SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934

Filed by the registrant [X]

Filed by a party other than the registrant [ ]

Check the appropriate box:

[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))

[X] Definitive proxy statement

[ ] Definitive additional materials

[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Lakes Gaming, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of filing fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.

(1) Title of each class of securities to which transaction applies:

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

(2) Aggregate number of securities to which transaction applies:

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

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):

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

(4) Proposed maximum aggregate value of transaction:

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

(5) Total fee paid:

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

[ ] Fee paid previously with preliminary materials.

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

[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.

(1) Amount previously paid:

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

(2) Form, Schedule or Registration Statement no.:

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

(3) Filing Party:

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(4) Date Filed:

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

[LAKES GAMING LOGO]

130 CHESHIRE LANE
MINNETONKA, MINNESOTA 55305

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JUNE 5, 2002

TO THE SHAREHOLDERS OF LAKES GAMING, INC.:

Please take notice that the Annual Meeting of Shareholders of Lakes Gaming,
Inc. will be held, pursuant to due call by the Board of Directors of the
Company, at the Doubletree Park Place Hotel, 1500 Park Place Boulevard,
Minneapolis, Minnesota 55416 at 3:00 p.m. on Wednesday, June 5, 2002, or at any
adjournment or adjournments thereof, for the purpose of considering and taking
appropriate action with respect to the following:

1. To elect five directors;

2. To amend the articles of incorporation to change the corporate name of
the Company from "Lakes Gaming, Inc." to "Lakes Entertainment, Inc."

3. To transact any other business as may properly come before the meeting
or any adjournments thereof.

Pursuant to due action of the Board of Directors, shareholders of record on
April 15, 2002, will be entitled to vote at the meeting or any adjournments
thereof.

A PROXY FOR THIS MEETING IS ENCLOSED HEREWITH. WE REQUEST THAT YOU FILL IN
AND SIGN THE PROXY, WHICH IS SOLICITED BY THE BOARD OF DIRECTORS, AND MAIL IT
PROMPTLY IN THE ENCLOSED ENVELOPE.
By Order of the Board of Directors

LAKES GAMING, INC.

/s/ Timothy J. Cope
Timothy J. Cope,
Executive Vice President, Chief
Financial Officer
and Secretary
May 3, 2002

LAKES GAMING, INC.
130 CHESHIRE LANE
MINNETONKA, MINNESOTA 55305

PROXY STATEMENT

ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
JUNE 5, 2002

This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Lakes Gaming, Inc. ("Lakes" or the
"Company") to be used at the Annual Meeting of Shareholders of the Company to be
held June 5, 2002. The approximate date on which this Proxy Statement and the
accompanying proxy were first sent or given to shareholders was May 3, 2002.
Each shareholder who signs and returns a proxy in the form enclosed with this
Proxy Statement may revoke the same at any time prior to its use by giving
notice of such revocation to the Company in writing, in open meeting or by
executing and delivering a new proxy to the Secretary of the Company. Unless so
revoked, the shares represented by each proxy will be voted at the meeting and
at any adjournments thereof. Presence at the meeting of a shareholder who has
signed a proxy does not alone revoke that proxy. Only shareholders of record at
the close of business on April 15, 2002 (the "Record Date") will be entitled to
vote at the meeting or any adjournments thereof. All shares which are entitled
to vote and are represented at the Annual Meeting by properly executed proxies
received prior to or at the Meeting and not revoked will be voted at the Meeting
in accordance with the instructions indicated on such proxies.

VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF

The Company has outstanding one class of voting securities, common stock,
$0.01 par value, of which 10,637,953 shares were issued and outstanding as of
the close of business on the Record Date. Each share of common stock is entitled
to one vote on all matters put to a vote of shareholders.

The following table sets forth, as of the Record Date, certain information
regarding the beneficial ownership of the Company's shares of common stock by
(i) all persons known by the Company to be the owner (or deemed to be the owner
pursuant to the rules and regulations of the SEC), of record or beneficially, of
more than 5% of the outstanding common stock of the Company, (ii) each of the
directors and nominees for election to the Board of Directors of the Company,
(iii) each Named Executive Officer named in the Summary Compensation Table, and
(iv) all directors and executive officers as a group, in each case based upon
beneficial ownership reporting of Lakes Common Stock as of such date.

Except as otherwise indicated, each shareholder has sole voting and
investment power with respect to the shares beneficially owned.

<Table>
<Caption>
SHARES OF LAKES
COMMON STOCK PERCENTAGE OF COMMON
NAME BENEFICIALLY OWNED STOCK OUTSTANDING
- ---- ------------------ --------------------

Lyle Berman(1)............................................ 2,144,961 19.17
Timothy J. Cope(2)........................................ 154,500 1.43
Joseph Galvin(3).......................................... 135,025 1.25
Morris Goldfarb(4)........................................ 34,830 *
Ronald J. Kramer(5)....................................... 15,500 *
Neil I. Sell(6)........................................... 920,449 8.63
All Lakes Gaming Directors and Executive Officers as a
Group
(6 people including the foregoing)(7)................... 3,405,265 29.5
FMR Corp. ................................................ 1,059,600(8) 9.96
82 Devonshire Street
Boston, MA 02109
Waveland International, Ltd............................... 569,900(9) 5.36
227 W. Monroe, Suite 4800
Chicago Illinois, IL 60606
</Table>

- ---------------
* Less than one percent.

