UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

----------------------------

FORM 10-Q/A
Amendment No. 1
(Mark One)

X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
--- SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2002

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

For the transition period from to
-------------- ---------------
Commission File No. 0-24993

LAKES GAMING, INC.
(Exact name of registrant as specified in its charter)

Minnesota 41-1913991
--------- ----------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)

130 Cheshire Lane
Minnetonka, Minnesota 55305
--------------------- -----
(Address of principal executive offices) (Zip Code)

(952) 449-9092
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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
--- ---

As of May 9, 2002, there were 10,637,953 shares of Common Stock, $0.01 par value
per share, outstanding.

This amendment to Form 10-Q is being filed to give effect to the restatement of
the Company's financial statements, as discussed in Note 8 to the Consolidated
Financial Statements.

LAKES GAMING, INC. AND SUBSIDIARIES
INDEX

PAGE OF
FORM 10-Q
---------

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Consolidated Balance Sheets as of March 31, 3
2002 (Restated) and December 30, 2001

Consolidated Statements of Earnings for the 4
three months ended March 31, 2002 (Restated)
and April 1, 2001 (Restated)

Consolidated Statements of Comprehensive 5
Earnings for the three months ended March 31, 2002
(Restated) and April 1, 2001 (Restated)

Consolidated Statements of Cash Flows for the 6
three months ended March 31, 2002 (Restated)
and April 1, 2001 (Restated)

Notes to Consolidated Financial Statements 7

ITEM 2. MANAGEMENT'S DISCUSSION AND 16
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

ITEM 3. QUANTITATIVE AND QUALITATIVE 24
DISCLOSURES ABOUT MARKET RISK

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS 26

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 28

LAKES GAMING, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)

MARCH 31, 2002 DECEMBER 30, 2001
- ----------------------------------------------------------------------------------------------------------------------
ASSETS (AS RESTATED, SEE NOTE 8)

Current Assets:
Cash and cash equivalents $34,962 $42,638
Short-term investments 2,016 2,027
Current installments of notes receivable - 67
Related party receivables 4,000 4,000
Accounts receivable, net 72 3,601
Deferred tax asset 4,553 4,549
Other current assets 1,601 1,079
- ----------------------------------------------------------------------------------------------------------------------
Total Current Assets 47,204 57,961
- ----------------------------------------------------------------------------------------------------------------------
Property and Equipment-Net 7,032 6,300
- ----------------------------------------------------------------------------------------------------------------------
Other Assets:
Land held under contract for sale 31,117 30,826
Land held for development 25,230 24,965
Notes receivable-less current installments 57,383 53,201
Cash and cash equivalents-restricted 9,202 9,175
Investments in and notes from unconsolidated affiliates 951 839
Deferred tax asset 4,300 3,870
Other long-term assets 6,367 6,042
- ----------------------------------------------------------------------------------------------------------------------
Total Other Assets 134,550 128,918
- ----------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $188,786 $193,179
======================================================================================================================

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $152 $105
Current maturities of long-term debt 1,325 1,325
Current installments of capital lease obligations - 123
Income taxes payable 4,244 3,906
Litigation and claims accrual 6,309 6,572
Accrued payroll and related 706 671
Other accrued expenses 3,906 2,670
- ----------------------------------------------------------------------------------------------------------------------
Total Current Liabilities 16,642 15,372
- ----------------------------------------------------------------------------------------------------------------------
Long-term Liabilities:
Capital lease obligations-less current installments - 5,591
Other long-term liabilities 224 225
- ----------------------------------------------------------------------------------------------------------------------
Total Long-Term Liabilities 224 5,816
- ----------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 16,866 21,188
- ----------------------------------------------------------------------------------------------------------------------

COMMITMENTS AND CONTINGENCIES
Shareholders' Equity:
Capital stock, $.01 par value; authorized 100,000 shares;
10,638 common shares issued and outstanding
at March 31, 2002, and December 30, 2001 106 106
Additional paid-in-capital 131,525 131,525
Retained Earnings 40,357 40,420
Accumulated other comprehensive loss (68) (60)
- ----------------------------------------------------------------------------------------------------------------------
Total Shareholders' Equity 171,920 171,991
- ----------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $188,786 $193,179
======================================================================================================================

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.

LAKES GAMING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
(UNAUDITED)

THREE MONTHS ENDED
-----------------------------------------------------
MARCH 31, 2002 APRIL 1, 2001
-------------- -------------
(AS RESTATED, SEE NOTE 8) (AS RESTATED, SEE NOTE 8)

REVENUES:
Management fee income $1,502 $9,223

COSTS AND EXPENSES:
Selling, general and administrative 2,099 2,580
Depreciation and amortization 99 331
- ----------------------------------------------------------------------------------------------------------------
Total costs and expenses 2,198 2,911
- ----------------------------------------------------------------------------------------------------------------

EARNINGS (LOSS) FROM OPERATIONS (696) 6,312
- ----------------------------------------------------------------------------------------------------------------

OTHER INCOME (EXPENSE):
Interest income 736 880
Interest expense (23) (24)
Equity in loss of unconsolidated affiliates (123) (109)
- ----------------------------------------------------------------------------------------------------------------
Total other income, net 590 747
- ----------------------------------------------------------------------------------------------------------------

Earnings (loss) before income taxes (106) 7,059
Provision (benefit) for income taxes (43) 2,894
- ----------------------------------------------------------------------------------------------------------------

NET EARNINGS (LOSS) ($63) $4,165
================================================================================================================

BASIC EARNINGS (LOSS) PER SHARE ($0.01) $0.39
================================================================================================================

DILUTED EARNINGS (LOSS) PER SHARE ($0.01) $0.39
================================================================================================================

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 10,638 10,638
DILUTIVE EFFECT OF STOCK COMPENSATION PROGRAMS - 144
- ----------------------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE COMMON AND DILUTED
SHARES OUTSTANDING 10,638 10,782
================================================================================================================

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.

LAKES GAMING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
(IN THOUSANDS)
(UNAUDITED)

THREE MONTHS ENDED
-----------------------------------------------------

MARCH 31, 2002 APRIL 1, 2001
-----------------------------------------------------
(AS RESTATED, SEE NOTE 8) (AS RESTATED, SEE NOTE 8)

NET EARNINGS (LOSS) ($63) $4,165

OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) during the period (8) 53
Reclassification adjustment for losses included
in net earnings - 67
-----------------------------------------------------

COMPREHENSIVE EARNINGS (LOSS) ($71) $4,285
=====================================================

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.

