 1986, as amended, and, consequently, no current or deferred income taxes have been reflected in the accompanying consolidated financial statements as these taxes are the responsibility of the stockholder.

Long-Lived Assets—We periodically evaluate our long-lived assets, including property, plant and equipment and identifiable intangibles, for potential impairment. If an impairment is indicated, such impaired assets are written down to their estimated fair value. For the years ended December 31, 2011, 2010 and 2009, we determined that there was no impairment of our long-lived assets other than those discussed in Notes 3 and 11.

During 2011 and 2010, based on operating results, we were required, pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 360,Property, Plant and Equipment, to assess our ability to recover the recorded cost of the Gold Dust West-Carson City and Virginia long-lived assets. We prepared a cash flow analysis based on management’s best estimates in an effort to assess the likelihood of recovering the cost of these assets. Based on these projections and the related underlying assumptions for Gold Dust West-Carson City, as well as our knowledge of the Carson City market, we believe that we will not be able to fully recover the carrying cost of these assets, and therefore, Gold Dust West-Carson City recorded an impairment of long-lived assets totaling $10,065 in 2011. Based on the cash flow projections and the related underlying assumptions for Virginia, as well as our knowledge of the Virginia

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market, we believe that we will be able to recover the carrying cost of these assets and no impairment currently exists. However, future events such as actual performance versus projected performance, continued market decline, increased and/or changing competitive forces, or other unforeseen events could change our estimates and cause us to recognize an additional impairment in the carrying value of the Gold-Dust West-Carson City or Virginia long-lived assets in future periods. Such an impairment could be material to our financial position and results of operations.

Use of Estimates—The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

We periodically evaluate our policies, and the estimates and assumptions related to such accounting principles. All of our subsidiary companies operate in a highly regulated industry. Our operations are subject to regulations that describe and regulate operating and internal control procedures. The majority of gaming revenue is in the form of cash which by nature does not require complex estimations. We estimate certain liabilities with payment periods that extend for longer than several months. Such estimates include, but are not limited to, the self-insured medical, workers compensation liabilities, slot club liabilities, chip and token liabilities and litigation costs. We believe that these estimates are reasonable based on past experience with the business and based upon assumptions related to possible outcomes in the future. Actual results, however, could differ from those estimates.

New Accounting Guidance—In December 2010, the FASB issued Accounting Standards Update No. 2010-29,Business Combinations: Disclosure of Supplementary Pro Forma Information for Business Combinations (“ASU 2010-29”), which provides amendments to FASB ASC Topic 805,Business Combinations. The objective of ASU 2010-29 is to clarify and expand the pro forma revenue and earnings disclosure requirements for business combinations. ASU 2010-29 was effective for fiscal years beginning after December 15, 2010. We adopted ASU 2010-29 effective January 1, 2011, which did not have a material impact on our consolidated financial statements.

New authoritative accounting guidance under FASB ASC Topic 924,Entertainment-Casinos (“ASC Topic 924”), clarified existing literature that an entity should accrue jackpot liabilities and charge to revenues when an entity has the obligation to pay the jackpot (or a portion thereof as applicable). This guidance applies to both base jackpots and the incremental portion of progressive jackpots. The standard was effective for us on January 1, 2011. The adoption of this standard did not have a material impact on our consolidated financial statements.

In May 2011, the FASB issued new fair value measurement authoritative guidance that clarifies the application of fair value measurement and disclosure requirements and changes particular principles or requirements for measuring fair value. This guidance is effective for interim and annual periods beginning after December 15, 2011. We are currently evaluating the provisions of this guidance and assessing the impact, if any, it may have on our fair value disclosures.

In June 2011, the FASB issued new authoritative guidance that states an entity that reports items of other comprehensive income has the option to present the components of net income and comprehensive income in either one continuous financial statement, or two consecutive financial statements. This guidance is effective for interim and annual periods beginning after December 15, 2011. The adoption of this guidance would only impact our consolidated financial statements if we have components of comprehensive income besides net income (loss) in the future.

In September 2011, the FASB issued Accounting Standards Update No. 2011-08,Intangibles – Goodwill and Other: Testing Goodwill for Impairment (“ASU 2011-08”), which provides amendments to FASB ASC Topic 350,Intangibles – Goodwill and Other. The objective of ASU 2011-08 is to simplify how entities test goodwill for impairment. The amendment provides an entity with the option to first assess qualitative factors to evaluate whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in ASC Topic 350. ASU 2011-08 is effective for interim and annual goodwill impairment tests performed for fiscal years beginning after December 15, 2011. We are currently evaluating the provisions of this guidance and assessing the impact, if any, it may have on our goodwill impairment test.

F-9

3. GOODWILL AND IDENTIFIABLE INTANGIBLE ASSETS

We test goodwill for impairment as of September 30 each year or when circumstances indicate it is necessary. Testing compares the estimated fair values of our reporting units to the reporting units’ carrying values. We consider a variety of factors when estimating the fair value of our reporting units, including estimates about the future operating results of each reporting unit, multiples of EBITDA (earnings before interest, income taxes, depreciation and amortization), investment banker market analyses, and recent sales of comparable business units, if such information is available to us. A variety of estimates and judgments about the relevance and comparability of these factors to the reporting units are made. As of September 30, 2011, we believe the carrying value of the goodwill held in our reporting units was not impaired. However, as of September 30, 2010 and 2009, prior to our acquisition from a related party (see Note 4), we determined the carrying value of the goodwill at one of our video poker truck stops was impaired. Consequently, we recorded goodwill impairment charges of $836 and $3,064 during the years ended December 31, 2010 and 2009, respectively. There have been no circumstances subsequently to indicate any additional impairment testing is required.

The changes in the carrying amount of goodwill for the years ended December 31, 2011 and 2010 are as follows:

	2011		2010
Balance as of beginning of year	$	48,728	$	49,564
Goodwill impairment during the year		—		(836	)
Balance as of end of year	$	48,728	$	48,728

In addition, as of September 30, 2011, we have reassessed the useful lives of our identifiable intangible assets without any change to the previously established amortization periods of such assets.

Identifiable intangible assets as of December 31, 2011 and 2010 consist of the following:

	Weighted Average Remaining Life		2011						2010
			Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Amortizable intangible assets:
Revenue rights		40.00	$	6,000	$	1,200	$	4,800	$	6,000	$	1,080	$	4,920
Device use rights		2.26		12,161		8,787		3,374		10,987		8,047		2,940
Restriction agreements		4.77		743		408		335		743		329		414
Total			$	18,904	$	10,395	$	8,509	$	17,730	$	9,456	$	8,274

Aggregate amortization expense of identifiable intangible assets was $1,521, $1,762, and $2,250 for the years ended December 31, 2011, 2010 and 2009, respectively.

F-10

Estimated amortization expense for the years ending December 31 (in thousands):

2012	$	1,422
2013		1,040
2014		810
2015		714
2016		322
Thereafter		4,201
Total	$	8,509

4. RECENT ACQUISITION ACTIVITY

Acquisition of Nautica Properties

During July 2006, we acquired from affiliated parties options to lease and options to purchase certain businesses and their related assets, including various parcels of land, buildings and related improvements, on the west bank of the Cuyahoga River in Cleveland, Ohio. We refer to these businesses and their related assets, covering an aggregate of approximately 624,000 square feet of land (14.4 acres) and a building comprised of 47,380 square feet of net rentable space, as the Nautica Properties.

Since January 2009, we have exercised substantially all of our options on the Nautica Properties and have acquired Sugar Warehouse, Flats Development, Nautica Phase 2, Sycamore & Main and Nautica Peninsula Land from related parties. Our CEO controlled each of these businesses prior to acquisition. These acquisitions and their related business were accounted for as combinations of entities under common control. Therefore, the portion of each business acquired from related parties have been recorded at the historical cost bases in the assets and liabilities transferred and the portion of these businesses acquired from third parties have been recorded at fair value at the acquisition date using the acquisition method of accounting in accordance with FASB ASC Topic 805,Business Combinations (“ASC Topic 805”). A distribution was recorded on the acquisition date for the portion of the purchase price attributable to related parties. The net assets of the entity acquired have been retroactively accounted for in our financial statements since January 1, 2009. The net assets attributable to the noncontrolling interest holders have been reflected as a separate component of equity.