(1) Includes 20,625 shares beneficially owned by Mr. Berman's spouse. Also
includes 11,403 shares held by Berman Consulting Corporation, a corporation
wholly owned by Mr. Berman and 161,500 shares owned by Mr. Berman through a
Berman Consulting Corporation profit sharing plan. Also includes options to
purchase 550,000 shares.

(2) Includes options to purchase 154,500 shares.

(3) Includes options to purchase 135,025 shares.

(4) Includes options to purchase 28,125 shares.

(5) Includes 500 shares beneficially owned by a partnership in which the general
partner is a corporation wholly owned by Mr. Kramer. Also includes options
to purchase 15,000 shares.

(6) Includes an aggregate of 893,000 shares held by four irrevocable trusts for
the benefit of Lyle Berman's children with respect to which Mr. Sell has
shared voting and dispositive powers as a co-trustee. Mr. Sell has
disclaimed beneficial ownership of such shares. Also includes options to
purchase 23,250 shares.

(7) Includes shares held by corporations controlled by such officers and
directors, shares held by the spouses of such officers and directors and
shares held by trusts of which such officers and directors are trustees.
Also includes options to purchase 905,900 shares.

(8) Based solely upon the most recent Schedule 13G on file with the Securities
and Exchange Commission. FMR Corp. has sole voting power with respect to
8,000 shares and sole dispositive power with respect to all 1,059,600
shares.

(9) Based solely upon the most recent Schedule 13G on file with the Securities
and Exchange Commission. Includes 14,000 shares owned by an account for
which Waveland Capital Management, L.P. (and Clincher Capital Corporation as
general partner of Waveland Capital Management, L.P.) serves as investment
adviser. The reporting person has sole voting and dispositive power with
respect to 555,900 shares. Waveland Capital Management, L.P. (and Clincher
Capital Corporation) has sole voting and dispositive power with respect to
14,000 shares.

The foregoing footnotes are provided for informational purposes only and
each person disclaims beneficial ownership of shares owned by any member of his
or her family or held in trust for any other person, including family members.

PROPOSAL FOR ELECTION OF DIRECTORS
(PROPOSAL 1)

The Board of Directors has nominated the following individuals to stand for
election to serve as directors of the Company, each to hold office until the
next Annual Meeting of Shareholders or until his successor is elected and
qualified. All of the persons listed below are now serving as directors of the
Company and each has consented to serve as a director, if elected.

<Table>
<Caption>
NAME AND AGE OF
DIRECTOR AND/OR PRINCIPAL OCCUPATION, BUSINESS EXPERIENCE DIRECTOR
NOMINEE FOR PAST FIVE YEARS AND DIRECTORSHIPS OF PUBLIC COMPANIES SINCE
- --------------- --------------------------------------------------------- --------

Lyle Berman Chairman of the Board and Chief Executive Officer of Lakes
Age 60 since June 1998, President of Lakes since November 1999, and 1998
Chairman of the Board of Directors of Grand Casinos, Inc.
("Grand") from October 1991 through December of 1998. Mr.
Berman is also a director of G-III Apparel Group Ltd.
("G-III"), New Horizon Kids Quest, Inc. ("Kids Quest") and
Wilsons The Leather Experts Inc. ("Wilsons"). Mr. Berman
served as Chief Executive Officer of Rainforest Cafe, Inc.
("Rainforest") from February 1994 until December 2000.
Timothy J. Cope Chief Financial Officer, Executive Vice President, Secretary
Age 50 and a director of Lakes since June 1998. Mr. Cope served as 1998
Chief Financial Officer of Grand from January 20, 1994
through December of 1998, and served as Executive Vice
President of Grand from April of 1997 through December of
1998. Mr. Cope also served as a director of Grand from
February 1998 through December 1998.
Morris Goldfarb Director of Lakes since June 1998. Mr. Goldfarb is a
Age 51 director, the President and Chief Executive Officer of 1998
G-III. Mr. Goldfarb has served as either the President or
Vice President of G-III and its predecessors since their
formation in 1974. Mr. Goldfarb is a director of Wilsons.
Ronald J. Kramer Director of Lakes since June 1998. Mr. Kramer is President
Age 43 of Wynn Resorts and has been employed in that capacity since 1998
April 2002. Mr. Kramer previously served as a Managing
Director at the investment banking firm of Dresdner
Kleinwort Wasserstein beginning in July 1999. From February
1986 to July 1999, Mr. Kramer was the Chairman of the Board
and Chief Executive Officer of Ladenburg Thalmann Group
Inc., an investment banking firm that provided investment
banking services to Grand. Mr. Kramer is also a Director of
Griffon Corporation, New Valley Corporation and TMP
Worldwide Inc.
Neil I. Sell Director of Lakes since June 1998. Since 1968, Mr. Sell has
Age 60 been engaged in the practice of law in Minneapolis, 1998
Minnesota with the firm of Maslon Edelman Borman & Brand,
LLP, which has rendered legal services to Grand and Lakes.
</Table>

PROXIES AND VOTING -- PROPOSAL 1

Assuming that a quorum is present for the election of directors (which
requires the presence in person or by proxy of at least a majority of the
outstanding shares entitled to vote on such matter), the affirmative vote of the
holders of a majority of the outstanding shares of common stock of the Company
present and entitled to vote on the election of directors is required for
election to the Board of each of the five nominees named above. A shareholder
who abstains with respect to the election of directors is considered to be
present and entitled to vote on the election of directors at the meeting, and is
in effect casting a negative vote, but a shareholder (including a broker) who
does not give authority to a proxy to vote, or withholds authority to vote, on
the election of directors, shall not be considered present and entitled to vote
on the election of directors.