LAKES GAMING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)

THREE MONTHS ENDED
------------------

MARCH 31, 2002 APRIL 1, 2001
-------------- -------------
(AS RESTATED, SEE NOTE 8) (AS RESTATED, SEE NOTE 8)

OPERATING ACTIVITIES:
Net earnings (loss) ($63) $4,165
Adjustments to reconcile net earnings (loss) to net cash
provided by operating activities:
Depreciation and amortization 99 331
Equity in loss of unconsolidated affiliates 123 109
Changes in operating assets and liabilities:
Accounts receivable 3,529 (4,708)
Income taxes 338 2,902
Accounts payable 47 63
Accrued expenses 1,008 (974)
Other (127) (889)
- ----------------------------------------------------------------------------------------------------------------------------------
Net Cash Provided by Operating Activities 4,954 999
- ----------------------------------------------------------------------------------------------------------------------------------

INVESTING ACTIVITIES:
Short-term investments, purchases - (5,208)
Short-term investments, sales/maturities - 24,882
Payments for land held under contract for sale (291) -
Payments for land held for development (265) (12,000)
Advances on notes receivable (4,557) (10,958)
Proceeds from repayment of notes receivable 67 2,926
Investment in and notes receivable from unconsolidated affiliates (160) (303)
Increase in restricted cash, net (27) (2,803)
Increase in other long-term assets (851) (113)
Payments for property and equipment, net (832) (19)
- ----------------------------------------------------------------------------------------------------------------------------------
Net Cash Used in Investing Activities (6,916) (3,596)
- ----------------------------------------------------------------------------------------------------------------------------------

FINANCING ACTIVITIES:
Payments on capital lease obligations (5,714) -
- ----------------------------------------------------------------------------------------------------------------------------------
Net Cash Used in Financing Activities (5,714) -
- ----------------------------------------------------------------------------------------------------------------------------------

Net decrease in cash and cash equivalents (7,676) (2,597)
Cash and cash equivalents - beginning of period 42,638 10,469
- ----------------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS - END OF PERIOD $34,962 $7,872
==================================================================================================================================

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $25 $24
Income taxes 5 1,292

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.

LAKES GAMING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

1. BUSINESS

Lakes Gaming, Inc., a Minnesota corporation ("Lakes" or the "Company") was
established as a public corporation on December 31, 1998, via a distribution
(the "Distribution") of its common stock, par value $.01 per share (the "Common
Stock") to the shareholders of Grand Casinos, Inc. ("Grand").

Lakes currently has development and management agreements with four separate
tribes for four new casino operations, one in Michigan, two in California and
one with the Nipmuc Nation on the east coast. The Company also has agreements
for the development of one additional casino on Indian owned land in California
through a joint venture. Each of these projects is currently in the development
phase.

On March 1, 2002, the Company announced it had signed a letter of intent with
respect to an investment in a joint venture with Steven Lipscomb, a producer of
televised poker tournaments. The purpose of this joint venture would be to
launch the World Poker Tour and establish poker as the next significant
televised mainstream sport. The terms of this investment would require Lakes to
make an investment of $0.1 million for an approximate 78% ownership position in
the joint venture. Lakes would also be required to lend up to $3.2 million to
the joint venture as needed. The joint venture would issue a note to Lakes at
6.2% interest per annum with principal payable at the end of three years. The
Lakes' note would be secured by a blanket security interest in all assets of the
joint venture. If certain predetermined goals are not achieved by the joint
venture, Lakes would have the right to stop advances on the note. If Lakes were
to elect to stop funding the joint venture, all outstanding principal amounts
would be due one year from the date Lakes stopped funding.

LAND HELD UNDER CONTRACT FOR SALE

On December 28, 2001, the Company transferred title and ownership obligations of
the Polo Plaza shopping center property to Metroflag Polo, LLC. In conjunction
with this transaction, Lakes transferred to Metroflag BP, LLC, rights to and
obligations of the adjacent Travelodge property consisting of a long-term land
lease and a motel operation. This transaction was accounted for under the
deposit method of accounting under the requirements of Statement of Financial
Accounting Standards No. 66, Accounting for Sales of Real Estate, rather than as
a sale. Therefore, the fair value of the property is included as land held under
contract for sale on the accompanying balance sheets as of March 31, 2002 and
December 30, 2001. The total price for this combined transaction was
approximately $30.9 million. Terms of the transaction include a $1.0 million
down payment, a contractual commitment to pay Lakes $23.3 million by December
29, 2002, and a second contractual agreement to pay Lakes $7.5 million on June
30, 2004. Lakes' collateral for the two contractual commitments is the property
and lease rights described above which would revert back to Lakes in the event
of default by Metroflag. The transaction was closed subject to certain
administrative post-closing conditions that must be satisfied within six months
after the closing. This post-closing period has been extended through September
27, 2002. Certain of these conditions have not yet been satisfied as of
September 15, 2002. If the conditions are not satisfied or waived by Metroflag
within the prescribed period, Metroflag has the right to require Lakes to
repurchase the property.

LAKES GAMING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

LAND HELD FOR DEVELOPMENT

Lakes continues to own the Shark Club property, which is an approximate 3.5 acre
undeveloped site adjacent to the Polo Plaza shopping center and Travelodge
sites. Lakes is currently in negotiations with a joint venture partner to
develop this site for an upscale time-share project. It is contemplated that
Lakes will contribute the property, valued at $16.0 million, and be required to
make no other material contributions of cash or property to the project.

Also included in land held for development is land held for possible transfer to
Indian tribes for use in future casino resort projects in the amount of $9.2
million and $8.9 million as of March 31, 2002 and December 30, 2001,
respectively.

RECENT ACCOUNTING PRONOUNCEMENTS

In July 2001, the FASB issued SFAS No. 141, Business Combinations, and SFAS No.
142, Goodwill and Other Intangible Assets. SFAS No. 141 requires that all
business combinations be accounted for under a single method, the purchase
method. SFAS No. 142 addresses financial accounting and reporting for acquired
goodwill and other intangible assets and supersedes APB Opinion No. 17,
Intangible Assets.

In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations". SFAS No. 143 supersedes previous guidance for financial accounting
and reporting for obligations associated with the retirement of tangible
long-lived assets and the associated asset retirement costs. The statement
applies to legal obligations associated with the retirement of long-lived assets
that result from the acquisition, construction, development and/or the normal
operation of a long-lived asset.

In August 2001, the FASB issued SFAS No. 144, "Accounting for Impairment or
Disposal of Long-Lived Assets", which provides new accounting and financial
reporting guidance for the impairment or disposal of long-lived assets and the
disposal of segments of a business.

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities". SFAS No. 146 requires that a liability for a
cost associated with an exit or disposal activity be recognized when the
liability is incurred. SFAS No. 146 eliminates the definition and requirement
for recognition of exit costs in Emerging Issues Task Force Issue No. 94-3 where
a liability for an exit is recognized at the date of an entity's commitment to
an exit plan. This statement is effective for exit or disposal activities
initiated after December 31, 2002.