If casino gaming were to become legalized in Ohio within seven years from the purchase date of each property and a casino is licensed on the Nautica Properties, the purchase price of each property could increase based on independent appraisals of the land, improvements and other asset values. Any additional purchase price shall be equal to the fair market value of the property at the time that a license is issued to JEI in the State of Ohio for a casino less the purchase price previously paid. There is no maximum additional purchase price. We will continue to evaluate the fair value of this additional contingent purchase price at each balance sheet date throughout the term of the agreement. If applicable, any additional purchase price would be accounted for consistently with the original acquisition accounting, whereby the portion attributable to related parties would be accounted for as a combination of entities under common control and as a distribution, and the portion attributable to third parties would be accounted for using the acquisition method of accounting. At December 31, 2011, the fair value of the aggregate contingent purchase price was immaterial to the financial position of JEI, but could have a material impact in the future if a casino license is granted for the Nautica Properties.

F-11

The following table summarizes the net assets acquired and liabilities assumed as of the acquisition date for each acquired property considering both the portion acquired from related parties and the noncontrolling interest holders:

	Sugar Warehouse		Flats Development		Nautica Phase 2		Sycamore & Main		Nautica Peninsula Land
Date of acquisition	January 21, 2009		August 16, 2010		January 18, 2011		October 3, 2011		October 28, 2011
Current Assets	$	47	$	—	$	—	$	—	$	—
Property and equipment, net		1,775		1,652		1,305		856		995
Total assets acquired		1,822		1,652		1,305		856		995
Current liabilities assumed		38		15		60		51		45
Other long-term liabilities		63		—		—		—		—
Total liabilities assumed		101		15		60		51		45
Net assets acquired	$	1,721	$	1,637	$	1,245	$	805	$	950
Purchase price	$	2,450	$	2,800	$	1,250	$	1,100	$	971
Distribution to related parties	$	2,238	$	2,800	$	7	$	1,100	$	107
Payment to noncontrolling interest holders	$	212		—	$	1,243		—	$	864

Any change in the fair value of the net assets of Nautica Peninsula Land acquired from the noncontrolling interest holders during the purchase price allocation period (generally within one year of the acquisition date) may result in an allocation to goodwill. The allocation of the purchase price of Nautica Phase 2 paid to acquire the noncontrolling interest was final as of December 31, 2011.

The following schedule discloses the effects on JEI’s equity due to the change in ownership interest in Sugar Warehouse, Nautica Phase 2 and Nautica Peninsula Land discussed above:

	Year Ended December 31,
	2011			2010		2009
Net (loss) income attributable to JEI	$	(5,621	)	$	1,910	$	(1,590	)
Decrease in JEI’s equity for purchase of Sugar Warehouse noncontrolling interest		—			—		(212	)
Decrease in JEI’s equity for purchase of Nautica Phase 2 noncontrolling interest		(623	)		—		—
Decrease in JEI’s equity for purchase of Nautica Peninsula Land noncontrolling interest		(732	)		—		—
Change from net (loss) income attributable to JEI and purchase of the noncontrolling interest	$	(6,976	)	$	1,910	$	(1,802	)

F-12

Acquisitions of Video Poker Truck Stops

We acquired three video poker truck stops in Louisiana, which were previously wholly owned by another JII subsidiary, Gameco Holdings, Inc. (“Gameco”), an entity under common control and with common management. We acquired Cash Magic Springhill, LLC (“Springhill”) and Cash Magic Vivian, LLC (“Vivian”) on January 31, 2011 and Jalou Forest Gold, LLC (“Forest Gold”) on March 31, 2011. The acquisitions of these video poker truck stops have been accounted for as combinations of entities under common control. Therefore, the acquisitions have been recorded at the historical cost bases in the assets and liabilities transferred. A distribution, equal to the purchase price, was recorded on the acquisition date for each property, and the net assets of the entity acquired have been retroactively accounted for in our financial statements since January 1, 2009.

The following table summarizes the net assets acquired and liabilities assumed as of the date of each acquisition:

	Springhill		Vivian		Forest Gold
Date of acquisition	January 31, 2011		January 31, 2011		March 31, 2011
Current assets	$	495	$	507	$	419
Property and equipment, net		2,309		2,555		2,056
Goodwill		1,376		—		880
Identifiable intangible assets		318		288		251
Other assets		27		12		—
Total assets acquired		4,525		3,362		3,606
Current liabilities assumed		188		228		646
Net assets acquired	$	4,337	$	3,134	$	2,960
Purchase price	$	5,462	$	4,913	$	3,025
Distribution recorded	$	5,462	$	4,913	$	3,025
Effective net distribution (distribution less net assets acquired	$	1,125	$	1,779	$	65

Subsequent Event –Black Hawk, Colorado

On February 24, 2012, we entered into a real estate sales contract with Dakota Blackhawk, LLC and Miner’s Mesa Development, LLC wherein we agreed to purchase approximately 45 acres of land located in the City of Black Hawk, Colorado (with approximately 1 acre within the casino gaming district) for an aggregate purchase price of $7,500. The transaction is expected to close on or before January 31, 2013.

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5. LONG-TERM DEBT

Long-term debt and capital lease obligations as of December 31, 2011 and 2010 consist of the following:

	2011			2010 (As adjusted, see Note 4)
9 3/4% Senior Unsecured Notes due 2014	$	210,000		$	210,000
Senior Secured Term Loan Facility due 2012		37,800			38,200
Senior Secured Delayed Draw Term Loan Facility due 2012		18,950			19,150
Senior Secured Revolving Credit Facility due 2011 and 2012		14,900			11,500
Truck Stop Indebtedness		—			20,723
Nautica Properties Indebtedness		27			1,295
Capital Leases		3,065			3,160
Total indebtedness		284,742			304,028
Less current indebtedness		(12,279	)		(22,336	)
Total long-term indebtedness	$	272,463		$	281,692

9 ³/4% Senior Unsecured Notes due 2014 and Senior Secured Credit Facility

On June 16, 2006, we issued senior unsecured notes in the amount of $210,000 bearing interest at 9 ³/4% due June 15, 2014 with interest only payments due each June 15 and December 15. We also have a $100,000 senior secured credit facility consisting of: (i) a $40,000 revolving credit facility (of which $3,000 expired June 2011 with the remainder initially due June 2012); (ii) a $40,000 six-year term loan facility initially due June 2012; and (iii) a $20,000 six-year delayed draw term loan initially due June 2012 (see below). Borrowings under our senior secured credit facility bear interest at a rate equal to an applicable margin plus, at our option, either (a) a base rate determined by reference to the higher of (1) the prime rate, as defined, and (2) the federal funds rate plus ¹/2 of 1% or (b) a LIBOR rate for the interest period relevant to such borrowing adjusted for certain costs. At December 31, 2011, the blended interest rate on our senior secured credit facility was approximately 3.50%. As of December 31, 2011, $22,100 was available on the revolving credit facility.

On February 23, 2012, we entered into a second amendment and restatement agreement to our credit facility (the “Restated Credit Agreement”). The Restated Credit Agreement extended the maturity of $45,000 of our term loans and $37,000 of our revolving loan commitments to December 16, 2013, among other minor amendments. In addition, we increased our revolver capacity to $40,000. We are required to pay down $11,750 of term loans on or before the June 16, 2012 maturity date. We also have the right to borrow an additional $12,000 of term loans under the Restated Credit Agreement if we choose, so long as the total indebtedness under the Restated Credit Agreement does not exceed $96,750.

As a result of the Restated Credit Agreement, our interest rate will increase by 0.25% on the loans that mature on December 16, 2013. As such, the interest rate on the drawn revolving loan balance will increase by 0.25%, the interest rate on the $11,750 of term loans that mature June 16, 2012 will remain 3% above LIBOR, and the $45,000 of term loans that mature December 16, 2013 will have an interest rate of 3.25% above LIBOR.