All shares represented by proxies will be voted FOR the election of the
foregoing nominees unless a contrary choice is specified. If any nominee should
withdraw or otherwise become unavailable for reasons not

presently known, the proxies which would have otherwise been voted for such
nominee will be voted for such substitute nominee as may be selected by the
Board of Directors.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR ALL OF THE
NOMINEES LISTED ABOVE.

SUMMARY COMPENSATION TABLE

The following table sets forth the cash and noncash compensation awarded to
or earned by each of the Chief Executive Officer of the Company and the two
other most highly compensated executive officers who served as executive
officers of the Company whose salary and bonus during the fiscal year ended
December 30, 2001 exceeded $100,000 (the "Named Executive Officers").

EXECUTIVE COMPENSATION

<Table>
<Caption>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------
----------------------------------------- SECURITIES
NAME AND OTHER ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY($)(1) BONUS($) COMPENSATION($) OPTIONS(#) COMPENSATION($)(2)
- ------------------ ---- ------------ -------- --------------- ------------ ------------------

Lyle Berman........... 2001 400,000 200,000 -- -- 9,507
Chairman, Chief 2000 375,000 50,000 -- -- 5,630
Executive Officer & 1999 100,000 72,800 -- 500,000 3,859
President
Timothy J. Cope....... 2001 250,000 125,000 -- -- 7,469
Chief Financial 2000 241,667 75,000 -- -- 7,469
Officer, Executive 1999 150,000 23,520 -- 200,000 4,432
Vice President and
Secretary
Joseph Galvin......... 2001 225,000 112,500 -- -- 8,575
Chief Operating 2000 218,750 75,000 -- -- 8,575
Officer 1999 150,000 24,080 -- 200,000 3,043
</Table>

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

(1) Includes cash compensation deferred at the election of the executive officer
under the terms of the Company's 401(k) Savings Incentive Plan.

(2) Amounts shown in this column represent matching contributions by the Company
under the Company's 401(k) Savings Incentive Plan and payment by the Company
of term life insurance premiums.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES

The following table summarizes information with respect to options held by
the executive officers named in the Summary Compensation Table, and the value of
the options held by such persons at the end of fiscal 2001.

<Table>
<Caption>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FY-END(#) AT FY-END(1)($)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ----------- ------------- ----------- -------------

Lyle Berman............ -- N/A 450,000 300,000 -- --
Timothy J. Cope........ -- N/A 114,500 120,000 -- --
Joseph Galvin.......... -- N/A 115,025 120,000 -- --
</Table>

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

(1) The closing sale price of the Company's common stock on December 28, 2001,
the last trading day prior to the end of the Company's fiscal year, was
$6.50.
4

EMPLOYMENT AGREEMENTS

Effective February 21, 2002, Lakes entered into an executive employment
agreement for an indefinite term with each of Timothy J. Cope, Lakes' Chief
Financial Officer, Executive Vice President and Secretary, and Joseph Galvin,
Lakes' Chief Operating Officer, each subject to early termination by either
Lakes or the executive for any reason or no reason, with or without cause. The
employment agreements provide for annual base salaries of $250,000 and $225,000
to Messrs. Cope and Galvin, respectively, or such higher amount as determined by
Lakes. In addition, Lakes pays each executive an additional $600 per month to
cover travel and other expenses and provide the executives with customary
benefits. The employment agreements provide that if Lakes terminates either
executive without "cause" or if either executive resigns for "good reason", such
executive will continue to receive his base salary and the two-year average of
his average of his bonus/ incentive compensation for a period of twelve months.
If such termination occurs within two years following a "change of control" of
Lakes, as defined in the employment agreements, the executive will instead be
entitled to a lump-sum severance payment equal to two times his "annual
compensation", which is defined as his annual base salary and bonus/incentive
compensation plus insurance costs, 401k matching contributions and certain other
benefits. In either case, all options to purchase shares of Lakes common stock
held by the executive at the time of his termination will immediately vest in
their entirety and remain exercisable for a period of two years thereafter. The
employment agreements provide that neither executive will compete with Lakes for
two years after the termination of his employment with Lakes.

No other Lakes Gaming executive officer has an employment agreement with
Lakes Gaming.

DIRECTOR COMPENSATION

Commencing April 2001, each director of Lakes Gaming who is not otherwise
employed by Lakes Gaming receives an annual fee of $12,500. Prior to April 2001,
each such director received an annual fee of $7,500. Lakes Gaming also pays each
director not otherwise employed by it a fee of $1,000 for each meeting of the
Board of Directors and $1,000 for each committee meeting of the Board of
Directors attended.

