10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________

Form 10-Q

(Mark One)
☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended June 29, 2014
or
☐	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 ENTERTAINMENT, 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, Suite 101	55305
Minnetonka, Minnesota	(Zip Code)
(Address of principal executive offices)

(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 ☑     No ☐

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

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

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

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

As of August 4, 2014, there were 26,778,084 shares of Common Stock, $0.01 par value per share, outstanding.

LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES

INDEX

		Page of Form 10-Q
PART I. FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS	1
	Consolidated Balance Sheets as of June 29, 2014 (unaudited) and December 29, 2013	1
	Unaudited Consolidated Statements of Operations for the three and six months ended June 29, 2014 and June 30, 2013	2
	Unaudited Consolidated Statements of Cash Flows for the six months ended June 29, 2014 and June 30, 2013	3
	Notes to Unaudited Consolidated Financial Statements	4
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	14
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	20
ITEM 4.	CONTROLS AND PROCEDURES	20
PART II. OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	21
ITEM 1A.	RISK FACTORS	21
ITEM 6.	EXHIBITS	21

i

Part I.

Financial Information

ITEM 1.  FINANCIAL STATEMENTS

LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

	(Unaudited)
	June 29, 2014			December 29, 2013
Assets
Current assets:
Cash and cash equivalents	$	38,164		$	37,897
Short-term investments		45,450			49,099
Income taxes receivable		2,155			2,155
Other		2,419			1,774
Total current assets		88,188			90,925
Property and equipment		40,656			37,200
Accumulated depreciation		(7,140	)		(5,541	)
Property and equipment, net		33,516			31,659
Other assets:
Investment in unconsolidated investee		20,997			20,997
Gaming license		1,945			2,015
Land held for development		960			1,130
Other		666			535
Total other assets		24,568			24,677
Total assets	$	146,272		$	147,261
Liabilities and shareholders' equity
Current liabilities:
Current portion of long-term debt, net of discount	$	1,364		$	1,251
Accounts payable		427			420
Accrued taxes, other than income taxes		576			462
Accrued payroll and related		1,161			1,403
Other accrued expenses		2,497			1,325
Total current liabilities		6,025			4,861
Long-term debt, net of current portion and discount		9,602			10,321
Total liabilities		15,627			15,182
Commitments and contingencies
Shareholders' equity:
Common stock, $.01 par value; authorized 200,000 shares; 26,777 and 26,721 common shares issued and outstanding		268			267
Additional paid-in capital		205,487			205,212
Deficit		(75,111	)		(73,400	)
Accumulated other comprehensive income		1			-
Total shareholders' equity		130,645			132,079
Total liabilities and shareholders' equity	$	146,272		$	147,261

See notes to consolidated financial statements.

1

LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Operations

(In thousands, except per share data)

	Three months ended						Six months ended
	June 29, 2014			June 30, 2013			June 29, 2014			June 30, 2013
Revenues:
Management fees	$	-		$	3,650		$	-		$	6,378
Gaming		11,068			3,188			21,388			3,188
Room		1,630			615			2,944			879
Food and beverage		1,566			703			2,825			901
Other operating		642			410			977			507
License fees and other		30			23			63			40
Gross revenues		14,936			8,589			28,197			11,893
Less promotional allowances		829			40			1,780			40
Net revenues		14,107			8,549			26,417			11,853
Costs and expenses:
Gaming		6,413			2,018			12,367			2,018
Room		173			214			283			325
Food and beverage		1,190			759			2,223			1,062
Other operating		419			418			661			633
Selling, general and administrative		5,723			4,613			11,463			8,380
Gain on sale of cost method investment		(1,000	)		-			(1,000	)		-
Preopening expenses		-			902			-			1,167
Amortization of intangible assets related to Indian casino projects		-			265			-			529
Loss (gain) on disposal of property and equipment		(1	)		143			24			143
Depreciation and amortization		864			460			1,717			717
Total costs and expenses		13,781			9,792			27,738			14,974
Earnings (loss) from operations		326			(1,243	)		(1,321	)		(3,121	)
Other income (expense):
Interest income		38			1,741			71			3,494
Interest expense		(308	)		(264	)		(626	)		(472	)
Other		1			10			165			10
Total other income (expense), net		(269	)		1,487			(390	)		3,032
Earnings (loss) before income taxes		57			244			(1,711	)		(89	)
Income tax benefit		-			-			-			-
Net earnings (loss)	$	57		$	244		$	(1,711	)	$	(89	)
Other comprehensive income		15			-			1			-
Comprehensive income (loss)	$	72		$	244		$	(1,710	)	$	(89	)
Weighted-average common shares outstanding
Basic		26,749			26,441			26,738			26,441
Dilutive impact of stock options		499			202			-			-
Diluted		27,248			26,643			26,738			26,441
Earnings (loss) per share
Basic	$	0.00		$	0.01		$	(0.06	)	$	0.00
Diluted	$	0.00		$	0.01		$	(0.06	)	$	0.00

See notes to consolidated financial statements.

2

LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Cash Flows

(In thousands)

	Six Months Ended
	June 29, 2014			June 30, 2013
OPERATING ACTIVITIES:
Net loss	$	(1,711	)	$	(89	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		1,717			717
Amortization of debt issuance costs, accretion of debt discount and imputed interest on contract acquisition costs		261			389
Accretion and amortization of discounts and premiums on short-term investments and accretion of interest and additions to long-term interest receivable		162			(2,562	)
Amortization of intangible assets related to Indian casino projects		-			529
Share-based compensation		143			283
Loss on disposal of property and equipment		24			143
Changes in operating assets and liabilities:
Management fees receivable		-			1,925
Other current assets		(496	)		(1,856	)
Income taxes receivable		-			(5	)
Accrued taxes, other than income taxes		114			-
Accounts payable and accrued expenses		937			952
Net cash provided by operating activities		1,151			426
INVESTING ACTIVITIES:
Purchase of short-term investments		(52,390	)		-
Sales and maturities of short-term investments		55,729			-
Payments to acquire investment in unconsolidated investee		-			(836	)
Changes in long-term management fees receivable and other		-			178
Purchase of property and equipment		(3,536	)		(15,808	)
Proceeds from disposal of property and equipment		17			25
Changes in other assets		23			-
Net cash used in investing activities		(157	)		(16,441	)
FINANCING ACTIVITIES:
Repayments of borrowings		(860	)		(3	)
Proceeds from borrowings		-			11,291
Proceeds from issuance of common stock		133			-
Contract acquisition costs payable		-			(1,000	)
Net cash provided by (used in) financing activities		(727	)		10,288
Net increase (decrease) in cash and cash equivalents		267			(5,727	)
Cash and cash equivalents - beginning of period		37,897			32,480
Cash and cash equivalents - end of period	$	38,164		$	26,753
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid received during the period for:
Interest	$	361		$	5
Noncash investing activities:
Capital expenditures in accounts payable and accrued expenses	$	1,216		$	906

See notes to consolidated financial statements.

3

LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

1.  Basis of Presentation

The unaudited consolidated financial statements of Lakes Entertainment, Inc., a Minnesota corporation, and subsidiaries (individually and collectively “Lakes” or the “Company”), have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) applicable to interim financial information. Accordingly, certain information normally included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United States has been condensed and/or omitted. For further information, please refer to the annual audited consolidated financial statements of the Company, and the related notes included within the Company’s Annual Report on Form 10-K, for the year ended December 29, 2013, previously filed with the SEC, from which the balance sheet information as of that date is derived. In the opinion of management, all adjustments considered necessary for a fair presentation have been included (consisting of normal recurring adjustments). The results for the current interim period are not necessarily indicative of the results to be expected for the full year.

All material intercompany accounts and transactions have been eliminated in consolidation.

Investments in unconsolidated investees, which are 20% or less owned and the Company does not have the ability to significantly influence the operating or financial decisions of the entity, are accounted for under the cost method. See note 7, Investment in Rock Ohio Ventures, LLC and note 8, Investment in Dania Entertainment Center, LLC.

2.  New Accounting Standards

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers. This ASU is a comprehensive new revenue recognition model that requires a company to recognize revenue from the transfer of goods or services to customers in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. ASU 2014-09 will be effective for the Company’s first quarter of 2017. Lakes is evaluating the impact this new standard will have on its financial statements.

In July 2013, the FASB issued ASU No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. ASU 2013-11 requires entities to present an unrecognized tax benefit as a reduction of a deferred tax asset for a net operating loss (“NOL”) or tax credit carryforward whenever the NOL or tax credit carryforward would be available to reduce the additional taxable income or tax due if the tax position is disallowed. This ASU requires entities to assess whether to net the unrecognized tax benefit with a deferred tax asset as of the reporting date. ASU 2013-11 became effective as of March 30, 2014. The adoption of ASU 2013-11 did not have an impact on the Company’s consolidated financial statements.

3.  Debt Termination Agreement with the Shingle Springs Tribe

On July 17, 2013, Lakes entered into a Debt Termination Agreement (the “Debt Termination Agreement”) with the Shingle Springs Band of Miwok Indians (the “Shingle Springs Tribe”) relating to amounts Lakes had previously advanced to the Shingle Springs Tribe under the development and management agreement for the Red Hawk Casino between Lakes and the Shingle Springs Tribe. The Debt Termination Agreement required certain conditions to be met, including a lump sum payment by the Shingle Springs Tribe to Lakes of $57.1 million (the “Debt Payment”). The Debt Payment was made on August 29, 2013 (the “Payment Date”) and constituted full and final payment of all debt owed to Lakes as of that date. The management agreement under which Lakes was managing the Red Hawk Casino also terminated on the Payment Date.

4

4.  Short-Term Investments

Short-term investments consist of commercial paper, corporate bonds and certificates of deposit which are classified as available-for-sale securities and are carried at current fair market value, with the resulting unrealized gains and losses, if any, excluded from earnings and reported, net of tax, as a separate component of shareholders' equity until realized. If the carrying value of an investment is in excess of its fair market value, an impairment charge to adjust the carrying value to the fair market value is recorded if the impairment is considered other-than-temporary. There were no other-than-temporary impairments related to declines in fair market value of short-term investments during the three or six months ended June 29, 2014. All short-term investments held as of June 29, 2014 have original maturity dates of twelve months or less and are classified as current assets. Short-term investments consisted of the following as of June 29, 2014 and December 29, 2013 (in thousands):

	Amortized Cost		Fair Value		Unrealized Gain/(Loss)
June 29, 2014
Commercial paper	$	31,446	$	31,452	$	6
Corporate bonds		11,841		11,838		(3	)
Certificates of deposit		2,162		2,160		(2	)
Balances at June 29, 2014	$	45,449	$	45,450	$	1
December 29, 2013
Commercial paper	$	21,986	$	21,993	$	7
Corporate bonds		27,113		27,106		(7	)
Balances at December 29, 2013	$	49,099	$	49,099	$	—

See note 15, Financial Instruments and Fair Value Measurements, for further discussion of the fair value of these investments.

5. Property and Equipment, net

The following table summarizes the components of property and equipment, at cost (in thousands):

		June 29, 2014			December 29, 2013
Building and site improvements	$	24,618		$	24,611
Furniture and equipment		12,970			12,370
Construction in process		3,068			219
Property and equipment		40,656			37,200
Less accumulated depreciation		(7,140	)		(5,541	)
Property and equipment, net	$	33,516		$	31,659

6. Gaming License

In April 2012, the State of Maryland Video Lottery Facility Location Commission awarded a video lottery operation license (“Gaming License”) to the Company for the Rocky Gap Lodge & Golf Resort (“Rocky Gap”). In August 2012, Lakes acquired the assets of Rocky Gap for $6.8 million which included a hotel, convention center, spa, two restaurants and the only Jack Nicklaus signature golf course in Maryland. In connection with the acquisition of Rocky Gap, the Company entered into an operating lease for the underlying land (see note 16, Commitments and Contingencies).