Our $210,000 of 9 ³/4% senior unsecured notes rank equally in right of payment with all of our existing and future unsecured senior indebtedness and senior to any existing and future subordinated indebtedness. The notes are effectively subordinated to any secured indebtedness (including indebtedness under our senior credit facility) up to the value of the collateral securing such indebtedness. The notes are guaranteed by our current and future restricted subsidiaries that also guarantee our senior secured credit facility. We can redeem all or part of our outstanding senior unsecured notes aggregating $210,000 at the redemption prices set forth below, plus accrued and unpaid interest. The redemption prices, expressed as a percentage of the principal amount, for the 12-month period beginning on June 15 of the years indicated below are as follows:

F-14

Year	Percentage
2011		102.438	%
2012 and thereafter		100.000	%

There are many restrictions and covenants placed upon us under both our secured and unsecured indebtedness. We are required to maintain certain operating performance ratios, our covenants impose various restrictions on us as to the timing of redemptions of our notes, there are various change of control covenants, and there are many other restrictive and operational limitations on us that would be difficult or impossible for us to change. The occurrence of any one of these events and/or covenant violations to our debt agreements could have a material adverse effect on our business, financial condition, results of operations, prospects and ability to satisfy our obligations under our debt agreements. The failure to repay or maintain compliance with our covenants on any of our indebtedness would result in an event of default under both our senior credit facility and our note indenture. Annual distributions may be made to our owner in an aggregate amount not to exceed the greater of $1,000 or 50% of consolidated net income as defined in our credit agreement and indenture. At December 31, 2011, we were in compliance with our financial covenants.

Truck Stop Indebtedness

At December 31, 2010, we had truck stop indebtedness totaling $20,723. The outstanding indebtedness was paid in full during 2011 in connection with the sales of Springhill, Vivian and Forest Gold to JEI. See Note 4.

Nautica Properties Indebtedness

At December 31, 2010, we had Nautica Properties indebtedness totaling $1,295, of which $1,147 was paid in full during 2011 in connection with the sales of Nautica Phase 2 and Sycamore & Main to JEI. See Note 4.

Capital Leases

Gold Dust West-Elko has a capital lease on its building, which requires interest and principal payments of $21 per month. The lease initially matured in October 2010. We have the right to extend the lease three times, each for five year intervals, or to purchase the land and building for $5,398 at any time through the first renewal period (i.e., through October 2015). The purchase option is no longer available after the first renewal period. Effective November 1, 2010, Gold Dust West-Elko exercised its right to extend the lease for five years to October 2015. The effective interest rate is 16.9%. Each additional lease renewal, if elected, will result in an increase in monthly payments based on the Consumer Price Index, as published.

Colonial has a capital lease on the land under its satellite wagering facility in Vinton, Virginia, which requires interest and principal payments of $11 per month. The lease initially matured in September 2009. We have the right to extend the term of the lease five times, each for five year intervals, or to purchase the land for $800 at any time after the first renewal period of the lease (i.e., after September 11, 2014). In 2009, we exercised our right under the lease to extend the term for five years to September 11, 2014. The effective interest rate is 11.8%. Each additional lease renewal, if elected, will result in an increase in monthly payments by 10% over the previous lease term.

Colonial has a capital lease on the land and building for its satellite wagering facility in Chesapeake, Virginia, with interest and principal payments of $6 per month until October 2010, then interest and principal payments of $7 per month until October 2015, with three renewal periods of five years each with monthly payments starting at $8 per month and increasing to $11 per month. The effective interest rate is 10.5% per annum.

The Company has historically entered into various other insignificant capital leases related to equipment used in its video poker truck stops and vehicles used by executives of JEI. These capital leases were paid in full in 2011.

F-15

Scheduled maturities of long-term debt and capital lease obligations as of December 31, 2011, are as follows:

2012	$	12,279
2013		59,523
2014		210,867
2015		50
2016		67
Thereafter		1,956
Total	$	284,742

6. FAIR VALUE OF FINANCIAL INSTRUMENTS

FASB ASC Topic 820,Fair Value Measurements and Disclosures (“ASC Topic 820”), establishes a framework for measuring fair value and requires specific disclosures about fair value measurements. ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The guidance identifies market or observable inputs as the preferred sources of values, followed by assumptions based on hypothetical transactions in the absence of market inputs. The guidance establishes a hierarchy for grouping these assets and liabilities, based on the significance level of the following inputs:

• Level 1 — inputs are unadjusted quoted prices foridentical assets or liabilities in active markets.

• Level 2 — inputs include quoted prices forsimilar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

• Level 3 — inputs are unobservable and considered significant to the fair value measurement.

A financial instrument’s categorization within the hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

Recurring Fair Value Measurements – Investment in Equity Securities

We own approximately three percent of the outstanding shares of MTR Gaming Group, Inc. (“MTR”), a publicly-traded gaming company. Our affiliates have also historically invested in MTR, which resulted in a combined ownership of approximately 18.3% of the outstanding common shares of MTR as of December 31, 2011 and thus making the affiliated group MTR’s largest shareholder.

We have elected the fair value option permitted by FASB ASC Topic 825,Financial Instruments (“ASC Topic 825”), and therefore, we recognize changes in the fair value of our investment in MTR as unrealized gains/losses in earnings based on its quoted market price. We recorded an unrealized loss (gain) on the change in the fair value of the investment totaling $131, ($594) and $309 for the years ended December 31, 2011, 2010 and 2009, respectively.

F-16

The following table presents information about our assets measured at fair value on a recurring basis as of December 31, 2011, aggregated by the level in the fair value hierarchy within which those assets fall:

Assets Measured at Fair Value on a Recurring Basis at December 31, 2011
	Total Fair Value		Level 1		Level 2		Level 3
Investment in equity securities	$	1,521	$	1,521		—		—

The following table presents information about our assets measured at fair value on a recurring basis as of December 31, 2010, aggregated by the level in the fair value hierarchy within which those assets fall:

Assets Measured at Fair Value on a Recurring Basis at December 31, 2010
	Total Fair Value		Level 1		Level 2		Level 3
Investment in equity securities	$	1,652	$	1,652		—		—

Effective May 6, 2008, our CEO was appointed to the MTR board of directors, and on October 31, 2008, he became the chairman of the MTR board. In March 2010, our CEO resigned from MTR’s board of directors. For the period that our CEO was the chairman of the MTR board, we reached a level of significant influence. Therefore, consistent with the requirements of ASC Topic 825 and Rule 4-08(g) of Regulation S-X of the Securities Exchange Act of 1934, the following is summary level financial information of MTR for the three months ended March 31, 2010 and for the year ended December 31, 2009 as derived from its reports filed with the SEC:

	Three Months Ended March  31, 2010			Year Ended December  31, 2009
Net revenues	$	99,359		$	444,155
Total operating expenses		90,069			421,308
Loss from continuing operations		(3,137	)		(23,698	)
Net loss		(3,280	)		(22,538	)

Nonrecurring Fair Value Measurements – Property, Plant and Equipment and Goodwill

We apply the provisions of the fair value measurement standard to our nonrecurring, non-financial measurements including property, plant and equipment and goodwill impairments. These assets are not measured at fair value on an ongoing basis, but are subject to fair value adjustments only in certain circumstances. Property, plant and equipment is evaluated for impairment and reduced to fair value when there is an indication that the carrying costs exceed the sum of the undiscounted cash flows. Goodwill is evaluated for impairment and reduced to fair value when there is an indication that the carrying costs exceed the fair value.

During June 2011, we evaluated our ability to recover the recorded cost of Gold Dust West-Carson City. See Note 11. Based on this evaluation, we recorded an impairment of long-lived assets totaling $10,065 related to this property. We used Level 3 inputs and income valuation, market valuation, and cost valuation techniques to measure the fair value of the Gold Dust West-Carson City asset group as of June 30, 2011. We considered a variety of factors when estimating the fair value of the asset group, including estimates about the future operating results, appropriate discount rates, multiples of EBITDA (earnings before interest, income taxes, depreciation and amortization), investment banker market analyses, and recent sales of comparable assets. A variety of estimates and judgments about the relevance and comparability of this information to our assets were made. Additionally, as discussed in Note 4, the portions of property, plant and equipment of Nautica Phase 2 and Nautica Peninsula Land acquired from third parties have been recorded at fair value at their acquisition dates.