The Company does not believe that the adoption of these statements will have a
material impact on its financial position or results of operations.

LAKES GAMING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

2. BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements include the
accounts of Lakes and its wholly-owned and majority-owned subsidiaries.
Investments in unconsolidated affiliates representing 50% or less of voting
interests are accounted for on the equity method. All significant intercompany
balances and transactions have been eliminated in consolidation.

Lakes' investments in unconsolidated affiliates include a 50 percent ownership
interest in PCG Santa Rosa, LLC, a joint venture formed to develop a casino on
Indian-owned land in California. During the first quarter of 2001, Lakes wrote
off its 50 percent investment in PCG Corning, LLC, also a joint venture formed
to develop a casino on Indian-owned land in California. Additionally, as a
result of its spin-off from Grand, Lakes received a 27 percent ownership
interest in New Horizon Kids Quest, Inc. (NHKQ), a publicly held provider of
child care facilities. In June 2001, Lakes entered into an agreement with NHKQ
pursuant to which NHKQ will acquire Lakes' interest in NHKQ. As a result of this
transaction, Lakes incurred a one time write-down charge of $0.7 million before
tax, during the second quarter of 2001.

The consolidated financial statements have been prepared by the Company in
accordance with accounting principles generally accepted in the United States of
America for interim financial information, in accordance with the rules and
regulations of the Securities and Exchange Commission. Pursuant to such rules
and regulations, certain financial information and footnote disclosures normally
included in the consolidated financial statements have been condensed or
omitted. In the opinion of management, all adjustments (consisting of normal
recurring adjustments) considered necessary for fair presentation have been
included. Operating results for the three months ended March 31, 2002, are not
necessarily indicative of the results that may be expected for the year ending
December 29, 2002. The consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto
included in the Company's annual report on Form 10-K/A for the year ended
December 30, 2001.

3. MANAGEMENT CONTRACTS OF LIMITED DURATION

The ownership, management and operation of gaming facilities are subject to
extensive federal, state, provincial, tribal and/or local laws, regulation, and
ordinances, which are administered by the relevant regulatory agency or agencies
in each jurisdiction. These laws, regulations and ordinances vary from
jurisdiction to jurisdiction, but generally concern the responsibility,
financial stability and character of the owners and managers of gaming
operations as well as persons financially interested or involved in gaming
operations. The Company is prohibited by the Indian Gaming Regulatory Act
("IGRA") from having an ownership interest in any casino it manages for Indian
tribes.

The management contract for Grand Casino Coushatta expired January 16, 2002,
which is seven years from the date the casino opened, and was not renewed. This
non-renewal has resulted in the loss of revenues to the Company derived from
such contract, which has had a material adverse effect on the Company's results
of operations. As of March 31, 2002, the Company has no other management
contracts from which it will derive revenues in 2002.

LAKES GAMING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

4. NOTES RECEIVABLE

The notes receivable from Indian Tribes are generally for the development of
gaming properties to be managed by the Company. The repayment terms are specific
to each tribe and are largely dependent upon the operating performance of each
gaming property. Repayments of the aforementioned notes receivable are required
to be made only if distributable profits are available from the operation of the
related casinos. Repayments are also the subject of certain distribution
priorities specified in the management contracts. In addition, repayment of the
notes receivable and the manager's fees under the management contracts are
subordinated to certain other financial obligations of the respective tribes.
Through March 31, 2002, no amounts have been withheld under these provisions.

Notes receivable consist of the following (in thousands):

March 31, 2002 December 30, 2001
-------------- -----------------

Properties under development:

Notes from the Pokagon Band of Potawatomi Indians with
variable interest rates (not to exceed 10%) (5.75% at
March 31, 2002), receivable in 60 monthly installments
subsequent to commencement date $37,035 $35,236

Notes from the Shingle Springs Band of Miwok Indians
with variable interest rates (6.75% at March 31, 2002),
receivable in 48 monthly installments subsequent to
commencement date 7,680 6,684

Notes from Jamul Indian Village with variable interest rates
(6.75% at March 31, 2002), receivable in 48 monthly
installments subsequent to commencement date 6,486 5,540

Other 6,182 5,741

Operating properties:

Notes from the Coushatta Tribe with variable interest rates
(5.75% at December 30, 2001), receivable in 84 monthly
installments through January 2002 - 67
------- -------
Total notes receivable 57,383 53,268

Less -- current installments of notes receivable - (67)
------- -------

Notes receivable, less current installments $57,383 $53,201
======= =======

LAKES GAMING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

Interest income on notes receivable from Indian Tribes related to casino
development projects is deferred because realizability of the interest is
contingent upon the completion and operating cash flow of the casino. Interest
deferred during the development period is recognized over the remaining life of
the note using the effective interest method. As of March 31, 2002 and December
30, 2001, $7.2 million and $6.1 million, respectively, of interest on notes
related to properties under development has been deferred.

Management periodically evaluates the recoverability of such notes receivable
based on the current and projected operating results of the underlying facility
and historical collection experience. No impairment losses on such notes
receivable have been recognized through March 31, 2002.

The terms of these notes require the casinos to be constructed and to generate
positive cash flows prior to the Company receiving repayment. As such, an
estimate of the fair value of these notes requires an assessment of the timing
of the construction of the related casinos and the profitability of the related
casinos. Due to the significant uncertainty involved in such an assessment, the
Company does not believe that it is practicable to accurately estimate the fair
value of these notes with the degree of precision necessary to make such
information meaningful.

5. CAPITAL LEASE OBLIGATIONS

Pursuant to the terms of the Distribution Agreement, Grand assigned to Lakes,
and Lakes assumed, a lease agreement dated February 1, 1996 covering Lakes'
current corporate office space of approximately 65,000 square feet with a lease
term of fifteen years. The lease commenced on October 14, 1996. During 2001,
also pursuant to the terms of the Distribution Agreement, Lakes entered into a
capital lease arrangement for the corporate office space at which time the
operating lease was cancelled. Accordingly, Lakes recorded a capital leased
asset and liability in the amount of approximately $5.8 million. These amounts
are included in the accompanying consolidated balance sheet as of December 30,
2001. On January 2, 2002, the Company completed the purchase of its corporate
office building for $6.4 million, including transaction expenses. This
transaction resulted in the extinguishment of the Company's capital lease
obligation related to the building.

6. COMMITMENTS AND CONTINGENCIES:

LEASES

The Company leases an airplane under a non-cancelable operating lease. The
airplane lease expires May 1, 2003 and provides for two one-year renewal terms.
Approximate future minimum lease payments, due under this lease as of March 31,
2002, considering both one-year renewals are exercised, are as follows (in
thousands):

Operating Leases
----------------

2002 $ 450
2003 600
2004 600
2005 200
------
$1,850
======

LAKES GAMING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

PURCHASE OPTIONS

The Company has the right to purchase the airplane it leases during the base
lease term and any renewal term for approximately $8 million.