After acquiring Rocky Gap, the Company converted the then-existing convention center into a gaming facility and renamed the property Rocky Gap Casino Resort. The gaming facility opened to the public on May 22, 2013 and features 577 video lottery terminals (“VLTs”), 15 table games including poker, a casino bar and a lobby food and beverage outlet. The AAA Four Diamond Award® winning resort also includes an event and conference center that opened during the fourth quarter of 2013, which is able to accommodate large groups and features multiple flexible use meeting rooms. The total cost of the Rocky Gap project was approximately $35.0 million, which included the initial acquisition cost.

5

Amortization of the Gaming License began on May 22, 2013, the date the gaming facility opened for public play. The Gaming License is being amortized over its 15 year term. Amortization expense related to the Gaming License was less than $0.1 million and approximately $0.1 million for the three and six months ended June 29, 2014, respectively, and less than $0.1 million for each of the three and six months ended June 30, 2013, respectively.

Information with respect to the Gaming License is as follows (in thousands):

	June 29, 2014			December 29, 2013
Original cost	$	2,100		$	2,100
Accumulated amortization		(155	)		(85	)
	$	1,945		$	2,015

7.  Investment in Rock Ohio Ventures, LLC     

Lakes has a 10% ownership investment in Rock Ohio Ventures, LLC (“Rock Ohio Ventures”), a privately-held company, that owns 80% of the Horseshoe Casino Cleveland in Cleveland, Ohio which opened to the public in May 2012; the Horseshoe Casino Cincinnati in Cincinnati, Ohio which opened in March 2013; the Thistledown Racino in North Randall, Ohio which added approximately 1,100 VLTs to its existing racetrack in April 2013; and Turfway Park, a thoroughbred horseracing track located in Florence, Kentucky. This investment is accounted for using the cost method since Lakes owns less than 20% of Rock Ohio Ventures and does not have the ability to significantly influence the operating and financial decisions of the entity. At June 29, 2014 and December 29, 2013, Lakes had invested a total of $21.0 million in Rock Ohio Ventures, which is included in investment in unconsolidated investee in the accompanying consolidated balance sheets.

The Company's cost method investment is evaluated, on at least a quarterly basis, for potential other-than-temporary impairment, or when an event or change in circumstances has occurred that may have a significant adverse effect on the fair value of the investment. Lakes monitors this investment for impairment by considering all information available to the Company including the economic environment of the markets served by the properties Rock Ohio Ventures owns; market conditions including existing and potential future competition; recent or expected changes in the regulatory environment; operational performance and financial results; known changes in the objectives of Rock Ohio Venture’s management; known or expected changes in ownership of Rock Ohio Ventures; and any other known significant factors relating to the business underlying the investment.

As part of the review of operational performance and financial results for considering if there are indications of impairment, the Company utilizes financial statements of Rock Ohio Ventures and its owned gaming properties to assess the investee’s ability to operate from a financial standpoint. The Company also analyzes Rock Ohio Ventures’ cash flows and working capital to determine if the Company’s investment in this entity has experienced an other-than-temporary impairment. As part of this process, the Company analyzes actual historical results compared to forecast and has periodic discussions with management of Rock Ohio Ventures to obtain additional information related to the Company’s investment in Rock Ohio Ventures to determine whether any events have occurred that would necessitate further analysis of the Company’s recorded investment in Rock Ohio Ventures for impairment. Based on these procedures, Lakes has determined that the Company’s investment in Rock Ohio Ventures has not experienced an other-than-temporary impairment as of June 29, 2014 and December 29, 2013. Lakes will continue to evaluate this investment at least quarterly.

The fair value of this cost method investment is considered impracticable to estimate.  The impracticability in developing such an estimate is due primarily to insufficient information necessary to prepare a valuation model to determine fair value.

Lakes has the right, but not the obligation, to make additional investments up to 10% of equity required by Rock Ohio Ventures to develop the properties it owns in return for a corresponding equity interest in those properties (see note 16, Commitments and Contingencies).

8.  Investment in Dania Entertainment Center, LLC

On May 22, 2013, Dania Entertainment Center, LLC (“DEC”) purchased the Dania Jai Alai property located in Dania Beach, Florida, from Boyd Gaming Corporation, for $65.5 million.

As part of a previous plan to purchase the property, during 2011 Lakes loaned $4.0 million to DEC (the “Loan”) which was written down to zero during the third quarter of 2011 when the acquisition did not close. During 2013, the Loan was exchanged for a 20% ownership interest in Dania Entertainment Holdings, LLC (“DEH”).

6

The Company accounted for its investment in DEH as a cost method investment. At the time the Loan was exchanged for an equity investment in DEH, Lakes determined its value remained at zero due to the negative cash flows of the existing operations of the Dania Jai Alai property as well as uncertainty surrounding completion of the project. Therefore, there was no value recorded for this investment in the Company’s accompanying consolidated balance sheet.

On April 21, 2014, Lakes entered into a redemption agreement with DEH that resulted in DEH redeeming Lakes’ 20% ownership in DEH in exchange for DEH granting to Lakes 5% ownership in DEC. Concurrently, Lakes entered into an agreement with an unrelated third party, ONDISS Corp. (“ONDISS”), to sell its ownership in DEC to ONDISS for approximately $2.6 million. Lakes received $1.0 million on April 21, 2014, which is recorded as a gain on sale of cost method investment in the consolidated statements of operations. Also on April 21, 2014, 40% of Lakes’ ownership was transferred to ONDISS. The agreement also requires that ONDISS pay Lakes three installments of approximately $0.5 million each on October 21, 2014, April 21, 2015 and October 21, 2015, and on each date one-third of Lakes’ remaining ownership will be transferred to ONDISS. Lakes will account for the receipt of each of these payments as a gain on sale of cost method investment in the consolidated statements of operations on the dates the payments are received.

See note 15, Financial Instruments and Fair Value Measurements, for discussion of the fair value of this investment.

9.  Land

Lakes owns parcels of undeveloped land related to its previous involvement in a potential casino project with the Jamul Indian Village (the “Jamul Tribe”) near San Diego, California. During the third quarter of 2012, Lakes entered into a ten-year option agreement (“Original Option Agreement”) with Penn National Gaming, Inc. (“Penn National”) that granted Penn National the right to purchase this land for $7.0 million, increasing 1% each year, but Penn National had no obligation to purchase the land. The Original Option Agreement was amended on May 15, 2014 to reduce the purchase price of the land to $5.5 million but requires Penn National to purchase the land within ten days after the Jamul Tribe opens a casino on its reservation. Annual option payments of less than $0.1 million are required to be made by Penn National to Lakes. As of June 29, 2014 and December 29, 2013, this land is carried at approximately $1.0 million on the accompanying consolidated balance sheets.

Lakes also owns undeveloped land in Oklahoma related to its previous involvement in a potential casino project with the Iowa Tribe of Oklahoma. During the second quarter of 2014, Lakes engaged a broker to sell this land which was previously held for development. As a result, during the second quarter of 2014, Lakes reclassified the land as held for sale, which is included in other assets on the consolidated balance sheet as of June 29, 2014 and is carried at approximately $0.2 million, which is its estimated fair value less expected cost to sell. As of December 29, 2013, the land was classified as held for development and was carried at approximately $0.2 million on the accompanying consolidated balance sheet.

The Company performs an impairment analysis on the land it owns at least quarterly and determined that no impairment had occurred as of June 29, 2014 and December 29, 2013.

10. Debt

Loan Agreement

Lakes has a two-year interest-only $8.0 million revolving line of credit loan agreement (the “Loan Agreement”) with Centennial Bank that expires in October 2014. The Loan Agreement is collateralized by primarily all of Lakes’ interest in the real property it owns in Minnetonka, Minnesota. Amounts borrowed under the Loan Agreement, if any, bear interest at 8.95%. Lakes’ Chief Executive Officer, Lyle Berman, personally guaranteed the Loan Agreement on behalf of Lakes. As of June 29, 2014 and December 29, 2013, no amounts were outstanding under the Loan Agreement.

Financing Facility

In December 2012, Lakes closed on a $17.5 million financing facility with Centennial Bank (the “Financing Facility”) to finance a portion of Rocky Gap project costs. Approximately $13.4 million was drawn on the Financing Facility. Lakes was required to invest $17.5 million in the Rocky Gap project prior to drawing on the Financing Facility. The Financing Facility is collateralized by the leasehold estate and the furniture, fixtures and equipment of Rocky Gap. In addition, Lakes guaranteed repayment of the loan and granted a second mortgage on its real property located in Minnetonka, Minnesota. Effective November 1, 2013, Lakes amended the Financing Facility with Centennial Bank to reduce the interest rate from 10.5% to 5.5%. Monthly payments of principal and interest began on December 1, 2013 and continue for 84 months. Although Lakes does not currently plan to make further draws on the Financing Facility, Lakes has the ability to draw the remaining $4.1 million on the Financing Facility through December 31, 2018. As of June 29, 2014 and December 29, 2013, $12.5 million and $13.3 million of principal was outstanding under the Financing Facility, respectively.

7

As a result of the amendment of the Financing Facility with Centennial Bank effective November 1, 2013, Lakes recorded a $1.7 million gain on modification of debt during the fourth quarter of 2013. This amount included $2.0 million recorded as a discount to the principal amount of the Financing Facility, which is being accreted to interest expense over the term of the Financing Facility using the effective interest method, and $0.3 million of original debt issuance costs expensed at the time of the amendment. Accretion of the discount to interest expense was $0.1 million and $0.2 million for the three and six months ended June 29, 2014.

Summary of Outstanding Debt

Long-term debt, net of current maturities and discount, is comprised of the following (in thousands):

	June 29, 2014			December 29, 2013
Financing Facility	$	12,513		$	13,315
Capital lease obligations		123			182
Total debt		12,636			13,497
Less: current maturities, net of discount		(1,364	)		(1,251	)
Less: unamortized debt discount		(1,670	)		(1,925	)
Long-term debt, net of current maturities and discount	$	9,602		$	10,321

11. Promotional Allowances 

The retail value of rooms, food and beverage, and other services furnished to guests without charge is included in gross revenues and then deducted as promotional allowances. Guests may be given, on a discretionary basis, coupons to use towards the purchase of rooms, food and beverage, and other amenities. Lakes recognizes a reduction in revenue as a promotional allowance for these coupons when the coupons are redeemed. The estimated retail value of the promotional allowances is as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 29, 2014		June 30, 2013		June 29, 2014		June 30, 2013
Food and beverage	$	139	$	20	$	246	$	20
Rooms		677		20		1,485		20
Other		13		—		49		—
Total promotional allowances	$	829	$	40	$	1,780	$	40

The estimated cost of providing these promotional allowances, which are included in gaming costs and expenses, is as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 29, 2014		June 30, 2013		June 29, 2014		June 30, 2013
Food and beverage	$	72	$	15	$	125	$	15
Rooms		163		5		357		5
Other		35		—		77		—
Total promotional allowances	$	270	$	20	$	559	$	20

12.  Share-Based Compensation

Share-based compensation expense related to stock options for the three and six months ended June 29, 2014 and June 30, 2013 were as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 29, 2014		June 30, 2013		June 29, 2014		June 30, 2013
Total cost of share-based payment plans	$	72	$	162	$	143	$	283

8

The Company uses the Black Scholes option pricing model to estimate the fair value and compensation cost associated with employee incentive stock options which requires the consideration of historical employee exercise behavior data and the use of a number of assumptions including volatility of the Company’s stock price, the weighted average risk-free interest rate and the weighted average expected life of the options. There were 6,000 and 16,000 options granted during the three and six months ended June 29, 2014, respectively. The weighted-average grant-date fair value of the stock options issued during the three and six months ended June 29, 2014 were $2.41 and $2.45, respectively. There were zero and 443,500 options granted during the three and six months ended June 30, 2013, respectively. The weighted-average grant-date fair value of the stock options issued during the six months ended June 30, 2013 was $1.72.