F-17

The following table presents information about our non-financial assets measured at fair value on a nonrecurring basis during 2011, aggregated by the level in the fair value hierarchy within which those assets fall:

Assets Measured at Fair Value on a Nonrecurring Basis During 2011
	Total Fair Value		Level 1		Level 2		Level 3
Property, plant and equipment	$	8,400		—		—	$	8,400

As discussed in Note 3, prior to the acquisition by JEI, we determined the carrying value of the goodwill at Forest Gold was impaired. Consequently, Forest Gold recorded a goodwill impairment charge of $836 during the year ended December 31, 2010.

The following table presents information about our non-financial assets measured at fair value on a nonrecurring basis during 2010, aggregated by the level in the fair value hierarchy within which those assets fall:

Assets Measured at Fair Value on a Nonrecurring Basis During 2010
	Total Fair Value		Level 1		Level 2		Level 3
Goodwill	$	880		—		—	$	880

Other Estimated Fair Value Disclosures

The following disclosure of estimated fair value of our debt and capital lease obligations has been determined using available market information and discounted cash flow analysis. However, considerable judgment is required to interpret market data in order to develop the estimates of fair value. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

The estimated fair value of our debt and capital lease obligations as of December 31, 2011 and 2010 is as follows:

	2011				2010 (As adjusted, see Note 4)
			Estimated				Estimated
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Liabilities—Debt and capital lease obligations	$	284,742	$	271,453	$	304,028	$	302,133

The estimation methodologies utilized are summarized as follows:

Debt—The fair value of our senior unsecured notes is based upon quoted market rates. The fair value of our variable rate debt and other fixed rate debt is estimated based on a discounted cash flow analysis, using the prevailing market interest rates for debt of similar dollar amount, maturity and risk.

The estimated fair value of our other financial instruments, such as cash and cash equivalents, accounts receivable and accounts payable, have been determined to approximate carrying value based on the short-term nature of those financial instruments.

F-18

7. RELATED PARTY TRANSACTIONS

JIMCO Management Agreement

In order to assist us in our efforts to research, develop, perform due diligence on and possibly acquire new gaming opportunities, we have a consulting agreement with Jacobs Investments Management Co. Inc. (“JIMCO”), 82% of which is owned by Jeffrey P. Jacobs and the remaining 18% of which is owned in equal portions by two of his business associates. This agreement calls for payments of $1,250 per year payable in two equal installments of $625 on January 1^st and July 1^st plus 2.5% of budgeted development costs for projects undertaken by us, if certain debt covenant ratios are met. Total expenses incurred under this agreement with JIMCO were $1,250, $1,250 and $1,325 for the years ended December 31, 2011, 2010 and 2009, respectively.

Transactions with Affiliate Video Poker Truck Stops

We manage and provide administrative services and support to a Gameco-owned video poker truck stop in exchange for certain fees. We allocate management, accounting and overhead costs incurred by JEI to the video poker truck stop owned by Gameco. These costs totaled $318, $291 and $240 for the years ended December 31, 2011, 2010 and 2009, respectively. Additionally, beginning in December 2009, to help JEI reach the fuel sale volume necessary to qualify for the reduced pricing structure under our fuel supply agreements discussed in Note 8 below, we entered into an agreement with Gameco to provide gasoline and diesel fuel at cost for its fuel operations, which totaled $5,564, $4,476, and $0 for the years ended December 31, 2011, 2010 and 2009, respectively.

Jalou Device Owner, L.P.

Under Louisiana law, video poker machines must be owned by Louisiana residents. Through October 2009, the video poker truck stops paid a fee to the third party owner of the machines in order to maintain the machines used in our video poker truck stops, plus reimbursement for the owner’s licensing costs and various other expenses. Beginning in November 2009, the ownership of the video poker machines and the related repair parts inventory used by in our video poker truck stops was transferred from the third party owner to a related party, Jalou Device Owner, L.P. (“Device Owner”), of which Gameco owns 49% and is the general partner. Two Louisiana residents own the remaining 51% of Device Owner and are the limited partners. Our video poker truck stops pay 90 cents per operating video poker machine per day to Device Owner, plus reimbursement for Device Owner’s licensing costs. Total expense under these arrangements was $1,510, $1,508 and $1,310 for the years ended December 31, 2011, 2010 and 2009, respectively.

Other Related Party Transactions

During 2009, we incurred expenses with the R.E. Jacobs Group for JEI-related airplane usage totaling $113. Additionally, prior to our acquisition, Nautica Phase 2 periodically provided working capital advances to JIMCO. These advances totaled $583 as of December 31, 2010 and are included in the balances due from affiliates discussed below. These working capital advances were settled at closing of the acquisition of Nautica Phase 2 by JEI during 2011.

Balances Due To/From Affiliates

Each of the above related party transactions results in either receivables from or payables to our affiliates. As of December 31, 2011 and 2010, these transactions resulted in net receivables from affiliates totaling $1,098 and $2,722, respectively. As of December 31, 2011 and 2010, these transactions resulted in net payables to affiliates totaling $1,203 and $1,251, respectively.

F-19

8. COMMITMENTS AND CONTINGENCIES

Commitments

Colonial has an agreement with a totalisator company to provide totalisator equipment and services for pari-mutuel wagering at all of Colonial’s facilities and through Colonial’s EZ Horseplay account wagering platform. The agreement has fixed and variable cost elements and expires in February 2015. Colonial has two one year renewal options. Colonial also has an agreement with a company which provides the internet wagering interface, video streaming and other services which support Colonial’s EZ Horseplay account wagering platform. Fees payable under the agreement is primarily based upon a sliding scale of the amount annually wagered through EZ Horseplay. The agreement expires in February 2014. Total expense incurred for totalisator and account wagering support services under these agreements was $1,071, $762, and $850 for the years ended December 31, 2011, 2010 and 2009, respectively.

The Interstate Horse Racing Act requires that we secure the consent of the Virginia Horsemen’s Benevolence and Protective Association (the “VaHBPA”) and the Virginia Harness Horse Association (“VHHA”) to export the simulcasting of races. These consents are usually contained in the agreement between each group and Colonial. We have an agreement with the VHHA that expires December 31, 2014 and an agreement with the VaHBPA that expires December 31, 2012.

JEI Distributing, LLC (“JEID”), a wholly-owned subsidiary of JEI, entered into fuel supply agreements with CITGO Petroleum Corporation (“CITGO”). The agreements provide for the purchase and sale of CITGO branded and unbranded gasoline and diesel fuel. On December 21, 2009, JEID and CITGO entered into a five-year Marketer Franchise Agreement (the “MFA”) which created a franchise relationship between JEID and CITGO and requires JEID to purchase at least 90% of certain listed monthly quantities of gasoline from CITGO in order to maintain the franchise and not be in violation of the MFA. Under the MFA, CITGO grants JEID the right to use CITGO’s applicable brand names, trademarks and other forms of CITGO’s identification, in connection with the resale by JEID of products acquired under CITGO’s brand names. Additionally, on December 21, 2009, JEID and CITGO entered into an Unbranded Rack Sales Agreement (the “RSA”). Although the initial term of the RSA is five years followed by annual renewals, the RSA provides that either party may terminate the RSA, without cause, upon providing thirty days written notice. The RSA requires JEID to purchase at least 90% of certain listed monthly quantities of fuel from CITGO in order to qualify for CITGO’s rack posting pricing in effect and not be in violation of the RSA. The Addendum to Unbranded Rack Sales Agreement between JEID and CITGO, also dated December 21, 2009, amends the pricing for unbranded fuel under the RSA. The amended pricing equals the sum of the base price and an adder fee that is dependent on the location of the terminal where the product is delivered.

Operating Leases

Our operating leases include various land and building leases for certain properties in Nevada, Louisiana and Virginia, leases for office space in Colorado, Louisiana, Virginia and Florida, as well as leases for automobiles and other property and equipment at all locations, expiring at various dates. Total expense under these non-cancelable operating leases was $3,119, $3,057 and $2,985 for the years ended December 31, 2011, 2010 and 2009, respectively.