In addition, the Lakes Gaming 1998 Director Stock Option Plan (the "Lakes
Director Plan") provides that each director who was not an employee of Lakes
Gaming or one of its subsidiaries (a "Non-Employee Director") and who was in
office at the time of the distribution of all of the outstanding Lakes Gaming
stock to the shareholders of Grand, and each subsequent Non-Employee Director at
the time of his or her initial election to the Lakes Board receives a
non-qualified stock option to purchase up to 12,500 shares of Lakes Common Stock
at an option exercise price equal to 100% of the fair market value of the shares
on such grant date. Each option under the 1998 Lakes Director Plan will have a
ten-year term and will generally become exercisable in five equal installments
commencing on the first anniversary of the grant date.

In addition to the initial option grants, non-employee directors may be
granted, at the discretion of the Board, additional options to purchase common
stock of the Company. Such options shall contain such terms and provisions as
the Board determines at the time of the grant. On July 17, 2001, Lakes granted
to each of Messrs. Morris Goldfarb, Ronald J. Kramer and Neil I. Sell, the
Non-Employee Directors of Lakes, an option to purchase up to 30,000 shares of
Lakes Common Stock at an exercise price equal to $7.75. Each such option vests
in six thousand share installments over five years beginning on the first
anniversary of the date of grant.

EXECUTIVE OFFICERS OF LAKES GAMING

Set forth below is certain required information with respect to the
executive officers of Lakes.

<Table>
<Caption>
NAME AGE POSITION(S) WITH LAKES GAMING
---- --- -----------------------------

Lyle Berman........ 60 See "Proposal for Election of Directors" -- above.
Timothy J. Cope.... 50 See "Proposal for Election of Directors" -- above.
Joseph Galvin...... 63 Chief Operating Officer of Lakes since January 1999 and
Chief Administrative Officer of Grand from November 1996
through December 1998, and prior thereto, Vice President of
Security of Grand.
</Table>

STOCK PERFORMANCE GRAPH

The Securities and Exchange Commission requires that Lakes include in this
Proxy Statement a line-graph presentation comparing cumulative shareholders'
returns (based on appreciation of the market price of the Company's common
stock) on an indexed basis since the time Lakes' stock became registered under
Section 12 of the Exchange Act with (i) the cumulative total return of a broad
equity market index, assuming reinvestment of dividends, that includes companies
whose equity securities are traded on the NASDAQ National Market or are of
comparable market capitalizations and (ii) the cumulative total return, assuming
reinvestment of dividends, of issuers with similar market capitalizations. The
following presentation compares Lakes' common stock price during the period from
January 4, 1999, to December 31, 2001, to the NASDAQ Stock Market and the
Russell 2000 Index.

Lakes has elected to use the Russell 2000 Index in compiling its stock
performance graph because it believes the Russell 2000 Index provides a better
comparison of shareholder returns for companies with market capitalizations
similar to that of Lakes, Lakes does not feel that it can reasonably identify a
peer group and there is no published industry or line-of-business index that
provides a meaningful comparison of shareholder returns.

The presentation assumes that the value of an investment in each of Lakes'
common stock, the NASDAQ Stock Market and the Russell 2000 index was $100 on
January 4, 1999, and that dividends paid were reinvested in the same security.

COMPARISON OF 3 YEAR CUMULATIVE TOTAL RETURN*
AMONG LAKES GAMING, INC., THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE RUSSELL 2000 INDEX

[PERFORMANCE GRAPH]
<Table>
<Caption>
Cumulative Total Return
1/4/99 3/99 6/99 9/99 12/99 3/00 6/00 9/00 12/00

Lakes Gaming, Inc. 100.00 97.76 130.60 114.93 94.78 94.78 105.97 102.99 111.94
Nasdaq Stock Market
(U.S.) 100.00 111.45 121.91 124.94 184.67 207.32 180.27 165.88 111.08
Russell 2000 100.00 94.72 109.45 102.53 121.44 130.05 125.13 126.51 117.77

<Caption>
Cumulative Total Return
3/01 6/01 9/01 12/01

Lakes Gaming, Inc. 111.20 88.36 66.27 74.03
Nasdaq Stock Market
(U.S.) 82.91 97.72 67.80 88.14
Russell 2000 110.11 125.85 99.68 120.70
</Table>

* $100 Invested on 1/4/99 in stock or index -- including reinvestment of
dividends.
Fiscal year ending December 30, 2001 or December 31, 2001, as applicable.

PROPOSAL TO CHANGE THE NAME OF THE COMPANY TO
LAKES ENTERTAINMENT, INC.
(PROPOSAL 2)

At the Annual Meeting of Shareholders, shareholders will be asked to
approve an amendment to Lakes' articles of incorporation to change the name of
the Company from "Lakes Gaming, Inc." to "Lakes Entertainment, Inc." The Board
of Directors has approved, subject to shareholders approval, an amendment to
Lakes' articles of incorporation that changes the Company's corporate name to
"Lakes Entertainment, Inc." Lakes has broadened its business focus and strategic
plans to include other entertainment-related business endeavors, including its
recently announced letter of intent to invest in a joint venture to produce
televised poker tournaments. Therefore, the Board and management believe that
the change in its corporate name will better identify Lakes and its business
going forward. A form of the proposed amendment is attached as Exhibit A to this
Proxy Statement.