The following table summarizes Lakes’ stock option activity during the six months ended June 29, 2014 and June 30, 2013:

	Number of Common Shares
	Options Outstanding			Exercisable		Available for Grant			Weighted-Average Exercise Price
2014
Balance at December 29, 2013		1,596,322			1,171,520		526,878		$	2.98
Forfeited/cancelled/expired		(40,423	)				38,423			2.48
Exercised		(55,682	)				—			2.37
Granted		16,000					(16,000	)		4.72
Balance at June 29, 2014		1,516,217			1,210,254		549,301			3.04
2013
Balance at December 30, 2012		1,528,039			1,298,809		875,627		$	3.04
Forfeited/cancelled/expired		(59,058	)				59,058			3.36
Granted		443,500					(443,500	)		3.07
Balance at June 30, 2013		1,912,481			1,267,339		491,185			2.95

As of June 29, 2014, the options outstanding had a weighted average remaining contractual life of 6.3 years, weighted average exercise price of $3.04 and aggregate intrinsic value of $2.8 million. The options exercisable have a weighted average exercise price of $2.99, a weighted average remaining contractual life of 5.8 years and aggregate intrinsic value of $2.3 million as of June 29, 2014.

There were 48,682 and 55,682 options exercised during the three and six months ended June 29, 2014, respectively and no options exercised during the three and six months ended June 30, 2013. The total intrinsic value of options exercised during each of the three and six months ended June 29, 2014 was $0.1 million. Lakes’ unrecognized share-based compensation expense related to stock options was approximately $0.4 million as of June 29, 2014, which is expected to be recognized over a weighted-average period of 1.7 years.

Lakes issues new shares of common stock upon the exercise of options.

13.  Earnings (Loss) per Share

For all periods, basic earnings (loss) per share (“EPS”) is calculated by dividing net earnings (loss) by the weighted-average common shares outstanding. Diluted EPS in profitable periods reflects the effect of all potentially dilutive common shares outstanding by dividing net earnings by the weighted-average of all common and potentially dilutive shares outstanding. Potentially dilutive stock options of 1,017,421 and 1,516,217 for the three and six months ended June 29, 2014, respectively and 1,710,645 and 1,912,481 for the three and six months ended June 30, 2013, respectively, were not used to compute diluted earnings (loss) per share because the effects would have been anti-dilutive.

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14.  Income Taxes

There was no income tax benefit for either the six months ended June 29, 2014 or June 30, 2013 because there is no remaining potential to carry back losses to prior years and future realization of the benefit is uncertain. The Company’s effective tax rate was 0% for each of the six months ended June 29, 2014 and June 30, 2013. The effective tax rate differs from the federal tax rate of 35% for both periods primarily due to the limitation of the income tax benefit due to the uncertainty of its future realization.

Lakes has recorded income taxes receivable of $2.2 million as of June 29, 2014 and December 29, 2013 related to the Company’s ability to carry back 2012 taxable losses to a prior year and receive a refund of taxes previously paid.

Deferred tax assets are evaluated by considering historical levels of income, estimates of future taxable income and the impact of tax planning strategies.  Management has evaluated all available evidence and has determined that negative evidence continues to outweigh positive evidence for the realization of deferred tax assets and as a result continues to provide a full valuation allowance against its deferred tax assets.

As of June 29, 2014, Lakes had approximately $72.3 million of federal net operating loss carryforwards, which will begin to expire in 2022, and approximately $96.5 million of state net operating loss carryforwards, which will expire at various times depending on specific state laws.

The Company is currently under IRS audit for the 2009-2012 tax years and the IRS has proposed certain adjustments to the 2009-2011 tax filings. However, Lakes believes it is more likely than not that it will prevail in challenging the proposed adjustments and maintains that the positions taken were proper and supported by applicable laws and regulations. While the outcome of this matter cannot be predicted with certainty, Lakes does not believe, when resolved, that this dispute will have a material effect on its consolidated financial statements. However, an unexpected adverse resolution could have a material effect on the consolidated financial statements in a particular quarter or fiscal year. The Company is currently under audit by the State of California for the 2010 tax year. No adjustments have been made as a result of the State of California audit. However, there is no assurance that the taxing authority will not propose adjustments that are different from the Company’s expected outcome and that may impact the provision for income taxes.

15. Financial Instruments and Fair Value Measurements

Overview

Estimates of fair value for financial assets and liabilities are based on the framework established in the accounting guidance for fair value measurements. The framework defines fair value, provides guidance for measuring fair value, and requires certain disclosures. The framework discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow) and the cost approach (cost to replace the service capacity of an asset or replacement cost). The framework utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

● Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

● Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

● Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions.

The Company’s financial instruments consist of cash and cash equivalents, short-term investments, cost method investments, accounts payable and debt.

For the Company’s cash and cash equivalents, accounts payable and current portion of debt, the carrying amounts approximate fair value because of the short duration of these financial instruments. As of June 29, 2014 and December 29, 2013, the fair value of the Company’s long-term debt approximates the carrying value based upon the Company’s expected borrowing rate for debt with similar remaining maturities and comparable risk.     

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Balances Measured at Fair Value on a Recurring Basis

The following table (in thousands) shows certain of the Company’s financial instruments measured at fair value on a recurring basis using Level 2 inputs, as they are priced principally by independent pricing services using observable inputs:

	June 29, 2014		December 29, 2013
Short-Term Investments
Commercial paper	$	31,452	$	21,993
Corporate bonds		11,838		27,106
Certificates of deposit		2,160		—

Balances Disclosed at Fair Value

The fair value of the Company’s investment in Rock Ohio Ventures, LLC was not estimated as of June 29, 2014 or December 29, 2013, as there were no events or changes in circumstances that may have a significant adverse effect on the fair value of the investment, and Lakes’ management determined that it was not practicable to estimate the fair value of the investment (see note 7, Investment in Rock Ohio Ventures, LLC). As of June 29, 2014, the fair value of the Company’s investment in Dania Entertainment Center, LLC was determined to be approximately $1.6 million, which was the negotiated sale price of Lakes’ remaining investment in DEC (see note 8, Investment in Dania Entertainment Center, LLC). The fair value of this investment was considered impracticable to estimate as of December 29, 2013 without incurring excessive costs relative to the materiality of the investment. 

16. Commitments and Contingencies

Operating Lease with the Maryland Department of Natural Resources Related to Rocky Gap

In connection with the closing of the acquisition of Rocky Gap, Lakes entered into a 40-year operating ground lease (the “Lease Agreement”) with the Maryland Department of Natural Resources for approximately 268 acres in the Rocky Gap State Park on which Rocky Gap is situated. The Lease Agreement contains an option to renew for 20 years after the initial 40-year term.

From August 3, 2012 and until the casino opened for public play on May 22, 2013, rent in the form of surcharges was due and payable with a minimum annual payment of $150,000. From May 22, 2013 through the remaining term of the Lease Agreement, rent payments are due and payable annually in the amount of $275,000 plus 0.9% of any gross operator share of gaming revenue (as defined in the Lease Agreement) in excess of $275,000, and $150,000 plus any surcharge revenue in excess of $150,000. Surcharge revenue consists of amounts billed to and collected from guests and are $3.00 per room per night and $1.00 per round of golf. Rent expense for the three and six months ended June 29, 2014 and June 30, 2013 were as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 29, 2014		June 30, 2013		June 29, 2014		June 30, 2013
Rent expense	$	79	$	89	$	171	$	184

Future minimum lease payments under the Lease Agreement at June 29, 2014 are as follows (in thousands):

		2015		2016		2017		2018		2019		Thereafter
Minimum lease payment	$	425	$	425	$	425	$	425	$	425	$	13,600

Rock Ohio Ventures, LLC

Lakes has a 10% ownership in Rock Ohio Ventures and as of June 29, 2014, Lakes has contributed approximately $21.0 million as required (see note 7, Investment in Rock Ohio Ventures, LLC). Lakes may contribute additional capital up to $4.1 million as needed to maintain its equity position in Rock Ohio Ventures. If Lakes chooses not to fund any additional amounts, it will maintain an ownership position in Rock Ohio Ventures in a pro rata amount of what its $2.8 million initial payment is to the total amount of equity funded to develop casino operations, and all equity funded in excess of the initial $2.8 million is required to be repurchased at an amount equal to the price paid. Payment to Lakes in the event of such repurchase would be deferred and paid in accordance with the terms of the Rock Ohio Ventures First Amended and Restated Operating Agreement.

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Jerry Argovitz Litigation

On March 12, 2014, Lakes received a demand for arbitration from Jerry Argovitz (“Argovitz”) relating to a Consent and Agreement to Buyout and Release by and between Argovitz  and Lakes KAR Shingle Springs, LLC (“LKAR”), Lakes Entertainment, Inc., and Lakes Shingle Springs, Inc. dated January 30, 2003 (“Buyout Agreement”).  The Buyout Agreement provided that LKAR was to make certain payments to Argovitz for so long as LKAR was managing the Red Hawk Casino for the Shingle Springs Tribe.  Lakes made the payments required under the Buyout Agreement while it was managing the Red Hawk Casino, and discontinued the payments after its management contract to manage the Red Hawk Casino was terminated.  Argovitz has asserted claims for breach of the Buyout Agreement and the implied covenant of good faith and fair dealing relating to the payments he alleges he is entitled to receive after the management agreement was terminated.  He seeks damages of approximately $2.7 million, plus interest, costs, and attorney fees.  The arbitration action names as defendants Lakes Entertainment, Inc. and Lakes Shingle Springs, Inc.  The arbitration has been scheduled for August 20, 2014.  Lakes believes the arbitration to be without merit and is vigorously defending itself in this matter.

Quest Media Group, LLC Litigation

On May 17, 2012, Lakes received service of a breach of contract lawsuit filed in the Franklin County Court of Common Pleas, Franklin County, Ohio by Quest Media Group, LLC (“Quest”) with respect to an  agreement (the “Agreement”) entered into between Lakes Ohio Development, LLC (a wholly owned subsidiary of Lakes) (“Lakes Ohio Development”) and Quest on March 9, 2010.  The Agreement relates to Quest assisting Lakes Ohio Development in partnering with Rock Ohio Ventures, LLC and Penn Ventures, LLC (“Penn Ventures”) with respect to funding the proposed citizen-initiated referendum in November 2009 to amend the Ohio constitution to permit one casino each in Cleveland, Cincinnati, Toledo and Columbus, Ohio. The lawsuit alleged, among other things, that Lakes breached the Agreement by selling Lakes Ohio Development’s interest in the Toledo and Columbus, Ohio casino projects to Penn Ventures, failing to pay the proper fee to Quest as a result of such sale, and incorrectly calculating the costs that are to be offset against Quest’s fee.  The lawsuit sought unspecified compensatory damages in excess of $25,000, punitive damages, declaratory and injunctive relief.  The lawsuit named as defendants Lakes Entertainment, Inc., Lakes Ohio Development, LLC and Lyle Berman, Chairman and CEO of Lakes. Lakes removed the case to federal court, answered the pleadings and filed a motion to dismiss the claims against all defendants.  Prior to the judge’s ruling on the motion to dismiss, the parties settled all but one of Quest’s claims (including obtaining a dismissal of Lyle Berman from the lawsuit) at no out-of-pocket expense to Lakes.  The judge subsequently granted Lakes’ motion to dismiss and dismissed the remaining claims against Lakes. 

Miscellaneous Legal Matters

Lakes and its subsidiaries 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, and although unable to estimate the minimum costs, if any, to be incurred in connection with these matters, management currently believes that the likelihood of an unfavorable outcome is remote, and is not likely to have a material adverse effect upon Lakes’ unaudited consolidated financial statements. Accordingly, no provision has been made with regard to these matters.

17.  Related Party Transaction

In March 2013, Lakes transferred to Lyle Berman, Lakes' Chairman of the Board and Chief Executive Officer, a $250,000 secured note from an unrelated third party company in exchange for a cash payment of $150,000 from Mr. Berman. The secured note was in default and related to a fiscal 2012 potential business development opportunity that Lakes decided not to pursue. The note receivable was written down to $150,000 in fiscal 2012.

18.  Segment Information

Lakes’ segments reported below (in millions) are the segments of the Company for which separate financial information is available and for which operating results are evaluated by the chief operating decision-maker in deciding how to allocate resources and in assessing performance.