F-20

The future minimum commitments relating to JEI’s non-cancelable operating leases are as follows:

Years Ending December 31
2012	$	3,234
2013		2,954
2014		2,712
2015		2,449
2016		1,664
Thereafter		22,405
Total	$	35,418

Capital Leases

The following is an analysis of the leased property under capital leases:

Class of Property	2011			2010
Land	$	1,182		$	1,182
Buildings		1,686			1,686
Equipment and furniture and fixtures		—			255
Other		—			40
Less: accumulated depreciation		(427	)		(600	)
Total leased property under capital leases	$	2,441		$	2,563

As of December 31, 2011, the following is a schedule by years of future minimum lease payments under capital leases together with the net present value of the minimum lease payments:

Years Ending December 31
2012	$	474
2013		474
2014		1,241
2015		345
2016		353
Thereafter		3,809
Total future minimum lease payments		6,696
Less amount representing interest ranging from 10.5% to 16.9% per annum		3,631
Net present value of minimum lease payments	$	3,065

Contingencies

We are involved in routine litigation arising in the ordinary course of our business pertaining to workers’ compensation claims, equal opportunity employment issues, or guest injury claims. All such claims are routinely turned over to our insurance providers. None of the claims is expected to have a material impact on our financial position, results of operations or cash flows. We believe these matters are covered by appropriate insurance policies.

F-21

In March 2008, the Nevada Supreme Court ruled that food and non-alcoholic beverages purchased for use in providing complimentary meals to customers and to employees were exempt from use tax. Recently, the Nevada Department of Taxation has asserted that gaming companies should pay sales tax on customer complimentary meals and employee meals on a prospective basis. This position stems from a recent Nevada Tax Commission decision which states that complimentary meals provided to customers are subject to sales tax at the retail value of the meal and employee meals are subject to sales tax at the cost of the meal. A petition for judicial review of the Nevada Tax Commission decision has been filed in Clark County District Court. We are currently evaluating whether or not to accrue tax prospectively as it disagrees with the position asserted by the Nevada Department of Taxation. The resolution of this matter is not expected to have a material impact on our consolidated financial statements.

9. ACCRUED EXPENSES

Accrued expenses as of December 31, 2011 and 2010, include the following:

	December 31, 2011		December 31, 2010 (As adjusted, see Note 4)
Payroll and related	$	5,725	$	4,897
Gaming taxes payable		3,379		3,318
Interest payable		1,229		963
Property taxes payable		1,176		1,147
Slot club liability		1,209		1,199
Progressive jackpot liability		1,549		1,260
Purses due horsemen		375		511
Other		3,776		3,588
	$	18,418	$	16,883

10. EMPLOYEE BENEFIT PLANS

The Company is the sponsor of Jacobs Entertainment, Inc.’s 401(k) Plan (the “Plan”). The Plan is a defined contribution plan. The Plan allows eligible employees to make tax-deferred contributions that are matched by us up to a specified level. We contributed approximately $472, $424, and $93 to the Plan for the years ended December 31, 2011, 2010 and 2009, respectively.

11. IMPAIRMENT OF LONG-LIVED ASSETS

During 2011, based on operating results, we were required, pursuant to FASB ASC Topic 360,Property, Plant and Equipment, to assess our ability to recover the recorded cost of the Gold Dust West-Carson City long-lived assets. We prepared a cash flow analysis based on management’s best estimates in an effort to assess the likelihood of recovering the cost of these assets. Based on these projections and the related underlying assumptions as well as our knowledge of the Carson City market, we believe that we will not be able to fully recover the carrying cost of these assets, and therefore, Gold Dust West-Carson City recorded an impairment of long-lived assets totaling $10,065 as of June 30, 2011. Future events such as actual performance versus projected performance, continued market decline, increased and/or changing competitive forces, or other unforeseen events could change our estimates and cause us to recognize an additional impairment in the carrying value of the Gold Dust West-Carson City long-lived assets in future periods. Such an impairment could be material to our financial position and results of operations.

F-22

12. CONSTITUTIONAL AMENDMENTS

During 2009, we provided financial support to oppose a proposed constitutional amendment in Ohio (“Issue 3”) that would allow for one casino each at designated locations in Cincinnati, Cleveland, Columbus and Toledo and distribute to all Ohio counties a tax on the casinos. For the year ended December 31, 2009, we provided financial support totaling $2,285 to oppose Issue 3. On November 3, 2009, Issue 3 was passed in Ohio which permits casino gaming at the locations designated in the amendment. None of the designated locations is owned by JEI or its affiliates.

13. SEGMENT INFORMATION

Our CEO is our chief operating decision maker. At December 31, 2011, 2010 and 2009, we had four segments representing the geographic regions of our operations. Each segment is managed separately because of the unique characteristics of its revenue stream and customer base. We have aggregated our operations into these four segments based on similarities in the nature of the properties’ businesses, customers and regulatory environment in which each property operates. The Colorado segment consists of The Lodge and Gilpin casinos. Our Nevada segment includes the Gold Dust West-Reno, Gold Dust West-Carson City and Gold Dust West-Elko casinos. The Louisiana operations consist of video poker truck stops, and the Virginia segment consists of Colonial’s pari-mutuel operations and satellite wagering facilities.

The accounting policies of the segments are the same as those described in Note 2. Corporate and other, which represents all other income and expenses, is also presented.

F-23

As of and for the Year Ended December 31, 2011

	Colorado			Nevada			Louisiana			Virginia		Corporate and Other			Total
Revenues
Gaming
Casino	$	107,743		$	36,152										$	143,895
Truck stop							$	72,388								72,388
Pari-mutuel										$	27,920					27,920
Food and beverage		11,854			9,569			5,687			1,785					28,895
Convenience store — fuel								119,253								119,253
Convenience store — other								14,583								14,583
Hotel		1,941			1,915											3,856
Other		1,007			1,241			1,525			1,475	$	729			5,977
Total revenues		122,545			48,877			213,436			31,180		729			416,767
Less: Promotional allowances		(24,540	)		(6,178	)		(6,104	)							(36,822	)
Net revenues	$	98,005		$	42,699		$	207,332		$	31,180	$	729		$	379,945
EBITDA(1)	$	32,253		$	(2,536	)	$	21,286		$	875	$	(9,833	)	$	42,045
Depreciation and amortization	$	6,596		$	5,894		$	5,793		$	2,459	$	756		$	21,498
Interest income	$	—		$	—		$	6		$	15	$	—		$	21
Interest expense	$	8,629		$	5,097		$	4,609		$	516	$	7,312		$	26,163
Net loss															$	(5,595	)
Goodwill	$	6,711		$	8,836		$	33,181		$	—	$	—		$	48,728
Identifiable intangible assets, net	$	—		$	—		$	8,509		$	—	$	—		$	8,509
Property, plant and equipment, net	$	86,571		$	25,194		$	44,478		$	60,773	$	11,667		$	228,683
Total assets	$	108,238		$	41,081		$	99,322		$	65,774	$	15,407		$	329,822
Long-term debt	$	84,771		$	61,086		$	62,713		$	4,844	$	59,049		$	272,463
Capital expenditures	$	4,764		$	3,043		$	2,074		$	1,298	$	1,046		$	12,225