During 2001, the option to purchase the Cable property in Las Vegas, Nevada for
the purchase price of $39.1 million was allowed to lapse.

INDEMNIFICATION AGREEMENT

As a part of the transaction establishing Lakes as a separate public company on
December 31, 1998, the Company has agreed to indemnify Grand against all costs,
expenses and liabilities incurred in connection with or arising out of certain
pending and threatened claims and legal proceedings to which Grand and certain
of its subsidiaries are likely to be parties. The Company's indemnification
obligations include the obligation to provide the defense of all claims made in
proceedings against Grand and to pay all related settlements and judgments.

As security to support Lakes' indemnification obligations to Grand, Lakes has
agreed to deposit, in trust for the benefit of Grand, as a wholly owned
subsidiary of Park Place, an aggregate of $30 million, to cover various
commitments and contingencies related to or arising out of, Grand's
non-Mississippi business and assets (including by way of example, but not
limitation, tribal loan guarantees, real property lease guarantees for Lakes'
subsidiaries and director and executive officer indemnity obligations)
consisting of four annual installments of $7.5 million, during the four-year
period subsequent to December 31, 1998. Any surplus proceeds remaining in this
trust after all the secured obligations are indefeasibly paid in full and
discharged shall be paid over to Lakes.

Lakes made the first deposit of $7.5 million on December 31, 1999 and in July,
2000, Lakes deposited $18 million in an escrow account in partial satisfaction
of the indemnification obligation. The $18 million deposit represented a
settlement agreement which was reached in June 2000 regarding both the
Stratosphere Shareholders' litigation and the Grand Casinos, Inc. Shareholders'
litigation. On August 14, 2001, the Court issued an order giving final approval
to the settlement. As such, the $18 million in restricted cash was removed from
the Company's consolidated balance sheet. In January 2001, Lakes also purchased
the Shark Club property in Las Vegas for $10.1 million in settlement of another
obligation that was subject to the indemnification obligations. As of March 31,
2002, and December 30, 2001, $7.5 million related to security to support Lakes'
indemnification obligations to Grand is included as restricted cash in the
accompanying consolidated balance sheets.

As part of the indemnification agreement, Lakes has agreed that it will not
declare or pay any dividends, make any distribution of Lakes' equity interests,
or otherwise purchase, redeem, defease or retire for value any equity interests
in Lakes without the written consent of Park Place.

LAKES GAMING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

LEGAL PROCEEDINGS

The following summaries describe certain known legal proceedings to which Grand
is a party which Lakes has assumed, or with respect to which Lakes may have
agreed to indemnify Grand, in connection with the Distribution.

SLOT MACHINE LITIGATION

In April 1994, William H. Poulos brought an action in the U.S. District Court
for the Middle District of Florida, Orlando Division -- William H. Poulos, et al
v. Caesars World, Inc. et al -- Case No. 39-478-CIV-ORL-22 -- in which various
parties (including Grand) alleged to operate casinos or be slot machine
manufacturers were named as defendants. The plaintiff sought to have the action
certified as a class action.

A subsequently filed Action -- William Ahearn, et al v. Caesars World, Inc. et
al -- Case No. 94-532-CIV-ORL-22 -- made similar allegations and was
consolidated with the Poulos action.

Both actions included claims under the federal Racketeering-Influenced and
Corrupt Organizations Act and under state law, and sought compensatory and
punitive damages. The plaintiffs claimed that the defendants are involved in a
scheme to induce people to play electronic video poker and slot machines based
on false beliefs regarding how such machines operate and the extent to which a
player is likely to win on any given play.

In December 1994, the consolidated actions were transferred to the U.S. District
Court for the District of Nevada.

In September 1995, Larry Schreier brought an action in the U.S. District Court
for the District of Nevada -- Larry Schreier, et al v. Caesars World, Inc. et al
- -- Case No. CV-95-00923-DWH(RJJ). The plaintiffs' allegations in the Schreier
action were similar to those made by the plaintiffs in the Poulos and Ahearn
actions, except that Schreier claimed to represent a more precisely defined
class of plaintiffs than Poulos or Ahearn.

In December 1996, the court ordered the Poulos, Ahearn and Schreier actions
consolidated under the title William H. Poulos, et al v. Caesars World, Inc., et
al -- Case No. CV-S-94-11236-DAE(RJJ) -- (Base File), and required the
plaintiffs to file a consolidated and amended complaint. In February 1997, the
plaintiffs filed a consolidated and amended complaint.

In March 1997, various defendants (including Grand) filed motions to dismiss or
stay the consolidated action until the plaintiffs submitted their claims to
gaming authorities and those authorities considered the claims submitted by the
plaintiffs.

In December 1997, the court denied all of the motions submitted by the
defendants, and ordered the plaintiffs to file a new consolidated and amended
complaint. That complaint has been filed. Grand has filed its answer to the new
complaint. The plaintiffs have filed a motion seeking an order certifying the
action as a class action. Grand and certain of the defendants have opposed the
motion. The Court has not ruled on the motion.

LAKES GAMING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

STANDBY EQUITY COMMITMENT LITIGATION

In September 1997, the Stratosphere Trustee under the indenture pursuant to
which Stratosphere issued its first mortgage notes filed a complaint in the U.S.
District Court for the District of Nevada -- IBJ Schroeder Bank & Trust Company,
Inc. v. Grand Casinos, Inc. -- File No. CV-S-97-01252-DWH (RJJ) -- naming Grand
as defendant.

The complaint alleges that Grand failed to perform under the Standby Equity
Commitment entered into between Stratosphere and Grand in connection with
Stratosphere's issuance of such first mortgage notes in March 1995. The
complaint seeks an order compelling specific performance of what the Trustee
claims are Grand's obligations under the Standby Equity Commitment.

The Stratosphere Trustee filed the complaint in its alleged capacity as a third
party beneficiary under the Standby Equity Commitment. Pursuant to the Second
Amended Plan, a new limited liability company (the "Stratosphere LLC") was
formed to pursue certain alleged claims and causes of action that Stratosphere
and other parties may have against numerous third parties, including Grand
and/or officers and/or directors of Grand. The Stratosphere LLC has been
substituted for IBJ Schroeder Bank & Trust Company, Inc. in this proceeding.

In August 2000, the Court and the parties agreed to try the action upon an
amended joint pre-trial order and a series of post-trial briefs. Post-trial
briefing concluded on December 12, 2000 and oral argument was held on January
22, 2001. On April 4, 2001, the Court entered judgment in favor of Grand and
issued its findings of fact and conclusions of law. The plaintiff filed an
appeal with the Ninth Circuit Court of Appeals on May 4, 2001, Case No.
01-15947. On August 13, 2002, the Ninth Circuit affirmed the prior ruling in
favor of Grand.

