Related Party Transactions

12 Months Ended

Jan. 01, 2012

Related Party Transactions [Abstract]

Related Party Transactions

16.  Related Party Transactions

KAR Entities

In 1999, Kean Argovitz Resorts — Jamul, LLC (“KAR-Jamul”) and KAR-Shingle Springs (together, the “KAR Entities”) held rights in development and management agreements for the Jamul and Shingle Springs casino projects and Lakes initially acquired interests in those casino projects by entering into joint ventures with the KAR Entities.

In 2003, Lakes purchased the respective joint venture interests of the KAR Entities. In connection with the purchase transactions, Lakes entered into separate agreements with Kevin M. Kean and Jerry A. Argovitz, the two individual owners of the KAR Entities.

During 2009, Mr. Kean elected to receive $1 million per year (prorated based on a 365 day year) during the remainder of the seven-year initial term of the management agreement with the Shingle Springs Tribe related to the Red Hawk Casino under the terms of his agreement with the Company. As a result of this election, Mr. Kean will not be entitled to receive consulting fees equal to 15% of the management fees earned by the Company from the Red Hawk Casino operations. The payments to Mr. Kean are a cost of acquiring contract rights and are therefore recorded as an intangible asset (see note 4, Intangible and Other Assets Related to Indian Casino Projects), which will be amortized through the end of the management agreement term. This obligation is included in contract acquisition costs payable (see note 9, Contract Acquisition Costs Payable).

Lakes has previously made loans to Mr. Kean, of which $1.8 million and $2.3 million were included in other assets in the accompanying consolidated balance sheets as of January 1, 2012 and January 2, 2011, respectively. Lakes continues to monitor the collectability of these receivables on a quarterly basis and has concluded that repayment is probable as Mr. Kean has agreed that 50% of the amounts payable to him under the agreement with Lakes shall be applied toward repayment of his indebtedness to Lakes.

During 2009, Mr. Argovitz elected to receive $1 million per year (prorated based on a 365 day year) during the remainder of the seven-year initial term of the management agreement with the Shingle Springs Tribe related to the Red Hawk Casino under the terms of his agreement with the Company. As a result of this election, Mr. Argovitz will not be entitled to obtain a 15% equity interest in the Company’s entity that holds the rights to the management fees earned by the Company from the Red Hawk Casino operations. The payments to Mr. Argovitz are a cost of acquiring contract rights and therefore recorded as an intangible asset (see note 4, Intangible and Other Assets Related to Indian Casino Projects), which will be amortized through the end of the management agreement term. This obligation is included in contract acquisition costs payable (see note 9, Contract Acquisition Costs Payable).

Lyle Berman Family Partnership.

Lakes had an obligation to make quarterly payments during the term of the management contract of the Four Winds Casino Resort to an unrelated third party. During 2006, the Lyle Berman Family Partnership (the “Partnership”) purchased a portion of the unrelated third party receivable. The Partnership received approximately $0.3 million per year of the payment stream related to this obligation during the five-year term of the management contract of the Four Winds Casino Resort. The Partnership received a final payment of $0.4 million during the second quarter of fiscal 2011 which represented the remaining obligation. Lyle Berman, Lakes’ Chief Executive Officer, does not have an ownership or any other beneficial interest in the Partnership. However, Neil I. Sell, a director of Lakes, is one of the trustees of the irrevocable trusts for the benefit of Lyle Berman’s children who are the partners in the Partnership.