F-24

As of and for the Year Ended December 31, 2010

	Colorado			Nevada			Louisiana (As adjusted, see Note 4)			Virginia		Corporate And Other (As adjusted, see Note 4)			Total (As adjusted, see Note 4)
Revenues:
Gaming
Casino	$	105,056		$	35,209										$	140,265
Truck stop							$	70,142								70,142
Pari-mutuel										$	27,669					27,669
Food and beverage		11,939			9,382			6,593			1,982					29,896
Convenience store — fuel								95,480								95,480
Convenience store — other								13,739								13,739
Hotel		1,936			1,870											3,806
Other		932			1,268			1,970			1,634	$	758			6,562
Total revenues		119,863			47,729			187,924			31,285		758			387,559
Less: Promotional allowances		(23,338	)		(6,593	)		(5,672	)							(35,603	)
Net revenues	$	96,525		$	41,136		$	182,252		$	31,285	$	758		$	351,956
EBITDA(1)	$	31,221		$	7,119		$	20,335		$	1,483	$	(8,946	)	$	51,212
Depreciation and amortization	$	6,792		$	6,346		$	6,077		$	2,261	$	952		$	22,428
Interest income	$	—		$	—		$	11		$	9	$	5		$	25
Interest expense	$	8,563		$	5,223		$	5,388		$	541	$	7,142		$	26,857
Net income															$	1,952
Goodwill	$	6,711		$	8,836		$	33,181		$	—	$	—		$	48,728
Identifiable intangible assets, net	$	—		$	—		$	8,274		$	—	$	—		$	8,274
Property, plant and equipment, net	$	88,587		$	38,124		$	46,019		$	61,856	$	10,586		$	245,172
Total assets	$	110,380		$	54,412		$	101,306		$	66,959	$	16,281		$	349,338
Long-term debt	$	84,771		$	61,113		$	53,989		$	4,875	$	76,944		$	281,692
Capital expenditures	$	3,866		$	3,653		$	2,465		$	1,329	$	439		$	11,752

F-25

As of and for the Year Ended December 31, 2009

	Colorado			Nevada			Louisiana (As adjusted, see Note 4)			Virginia		Corporate And Other (As adjusted, see Note 4)			Total (As adjusted, see Note 4)
Revenues
Gaming
Casino	$	102,032		$	37,734										$	139,766
Truck stop							$	72,309								72,309
Pari-mutuel										$	32,276					32,276
Food and beverage		11,388			8,961			8,674			2,424					31,447
Convenience store — fuel								70,510								70,510
Convenience store — other								15,146								15,146
Hotel		1,738			1,869											3,607
Other		947			1,362			1,550			1,812	$	925			6,596
Total revenues		116,105			49,926			168,189			36,512		925			371,657
Less: Promotional allowances		(21,059	)		(8,507	)		(5,519	)							(35,085	)
Net revenues	$	95,046		$	41,419		$	162,670		$	36,512	$	925		$	336,572
EBITDA(1)	$	32,325		$	7,576		$	17,381		$	1,547	$	(11,463	)	$	47,366
Depreciation and amortization	$	7,087		$	5,984		$	6,337		$	2,124	$	1,006		$	22,538
Interest income	$	—		$	—		$	8		$	17	$	3		$	28
Interest expense	$	8,686		$	5,084		$	5,130		$	594	$	6,889		$	26,383
Net loss															$	(1,527	)
Goodwill	$	6,711		$	8,836		$	34,017		$	—	$	—		$	49,564
Identifiable intangible assets, net	$	—		$	—		$	9,139		$	—	$	—		$	9,139
Property, plant and equipment, net	$	91,585		$	40,907		$	47,930		$	62,964	$	10,734		$	254,120
Total assets	$	113,679		$	57,580		$	104,471		$	67,847	$	16,976		$	360,553
Long-term debt	$	84,981		$	61,337		$	54,015		$	4,902	$	89,114		$	294,349
Capital expenditures	$	7,722		$	2,887		$	3,869		$	1,052	$	900		$	16,430

(1) EBITDA (earnings before interest, income taxes, depreciation and amortization) is presented as supplemental information in the tables above as it is a key measure of operating performance used by our chief operating decision maker. EBITDA can be reconciled directly to our consolidated net income (loss) by adding the amounts shown for depreciation, amortization, income taxes and interest to net income (loss). This information should not be considered as an alternative to any measure of performance as promulgated under accounting principles generally accepted in the United States of America, such as net income (loss), nor should it be considered as an indicator of our overall financial performance. Our calculation of EBITDA may be different from the calculation used by other companies and comparability may be limited. Management believes that presentation of a non-GAAP financial measure such as EBITDA is useful because it allows holders of our debt and management to evaluate and compare our operating results from continuing operations from period to period in a meaningful and consistent manner in addition to standard GAAP financial measures. Management internally evaluates the performance of our segments using EBITDA measures as do most analysts following the gaming industry. EBITDA is also a key component of certain financial covenants in our debt agreements.

F-26

14. CONDENSED CONSOLIDATING FINANCIAL INFORMATION

Our senior secured credit facility and unsecured senior notes are both guaranteed by our current and future restricted subsidiaries. Each subsidiary guarantor is 100% owned by the parent company, all guarantees are full and unconditional and joint and several, and all subsidiaries of JEI guarantee the securities.

The following information sets forth our Condensed Consolidating Balance Sheets as of December 31, 2011 and 2010, and the Condensed Consolidating Statements of Operations and the Condensed Consolidating Statements of Cash Flows for the three years ended December 31, 2011 as required by Rule 3-10 of Regulation S-X of the Securities Exchange Act of 1934, as amended. Investments in our subsidiaries are accounted for on the equity method. Accordingly, entries necessary to consolidate the Parent Company Issuer and our Subsidiary Guarantors are reflected in the eliminations column.

F-27

JACOBS ENTERTAINMENT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEETS

AS OF DECEMBER 31, 2011

	Parent Company Issuer			Subsidiary Guarantors		Eliminations			Consolidated
ASSETS
Current assets	$	511		$	37,020				$	37,531
Property, plant and equipment, net		868			227,815					228,683
Net investment in and advances to subsidiaries		86,363				$	(86,363	)		—
Other long-term assets		2,879			60,729					63,608
Total assets	$	90,621		$	325,564	$	(86,363	)	$	329,822
LIABILITIES AND EQUITY
Current liabilities	$	15,584		$	24,593				$	40,177
Long-term debt		269,450			3,013					272,463
Long-term debt (receivable from) payable to affiliate		(210,407	)		210,407					—
Other long-term liabilities		23			1,188					1,211
Total equity		15,971			86,363	$	(86,363	)		15,971
Total liabilities and equity	$	90,621		$	325,564	$	(86,363	)	$	329,822

AS OF DECEMBER 31, 2010

(As adjusted, see Note 4)

	Parent Company Issuer			Subsidiary Guarantors		Eliminations			Consolidated
ASSETS
Current assets	$	554		$	38,208				$	38,762
Property, plant and equipment, net		897			244,275					245,172
Net investment in and advances to subsidiaries		94,045				$	(94,045	)		—
Other long-term assets		4,389			61,015					65,404
Total assets	$	99,885		$	343,498	$	(94,045	)	$	349,338
LIABILITIES AND EQUITY
Current liabilities	$	5,884		$	43,119				$	49,003
Long-term debt		275,250			6,442					281,692
Long-term debt (receivable from) payable to affiliate		(198,782	)		198,782					—
Other long-term liabilities		4			1,110					1,114
Total equity		17,529			94,045	$	(94,045	)		17,529
Total liabilities and equity	$	99,885		$	343,498	$	(94,045	)	$	349,338

F-28

JACOBS ENTERTAINMENT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2011

	Parent
	Company			Subsidiary
	Issuer			Guarantors			Eliminations			Consolidated
Net revenues	$	—		$	380,120		$	(175	)	$	379,945
Costs and expenses		(10,084	)		(349,489	)		175			(359,398	)
Interest expense, net		(5,679	)		(20,463	)		—			(26,142	)
Equity in earnings of subsidiaries		10,142			—			(10,142	)		—
Noncontrolling interest		—			(26	)		—			(26	)
Net (loss) income attributable to JEI	$	(5,621	)	$	10,142		$	(10,142	)	$	(5,621	)

FOR THE YEAR ENDED DECEMBER 31, 2010

(As adjusted, see Note 4)

	Parent
	Company			Subsidiary
	Issuer			Guarantors			Eliminations			Consolidated
Net revenues	$	—		$	352,131		$	(175	)	$	351,956
Costs and expenses		(9,440	)		(313,907	)		175			(323,172	)
Interest expense, net		(5,452	)		(21,380	)		—			(26,832	)
Equity in earnings of subsidiaries		16,802			—			(16,802	)		—
Noncontrolling interest		—			(42	)		—			(42	)
Net income attributable to JEI	$	1,910		$	16,802		$	(16,802	)	$	1,910