STRATOSPHERE PREFERENCE ACTION

In April 1998, Stratosphere served on Grand and Grand Media & Electronics
Distributing, Inc., a wholly owned subsidiary of Grand ("Grand Media"), a
complaint in the Stratosphere bankruptcy case seeking recovery of certain
amounts paid by Stratosphere to (i) Grand as management fees and for costs and
expenses under a management agreement between Stratosphere and Grand, and (ii)
Grand Media for electronic equipment purchased by Stratosphere from Grand Media.

Stratosphere claims in its complaint that such amounts are recoverable by
Stratosphere as preferential payments under bankruptcy law.

In May 1998, Grand responded to Stratosphere's complaint. That response denying
that Stratosphere is entitled to recover the amounts described in the complaint.
Discovery was completed on December 31, 2001 and the case proceeded to trial
before the United States Bankruptcy Court for the District of Nevada on June 20,
2002. A decision has not yet been issued.

LAKES GAMING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

OTHER LITIGATION

The Company has recorded a reserve assessment related to various of the above
items. The reserve is reflected as a litigation and claims accrual on the
accompanying consolidated balance sheet as of March 31, 2002.

Grand and Lakes are involved in various other inquiries, administrative
proceedings, and litigation relating to contracts and other matters arising in
the normal course of business. While any proceeding or litigation has an element
of uncertainty, management currently believes that the final outcome of these
matters is not likely to have a material adverse effect upon Grand's or the
Company's consolidated financial position or results of operations.

7. RELATED PARTY TRANSACTIONS

During 2001 and 2000, Lakes made a total of $4.0 million in unsecured loans to
ViatiCare Financial Services, LLC, which has since been acquired by Living
Benefits Financial Services. In March 2001, the Board of Directors of Lakes
decided not to make further loans to ViatiCare. The outstanding note receivable
balance from Living Benefits to lakes was $4.0 million as of March 31, 2002 and
December 30, 2001. A $4.0 million impairment charge for this note was recorded
during the quarter ended June 30, 2002 due to increased competition in the
viatical insurance business and restrictions on the ability to make further
policy acquisitions.

Subsequent to the decision by the Lakes Board to make no further loans to
ViatiCare, L. B. Acquisitions, LLC, which is owned by Lyle Berman, the Chief
Executive Officer and Director of Lakes, has made loans to Living Benefits.
Advances outstanding were $5.3 million as of March 31, 2002 and $4.9 million as
of December 30, 2001. As an incentive to make the loans, L. B. Acquisitions was
granted an initial 9% voting interest in Living Benefits and was given the
option to convert the loan balance into 45% of the voting interest in Living
Benefits. Therefore, Lyle Berman, through L. B. Acquisitions, beneficially owns
a total of approximately 55% of the voting interest of Living Benefits.

8. RESTATEMENT

Subsequent to the issuance of the Company's financial statements for the quarter
ended March 31, 2002, management of the Company determined that the contract to
sell the Polo Plaza Shopping Center property entered into in December 2001
should not have been recognized as a sale for accounting purposes, but should
have been accounted for under the deposit method of accounting as specified by
SFAS No. 66, Accounting for Sale of Real Estate. In addition, management
determined that the interest on notes receivable related to the development of
casinos should have been deferred because the interest is not payable until the
casinos are open and generating operating cash flow. As a result, the
accompanying consolidated financial statements for the quarters ended March 31,
2002 and April 1, 2001 have been restated to correct the accounting for these
transactions.

LAKES GAMING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

A summary of the significant effects of the restatement is as follows:

March 31, 2002
--------------
As previously
Balance Sheets: reported Restated
------------- --------

Current installments of notes receivable $ 27,265 $ -
Land held under contract for sale - 31,117
Notes receivable - less current installments 72,250 57,383
Interest receivable 7,311 126
Other long-term assets 7,736 10,541
Total Shareholders' Equity 176,302 171,920

March 31, 2002 April 1, 2001
-------------- -------------
As previously As previously
Statements of Earnings (Loss): reported Restated reported Restated
------------- -------- ------------- --------

Interest Income $ 1,785 $ 736 $ 1,816 $ 880
Earnings (loss) before income taxes 943 (106) 7,995 7,059
Provision (benefit) for income taxes 387 (43) 3,278 2,894
Net Earnings (Loss) 556 (63) 4,717 4,165
Basic Earnings (Loss) per share $ 0.05 $ (0.01) $ 0.44 $ 0.39
Diluted Earnings (Loss) per share $ 0.05 $ (0.01) $ 0.44 $ 0.39

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

As discussed in Note 8 to the consolidated financial statements included in Item
1, the accompanying financial statements have been restated. The following
Management's Discussion and Analysis reflects this restatement.

OVERVIEW

Lakes Gaming, Inc., a Minnesota corporation ("Lakes" or the "Company") was
established as a public corporation on December 31, 1998, via a distribution
(the "Distribution") of its Common Stock, to the shareholders of Grand Casinos,
Inc. ("Grand").

As a result of the Distribution, Lakes operates the Indian casino management
business and holds various other assets previously owned by Grand. Lakes' main
business is the development, construction and management of casinos and related
hotel and entertainment facilities in emerging and established gaming
jurisdictions.

LAKES GAMING, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(UNAUDITED)

Lakes has entered into the following contracts for the development, management
and/or financing of new casino operations, all of which are subject to various
regulatory approvals before construction can begin: (1) Lakes has a contract to
be the exclusive developer and manager of an Indian-owned gaming resort near New
Buffalo, Michigan. (2) Lakes and another company have formed partnerships with
contracts to develop and manage two casinos to be owned by Indian tribes in
California, one near San Diego and the other near Sacramento. (3) Lakes and
another company have formed a partnership with a contract to finance the
construction of an Indian-owned casino 60 miles north of San Francisco,
California. (4) Lakes has also signed contracts with a Massachusetts Indian
tribe for development and management of a potential future gaming resort in the
eastern United States; however, this tribe has received a negative finding
regarding federal recognition from the Bureau of Indian Affairs (BIA). The tribe
has indicated that it will submit additional information for reconsideration.

Lakes' historical revenues have been derived almost exclusively from management
fees. During 2001, Lakes managed a land-based, Indian-owned casino, Grand Casino
Coushatta, in Kinder, Louisiana ("Grand Casino Coushatta"). Pursuant to the
Coushatta management contract, Lakes received a fee based on the net
distributable profits (as defined in the contracts) generated by Grand Casino
Coushatta. The management contract expired January 16, 2002, and was not
renewed. This non-renewal has resulted in the loss of revenues to the Company
derived from such contract, which has had a material adverse effect on the
Company's results of operations.