PROXIES AND VOTING -- PROPOSAL 2

Assuming that a quorum is present for ratification of the appointment of
independent auditors (which requires the presence in person or by proxy of at
least a majority of the outstanding shares entitled to vote on such matter), the
affirmative vote of the holders of a majority of the outstanding shares of
common stock of the Company present and entitled to vote is required to approve
the proposed amendment to the articles of incorporation. A shareholder who
abstains with respect to the proposed amendment is considered to be present and
entitled to vote on such amendment at the meeting, and is in effect casting a
negative vote, but a shareholder (including a broker) who does not give
authority to a proxy to vote, or withholds authority to vote, on the proposed
amendment, shall not be considered present and entitled to vote on this matter.

All shares represented by proxies will be voted FOR the proposal to amend
the articles of incorporation to change Lakes' corporate name to "Lakes
Entertainment, Inc."

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE
AMENDMENT TO THE ARTICLES OF INCORPORATION.

OTHER MATTERS

Neil I. Sell is a partner in the law firm of Maslon Edelman Borman & Brand,
LLP, which renders legal services to Lakes from time to time.

INDEPENDENT AUDITORS

The Board of Directors and management of Lakes are committed to the
quality, integrity and transparency of the Company's financial reports.
Independent auditors play an important part in the Company's system of financial
control. Arthur Andersen LLP has performed this function for the Company or
Grand Casinos, Inc., as its predecessor, since May 1995. The Board of Directors
and management of Lakes have been consistently satisfied with the quality,
integrity and professionalism of Arthur Andersen's audit team.

Although not required to do so, Lakes has historically sought shareholder
ratification of its appointment of an independent auditor at its annual
shareholders' meeting. However, due to the uncertainty surrounding Arthur
Andersen as a result of recent events, Lakes has not yet completed the process
of selecting an independent auditor for the 2002 fiscal year. As a result, the
Board is not seeking shareholder ratification for its independent auditor
selection at the Annual Meeting of Shareholders. The Board of Directors
(including the Audit Committee) will continue to monitor Arthur Andersen's
response to the challenges facing it and will, in its discretion, direct the
appointment of independent auditors who it feels would best serve the interests
of Lakes and its shareholders.

The Board currently believes that representatives of Lakes' independent
auditors will be present at the Annual Meeting of Shareholders to answer your
questions and to make a statement if they desire to do so.

FEES BILLED TO COMPANY BY ARTHUR ANDERSEN LLP DURING FISCAL 2001.

Audit Fees:

Audit fees billed to the Company by Arthur Andersen LLP during the
Company's 2001 fiscal year for review of the Company's annual financial
statements and those financial statements included in the Company's quarterly
reports on Form 10-Q totaled $76,560.

Financial Information Systems Design and Implementation Fees:

The Company did not engage Arthur Andersen LLP to provide advice to the
Company regarding financial information systems design and implementation during
the fiscal year ended December 30, 2001.

All Other Fees:

Fees billed to the Company by Arthur Andersen LLP during the Company's 2001
fiscal year for all other non-audit services rendered to the Company, including
tax related services, totaled $286,265.

The audit committee of the Board of Directors has reviewed the fees billed
by Arthur Andersen LLP during fiscal year 2001 and, after consideration, has
determined that the receipt of these fees by Arthur Andersen LLP is compatible
with Arthur Andersen LLP's maintaining its independence.

BOARD OF DIRECTORS AND COMMITTEES

The Board of Directors held six (6) meetings during the fiscal year ended
December 30, 2001, and took action by written action in lieu of a meeting two
(2) times during the fiscal year ended December 30, 2001. The Company has an
audit committee and a compensation committee, but does not have a nominating
committee of the Board of Directors.

The Company's audit committee consists of Messrs. Ronald J. Kramer, Neil I.
Sell and Morris Goldfarb. Mr. Goldfarb was appointed to the audit committee on
April 12, 2001 in order to fill the vacancy created when Mr. Joel L. Waller (a
former director of Lakes) resigned from the Board of Directors. The audit
committee held two (2) meetings during the fiscal year ended December 30, 2001.
The functions of the audit committee are described under "Report of the Audit
Committee" below.

The Company's Compensation Committee consists of Messrs. Goldfarb and
Kramer. Mr. Kramer was appointed to the Compensation Committee on April 12, 2001
in order to fill the vacancy created when Mr. Waller resigned from the Board of
Directors. The Compensation Committee held one (1) meeting during the fiscal
year ended December 30, 2001. The Compensation Committee reviews the Company's
remuneration policies and practices, makes recommendations to the Board in
connection with all compensation matters affecting the Company and administers
the 1998 Stock Option and Compensation Plan and the Assumed Stock Option Plan.