The Rocky Gap segment includes results of operations and assets related to the Rocky Gap Casino Resort near Cumberland, Maryland. The Indian Casino Projects segment includes results of operations and assets related to the development, financing, and management of the gaming-related property for the Shingle Springs Tribe. The Other segment includes Lakes’ cash and cash equivalents, short-term investments, Lakes corporate overhead and the investment in Rock Ohio Ventures. Costs in Other have not been allocated to the other segments because these costs are not easily allocable and to do so would not be practical. Amounts in Eliminations represent the intercompany management fee for Rocky Gap.

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				Indian
				Casino
	Rocky Gap			Projects			Other			Eliminations			Consolidated
Three months ended June 29, 2014
Net revenue	$	14.1		$	—		$	0.4		$	(0.4	)	$	14.1
Management fee revenue – Rocky Gap		—			—			0.4			(0.4	)		—
Management fee expense – Rocky Gap		(0.4	)		—			—			0.4			—
Depreciation and amortization expense		(0.8	)		—			(0.1	)		—			(0.9	)
Earnings (loss) from operations		0.9			—			(0.6	)		—			0.3
Interest expense		(0.3	)		—			—			—			(0.3	)
Three months ended June 30, 2013
Net revenue	$	4.9		$	3.6		$	0.1		$	(0.1	)	$	8.5
Management fee revenue – Rocky Gap		—			—			0.1			(0.1	)		—
Management fee expense – Rocky Gap		(0.1	)		—			—			0.1			—
Amortization of intangible assets related to Indian casino projects		—			(0.3	)		—			—			(0.3	)
Depreciation and amortization expense		(0.4	)		—			(0.1	)		—			(0.5	)
Earnings (loss) from operations		(2.4	)		3.2			(2.0	)		—			(1.2	)
Interest expense		(0.1	)		(0.2	)		—			—			(0.3	)
Six months ended June 29, 2014
Net revenue	$	26.4		$	—		$	0.7		$	(0.7	)	$	26.4
Management fee revenue – Rocky Gap		—			—			0.7			(0.7	)		—
Management fee expense – Rocky Gap		(0.7	)		—			—			0.7			—
Depreciation and amortization expense		(1.6	)		—			(0.1	)		—			(1.7	)
Earnings (loss) from operations		1.0			—			(2.3	)		—			(1.3	)
Interest expense		(0.6	)		—			—			—			(0.6	)
Six months ended June 30, 2013
Net revenue	$	5.4		$	6.4		$	0.2		$	(0.1	)	$	11.9
Management fee revenue – Rocky Gap		—			—			0.1			(0.1	)		—
Management fee expense – Rocky Gap		(0.1	)		—			—			0.1			—
Amortization of intangible assets related to Indian casino projects		—			(0.5	)		—			—			(0.5	)
Depreciation and amortization expense		(0.6	)		—			(0.1	)		—			(0.7	)
Earnings (loss) from operations		(5.0	)		5.6			(3.7	)		—			(3.1	)
Interest expense		(0.1	)		(0.4	)		—			—			(0.5	)
As of June 29, 2014
Total assets	$	37.5		$	—		$	108.8		$	—		$	146.3
Capital expenditures		3.5			—			—			—			3.5
Investment in unconsolidated investees		—			—			21.0			—			21.0
As of December 29, 2013
Total assets	$	34.4		$	—		$	112.9		$	—		$	147.3
Capital expenditures		20.6			—			0.1			—			20.7
Investment in unconsolidated investees		—			—			21.0			—			21.0

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

Overview

Lakes Entertainment, Inc. and subsidiaries (“Lakes”, “we”, or “our”) develops, finances, manages and owns casino properties with a historical emphasis on Indian-owned properties. An overview of our projects as of June 29, 2014 is as follows:

• We own and operate the Rocky Gap Casino Resort in Allegany County, Maryland (“Rocky Gap”) which we acquired on August 3, 2012. In connection with the acquisition of Rocky Gap, we entered into a 40-year operating ground lease with the Maryland Department of Natural Resources (“Maryland DNR”) for approximately 268 acres in the Rocky Gap State Park on which Rocky Gap is situated. After acquiring Rocky Gap, which included a hotel, convention center, spa, two restaurants and the only Jack Nicklaus signature golf course in Maryland, we converted the then-existing convention center into a gaming facility which opened to the public on May 22, 2013. The gaming facility features 577 video lottery terminals (“VLTs”), 15 table games including poker, a casino bar and a lobby food and beverage outlet. The AAA Four Diamond Award® winning resort also includes an event and conference center that opened in the fourth quarter of 2013, which is able to accommodate large groups and features flexible use meeting rooms. The total cost of the Rocky Gap project was approximately $35.0 million, which included the initial acquisition cost.

• We have an investment in Rock Ohio Ventures, LLC (“Rock Ohio Ventures”) that owns the Horseshoe Casino Cleveland in Cleveland, Ohio; the Horseshoe Casino Cincinnati in Cincinnati, Ohio; the Thistledown Racino in North Randall, Ohio; and Turfway Park in Florence, Kentucky. As of June 29, 2014, we have contributed approximately $21.0 million to Rock Ohio Ventures. We currently maintain a 10% interest in Rock Ohio Ventures’ 80% ownership in its gaming properties. We currently plan to contribute additional capital as needed to maintain our equity position in Rock Ohio Ventures. If we choose not to fund any additional amounts, we will maintain an ownership position in Rock Ohio Ventures in a pro rata amount of what our $2.8 million initial payment is to the total amount of equity funded to develop casino operations, and all equity funded in excess of the initial $2.8 million is required to be repurchased at an amount equal to the price paid. Payment to Lakes in the event of such repurchase would be deferred and paid in accordance with the terms of the Rock Ohio Ventures First Amended and Restated Operating Agreement.

The Horseshoe Casino Cleveland opened in May 2012. The casino features approximately 1,700 slot machines, 89 table games, a 30-table poker room and multiple food and beverage outlets. The Horseshoe Casino Cincinnati   opened in March 2013 and features approximately 2,000 slot machines, 118 table games (including poker), food and beverage outlets, and a parking structure with approximately 2,500 parking spaces. The Thistledown Racino added approximately 1,100 VLTs to its existing racetrack in April 2013. Turfway Park is a thoroughbred horseracing track located in Florence, Kentucky.

• We developed and had a seven-year contract to manage the Red Hawk Casino that was built on the Rancheria of the Shingle Springs Band of Miwok Indians (“Shingle Springs Tribe”) in El Dorado County, California, adjacent to U.S. Highway 50, approximately 30 miles east of Sacramento, California. We began managing the Red Hawk Casino when it opened to the public on December 17, 2008.

On July 17, 2013, we entered into a debt termination agreement with the Shingle Springs Tribe relating to amounts we had previously advanced to the Shingle Springs Tribe (the “Shingle Springs Notes”) for the development of the Red Hawk Casino (the “Debt Termination Agreement”). The Debt Termination Agreement required certain conditions to be met, including a lump sum payment by the Shingle Springs Tribe to us of $57.1 million (the “Debt Payment”). The Debt Payment was made on August 29, 2013 (the “Payment Date”) and constituted full and final payment of all debt owed to us as of that date. The management agreement under which we were managing the Red Hawk Casino also terminated on the Payment Date.

Results of Operations

The following discussion and analysis should be read in conjunction with the unaudited consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q for the three and six months ended June 29, 2014.

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Three months ended June 29, 2014 compared to the three months ended June 30, 2013

Net Revenues

Net revenues were $14.1 million for the second quarter of 2014 compared to $8.5 million for the second quarter of 2013. The increase in net revenues for the three months ended June 29, 2014 compared to the three months ended June 30, 2013 was due to additional net revenue of $9.2 million related to the operation of Rocky Gap, which Lakes acquired on August 3, 2012 and which commenced gaming operations on May 22, 2013. Included in net revenues for the three months ended June 30, 2013 were $3.7 million in management fees earned related to the Red Hawk Casino. Due to the termination of the management agreement between Lakes and the Shingle Springs Tribe for the management of the Red Hawk Casino during the third quarter of 2013, Lakes’ consolidated statements of operations do not include management fee revenues related to the management of the Red Hawk Casino subsequent to August 29, 2013.

Property Operating Expenses

Property operating expenses were $8.2 million for the second quarter of 2014 compared to $3.4 million for the second quarter of 2013 which primarily related to gaming, rooms, food and beverage and golf operations of Rocky Gap. The increase in property operating expenses resulted primarily from the inclusion of a full period of gaming-related expenses in the current year quarter as the gaming facility opened to the public in May 2013.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $5.7 million in the second quarter of 2014 compared to $4.6 million for the second quarter of 2013. Included in these amounts were Lakes corporate selling, general and administrative expenses of $1.9 million and $2.0 million for the second quarters of 2014 and 2013, respectively, and Rocky Gap selling, general and administrative expenses of $3.8 million and $2.6 million for the second quarters of 2014 and 2013, respectively. The increase in Rocky Gap selling, general and administrative expenses was due primarily to the addition of gaming during May 2013.

For the second quarter of 2014, selling, general and administrative expenses consisted primarily of payroll and related expenses of $2.8 million (including share-based compensation), marketing and advertising expenses of $0.7 million, building and rent expenses of $0.6 million, professional fees of $0.5 million and business development expenses of $0.4 million. For the second quarter of 2013, selling, general and administrative expenses consisted primarily of payroll and related expenses of $2.2 million (including share-based compensation), marketing and advertising expenses of $0.4 million, building and rent expenses of $0.5 million and professional fees of $0.8 million.

Gain on Sale of Cost Method Investment

During the second quarter of 2014, Lakes entered into an agreement to sell its interest in Dania Casino & Jai Alai in Dania Beach, Florida for a total of $2.6 million. Per the agreement, on April 21, 2014, Lakes received $1.0 million in exchange for 40% of Lakes’ interest in the project. The remaining purchase price will be paid in three equal semi-annual installments of approximately $0.5 million and 20% of Lakes’ original ownership will be transferred upon each remaining payment. Upon the receipt of the payment during the second quarter of 2014, Lakes recognized a $1.0 million gain on sale of cost method investment since this asset had previously been written off.

Preopening Expenses

Lakes expenses certain project preopening costs as incurred. There were no preopening expenses during the second quarter of 2014. During the second quarter of 2013, Lakes recognized preopening expenses of $0.9 million related to the Rocky Gap project.

Amortization of Intangible Assets Related to Indian Casino Projects

Amortization of intangible assets related to Indian casino projects was $0.3 million for the second quarter of 2013 and were associated with the project with the Shingle Springs Tribe. In connection with the Debt Termination Agreement entered into with the Shingle Springs Tribe during the third quarter of 2013, the remaining intangible assets associated with that project were fully impaired as of August 29, 2013, and therefore there was no amortization of intangible assets related to Indian casino projects for the second quarter of 2014.

Depreciation and Amortization

Depreciation and amortization was $0.9 million for the second quarter of 2014 compared to $0.5 million for the second quarter of 2013. The increase was due primarily to depreciation on Rocky Gap property and equipment.

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Other Income (Expense), net

Other income (expense), net was $(0.3) million for the second quarter of 2014 compared to $1.5 million for the second quarter of 2013. A significant portion of the 2013 amount was related to non-cash interest income associated with accretion on notes receivable from the Shingle Springs Tribe.

Income Taxes

There was no income tax benefit for either the second quarter of 2014 or 2013 because there is no remaining potential to carry back losses to prior years and future realization of the benefit is uncertain. Our effective tax rate was 0% for each of the second quarters of 2014 and 2013. The effective tax rate differs from the federal tax rate of 35% for both periods primarily due to the limitation of the income tax benefit due to the uncertainty of its future realization.