Lakes' limited operating history may not be indicative of Lakes' future
performance. In addition, a comparison of results from year to year may not be
meaningful due to the opening of new facilities during each year and the buy-out
and/or cessation of other casino management contracts. Lakes' growth strategy
contemplates the expansion of existing operations, the pursuit of opportunities
to develop and manage additional gaming facilities and the pursuit of new
business opportunities. The successful implementation of this growth strategy is
contingent upon the satisfaction of various conditions, including obtaining
governmental approvals, the impact of increased competition, and the occurrence
of certain events, many of which are beyond the control of Lakes.

The significant accounting policies, which Lakes believes are the most critical
to aid in fully understanding and evaluating its reported financial results,
include the following: revenue recognition and realizability of notes
receivable.

REVENUE RECOGNITION: Revenue from the management of Indian-owned casino gaming
facilities is recognized when earned according to the terms of the management
contracts. Currently all of the Indian-owned casino projects that Lakes is
involved with are in development stages and are not yet open. Therefore, Lakes
is not currently recognizing revenue related to Indian casino management.

LAKES GAMING, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
(UNAUDITED)

REALIZABILITY OF NOTES RECEIVABLE: The Company's notes receivable from Indian
Tribes are generally for the development of gaming properties to be managed by
the Company. The repayment terms are specific to each tribe and are largely
dependent upon the operating performance of each gaming property. Repayments of
the notes receivable are required to be made only if distributable profits are
available from the operation of the related casinos. Repayments are also the
subject of certain distribution priorities specified in the management
contracts. In addition, repayment of the notes receivable and the manager's fees
under the management contracts are subordinated to certain other financial
obligations of the respective tribes. Through December 30, 2001, no amounts have
been withheld under these provisions. Management periodically evaluates the
recoverability of such notes receivable based on the current and projected
operating results of the underlying facility and historical collection
experience.

Interest income from Indian Tribes related to casino development projects is
deferred because realizability of the interest is contingent upon the completion
and positive operating cash flow from the casino. Interest deferred during the
development period is recognized over the remaining life of the note using the
effective interest method. As of March 31, 2002 and December 30, 2001, $7.2
million and $6.1 million, respectively, of interest on notes related to
properties under development has been deferred.

The following discussion and analysis should be read in conjunction with the
consolidated financial statements and notes thereto and management's discussion
and analysis included in the Company's Annual Report on Form 10-K/A for the year
ended December 30, 2001.

RECENT ACCOUNTING PRONOUNCEMENTS

LAKES GAMING, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
(UNAUDITED)

The Company does not believe that the adoption of these statements will have a
material impact on its financial position or results of operations.

RESULTS OF OPERATIONS

Revenues are calculated in accordance with accounting principles generally
accepted in the United States of America and are presented in a manner
consistent with industry practice. Net distributable profits are computed by the
Indian casinos using a modified cash basis of accounting in accordance with the
management contracts. Under this modified cash basis of accounting prescribed by
the management contract to calculate management fees, the write-off of capital
equipment and leased assets for the casino operations is accelerated, which
thereby impacts the timing of net distributable profits.

THREE MONTHS ENDED MARCH 31, 2002 COMPARED TO THE THREE MONTHS ENDED APRIL 1,
2001

Revenues

Total revenues were $1.5 million for the three months ended March 31, 2002
compared to $9.2 million for the same period in the prior year. Revenues for the
quarter in both years were derived from fees related to the management of Grand
Casino Coushatta. Revenue and earnings for the quarter were less than the same
period last year primarily due to the expiration of the management contract with
the Coushatta Tribe of Louisiana for Grand Casino Coushatta on January 16, 2002.
The Company's revenues and earnings will not include contributions from the
Coushatta operation going forward. As of March 31, 2002, the Company has no
other management contracts from which it will derive revenues in 2002.

Costs and Expenses

Total costs and expenses were $2.2 million for the three months ended March 31,
2002, compared to $2.9 million for the same period in the prior year. Selling,
general and administrative expenses decreased from $2.6 million for the three
months ended April 1, 2001 to $2.1 million for the three months ended March 31,
2002. This decrease is partially due to a decline in rent expense resulting from
the purchase of the corporate office building in January 2002. Fewer costs
relating to travel and payroll also contributed to the decline in selling,
general and administrative expenses during the current year period.

LAKES GAMING, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
(UNAUDITED)

Other

Interest income was $0.7 million and $0.9 million for the three months ended
March 31, 2002 and April 1, 2001, respectively. Equity in loss of unconsolidated
affiliates remained constant at $0.1 million.

Earnings per Common Share and Net Earnings

For the three months ended March 31, 2002, basic and diluted loss per common
share were ($0.01). This compares to basic and diluted earnings of $0.39 per
common share, for the three months ended April 1, 2001. Net losses totaled $0.1
million for the three months ended March 31, 2002 compared to earnings of $4.2
million for the three months ended April 1, 2001. The decrease in earnings
relates primarily to the expiration of the management contract for Grand Casino
Coushatta on January 16, 2002 described above.

Outlook

Except for fees earned from the management of Grand Casino Coushatta through
January 16, 2002, it is currently contemplated that there will be no additional
operating revenues for the remainder of 2002. Although none of the existing
casino development projects are expected to produce revenue in 2002, Lakes
continues to evaluate potential new revenue-generating business opportunities.
Lakes continues to closely monitor its operating expenses. Currently, operating
expenses are expected to remain consistent for the remainder of 2002. The
Company's cash position is considered adequate to cover expected 2002 operating
expenses.

CAPITAL RESOURCES, CAPITAL SPENDING, AND LIQUIDITY

At March 31, 2002, Lakes had $44.2 million in restricted and unrestricted cash
and cash equivalents. The Company also had $2.0 million in short-term,
available-for-sale investments, consisting primarily of a fixed income portfolio
made up of various types of bonds which are rated A1 or better. The cash and
short-term investment balances are planned to be used to fund operating expenses
and for loans to current joint venture and tribal partners to develop existing
and anticipated Indian casino operations, the pursuit of additional business
opportunities, and settlement of pending litigation matters.

The amount and timing of Lakes' cash outlays for casino development loans will
depend on the timing of the regulatory approval process and the availability of
external financing. When approvals are received, additional financing will be
needed to complete the projects.

LAKES GAMING, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
(UNAUDITED)

It is currently planned that this third-party financing will be obtained by each
individual tribe. However, there can be no assurance that if third-party
financing is not available, Lakes will not be required to finance these projects
directly. If Lakes must provide this financing, Lakes expects to obtain debt or
equity financing which it would loan to the respective tribes as necessary. As
part of a recently announced letter of intent to invest in a joint venture which
would televise poker tournaments, the Company would be required to invest $0.1
million for an approximately 78% ownership position in the joint venture. The
Company would also be required to loan up to $3.2 million to the joint venture
as needed.