None of the Company's directors attended fewer than 75 percent of the
aggregate of (i) the total number of meetings of the Board during fiscal 2001,
and (ii) the total number of meetings held by all committees of the Board on
which he served, except for Mr. Goldfarb, who attended two-thirds (2/3s) of such
meetings.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Prior to April 12, 2001, the 2001 Compensation Committee was comprised of
Messrs. Morris Goldfarb and Joel N. Waller. During that time, Messrs. Goldfarb
and Waller were each directors of Wilsons The Leather Experts, and Mr. Waller
was an executive officer of Wilsons The Leather Experts. Mr. Goldfarb is also
director and executive officer of G-III Apparel Group Ltd. Lyle Berman, a
director and executive officer of the Company is also a director of Wilsons The
Leather Experts and G-III Apparel Group Ltd.

On April 12, 2001, Ronald J. Kramer was appointed to the Compensation
Committee in order to fill the vacancy created when Mr. Waller resigned from the
Board of Directors.

REPORT OF THE AUDIT COMMITTEE

The Company has established a three-member audit committee within the Board
of Directors that currently consists of Messrs. Ronald J. Kramer, Neil I. Sell
and Morris Goldfarb. The primary functions of the audit committee are (i) to
serve an as independent and objective party to monitor the Company's financial
reporting process and internal control system, (ii) to review and appraise the
audit efforts of the Company's independent accountants and internal audit
department, and (iii) to provide an open avenue of communication among the
independent accountants, financial and senior management, the internal audit
department, and the Board of Directors.

The Board of Directors has determined that each of the three audit
committee members is an "independent director", as such term is defined by
Section 4200(a)(13) of the National Association of Securities Dealers' listing
standards. The Board of Directors has also determined that each of the audit
committee members is able to read and understand fundamental financial
statements and that at least one member of the audit committee has past
employment experience in finance or accounting. The Board of Directors has
reviewed, assessed the adequacy of, and approved a written audit committee
charter.

The audit committee has reviewed the Company's audited financial statements
for the last fiscal year and discussed them with management.

The audit committee has discussed with the independent auditors the matters
required to be discussed by Statement on Auditing Standards No. 61,
Communication with Audit Committees, as amended, by the Auditing Standards Board
of the American Institute of Certified Public Accountants.

We have received and reviewed the written disclosures and the letter from
the independent auditors required by independence Standard No. 1, Independence
Discussions with Audit Committees, as amended, by the Independence Standards
Board, and have discussed with the auditors the auditors' independence.

The audit committee, based on the review and discussions described above,
has recommended to the Board of Directors that the audited financial statements
be included in the Company's Annual Report on Form 10-K for the last fiscal
year.
MORRIS GOLDFARB
RONALD J. KRAMER
NEIL I. SELL
9

BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

Decisions on compensation of the Company's executives generally will be
made by the Compensation Committee. Each member of the Compensation Committee is
a non-employee director. All decisions by the Compensation Committee relating to
the compensation of the Company's executive officers are reviewed by the full
Board. Pursuant to rules designed to enhance disclosure of the Company's
policies toward executive compensation, set forth below is a report prepared by
the Compensation Committee addressing the compensation policies for the Company
and its subsidiaries.

The Compensation Committee's executive compensation policies are designed
to provide competitive levels of compensation that integrate pay with the
Company's annual objectives and long-term goals, reward above-average corporate
performance, recognize individual initiative and achievements, and assist the
Company in attracting and retaining qualified executives. Executive compensation
will be set at levels that the Compensation Committee believes to be consistent
with others in the Company's industry.

There are three elements in the Company's executive compensation program,
all determined by individual and corporate performance.

- Base salary compensation

- Annual incentive compensation

- Stock options

Total compensation opportunities are competitive with those offered by
employers of comparable size, growth and profitability in the Company's
industry.

Base salary compensation is determined by the potential impact the
individual has on the Company, the skills and experiences required by the job,
and the performance and potential of the incumbent in the job.

Annual incentive compensation for executives of the Company is based
primarily on corporate earnings and growth as measured by the Company's EBITDA
(Earnings Before Interest, Taxes, Depreciation and Amortization) results and
goals and the Company's positioning for future results, but also includes an
overall assessment by the Compensation Committee of executive management's
performance, as well as market conditions.

The annualized base salary during fiscal 2001 for Lyle Berman, the
Company's Chief Executive Officer and Chairman of the Board, was $400,000. The
amount of Mr. Berman's compensation resulted from the Committee's assessment of
the Company's performance and business development during fiscal 2001. The
Committee believes that Mr. Berman's salary is competitive with executives in
other industry-related companies of similar size. The Committee considered
criteria similar to that considered for Mr. Berman when determining the
annualized base salaries for the other Named Executive Officers.

Mr. Berman received an incentive compensation award of $200,000 in fiscal
2001, which amount was based primarily on the Company's ability to meet its
EBITDA performance goals. The other named executive officers also received
incentive compensation, again based primarily on the Company's ability to meet
its EBITDA performance goals.

Awards of stock options under the 1998 Stock Option and Compensation Plan
(the "1998 Plan") are designed to integrate compensation of the Company's
executives with the long-term interests of the Company and its shareholders and
assist in the retention of executives. The 1998 Plan also permits the Committee
to grant stock options to key personnel. Options become exercisable based upon
criteria established by the Company. During fiscal 2001, the Compensation
Committee did not grant options to the executive officers. The Committee granted
97,000 options pursuant to the 1998 Plan to new employees hired by the Company
during fiscal 2001.