Six months ended June 29, 2014 compared to the six months ended June 30, 2013

Net Revenues

Net revenues were $26.4 million for the six months ended June 29, 2014 compared to $11.9 million for the six months ended June 30, 2013. The increase in net revenues was due to additional net revenue of $20.9 million related to the operation of Rocky Gap, which Lakes acquired on August 3, 2012 and which commenced gaming operations on May 22, 2013. Included in net revenues for the six months ended June 30, 2013 were $6.4 million in management fees earned related to the management of the Red Hawk Casino. Due to the termination of the management agreement between Lakes and the Shingle Springs Tribe for the management of the Red Hawk Casino during the third quarter of 2013, Lakes’ consolidated statements of operations do not include management fee revenues related to the management of the Red Hawk Casino subsequent to August 29, 2013.

Property Operating Expenses

Property operating expenses were $15.5 million for the six months ended June 29, 2014 compared to $4.0 million for the six months ended June 30, 2013 which primarily related to gaming, rooms, food and beverage and golf operations of Rocky Gap. The increase in property operating expenses resulted primarily from the inclusion of a full period of gaming-related expenses as gaming commenced in May 2013.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $11.5 million for the six months ended June 29, 2014 compared to $8.4 million for the six months ended June 30, 2013. Included in these amounts were Lakes corporate selling, general and administrative expenses of $4.0 million for each of the second quarters of 2014 and 2013, and Rocky Gap selling, general and administrative expenses of $7.5 million and $4.4 million for the second quarters of 2014 and 2013, respectively. The increase in Rocky Gap selling, general and administrative expenses was due primarily to the addition of gaming during May 2013.

For the six months ended June 29, 2014, selling, general and administrative expenses consisted primarily of payroll and related expenses of $5.6 million (including share-based compensation), marketing and advertising expenses of $1.3 million, building and rent expenses of $1.4 million, professional fees of $1.1 million and business development expenses of $0.8 million. For the six months ended June 30, 2013, selling, general and administrative expenses consisted primarily of payroll and related expenses of $4.1 million (including share-based compensation), marketing and advertising expenses of $0.5 million, building and rent expenses of $0.9 million and professional fees of $1.8 million.

Gain on Sale of Cost Method Investment

During the six months ended June 29, 2014, Lakes entered into an agreement to sell its interest in Dania Casino & Jai Alai in Dania Beach, Florida for a total of $2.6 million. Per the agreement, on April 21, 2014, Lakes received $1.0 million in exchange for 40% of Lakes’ interest in the project. The remaining purchase price will be paid in three equal semi-annual installments of approximately $0.5 million and 20% of Lakes’ original ownership will be transferred upon each remaining payment. Upon the receipt of the payment during the second quarter of 2014, Lakes recognized a $1.0 million gain on sale of cost method investment since this asset had previously been written off.

Preopening Expenses

Lakes expenses certain project preopening costs as incurred. There were no preopening expenses during the six months ended June 29, 2014. During the six months ended June 30, 2013, Lakes recognized preopening expenses of $1.2 million related to the Rocky Gap project.

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Amortization of Intangible Assets Related to Indian Casino Projects

Amortization of intangible assets related to Indian casino projects was $0.5 million for the six months ended June 30, 2013 and were associated with the project with the Shingle Springs Tribe. In connection with the Debt Termination Agreement entered into with the Shingle Springs Tribe during the third quarter of 2013, the remaining intangible assets associated with that project were fully impaired as of August 29, 2013, and therefore there was no amortization of intangible assets related to Indian casino projects for the six months ended June 29, 2014.

Depreciation and Amortization

Depreciation and amortization was $1.7 million for the six months ended June 29, 2014 compared to $0.7 million for the six months ended June 30, 2013. The increase was due primarily to depreciation on Rocky Gap property and equipment.

Other Income (Expense), net

Other income (expense), net was $(0.4) million for the six months ended June 29, 2014 compared to $3.0 million for the six months ended June 30, 2013. A significant portion of the 2013 amount was related to non-cash interest income associated with accretion on notes receivable from the Shingle Springs Tribe.

Income Taxes

There was no income tax benefit for either the six months ended June 29, 2014 or June 30, 2013 because there is no remaining potential to carry back losses to prior years and future realization of the benefit is uncertain. Our effective tax rate was 0% for each of the six months ended June 29, 2014 and June 30, 2013. The effective tax rate differs from the federal tax rate of 35% for both periods primarily due to the limitation of the income tax benefit due to the uncertainty of its future realization.

Outlook

Historically, Lakes’ revenues have primarily come from the management of Indian casino properties. As a result of the August 29, 2013 termination of the management agreement between Lakes and the Shingle Springs Tribe for the management of the Red Hawk Casino, Lakes’ subsequent consolidated statements of operations have not included revenues from the management of Indian casino properties. During the next twelve months, Lakes currently expects the majority of its revenue to come from the operation of Rocky Gap. However, due to the relatively short operating history of Rocky Gap, we do not plan to provide guidance on future results of operations.

Liquidity and Capital Resources

As of June 29, 2014, we had $38.2 million in cash and cash equivalents and $45.4 million in short-term investments. We currently believe that our cash and cash equivalents, short-term investments, and our cash flows from operations will be sufficient to meet our working capital requirements during the next 12 months.

Our operating results and performance depend significantly on economic conditions and their effect on consumer spending in the property we own. Declines in consumer spending would cause our revenues generated from the ownership of Rocky Gap to be adversely affected.

During the three and six months ended June 30, 2013, our management fee revenues were derived from the management of the Red Hawk Casino. On July 17, 2013, we entered into a Debt Termination Agreement with the Shingle Springs Tribe relating to amounts we had previously advanced to the Shingle Springs Tribe for the development of the Red Hawk Casino. Per the terms of the Debt Termination Agreement, the Shingle Springs Tribe paid us $57.1 million on August 29, 2013. This Debt Payment constituted full and final payment of all debt owed to us by the Shingle Springs Tribe. As of the Payment Date, the Shingle Springs Notes were valued at $39.7 million. The face value of the Shingle Springs Notes including accrued interest was $69.7 million as of the Payment Date. The management agreement under which Lakes was managing the Red Hawk Casino also terminated on the Payment Date, and as a result, we no longer earn fees for the management of the Red Hawk Casino.

We have a $17.5 million financing facility that was used to finance a portion of the Rocky Gap gaming facility project and new event and conference center construction costs. We drew approximately $13.4 million on the financing facility, of which $12.5 million remains outstanding as of June 29, 2014. Although we do not currently plan to make additional draws on the financing facility, we have the ability to draw the remaining $4.1 million through December 31, 2018. Effective November 1, 2013, we amended this financing facility to reduce the interest rate from 10.5% to 5.5%. Monthly principal and interest payments on the outstanding amount of the financing facility began on December 1, 2013 and continue for 84 months.

17

Room, food and beverage, and other operating revenues and expenses from Rocky Gap are included in operations from the date of the acquisition of the property. Gaming revenues and expenses are included in operations from May 22, 2013, the date that the gaming facility opened for public play.

We have a total investment of $21.0 million in Rock Ohio Ventures. Per our agreement with Rock Ohio Ventures related to the casino properties in Cincinnati and Cleveland, Ohio, the Thistledown Racetrack in North Randall, Ohio and Turfway Park, a thoroughbred horseracing track located in Florence, Kentucky, we may be required to invest additional funds of up to $4.1 million in those projects.

On April 21, 2014, Lakes entered into a redemption agreement with Dania Entertainment Holdings (“DEH”) that resulted in DEH redeeming Lakes’ 20% ownership in DEH in exchange for DEH granting to Lakes 5% ownership in Dania Entertainment Center, LLC (the entity that owns the Dania Casino & Jai Alai in Dania Beach, Florida) (“DEC”). Concurrently, Lakes entered into an agreement with an unrelated third party to sell its ownership in DEC for approximately $2.6 million. Lakes had invested $4.0 million in this project, which was previously written down to zero. Lakes received $1.0 million on April 21, 2014 in exchange for 40% of its ownership. Per the terms of the agreement, Lakes will also receive three payments of approximately $0.5 million each on October 21, 2014, April 21, 2015 and October 21, 2015, and will transfer one-third of its remaining ownership on each of those dates.

We have an interest-only $8.0 million revolving bank line of credit loan agreement (the “Loan Agreement”) that expires on October 28, 2014. As of June 29, 2014, no amounts were outstanding under the Loan Agreement.

Critical Accounting Policies and Estimates

This Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses our consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles. The preparation of these financial statements requires us to make estimates that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the balance sheet date and reported amounts of revenue and expenses during the reporting period. On an ongoing basis, we evaluate our estimates and judgments, including those related to revenue recognition, short-term investments, investments in unconsolidated investees, litigation costs, income taxes and share-based compensation. We base our estimates and judgments on historical experience and on various other factors that are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The following represent our accounting policies that involve the more significant judgments and estimates used in the preparation of our consolidated financial statements. See note 2, Summary of Significant Accounting Policies, to the consolidated financial statements included in Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 29, 2013, previously filed with the SEC, for a discussion of all of our significant accounting policies.

Revenue Recognition and Promotional Allowances

Revenue from the management, development, financing of and consulting with Indian-owned casino gaming facilities is recognized as it is earned pursuant to each respective agreement. Food, beverage, and retail revenues are recorded at the time of sale. Room revenue is recorded at the time of occupancy. Sales taxes and surcharges collected from guests and remitted to governmental authorities are presented on a net basis. Accounts receivable deemed uncollectible are charged off through a provision for uncollectible accounts.

Gaming revenue, which is defined as the difference between gaming wins and losses, is recognized as wins and losses occur from gaming activities. The retail value of rooms, food and beverage, and other services furnished to guests without charge is included in gross revenues and then deducted as a promotional allowance. Our guests may be given, on a discretionary basis, coupons to use towards the purchase of rooms, food and beverage, and other amenities. We recognize a reduction in revenue as a promotional allowance for these coupons when the coupons are redeemed. The estimated cost of providing such promotional allowances is included in gaming expenses.

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Short-Term Investments and Concentrations of Credit Risk

Short-term investments consist of commercial paper, corporate bonds and certificates of deposit which are classified as available-for-sale securities and are valued at current market value, with the resulting unrealized gains and losses, if any, excluded from earnings and reported, net of tax, as a separate component of shareholders' equity until realized. All of our investments in commercial paper and corporate bonds carry a rating by one or more of the nationally recognized statistical rating organizations. Any change in such rating agencies' approach to evaluating credit and assigning an opinion could negatively impact the fair value of our investments. Any impairment loss to reduce an investment's carrying amount to its fair market value is recognized in income when a decline in the fair market value of an individual security below its cost or carrying value is determined to be other than temporary.

Investments in Unconsolidated Investees

Investments in an entity where we own 20% or less of the voting stock of the entity and do not exercise significant influence over operating and financial policies of the entity are accounted for using the cost method.

We have a policy in place to review our investments at least annually, to evaluate the accounting method and carrying value of our investments in unconsolidated investees. Our cost method investments are evaluated, on at least a quarterly basis, for potential other-than-temporary impairment, or when an event or change in circumstances has occurred that may have a significant adverse effect on the fair value of the investments. We monitor the investments for impairment by considering all information available to us including the economic environment of the markets served by the properties; market conditions including existing and potential future competition; recent or expected changes in the regulatory environment; operational performance and financial results; known changes in the objectives of the properties’ management; known or expected changes in ownership; and any other known significant factors relating to the businesses underlying the investments. If we believe that the carrying value of an investment is in excess of its estimated fair value, it is our policy to record an impairment charge to adjust the carrying value to the estimated fair value, if the impairment is considered other-than-temporary.

Income Taxes 

The determination of our income tax-related account balances requires the exercise of significant judgment by management. Accordingly, we determine deferred tax assets and liabilities based upon the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to affect taxable income. Management assesses the likelihood that deferred tax assets will be recovered from future taxable income and establishes a valuation allowance when management believes recovery is not likely.

We record estimated penalties and interest related to income tax matters, including uncertain tax positions, if any, as a component of income tax expense.

Share-Based Compensation Expense

We have various share-based compensation programs, which provide for equity awards including stock options and restricted stock. We use the straight-line method to recognize compensation expense associated with share-based awards based on the fair value on the date of grant, net of the estimated forfeiture rate, if any. Expense is recognized over the requisite service period related to each award, which is the period between the grant date and the award’s stated vesting term. The fair value of stock options is estimated using the Black-Scholes option pricing model. All of our stock compensation expense is recorded in selling, general and administrative expenses in the consolidated statements of operations.