For the three months ended March 31, 2002 and April 1, 2001, net cash provided
by operating activities totaled $5.0 million and $1.0 million, respectively. A
$4.2 million reduction in net earnings was more than offset by changes in
accounts receivable, which increased by $4.7 million during the 2001 period and
decreased by $3.5 million during the 2002 period. For the three months ended
March 31, 2002 and April 1, 2001, net cash used in investing activities totaled
$6.9 million and $3.6 million, respectively. Included in these investing
activities for the three months ended March 31, 2002 and April 1, 2001, are
proceeds primarily from repayment of notes receivable from Indian-owned casinos,
which amounted to $0.1 million and $2.9 million, respectively. Advances under
notes receivable were $4.6 million and $11.0 million for the three months ended
March 31, 2002 and April 1, 2001, respectively. There was a net decrease in
short-term investments of $0 and $19.7 million for the three months ended March
31, 2002 and April 1, 2001, respectively.

Also during these periods, payments for land held for development amounted to
$0.3 million and $12.0 million, respectively. Included in the payments for land
held for development of $12.0 million during the three months ended April 1,
2001 was the purchase of the Shark Club property in Las Vegas, Nevada for
approximately $10.1 million. The remaining decrease in payments made for land
held for development from the prior year quarter to the current year quarter is
the result of the contract for sale of the Polo Plaza Shopping Center and
Travelodge sites on December 28, 2001.

As a part of the agreements dated as of June 30, 1998, by and among Hilton
Hotels Corporation, Park Place, Gaming Acquisition Corporation, Lakes and Grand,
the Company has agreed to indemnify Grand Casinos, Inc. against all costs,
expenses and liabilities incurred in connection with or arising out of certain
pending and threatened claims and legal proceedings to which Grand and certain
of its subsidiaries are likely to be parties.

The Company's indemnification obligations include the obligation to provide the
defense of all claims made in proceedings against Grand and to pay all related
settlements and judgments. See Part II, Item 1. Legal Proceedings.

LAKES GAMING, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
(UNAUDITED)

As security to support Lakes' indemnification obligations to Grand, Lakes agreed
to deposit, in trust for the benefit of Grand, as a wholly owned subsidiary of
Park Place, an aggregate of $30 million, consisting of four annual installments
of $7.5 million during the four-year period subsequent to December 31, 1998.
Lakes' ability to satisfy this funding obligation is materially dependent upon
the continued success of its operations and the general risks inherent in its
business. In the event Lakes is unable to satisfy its funding obligation, it
would be in breach of its agreement with Grand, possibly subjecting itself to
additional liability for contract damages, which could have a material adverse
effect on Lakes' business and results of operations. The Company made the first
deposit of $7.5 million on December 31, 1999. In 2000, Lakes deposited $18.0
million into an escrow account on behalf of the recipients in the Stratosphere
shareholders' litigation and the Grand Casinos, Inc. shareholders' litigation.
As the $18.0 million was paid out during 2001, the remaining deposit of $7.5
million is included as restricted cash in the accompanying consolidated balance
sheets as of March 31, 2002 and December 30, 2001. In January 2001, Lakes also
purchased the Shark Club property in Las Vegas for $10.1 million in settlement
of another claim that was subject to the indemnification obligations.

On December 28, 2001, the Company transferred title and ownership obligations of
the Polo Plaza shopping center property to Metroflag Polo, LLC. In conjunction
with this transaction, Lakes transferred to Metroflag BP, LLC, rights to and
obligations of the adjacent Travelodge property consisting of a long-term land
lease and a motel operation. This transaction was accounted for under the
deposit method of accounting under the requirements of Statement of Financial
Accounting Standards No. 66, Accounting for Sales of Real Estate rather than as
a sale. Therefore, the fair value of the property is included as land held under
contract for sale in the accompanying balance sheets as of June 30, 2002 and
December 30, 2001. The transaction price for this combined transaction was
approximately $30.9 million. Terms of the transaction include a $1.0 million
down payment, a contractual commitment to pay Lakes $23.3 million by December
29, 2002, and a second contractual agreement to pay Lakes $7.5 million on June
30, 2004. Lakes' collateral for the two contractual commitments is the property
and lease rights described above which would revert back to Lakes in the event
of default by Metroflag. The transaction was closed subject to certain
administrative post-closing conditions that must be satisfied within six months
after the closing. This post-closing period has been extended through September
27, 2002. Certain of these conditions have not yet been satisfied as of
September 15, 2002. If the conditions are not satisfied or waived by Metroflag
within the prescribed period, Metroflag has the right to require Lakes to
repurchase the properties.

Lakes also has approximately $57.4 million in notes receivable from Indian
tribes and other parties. Most of these amounts are advances made to the tribes
for the development of gaming properties managed by Lakes. See Note 4 to the
Consolidated Financial Statements.

Lakes continues to own the Shark Club property which is an approximate 3.5 acre
undeveloped site adjacent to the Polo Plaza shopping center and Travelodge
sites. Lakes is currently in negotiations with a joint venture partner to
develop this site for an upscale time-share project. It is contemplated that
Lakes will contribute the property, valued at $16.0 million, and be required to
make no other material contributions of cash or property to the project.

LAKES GAMING, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
(UNAUDITED)

Notes receivable from the Coushatta Tribe of Louisiana were $0.1 million at
December 30, 2001. The outstanding balance was repaid at the conclusion of the
management agreement on January 16, 2002. In addition, Lakes was previously the
guarantor of a loan agreement entered into by the Coushatta Tribe in the amount
of $25.0 million, with a balance of $6.8 million outstanding at December 30,
2001. Lakes was released from the guaranty agreement on January 16, 2002.

On January 2, 2002, the Company completed the purchase of its corporate office
building in Minnetonka, Minnesota for $6.4 million, including transaction
expenses. This transaction resulted in the extinguishment of the Company's
capital lease obligation related to the building.

OBLIGATIONS

The Company has two notes payable with third parties. The first is
collateralized by certificates of deposit, with $1.0 million outstanding at
March 31, 2002 and December 30, 2001. Interest is compounded and paid on a
quarterly basis at 10%. The principal and any unpaid interest are due December
22, 2002. The second is collateralized by property with $0.4 million outstanding
at March 31, 2002 and December 30, 2001. Interest is compounded and paid on a
quarterly basis at 8.5%. The principal and any unpaid interest are due October
9, 2002.