While the value realizable from exercisable options is dependent upon the
extent to which the Company's performance is reflected in the market price of
the Company's common stock at any particular point in time, the decision as to
whether such value will be realized in any particular year is determined by each
individual

executive and not by the Compensation Committee. Accordingly, when the Committee
recommends that an option be granted to an executive, that recommendation does
not take into account any gains realized that year by that executive as a result
of his or her individual decision to exercise an option granted in a previous
year.

The Compensation Committee does not anticipate that any of the compensation
payable to executive officers of the Company in the coming year will exceed the
limits and deductibilities set forth in section 162(m) of the Internal Revenue
Code of 1986, as amended, (the "Code"). The Compensation Committee has not
established a policy regarding compensation in excess of these limits, but will
continue to monitor this issue.

MORRIS GOLDFARB
RONALD J. KRAMER

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

NEW HORIZON KIDS QUEST, INC.

New Horizon Kids Quest owns and operates Kids Quest(SM) child care
entertainment centers and operated such child care centers in casinos previously
managed by Lakes. Lakes beneficially owned approximately 27% of New Horizon Kids
Quest common stock until June 2001, when Lakes divested its interest in that
company. Lyle Berman, Chairman of the Board and a principal shareholder of
Lakes, is a director of New Horizon Kids Quest. The agreements under which New
Horizon Kids Quest operated child care centers typically provided for a minimum
guaranteed management fee to be paid to New Horizon Kids Quest by each property
previously managed by Lakes, which varied by location, as well as a child care
rate subsidy from each previously-managed property against New Horizon Kids
Quest's operating losses at those respective locations.

Pursuant to an indemnification agreement entered into as of December, 1998,
by and between Lakes and Mr. Berman, Lakes agreed to indemnify Mr. Berman for
any damages incurred by Mr. Berman arising out of his acts and omissions as a
director of New Horizon Kids Quest.

PARK PLACE ENTERTAINMENT CORPORATION

Lyle Berman entered into an employment agreement with Park Place as of
January 1, 1999 (the "Park Place Employment Agreement") pursuant to which he
serves as a part-time employee of Park Place for an initial term of 4 years,
unless earlier terminated by Park Place. As a part-time employee of Park Place,
Mr. Berman received compensation during 2001 of $10,000 and will receive
compensation in 2002 of an amount not less than Ten Thousand Dollars
($10,000.00). In connection with his execution of the Park Place Employment
Agreement, Mr. Berman received stock options to purchase an aggregate of four
hundred thousand (400,000) shares of Park Place common stock at a per share
exercise price of Six Dollars and Sixty-Seven cents ($6.67), said options to
vest at the rate of One Hundred Thousand (100,000) shares per year on the
anniversary date of the Park Place Employment Agreement. The Park Place
Employment Agreement also contains a noncompetition covenant under which Mr.
Berman is prohibited, subject to certain exceptions, from participating in the
ownership, management or control of any business that is engaged in a gaming
enterprise that competes or would compete with Park Place. Additionally, Mr.
Berman must present any gaming opportunities and projects to Park Place in the
first instance. If Park Place determines not to pursue any venture or
opportunity presented by Mr. Berman, only then may that opportunity be presented
to and pursued by Lakes. The following exceptions are not subject to Mr.
Berman's noncompetition agreement: (i) the management of Indian owned casinos
and related amenities; (ii) the development of the Polo Plaza project in Las
Vegas, NV; and (iii) Internet, cable television or other electronic media-based
gaming enterprises. The terms of Mr. Berman's employment with Park Place may
substantially limit the number and scope of opportunities that Lakes will be
able to consider and pursue.

SECTION 16(A) BENEFICIAL REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "SEC") and the

NASDAQ National Market. Officers, directors and greater than ten percent
shareholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file.

Morris Goldfarb reported a June 2001 sale of shares on a Form 5 dated as of
December 30, 2001. Based solely upon a review of the copies of such forms
furnished to the Company, or written representations that no Form 5(s) were
required, the Company believes that during the fiscal year ended December 30,
2001, all Section 16(a) filing requirements applicable to its officers,
directors and greater than ten-percent beneficial owners were satisfied, except
as stated above.

PROPOSALS OF SHAREHOLDERS

Shareholder proposals sought to be included in the Proxy Statement for the
2003 Annual Meeting of Shareholders must be received by the Company at its
principal executive offices on or before January 3, 2003.

DISCRETIONARY PROXY VOTING AUTHORITY/
UNTIMELY STOCKHOLDER PROPOSALS

Rule 14a-4 promulgated under the Securities and Exchange Act of 1934
governs the Company's use of its discretionary proxy voting authority with
respect to a shareholder proposal that the shareholder has not sought to include
in the Company's proxy statement. The Rule provides that if a proponent of a
proposal fails to notify the company at least 45 days prior to the month and day
of mailing of the prior year's proxy statement, management proxies will be
allowed to use their discretionary voting authority when the proposal is raised
at the meeting, without any discussion of the matter.