Seasonality

We believe that the operations of all casino and resort properties owned and/or managed by us are affected by seasonal factors, including holidays, weather and travel conditions.

Regulation and Taxes

The casino we manage and own is subject to extensive regulation by state gaming authorities. Changes in applicable laws or regulations could have an adverse effect on us.

The gaming industry represents a significant source of tax revenues to regulators. 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.

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Such changes, if adopted, could have a material adverse effect on our future financial position, results of operations and cash flows.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors, except for the financing commitments previously discussed.

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 Quarterly Report on Form 10-Q and other materials filed or to be filed by Lakes with the United States Securities and Exchange Commission (“SEC”) as well as information included in oral statements or other written statements made or to be made by Lakes 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, 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 Lakes.

These risks and uncertainties include, but are not limited to, the need for potential future financing to meet Lakes’ development needs and expansion goals; the highly competitive industry in which Lakes operates; possible changes in regulations; risks of entry into new businesses; reliance on Lakes’ management; and litigation costs. For more information, review Lakes’ filings with the Securities and Exchange Commission. For further information regarding the risks and uncertainties, see the “Risk Factors” section in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 29, 2013, previously filed with the SEC.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

At June 29, 2014, our investment portfolio included $45.4 million of commercial paper, corporate bonds and certificates of deposit classified as fixed income securities and cash and cash equivalents of $38.2 million. The fixed income securities, like all fixed income instruments, are subject to interest rate risks and will decline in value if market interest rates increase. However, while the value of the investment may fluctuate in any given period, we intend to hold our fixed income investments until maturity. Consequently, we would not expect to recognize an adverse impact on net income or cash flows during the holding period. We adjust the carrying value of our investments if impairment occurs that is other than temporary.

ITEM 4.  CONTROLS AND PROCEDURES

Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended, (the “1934 Act”) as of the end of the period covered by this quarterly report. Based on their evaluation, our chief executive officer and chief financial officer concluded that the Company’s disclosure controls and procedures are effective in ensuring that information required to be disclosed by the Company in the reports it files or submits under the 1934 Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information required to be disclosed by the Company in the reports that it files or submits under the 1934 Act is accumulated and communicated to the Company’s management, including its chief executive officer and chief financial officer as appropriate to allow timely decisions regarding required disclosure.

On May 14, 2013, the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) issued an updated version of its Internal Control - Integrated Framework (the “2013 Framework”). Originally issued in 1992 (the “1992 Framework”), the framework helps organizations design, implement and evaluate the effectiveness of internal control concepts and simplify their use and application. The 1992 Framework remains available during the transition period, which extends to December 15, 2014, after which time COSO will consider it as superseded by the 2013 Framework. As of June 29, 2014, the Company continues to utilize the 1992 Framework during the transition to the 2013 Framework.

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Part II.

Other Information

ITEM 1.  LEGAL PROCEEDINGS

Jerry Argovitz Litigation

On March 12, 2014, Lakes received a demand for arbitration from Jerry Argovitz (“Argovitz”) relating to a Consent and Agreement to Buyout and Release by and between Argovitz  and Lakes KAR Shingle Springs, LLC (“LKAR”), Lakes Entertainment, Inc., and Lakes Shingle Springs, Inc. dated January 30, 2003 (“Buyout Agreement”).  The Buyout Agreement provided that LKAR was to make certain payments to Argovitz for so long as LKAR was managing the Red Hawk Casino for the Shingle Springs Tribe.  Lakes made the payments required under the Buyout Agreement while it was managing the Red Hawk Casino, and discontinued the payments after its management contract to manage the Red Hawk Casino was terminated.  Argovitz has asserted claims for breach of the Buyout Agreement and the implied covenant of good faith and fair dealing relating to the payments he alleges he is entitled to receive after the management agreement was terminated.  He seeks damages of approximately $2.7 million, plus interest, costs, and attorney fees.  The arbitration action names as defendants Lakes Entertainment, Inc. and Lakes Shingle Springs, Inc.  The arbitration has been scheduled for August 20, 2014.  Lakes believes the arbitration to be without merit and is vigorously defending itself in this matter.

Quest Media Group, LLC Litigation

On May 17, 2012, Lakes received service of a breach of contract lawsuit filed in the Franklin County Court of Common Pleas, Franklin County, Ohio by Quest Media Group, LLC (“Quest”) with respect to an  agreement (the “Agreement”) entered into between Lakes Ohio Development, LLC (a wholly owned subsidiary of Lakes) (“Lakes Ohio Development”) and Quest on March 9, 2010.  The Agreement relates to Quest assisting Lakes Ohio Development in partnering with Rock Ohio Ventures, LLC and Penn Ventures, LLC (“Penn Ventures”) with respect to funding the proposed citizen-initiated referendum in November 2009 to amend the Ohio constitution to permit one casino each in Cleveland, Cincinnati, Toledo and Columbus, Ohio. The lawsuit alleged, among other things, that Lakes breached the Agreement by selling Lakes Ohio Development’s interest in the Toledo and Columbus, Ohio casino projects to Penn Ventures, failing to pay the proper fee to Quest as a result of such sale, and incorrectly calculating the costs that are to be offset against Quest’s fee.  The lawsuit sought unspecified compensatory damages in excess of $25,000, punitive damages, declaratory and injunctive relief.  The lawsuit named as defendants Lakes Entertainment, Inc., Lakes Ohio Development, LLC and Lyle Berman, Chairman and CEO of Lakes. Lakes removed the case to federal court, answered the pleadings and filed a motion to dismiss the claims against all defendants.  Prior to the judge’s ruling on the motion to dismiss, the parties settled all but one of Quest’s claims (including obtaining a dismissal of Lyle Berman from the lawsuit) at no out-of-pocket expense to Lakes.  The judge subsequently granted Lakes’ motion to dismiss and dismissed the remaining claims against Lakes. 

Miscellaneous Legal Matters

We are involved in various other inquiries, administrative proceedings, and litigation relating to various 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 likelihood of an unfavorable outcome is remote, and is not likely to have a material adverse effect upon our unaudited consolidated financial statements.

ITEM 1A.  RISK FACTORS

There have been no material changes to our risk factors identified in the “Risk Factors” section in Item IA of our Annual Report on Form 10-K for the year ended December 29, 2013, previously filed with the SEC.

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ITEM 6.  EXHIBITS

Exhibits	Description
31.1	Certification of CEO pursuant to Securities Exchange Act Rules 13a-15(e) and 15d-15(e) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of CFO pursuant to Securities Exchange Act Rules 13a-15(e) and 15d-15(e) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Calculation Definition Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

22

SIGNATURES

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

LAKES ENTERTAINMENT, INC.

Registrant

 /s/  LYLE BERMAN          

Lyle Berman

Chairman of the Board and

Chief Executive Officer

(Principal Executive Officer)

 /s/  TIMOTHY J. COPE          

Timothy J. Cope

President and Chief Financial Officer

(Principal Financial and Accounting Officer)

Dated: August 7, 2014

23

EX-31

Exhibit 31.1

CERTIFICATIONS

I, Lyle Berman, certify that:

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

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

3. Based on my knowledge, the financial statements, and other financial information included in this 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 report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant, and have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/  Lyle Berman          

Lyle Berman

Chief Executive Officer

Date: August 7, 2014

EX-31

Exhibit 31.2

CERTIFICATIONS

I, Timothy J. Cope, certify that:

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

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

3. Based on my knowledge, the financial statements, and other financial information included in this 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 report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant, and have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/  Timothy J. Cope          

Timothy J. Cope

President and Chief Financial Officer

Date: August 7, 2014

EX-32

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. §1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Lakes Entertainment, Inc. (the “Company”) on Form 10-Q for the period ended June 29, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Lyle Berman, Chief Executive Officer of the Company, and Timothy J. Cope, President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 /s/  Lyle Berman          

Lyle Berman

Chief Executive Officer

By:	/s/  Timothy J. Cope
	Timothy J. Cope
	President and Chief Financial Officer

August 7, 2014

XML

Note 9 - Land (Details) (USD $)			6 Months Ended	12 Months Ended
	Jun. 29, 2014	Dec. 29, 2013	Jun. 29, 2014 Land [Member]	Dec. 29, 2013 Land [Member]	May 15, 2014 Option Agreement [Member] Penn National [Member]	Sep. 30, 2012 Option Agreement [Member] Penn National [Member]	Jun. 29, 2014 Oklahoma [Member]	Dec. 29, 2013 Oklahoma [Member]
Note 9 - Land (Details) [Line Items]
Land Available for Development	$ 960,000	$ 1,130,000			$ 5,500,000	$ 7,000,000		$ 200,000
Land Available for Development, Inflation, Percent						1.00%
Annual Payment Option, Land Available for Development						100,000
Inventory, Land Held-for-sale							200,000
Asset Impairment Charges			$ 0	$ 0

XML

Note 17 - Related Party Transaction (Details) (Chief Executive Officer [Member], USD $)	1 Months Ended
	Mar. 31, 2013	Dec. 30, 2012
Chief Executive Officer [Member]
Note 17 - Related Party Transaction (Details) [Line Items]
Increase (Decrease) in Notes Receivables	$ (250,000)
Proceeds from Sale of Notes Receivable	150,000
Financing Receivable, Individually Evaluated for Impairment		$ 150,000

XML

Note 14 - Income Taxes (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 29, 2014	Jun. 30, 2013	Jun. 29, 2014	Jun. 30, 2013	Dec. 29, 2013
Note 14 - Income Taxes (Details) [Line Items]
Income Tax Expense (Benefit)	$ 0	$ 0	$ 0	$ 0
Effective Income Tax Rate Reconciliation, Percent			0.00%	0.00%
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent			35.00%	35.00%
Income Taxes Receivable	2,155,000		2,155,000		2,155,000
Internal Revenue Service (IRS) [Member]
Note 14 - Income Taxes (Details) [Line Items]
Deferred Tax Assets, Operating Loss Carryforwards, Subject to Expiration	72,300,000		72,300,000
State and Local Jurisdiction [Member]
Note 14 - Income Taxes (Details) [Line Items]
Deferred Tax Assets, Operating Loss Carryforwards, Subject to Expiration	$ 96,500,000		$ 96,500,000

XML

Note 18 - Segment Information (Details) - Assets and Operations of Report Segments (USD $)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 29, 2014	Jun. 30, 2013	Jun. 29, 2014	Jun. 30, 2013	Dec. 29, 2013
Segment Reporting Information [Line Items]
Net revenue	$ 14,107,000	$ 8,549,000	$ 26,417,000	$ 11,853,000
Management fee revenue – Rocky Gap		3,650,000		6,378,000
Management fee expense – Rocky Gap	5,723,000	4,613,000	11,463,000	8,380,000
Depreciation and amortization expense	(864,000)	(460,000)	(1,717,000)	(717,000)
Earnings (loss) from operations	300,000	(1,200,000)	(1,300,000)	(3,100,000)
Interest expense	(300,000)	(300,000)	(600,000)	(500,000)
Three months ended June 30, 2013
Amortization of intangible assets related to operating casinos		(265,000)		(529,000)
As of June 29, 2014
Total assets	146,272,000		146,272,000		147,261,000
Capital expenditures			3,500,000		20,700,000
Investment in unconsolidated investees	20,997,000		20,997,000		20,997,000
Rocky Gap Resort [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Net revenue	14,100,000	4,900,000	26,400,000	5,400,000
Management fee expense – Rocky Gap	(400,000)	(100,000)	(700,000)	(100,000)
Depreciation and amortization expense	(800,000)	(400,000)	(1,600,000)	(600,000)
Earnings (loss) from operations	900,000	(2,400,000)	1,000,000	(5,000,000)
Interest expense	(300,000)	(100,000)	(600,000)	(100,000)
As of June 29, 2014
Total assets	37,500,000		37,500,000		34,400,000
Capital expenditures			3,500,000		20,600,000
Indian Casino Projects [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Net revenue		3,600,000		6,400,000
Earnings (loss) from operations		3,200,000		5,600,000
Interest expense		(200,000)		(400,000)
Three months ended June 30, 2013
Amortization of intangible assets related to operating casinos		(300,000)		(500,000)
Other Segments [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Net revenue	400,000	100,000	700,000	200,000
Management fee revenue – Rocky Gap	400,000	100,000	700,000	100,000
Depreciation and amortization expense	(100,000)	(100,000)	(100,000)	(100,000)
Earnings (loss) from operations	(600,000)	(2,000,000)	(2,300,000)	(3,700,000)
As of June 29, 2014
Total assets	108,800,000		108,800,000		112,900,000
Capital expenditures					100,000
Investment in unconsolidated investees	21,000,000		21,000,000		21,000,000
Consolidation, Eliminations [Member]
Segment Reporting Information [Line Items]
Net revenue	(400,000)	(100,000)	(700,000)	(100,000)
Management fee revenue – Rocky Gap	(400,000)	(100,000)	(700,000)	(100,000)
Management fee expense – Rocky Gap	$ 400,000	$ 100,000	$ 700,000	$ 100,000