FOR THE YEAR ENDED DECEMBER 31, 2009

(As adjusted, see Note 4)

	Parent
	Company			Subsidiary
	Issuer			Guarantors			Eliminations			Consolidated
Net revenues	$	—		$	336,897		$	(325	)	$	336,572
Costs and expenses		(12,359	)		(299,710	)		325			(311,744	)
Interest expense, net		(5,184	)		(21,171	)		—			(26,355	)
Equity in earnings of subsidiaries		15,953			—			(15,953	)		—
Noncontrolling interest		—			(63	)		—			(63	)
Net (loss) income attributable to JEI	$	(1,590	)	$	15,953		$	(15,953	)	$	(1,590	)

F-29

JACOBS ENTERTAINMENT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2011

	Parent
	Company			Subsidiary
	Issuer			Guarantors			Consolidated
Net cash provided by operating activities	$	25,129		$	4,222		$	29,351
INVESTING ACTIVITIES:
Additions to property, plant and equipment		(432	)		(11,793	)		(12,225	)
Proceeds from sale of equipment		—			145			145
Purchases of device rights		—			(1,756	)		(1,756	)
Net cash used in investing activities		(432	)		(13,404	)		(13,836	)
FINANCING ACTIVITIES:
Proceeds from issuance of debt		—			800			800
Proceeds from revolving line of credit		40,800			—			40,800
Payments on long-term debt		(401	)		(1,071	)		(1,472	)
Payments on revolving line of credit		(37,400	)		—			(37,400	)
Net advances to/from subsidiaries		(9,890	)		9,890			—
Acquisition of noncontrolling interest		(2,107	)		—			(2,107	)
Distributions to stockholder		(15,614	)		—			(15,614	)
Net cash (used in) provided by financing activities		(24,612	)		9,619			(14,993	)
Net Increase in Cash and Cash Equivalents		85			437			522
Cash and Cash Equivalents — Beginning of Year		196			24,509			24,705
Cash and Cash Equivalents — End of Year	$	281		$	24,946		$	25,227

F-30

JACOBS ENTERTAINMENT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2010

(As adjusted, see Note 4)

	Parent
	Company			Subsidiary
	Issuer			Guarantors			Consolidated
Net cash provided by operating activities	$	19,570		$	8,512		$	28,082
INVESTING ACTIVITIES:
Additions to property, plant and equipment		(145	)		(11,607	)		(11,752	)
Proceeds from sale of equipment		37			301			338
Purchases of device rights					(901	)		(901	)
Net cash used in investing activities		(108	)		(12,207	)		(12,315	)
FINANCING ACTIVITIES:
Payments to obtain financing		(1,500	)					(1,500	)
Proceeds from revolving line of credit		24,000						24,000
Payments on long-term debt		(406	)		(2,508	)		(2,914	)
Payments on revolving line of credit		(31,500	)					(31,500	)
Net advances to/from subsidiaries		(6,251	)		6,251			—
Contribution from stockholder					25			25
Distributions to stockholder		(3,800	)		(4	)		(3,804	)
Net cash (used in) provided by financing activities		(19,457	)		3,764			(15,693	)
Net Increase in Cash and Cash Equivalents		5			69			74
Cash and Cash Equivalents — Beginning of Year		191			24,440			24,631
Cash and Cash Equivalents — End of Year	$	196		$	24,509		$	24,705

F-31

JACOBS ENTERTAINMENT, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2009

(As adjusted, see Note 4)

	Parent
	Company			Subsidiary
	Issuer			Guarantors			Consolidated
Net cash provided by operating activities	$	8,971		$	14,092		$	23,063
INVESTING ACTIVITIES:
Additions to property, plant and equipment		(192	)		(16,238	)		(16,430	)
Proceeds from sale of equipment		4			385			389
Purchases of device rights					(1,124	)		(1,124	)
Acquisition of noncontrolling interest		(212	)					(212	)
Net cash used in investing activities		(400	)		(16,977	)		(17,377	)
FINANCING ACTIVITIES:
Payments to obtain financing		(555	)					(555	)
Proceeds from revolving line of credit		29,463						29,463
Payments on long-term debt		(404	)		(1,553	)		(1,957	)
Payments on revolving line of credit		(27,000	)					(27,000	)
Net advances to/from subsidiaries		(7,127	)		7,127			—
Distributions to stockholder		(3,244	)		(46	)		(3,290	)
Net cash (used in) provided by financing activities		(8,867	)		5,528			(3,339	)
Net (Decrease) Increase in Cash and Cash Equivalents		(296	)		2,643			2,347
Cash and Cash Equivalents — Beginning of Year		487			21,797			22,284
Cash and Cash Equivalents — End of Year	$	191		$	24,440		$	24,631

******

F-32

EXHIBIT INDEX

The following exhibits are filed, or incorporated by reference where indicated, in Part IV of this Annual Report on Form 10-K.

Exhibit No.	Description	Form	File No.	Where located (Exhibit No.)	Filing Date	Filed Herewith
3.1	Certificate of Incorporation of Gameco, Inc.	S-4	333-88242	3.1	May 14, 2002
3.2	By-Laws of Gameco, Inc.	S-4	333-88242	3.2	May 14, 2002
3.3	Amendment to the Certificate of Incorporation of Gameco, Inc.	S-4A	333-88242	3.36	August 8, 2002
3.4	Certificate of Amendment of Certificate of Incorporation of Jacobs Entertainment, Inc. dated September 27, 2005.	10-Q	333-88242	3.40	November 14, 2005
4.1	Trust Indenture Agreement by and between Jacobs Entertainment, Inc. and Wells Fargo Bank, as Trustee, dated June 16, 2006.	8-K	333-88242	4.1	March 23, 2006
4.2	Registration Rights Agreement by and between Jacobs Entertainment, Inc. and Credit Suisse Securities (USA) LLC, CIBC World Markets Corp., Libra Securities, LLC, Wells Fargo Securities, LLC and KeyBanc Capital Markets, a Division of McDonald Investments Inc., as the initial purchasers, dated June 16, 2006.	8-K	333-88242	4.2	March 23, 2006
4.3	Pledge Agreement dated as of June 16, 2006 by and among Jacobs Entertainment, Inc., Black Hawk Gaming & Development Company, Inc. and Credit Suisse, Cayman Islands Branch.	S-4	333-136066	4.3	July 27, 2006
4.4	Guarantee Agreement dated as of June 16, 2006, by and among Jacobs Entertainment, Inc., certain of the subsidiaries of Jacobs Entertainment, Inc. and Credit Suisse, Cayman Islands Branch.	S-4	333-136066	4.4	July 27, 2006

E-1

Exhibit No.	Description	Form		File No.		Where located (Exhibit No.)		Filing Date		Filed Herewith
4.5	Security Agreement dated as of June 16, 2006, made by Jacobs Entertainment, Inc. and each of the guarantors listed on the signature pages or from time to time a party by execution of a joinder agreement, as pledgors, assignors and debtors in favor of Credit Suisse, Cayman Islands Branch, in its capacity as collateral agent for the Secured Parties pursuant to the Credit Agreement.		S-4		333-136066		4.5		July 27, 2006
4.6	Contribution Agreement dated June 16, 2006, by and among Jacobs Entertainment, Inc. and affiliates of Jacobs Entertainment, Inc.		S-4		333-136066		4.6		July 27, 2006
4.7	Custodian Agreement dated as of June 16, 2006, by and between Dunham Trust Company, 1 East Liberty Street, Sixth Floor, Reno, NV 89504, as custodian, Credit Suisse, Cayman Islands Branch as Collateral Agent under the Credit Agreement, Jacobs Entertainment, Inc., as the Borrower under the Credit Agreement and Blackhawk Gaming & Development Company, Inc.		S-4		333-136066		4.7		July 27, 2006
4.8	Form of Jacobs Entertainment, Inc. 9.75% Rule 144A Global Note due 2014.		S-4		333-136066		4.8		July 27, 2006
4.9	Form of Jacobs Entertainment, Inc. 9.75% Regulation S Global Note due 2014.		S-4		333-136066		4.9		July 27, 2006
4.10	Form of Jacobs Entertainment, Inc. 9.75% IAI Global Note due 2014.		S-4		333-136066		4.10		July 27, 2006
4.11	Intercompany Note dated as of June 16, 2006 by and among Jacobs Entertainment, Inc., and Credit Suisse, Cayman Islands Branch.		S-4		333-136066		4.11		July 27, 2006