With respect to the Company's 2003 Annual Meeting of Shareholders, if the
Company is not provided notice of a shareholder proposal, which the shareholder
has not previously sought to include in the Company's proxy statement, by March
19, 2002, the management proxies will be allowed to use their discretionary
authority as outlined above.

SOLICITATION

The Company will bear the cost of preparing, assembling and mailing the
proxy, Proxy Statement and other material that may be sent to the shareholders
in connection with this solicitation. Brokerage houses and other custodians,
nominees and fiduciaries may be requested to forward soliciting material to the
beneficial owners of stock, in which case they will be reimbursed by the Company
for their expenses in doing so. Proxies are being solicited primarily by mail,
but, in addition, officers and regular employees of the Company may solicit
proxies personally, by telephone, by telegram or by special letter.

The Board of Directors does not intend to present to the meeting any other
matter not referred to above and does not presently know of any matters that may
be presented to the meeting by others. However, if other matters come before the
meeting, it is the intent of the persons named in the enclosed proxy to vote the
proxy in accordance with their best judgment.
By Order of the Board of Directors

LAKES GAMING, INC.

/s/ Timothy J. Cope
Timothy J. Cope,
Executive Vice President, Chief
Financial Officer
and Secretary

EXHIBIT A

ARTICLES OF AMENDMENT
OF
LAKES GAMING, INC.

The undersigned, Secretary of Lakes Gaming, Inc., a Minnesota corporation
(the "Corporation"), hereby certifies that the following Articles of Amendment
have been duly adopted by the Board of Directors, pursuant to the provisions of
the Minnesota Business Corporation Act.

1. The name of the Corporation is Lakes Gaming, Inc.

2. Article 1 of the Corporation's Articles of Incorporation is amended to
read in its entirety as follows:

ARTICLE 1

NAME

THE NAME OF THE CORPORATION IS LAKES ENTERTAINMENT, INC.

3. This amendment has been adopted pursuant to Chapter 302A of the
Minnesota Statutes, also called the Minnesota Business Corporation Act.

IN WITNESS WHEREOF, the undersigned has hereunto set his hand this day
of June, 2002.

--------------------------------------
Timothy J. Cope
Chief Financial Officer, Executive
Vice President
and Secretary

[LAKES GAMING LOGO]

ANNUAL MEETING

Doubletree Park Place Hotel
1500 Park Place Boulevard
Minneapolis, Minnesota
JUNE 5, 2002
3:00 P.M.

LAKES GAMING, INC.
FOR ANNUAL MEETING OF SHAREHOLDERS -- JUNE 5, 2002 PROXY
- --------------------------------------------------------------------------------

The undersigned, a shareholder of Lakes Gaming, Inc., hereby appoints
Lyle Berman and Timothy J. Cope, and each of them, as proxies, with full power
of substitution, to vote on behalf of the undersigned the number of shares which
the undersigned is then entitled to vote, at the Annual Meeting of Shareholders
of Lakes Gaming, Inc. to be held at the Doubletree Park Place Hotel, 1500 Park
Place Boulevard, Minneapolis, Minnesota on June 5, 2002 at 3:00 p.m., and at any
and all adjournments thereof, as specified below on the matters referred to and
in their discretion upon any other matters brought before the meeting, with all
the powers which the undersigned would possess if personally present.

The undersigned hereby revokes all previous proxies relating to the
shares covered hereby and acknowledges receipt of the Notice of Annual Meeting
of Shareholders and Proxy Statement relating to the Annual Meeting of
Shareholders.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.

When properly executed, this proxy will be voted on the proposals set forth
herein as directed by the shareholder, but if no direction is made in the space
provided, this proxy will be voted FOR the election of all nominees for director
and FOR approval of the amendment to the articles of incorporation.

See reverse for voting instructions.

- Please detach here -
- --------------------------------------------------------------------------------

THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR ALL NOMINEES, AND
FOR RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS.

1. Election of directors: 01 LYLE BERMAN 02 MORRIS GOLDFARB 03 RONALD KRAMER
04 NEIL I. SELL 05 TIMOTHY J. COPE

(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE BOX PROVIDED TO THE RIGHT.)

2. To amend the articles of incorporation to change the corporate name of the
company from "Lakes Gaming, Inc." to "Lakes Entertainment, Inc."

3. Upon such other business as may properly come before the meeting or any
adjournments thereof.

[ ] FOR all nominees (except as marked [ ] WITHHOLD all vote for
to the contrary below) nominees listed

[ ] For [ ] Against [ ] Abstain

THIS PROXY, WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION
IS GIVEN, WILL BE VOTED FOR ALL NOMINEES IN ITEM 1 AND FOR APPROVAL OF THE
AMENDMENT TO THE ARTICLES OF INCORPORATION.

Address Change? Mark Box Indicate changes below: [ ] Dated:
, 2002 -----------------
- ------------------------------

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

- --------------------------------------------------------------------------------
Signature(s) in Box

(Shareholder must sign exactly as the name appears at left. When signed as a
corporate officer, executor, administrator, trustee, guardian, etc., please give
full title as such. Both joint tenants must sign.)