XML

Note 12 - Share-Based Compensation (Details) - Table of Lakes’ Stock Option Activity (USD $)	3 Months Ended		6 Months Ended
	Jun. 29, 2014	Jun. 30, 2013	Jun. 29, 2014	Jun. 30, 2013	Dec. 29, 2013	Dec. 30, 2012
2014
Options Outstanding	1,516,217	1,912,481	1,516,217	1,912,481	1,596,322	1,528,039
Exercisable	1,210,254	1,267,339	1,210,254	1,267,339	1,171,520	1,298,809
Available for Grant	549,301	491,185	549,301	491,185	526,878	875,627
Weighted-Average Exercise Price (in Dollars per share)	$ 3.04	$ 2.95	$ 3.04	$ 2.95	$ 2.98	$ 3.04
Options Outstanding, Forfeited/cancelled/expired			(40,423)	(59,058)
Available for Grant, Forfeited/cancelled/expired			38,423	59,058
Weighted-Average Exercise Price, Forfeited/cancelled/expired (in Dollars per share)			$ 2.48	$ 3.36
Exercised	(48,682)	0	(55,682)	0
Exercised (in Dollars per share)			$ 2.37
Options Outstanding, Granted	6,000	0	16,000	443,500
Available for Grant, Granted			(16,000)	(443,500)
Weighted-Average Exercise Price, Granted (in Dollars per share)			$ 4.72	$ 3.07

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Note 4. Short-Term Investments (Details) (USD $)	3 Months Ended	6 Months Ended
	Jun. 29, 2014	Jun. 29, 2014
Investments, Debt and Equity Securities [Abstract]
Other than Temporary Impairment Losses, Investments	$ 0	$ 0

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Note 6 - Gaming License (Tables) (Licensing Agreements [Member])

6 Months Ended

Jun. 29, 2014

Licensing Agreements [Member]

Note 6 - Gaming License (Tables) [Line Items]

Schedule of Finite-Lived Intangible Assets [Table Text Block]

	June 29, 2014			December 29, 2013
Original cost	$	2,100		$	2,100
Accumulated amortization		(155	)		(85	)
	$	1,945		$	2,015

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Note 15 - Financial Instruments and Fair Value Measurements (Details) - Estimated Fair Value of Financial Instruments, Current Year (USD $) In Thousands, unless otherwise specified	Jun. 29, 2014	Dec. 29, 2013
Short-Term Investments
Available for Sale Securities	$ 45,450	$ 49,099
Commercial Paper, Not Included with Cash and Cash Equivalents [Member] | Fair Value, Inputs, Level 1 [Member]
Short-Term Investments
Available for Sale Securities	31,452	21,993
Commercial Paper, Not Included with Cash and Cash Equivalents [Member]
Short-Term Investments
Available for Sale Securities	31,452	21,993
Corporate Bond Securities [Member] | Fair Value, Inputs, Level 1 [Member]
Short-Term Investments
Available for Sale Securities	11,838	27,106
Corporate Bond Securities [Member]
Short-Term Investments
Available for Sale Securities	11,838	27,106
Certificates of Deposit [Member] | Fair Value, Inputs, Level 1 [Member]
Short-Term Investments
Available for Sale Securities	2,160
Certificates of Deposit [Member]
Short-Term Investments
Available for Sale Securities	$ 2,160

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Note 11 - Promotional Allowances (Details) - Estimated Retail Value of Promotional Allowance (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 29, 2014	Jun. 30, 2013	Jun. 29, 2014	Jun. 30, 2013
Note 11 - Promotional Allowances (Details) - Estimated Retail Value of Promotional Allowance [Line Items]
Promotional Allowances	$ 829	$ 40	$ 1,780	$ 40
Food and Beverage [Member]
Note 11 - Promotional Allowances (Details) - Estimated Retail Value of Promotional Allowance [Line Items]
Promotional Allowances	139	20	246	20
Rooms [Member]
Note 11 - Promotional Allowances (Details) - Estimated Retail Value of Promotional Allowance [Line Items]
Promotional Allowances	677	20	1,485	20
Other [Member]
Note 11 - Promotional Allowances (Details) - Estimated Retail Value of Promotional Allowance [Line Items]
Promotional Allowances	$ 13		$ 49

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Note 6 - Gaming License (Details) - Information with Respect to Gaming License (Licensing Agreements [Member], USD $) In Thousands, unless otherwise specified	Jun. 29, 2014	Dec. 29, 2013
Licensing Agreements [Member]
Finite-Lived Intangible Assets [Line Items]
Original cost	$ 2,100	$ 2,100
Accumulated amortization	(155)	(85)
	$ 1,945	$ 2,015

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Note 16 - Commitments and Contingencies (Details) - Rent Expense (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 29, 2014	Jun. 30, 2013	Jun. 29, 2014	Jun. 30, 2013
Rent Expense [Abstract]
Rent expense	$ 79	$ 89	$ 171	$ 184

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Note 13 - Earnings (Loss) Per Share (Details)	3 Months Ended		6 Months Ended
	Jun. 29, 2014	Jun. 30, 2013	Jun. 29, 2014	Jun. 30, 2013
Earnings Per Share [Abstract]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	1,017,421	1,710,645	1,516,217	1,912,481

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Note 4. Short-Term Investments

6 Months Ended

Jun. 29, 2014

Investments, Debt and Equity Securities [Abstract]

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

4.  Short-Term Investments

Short-term investments consist of commercial paper, corporate bonds and certificates of deposit which are classified as available-for-sale securities and are carried at current fair market value, with the resulting unrealized gains and losses, if any, excluded from earnings and reported, net of tax, as a separate component of shareholders' equity until realized. If the carrying value of an investment is in excess of its fair market value, an impairment charge to adjust the carrying value to the fair market value is recorded if the impairment is considered other-than-temporary. There were no other-than-temporary impairments related to declines in fair market value of short-term investments during the three or six months ended June 29, 2014. All short-term investments held as of June 29, 2014 have original maturity dates of twelve months or less and are classified as current assets. Short-term investments consisted of the following as of June 29, 2014 and December 29, 2013 (in thousands):

	Amortized Cost		Fair Value		Unrealized Gain/(Loss)
June 29, 2014
Commercial paper	$	31,446	$	31,452	$	6
Corporate bonds		11,841		11,838		(3	)
Certificates of deposit		2,162		2,160		(2	)
Balances at June 29, 2014	$	45,449	$	45,450	$	1
December 29, 2013
Commercial paper	$	21,986	$	21,993	$	7
Corporate bonds		27,113		27,106		(7	)
Balances at December 29, 2013	$	49,099	$	49,099	$	—

See note 15, Financial Instruments and Fair Value Measurements, for further discussion of the fair value of these investments.

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Note 11 - Promotional Allowances (Details) - Estimated Cost of Providing Promotional Allowances (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 29, 2014	Jun. 30, 2013	Jun. 29, 2014	Jun. 30, 2013
Note 11 - Promotional Allowances (Details) - Estimated Cost of Providing Promotional Allowances [Line Items]
Food and beverage	$ 1,190	$ 759	$ 2,223	$ 1,062
Rooms	173	214	283	325
Total promotional allowances	270	20	559	20
Cost of Sales [Member]
Note 11 - Promotional Allowances (Details) - Estimated Cost of Providing Promotional Allowances [Line Items]
Food and beverage	72	15	125	15
Rooms	163	5	357	5
Other	$ 35		$ 77

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Note 15 - Financial Instruments and Fair Value Measurements (Tables)

6 Months Ended

Jun. 29, 2014

Fair Value Disclosures [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

	June 29, 2014		December 29, 2013
Short-Term Investments
Commercial paper	$	31,452	$	21,993
Corporate bonds		11,838		27,106
Certificates of deposit		2,160		—

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Note 12 - Share-Based Compensation (Tables)

6 Months Ended

Jun. 29, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Share-based Compensation, Activity [Table Text Block]

	Three Months Ended				Six Months Ended
	June 29, 2014		June 30, 2013		June 29, 2014		June 30, 2013
Total cost of share-based payment plans	$	72	$	162	$	143	$	283

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

	Number of Common Shares
	Options Outstanding			Exercisable		Available for Grant			Weighted-Average Exercise Price
2014
Balance at December 29, 2013		1,596,322			1,171,520		526,878		$	2.98
Forfeited/cancelled/expired		(40,423	)				38,423			2.48
Exercised		(55,682	)				—			2.37
Granted		16,000					(16,000	)		4.72
Balance at June 29, 2014		1,516,217			1,210,254		549,301			3.04
2013
Balance at December 30, 2012		1,528,039			1,298,809		875,627		$	3.04
Forfeited/cancelled/expired		(59,058	)				59,058			3.36
Granted		443,500					(443,500	)		3.07
Balance at June 30, 2013		1,912,481			1,267,339		491,185			2.95

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Note 12 - Share-Based Compensation (Details) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended			6 Months Ended
	Jun. 29, 2014	Mar. 30, 2014	Jun. 30, 2013	Jun. 29, 2014	Jun. 30, 2013	Dec. 29, 2013	Dec. 30, 2012
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	6,000		0	16,000	443,500
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value (in Dollars per share)	$ 2.41			$ 2.45	$ 1.72
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term				6 years 109 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price (in Dollars per share)	$ 3.04		$ 2.95	$ 3.04	$ 2.95	$ 2.98	$ 3.04
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Aggregate Intrinsic Value (in Dollars)	$ 2.8			$ 2.8
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price (in Dollars per share)	$ 2.99			$ 2.99
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term		5 years 292 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value (in Dollars)		2.3
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period	48,682		0	55,682	0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period, Intrinsic Value (in Dollars)	0.1			0.1
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized (in Dollars)	$ 0.4			$ 0.4
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition				1 year 255 days

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Note 16 - Commitments and Contingencies (Tables)

6 Months Ended

Jun. 29, 2014

Commitments and Contingencies Disclosure [Abstract]

Schedule of Rent Expense [Table Text Block]

	Three Months Ended				Six Months Ended
	June 29, 2014		June 30, 2013		June 29, 2014		June 30, 2013
Rent expense	$	79	$	89	$	171	$	184

Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block]

		2015		2016		2017		2018		2019		Thereafter
Minimum lease payment	$	425	$	425	$	425	$	425	$	425	$	13,600

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Note 18 - Segment Information (Tables)

6 Months Ended

Jun. 29, 2014

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment [Table Text Block]