E-2

Exhibit No.	Description	Form	File No.	Where located (Exhibit No.)	Filing Date	Filed Herewith
4.12	Purchase Agreement dated June 9, 2006 by and among Jacobs Entertainment, Inc. and Credit Suisse Securities (USA) LLC, on behalf of the purchasers of the $210,000,000 9.75% Senior Notes.	S-4	333-136066	4.12	July 27, 2006
4.13	Pledge Agreement dated June 16, 2006 by and among Jacobs Entertainment, Inc., Black Hawk Gaming & Development Company, Inc. and Canadian Imperial Bank of Commerce, acting through its New York Agency.	S-4	333-136066	4.13	July 27, 2006
10.1	Deed of Lease dated May 8, 2003 between Haynes Chippenham Plaza, LLC and Colonial Downs, L.P.	10-K	333-88242	10.1	March 29, 2004
10.2	Piñon Plaza Ground Lease dated June 26, 2006 by and between Clark G. Russell and Jean M. Russell, Trustees of The Clark and Jean Russell Family Trust and Jacobs Entertainment, Inc.	S-4	333-136066	10.3	July 27, 2006
10.3	Triple Net Lease dated November 14, 2005 among Route 225 Investments, LLC and Jacobs Entertainment, Inc.	8-K	333-88242	10.4	November 15, 2005
10.4	Shopping Center Lease dated February 28, 2005 between Jay F. Wilks, Trustee under Indenture dated December 20, 1976 by and between Herbert Cashvan and Marvin Simon, as Settlors, and Jay F. Wilks as Trustee, and Colonial Downs, L.P.	8-K	333-88242	10.7	March 23, 2006

E-3

Exhibit No.	Description	Form	File No.	Where located (Exhibit No.)	Filing Date	Filed Herewith
10.5	Consulting Agreement dated January 1, 2006 and amended June 16, 2006, by and among Jacobs Entertainment, Inc. and Jacobs Investments Management Co., Inc.	S-4	333-136066	10.12	July 27, 2006
10.6	Purchase Agreement between Jacobs Sugar Warehouse, Inc. and Flats Development, Inc. dated July 7, 2010.	8-K	333-88242	10.12B	July 12, 2010
10.7	Option Agreement dated July 11, 2006 between Jacobs Entertainment, Inc. and Nautica Peninsula Land Limited Partnership.	S-4	333-136066	10.18	July 27, 2006
10.8	Amendment to Option Agreement between Jacobs Entertainment, Inc. and Nautica Peninsula Land Limited Partnership dated July 6, 2010.	8-K	333-88242	10.14B	July 12, 2010
10.9	Lease and Option to Purchase Agreement dated June 21, 2006 by and between Curray Corporation, Texas Pelican, LLC and Jalou of Vinton, LLC.	S-4	333-136066	10.20	July 27, 2006
10.10	Purchase Agreement dated March 14, 2008 regarding Jacobs Lot D, Inc.	10-Q	333-88242	10.30	May 13, 2008
10.11	Executive Employment Agreement between Jacobs Entertainment, Inc. and Emanuel J. Cotronakis signed August 21, 2009.	8-K	333-88242	10.32	August 24, 2009
10.12	Executive Employment Agreement between Jacobs Entertainment, Inc. and Michael T. Shubic signed September 23, 2009.	8-K	333-88242	10.33	September 29, 2009
10.13	Executive Employment Agreement between Jacobs Entertainment, Inc. and Ian M. Stewart signed September 23, 2009.	8-K	333-88242	10.34	September 29, 2009

E-4

Exhibit No.	Description	Form	File No.	Where located (Exhibit No.)	Filing Date	Filed Herewith
10.14	Marketer Franchise Agreement between JEI Distributing, LLC and CITGO Petroleum Corporation dated as of December 21, 2009.	8-K	333-88242	10.35	January 13, 2010
10.15	Unbranded Rack Sales Agreement between JEI Distributing, LLC and CITGO Petroleum Corporation dated as of December 21, 2009.	8-K	333-88242	10.36	January 13, 2010
10.16	Addendum to Unbranded Rack Sales Agreement between JEI Distributing, LLC and CITGO Petroleum Corporation dated as of December 21, 2009.	8-K	333-88242	10.37	January 13, 2010
10.17	Membership Interests Purchase Agreement effective January 31, 2011 by and between Gameco Holdings, Inc. and Jacobs Entertainment, Inc.	8-K	333-88242	10.28	February 3, 2011
10.18	Purchase Agreement between Nautica Phase 2 Limited Partnership and Jacobs Sugar Warehouse, Inc. dated January 14, 2011.	10-K	333-88242	10.29	March 29, 2011
10.19	Membership Interests Purchase Agreement effective March 31, 2011 by and between Gameco Holdings, Inc. and Jacobs Entertainment, Inc.	8-K	333-88242	10.30	April 4, 2011
10.20	Purchase Agreement between Sycamore & Main, Inc. and Jacobs Sugar Warehouse, Inc. dated October 3, 2011.	8-K	333-88242	10.31	October 6, 2011
10.21	Purchase Agreement between Nautica Peninsula Land Limited Partnership and Jacobs Sugar Warehouse, Inc. dated October 28, 2011.	8-K	333-88242	10.32	November 3, 2011

E-5

Exhibit No.	Description	Form	File No.	Where located (Exhibit No.)	Filing Date	Filed Herewith
10.22	Second Amendment and Restatement Agreement, dated as of February 23, 2012, among the Registrant, as borrower, several lenders from time to time party thereto and Credit Suisse AG, Cayman Islands Branch, as Administrative Agent and Wells Fargo Bank, National Association, as Swingline Lender, which amended and restated in its entirety the Amended and Restated Credit Agreement, dated as of June 16, 2006, as amended and restated as of March 31, 2010, among such parties, as set forth in such Second Amendment and Restatement Agreement.	8-K	333-88242	10.33	February 29, 2012
10.23	Increase Joinder to the Credit Agreement, dated as of February 23, 2012, among the Registrant, Capital One, National Association, as Additional Revolving Lender, and Credit Suisse AG, Cayman Islands Branch, as Administrative Agent.	8-K	333-88242	10.34	February 29, 2012
10.24	Specific Performance Real Estate Sales Contract, dated as of February 24, 2012, among the Registrant, Dakota Blackhawk, LLC and Miner’s Mesa Development, LLC.	8-K	333-88242	10.35	March 1, 2012
12	Computation of Ratio of Earnings to Fixed Charges.						X
14	Code of Ethics (as revised).	10-K	333-88242	14.1	March 26, 2008
21	Subsidiaries of Jacobs Entertainment, Inc.						X
25.1	Statement of Eligibility of Trustee on Form T-1.	S-4	333-136066	25.1	July 27, 2006

E-6

Exhibit No.	Description	Form	File No.	Where located (Exhibit No.)	Filing Date	Filed Herewith
31.1	Chief Executive Officer Certification under Section 302 of the Sarbanes-Oxley Act of 2002.					X
31.2	Chief Financial Officer Certification under Section 302 of the Sarbanes-Oxley Act of 2002.					X
32.1	Chief Executive Officer Certification under Section 906 of the Sarbanes-Oxley Act of 2002.					X
32.2	Chief Financial Officer Certification under Section 906 of the Sarbanes-Oxley Act of 2002.					X
101*	Financial statements for the Jacobs Entertainment, Inc. Annual Report on Form 10-K for the year ended December 31, 2011, formatted in XBRL: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Equity, (iv) the Consolidated Statements of Cash Flows and (v) the Notes to Consolidated Financial Statements.

* Pursuant to Rule 406T of Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Exchange Act, and otherwise is not subject to liability under these sections.

E-7