Pursuant to the terms of the Distribution Agreement, Grand assigned to Lakes,
and Lakes assumed, a lease agreement dated February 1, 1996 covering Lakes'
current corporate office space of approximately 65,000 square feet with a lease
term of fifteen years. The lease commenced on October 14, 1996. During 2001,
also pursuant to the terms of the Distribution Agreement, Lakes entered into a
capital lease arrangement for the corporate office space at which time the
operating lease was cancelled. Accordingly, Lakes recorded a capital leased
asset and liability in the amount of approximately $5.8 million. These amounts
are included in the accompanying consolidated balance sheet as of December 30,
2001. On January 2, 2002, as per the agreement with Grand Casinos, Lakes
purchased the building as discussed above.

SEASONALITY

The Company believes that the operations of all casinos to be managed by the
Company will be affected by seasonal factors, including holidays, weather and
travel conditions.

REGULATION AND TAXES

The Company is subject to extensive regulation by state gaming authorities. The
Company will also be subject to regulation, which may or may not be similar to
current state regulations, by the appropriate authorities in any other
jurisdiction where it may conduct gaming activities in the future. Changes in
applicable laws or regulations could have an adverse effect on the Company.

LAKES GAMING, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
(UNAUDITED)

The gaming industry represents a significant source of tax revenues. From time
to time, various federal legislators and officials have proposed changes in tax
law, or in the administration of such law, affecting the gaming industry. It is
not possible to determine the likelihood of possible changes in tax law or in
the administration of such law. Such changes, if adopted, could have a material
adverse effect on the Company's results of operations and financial results.

PRIVATE SECURITIES LITIGATION REFORM ACT

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements. Certain information included in this integrated
Quarterly Report on Form 10-Q/A and other materials filed or to be filed by the
Company with the Securities and Exchange Commission (as well as information
included in oral statements or other written statements made or to be made by
the Company) contain statements that are forward-looking, such as plans for
future expansion and other business development activities as well as other
statements regarding capital spending, financing sources and the effects of
regulation (including gaming and tax regulation) and competition.

Such forward-looking information involves important risks and uncertainties that
could significantly affect the anticipated results in the future and,
accordingly, actual results may differ materially from those expressed in any
forward-looking statements made by or on behalf of the Company.

These risks and uncertainties include, but are not limited to, those relating to
possible delays in completion of Lakes' casino projects, including various
regulatory approvals and numerous other conditions which must be satisfied
before completion of these projects; possible termination or adverse
modification of management contracts; continued indemnification obligations to
Grand; highly competitive industry; possible changes in regulations; reliance on
continued positive relationships with Indian tribes; possible impairment of
notes receivable of Indian tribes held by Lakes, which represent a large portion
of Lakes' assets; possible need for future financing to meet Lakes' expansion
goals; risks of entry into new businesses; and reliance on Lakes' management.
For further information regarding the risks and uncertainties, see the "Business
- -- Risk Factors" section of the Company's Annual Report on Form 10-K/A for the
fiscal year ended December 30, 2001.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's financial instruments include cash and cash equivalents,
marketable securities and long-term debt. The Company's main investment
objectives are the preservation of investment capital and the maximization of
after-tax returns on its investment portfolio. Consequently, the Company invests
with only high-credit-quality issuers and limits the amount of credit exposure
to any one issuer. The Company does not use derivative instruments for
speculative or investment purposes.

LAKES GAMING, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
(UNAUDITED)

The Company's cash and cash equivalents are not subject to significant interest
rate risk due to the short maturities of these instruments. As of March 31,
2002, the carrying value of the Company's cash and cash equivalents approximates
fair value. The Company's marketable debt securities (principally consisting of
commercial paper, corporate bonds, and government securities) have a weighted
average duration of one year or less. Consequently such securities are not
subject to significant interest rate risk.

The Company's primary exposure to market risk associated with changes in
interest rates involves the Company's notes receivable related to loans for the
development and construction of Native American owned casinos. The loans and
related note balances earn various interest rates based upon a defined reference
rate. The floating rate receivables will generate more or less interest income,
if interest rates rise or fall. As of March 31, 2002, Lakes had $57.4 million of
floating rate notes receivable. Based on the applicable current reference rates
and assuming all other factors remain constant, deferred interest income for a
twelve month period would be $3.5 million. A reference rate increase of 100
basis points would result in an increase in deferred interest income of $0.6
million. A 100 basis point decrease in the reference rate would result in a
decrease of $0.6 million in deferred interest income over the same twelve month
period.

LAKES GAMING, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

SLOT MACHINE LITIGATION

A subsequently filed Action -- William Ahearn, et al v. Caesars World, Inc. et
al -- Case No. 94-532-CIV-ORL-22 -- made similar allegations and was
consolidated with the Poulos action.

In December 1994, the consolidated actions were transferred to the U.S. District
Court for the District of Nevada.

LAKES GAMING, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION (CONTINUED)

The plaintiffs have filed a motion seeking an order certifying the action as a
class action. Grand and certain of the defendants have opposed the motion. The
Court has not ruled on the motion.

STANDBY EQUITY COMMITMENT LITIGATION

STRATOSPHERE PREFERENCE ACTION

LAKES GAMING, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION (CONTINUED)

Stratosphere claims in its complaint that such amounts are recoverable by
Stratosphere as preferential payments under bankruptcy law.

OTHER LITIGATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

10.1 Purchase Agreement dated October 31, 2001 by and between Park
Place Entertainment Corp. and Lakes Gaming, Inc. Filed with
original Form 10-Q report for the quarter ended March 31,
2002, as filed on May 14, 2002.

99.1 Certification of Chief Executive Officer

99.2 Certification of Chief Financial Officer

(b) Reports on Form 8-K

(i) A Form 8-K, Item 5. Other Events, was filed on January 2, 2002.

(ii) A Form 8-K, Item 5. Other Events, was filed on February 4, 2002.

(iii) A Form 8-K, Item 5. Other Events, was filed on March 1, 2002.

(iv) A Form 8-K, Item 5. Other Events, was filed on April 19, 2002.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report on 10-Q/A to be signed on its behalf by
the undersigned, thereunto duly authorized.

Dated: September 18, 2002 LAKES GAMING, INC.
--------------------------
Registrant

/ S / LYLE BERMAN
--------------------------
Lyle Berman
Chairman of the Board,
Chief Executive Officer and
President

CERTIFICATIONS

I, Lyle Berman, certify that:

1. I have reviewed this quarterly report on Form 10-Q/A of Lakes
Entertainment, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statement made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report; and

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report.

/s/Lyle Berman
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Lyle Berman
Chief Executive Officer

I, Timothy J. Cope, certify that:

1. I have reviewed this quarterly report on Form 10-Q/A of Lakes
Entertainment, Inc.;

/s/Timothy J. Cope
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Timothy J. Cope
Chief Financial Officer