				Indian
				Casino
	Rocky Gap			Projects			Other			Eliminations			Consolidated
Three months ended June 29, 2014
Net revenue	$	14.1		$	—		$	0.4		$	(0.4	)	$	14.1
Management fee revenue – Rocky Gap		—			—			0.4			(0.4	)		—
Management fee expense – Rocky Gap		(0.4	)		—			—			0.4			—
Depreciation and amortization expense		(0.8	)		—			(0.1	)		—			(0.9	)
Earnings (loss) from operations		0.9			—			(0.6	)		—			0.3
Interest expense		(0.3	)		—			—			—			(0.3	)
Three months ended June 30, 2013
Net revenue	$	4.9		$	3.6		$	0.1		$	(0.1	)	$	8.5
Management fee revenue – Rocky Gap		—			—			0.1			(0.1	)		—
Management fee expense – Rocky Gap		(0.1	)		—			—			0.1			—
Amortization of intangible assets related to Indian casino projects		—			(0.3	)		—			—			(0.3	)
Depreciation and amortization expense		(0.4	)		—			(0.1	)		—			(0.5	)
Earnings (loss) from operations		(2.4	)		3.2			(2.0	)		—			(1.2	)
Interest expense		(0.1	)		(0.2	)		—			—			(0.3	)
Six months ended June 29, 2014
Net revenue	$	26.4		$	—		$	0.7		$	(0.7	)	$	26.4
Management fee revenue – Rocky Gap		—			—			0.7			(0.7	)		—
Management fee expense – Rocky Gap		(0.7	)		—			—			0.7			—
Depreciation and amortization expense		(1.6	)		—			(0.1	)		—			(1.7	)
Earnings (loss) from operations		1.0			—			(2.3	)		—			(1.3	)
Interest expense		(0.6	)		—			—			—			(0.6	)
Six months ended June 30, 2013
Net revenue	$	5.4		$	6.4		$	0.2		$	(0.1	)	$	11.9
Management fee revenue – Rocky Gap		—			—			0.1			(0.1	)		—
Management fee expense – Rocky Gap		(0.1	)		—			—			0.1			—
Amortization of intangible assets related to Indian casino projects		—			(0.5	)		—			—			(0.5	)
Depreciation and amortization expense		(0.6	)		—			(0.1	)		—			(0.7	)
Earnings (loss) from operations		(5.0	)		5.6			(3.7	)		—			(3.1	)
Interest expense		(0.1	)		(0.4	)		—			—			(0.5	)
As of June 29, 2014
Total assets	$	37.5		$	—		$	108.8		$	—		$	146.3
Capital expenditures		3.5			—			—			—			3.5
Investment in unconsolidated investees		—			—			21.0			—			21.0
As of December 29, 2013
Total assets	$	34.4		$	—		$	112.9		$	—		$	147.3
Capital expenditures		20.6			—			0.1			—			20.7
Investment in unconsolidated investees		—			—			21.0			—			21.0

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Note 3 - Debt Termination Agreement with the Shingle Springs Tribe

6 Months Ended

Jun. 29, 2014

Receivables [Abstract]

Financing Receivables [Text Block]

3.  Debt Termination Agreement with the Shingle Springs Tribe

On July 17, 2013, Lakes entered into a Debt Termination Agreement (the “Debt Termination Agreement”) with the Shingle Springs Band of Miwok Indians (the “Shingle Springs Tribe”) relating to amounts Lakes had previously advanced to the Shingle Springs Tribe under the development and management agreement for the Red Hawk Casino between Lakes and the Shingle Springs Tribe. The Debt Termination Agreement required certain conditions to be met, including a lump sum payment by the Shingle Springs Tribe to Lakes of $57.1 million (the “Debt Payment”). The Debt Payment was made on August 29, 2013 (the “Payment Date”) and constituted full and final payment of all debt owed to Lakes as of that date. The management agreement under which Lakes was managing the Red Hawk Casino also terminated on the Payment Date.

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Note 3 - Debt Termination Agreement with the Shingle Springs Tribe (Details) (Shingle Springs Tribe [Member], USD $) In Millions, unless otherwise specified	1 Months Ended
	Aug. 29, 2013
Shingle Springs Tribe [Member]
Note 3 - Debt Termination Agreement with the Shingle Springs Tribe (Details) [Line Items]
Proceeds from Collection of Loans Receivable	$ 57.1

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Note 10 - Debt (Details) (USD $)	3 Months Ended			6 Months Ended	7 Months Ended	8 Months Ended	11 Months Ended	18 Months Ended
	Jun. 29, 2014	Dec. 29, 2013	Dec. 29, 2013	Jun. 29, 2014	Jun. 29, 2014	Jun. 29, 2014	Oct. 31, 2013	Jun. 29, 2014	Dec. 30, 2012
Note 10 - Debt (Details) [Line Items]
Long-term Line of Credit	$ 12,513,000	$ 13,315,000	$ 13,315,000	$ 12,513,000	$ 12,513,000	$ 12,513,000		$ 12,513,000
Fair Value of Debt Instrument, Unamortized Discount	1,670,000	1,925,000	1,925,000	1,670,000	1,670,000	1,670,000		1,670,000
Rocky Gap Resort [Member]
Note 10 - Debt (Details) [Line Items]
Required Investment In Project	17,500,000			17,500,000	17,500,000	17,500,000		17,500,000
Revolving Credit Facility [Member] | Centennial Bank [Member]
Note 10 - Debt (Details) [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	8,000,000			8,000,000	8,000,000	8,000,000		8,000,000
Line of Credit Facility, Interest Rate at Period End	8.95%			8.95%	8.95%	8.95%		8.95%
Long-term Line of Credit	0	0	0	0	0	0		0
Financing Facility [Member] | Centennial Bank [Member]
Note 10 - Debt (Details) [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity									17,500,000
Long-term Line of Credit	12,500,000	13,300,000	13,300,000	12,500,000	12,500,000	12,500,000		12,500,000
Proceeds from Lines of Credit								13,400,000
Line of Credit Facility, Interest Rate During Period						5.50%	10.50%
Line of Credit Facility, Expiration Period					84 months
Line of Credit Facility, Remaining Borrowing Capacity	4,100,000			4,100,000	4,100,000	4,100,000		4,100,000
Gains (Losses) on Restructuring of Debt			1,700,000
Fair Value of Debt Instrument, Unamortized Discount		2,000,000	2,000,000
Debt Issuance Cost		300,000
Amortization of Debt Discount (Premium)	$ 100,000			$ 200,000

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Note 16 - Commitments and Contingencies (Details) - Future Minimum Payments for Operating Lease (USD $) In Thousands, unless otherwise specified	Jun. 29, 2014
Future Minimum Payments for Operating Lease [Abstract]
Minimum lease payment	$ 425
Minimum lease payment	425
Minimum lease payment	425
Minimum lease payment	425
Minimum lease payment	425
Minimum lease payment	$ 13,600

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Consolidated Balance Sheets (Current Period Unaudited) (USD $) In Thousands, unless otherwise specified	Jun. 29, 2014	Dec. 29, 2013
Current assets:
Cash and cash equivalents	$ 38,164	$ 37,897
Short-term investments	45,450	49,099
Income taxes receivable	2,155	2,155
Other	2,419	1,774
Total current assets	88,188	90,925
Property and equipment	40,656	37,200
Accumulated depreciation	(7,140)	(5,541)
Property and equipment, net	33,516	31,659
Other assets:
Investment in unconsolidated investee	20,997	20,997
Gaming license	1,945	2,015
Land held for development	960	1,130
Other	666	535
Total other assets	24,568	24,677
Total assets	146,272	147,261
Current liabilities:
Current portion of long-term debt, net of discount	1,364	1,251
Accounts payable	427	420
Accrued taxes, other than income taxes	576	462
Accrued payroll and related	1,161	1,403
Other accrued expenses	2,497	1,325
Total current liabilities	6,025	4,861
Long-term debt, net of current portion and discount	9,602	10,321
Total liabilities	15,627	15,182
Shareholders' equity:
Common stock, $.01 par value; authorized 200,000 shares; 26,777 and 26,721 common shares issued and outstanding	268	267
Additional paid-in capital	205,487	205,212
Deficit	(75,111)	(73,400)
Accumulated other comprehensive income	1
Total shareholders' equity	130,645	132,079
Total liabilities and shareholders' equity	$ 146,272	$ 147,261

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Note 12 - Share-Based Compensation (Details) - Share-Based Compensation Expense Related to Stock Options (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 29, 2014	Jun. 30, 2013	Jun. 29, 2014	Jun. 30, 2013
Share-Based Compensation Expense Related to Stock Options [Abstract]
Total cost of share-based payment plans	$ 72	$ 162	$ 143	$ 283

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Note 1 - Basis of Presentation

6 Months Ended

Jun. 29, 2014

Disclosure Text Block [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

1.  Basis of Presentation

The unaudited consolidated financial statements of Lakes Entertainment, Inc., a Minnesota corporation, and subsidiaries (individually and collectively “Lakes” or the “Company”), have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) applicable to interim financial information. Accordingly, certain information normally included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United States has been condensed and/or omitted. For further information, please refer to the annual audited consolidated financial statements of the Company, and the related notes included within the Company’s Annual Report on Form 10-K, for the year ended December 29, 2013, previously filed with the SEC, from which the balance sheet information as of that date is derived. In the opinion of management, all adjustments considered necessary for a fair presentation have been included (consisting of normal recurring adjustments). The results for the current interim period are not necessarily indicative of the results to be expected for the full year.

All material intercompany accounts and transactions have been eliminated in consolidation.

Investments in unconsolidated investees, which are 20% or less owned and the Company does not have the ability to significantly influence the operating or financial decisions of the entity, are accounted for under the cost method. See note 7, Investment in Rock Ohio Ventures, LLC and note 8, Investment in Dania Entertainment Center, LLC.

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Note 5 - Property and Equipment, Net (Details) - Property, Plant and Equipment, at Cost (USD $) In Thousands, unless otherwise specified	Jun. 29, 2014	Dec. 29, 2013
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	$ 40,656	$ 37,200
Less accumulated depreciation	(7,140)	(5,541)
Property and equipment, net	33,516	31,659
Building and Building Improvements [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	24,618	24,611
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	12,970	12,370
Construction in Progress [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	$ 3,068	$ 219

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Note 18 - Segment Information

6 Months Ended

Jun. 29, 2014

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

18.  Segment Information

Lakes’ segments reported below (in millions) are the segments of the Company for which separate financial information is available and for which operating results are evaluated by the chief operating decision-maker in deciding how to allocate resources and in assessing performance.

The Rocky Gap segment includes results of operations and assets related to the Rocky Gap Casino Resort near Cumberland, Maryland. The Indian Casino Projects segment includes results of operations and assets related to the development, financing, and management of the gaming-related property for the Shingle Springs Tribe. The Other segment includes Lakes’ cash and cash equivalents, short-term investments, Lakes corporate overhead and the investment in Rock Ohio Ventures. Costs in Other have not been allocated to the other segments because these costs are not easily allocable and to do so would not be practical. Amounts in Eliminations represent the intercompany management fee for Rocky Gap.

				Indian
				Casino
	Rocky Gap			Projects			Other			Eliminations			Consolidated
Three months ended June 29, 2014
Net revenue	$	14.1		$	—		$	0.4		$	(0.4	)	$	14.1
Management fee revenue – Rocky Gap		—			—			0.4			(0.4	)		—
Management fee expense – Rocky Gap		(0.4	)		—			—			0.4			—
Depreciation and amortization expense		(0.8	)		—			(0.1	)		—			(0.9	)
Earnings (loss) from operations		0.9			—			(0.6	)		—			0.3
Interest expense		(0.3	)		—			—			—			(0.3	)
Three months ended June 30, 2013
Net revenue	$	4.9		$	3.6		$	0.1		$	(0.1	)	$	8.5
Management fee revenue – Rocky Gap		—			—			0.1			(0.1	)		—
Management fee expense – Rocky Gap		(0.1	)		—			—			0.1			—
Amortization of intangible assets related to Indian casino projects		—			(0.3	)		—			—			(0.3	)
Depreciation and amortization expense		(0.4	)		—			(0.1	)		—			(0.5	)
Earnings (loss) from operations		(2.4	)		3.2			(2.0	)		—			(1.2	)
Interest expense		(0.1	)		(0.2	)		—			—			(0.3	)
Six months ended June 29, 2014
Net revenue	$	26.4		$	—		$	0.7		$	(0.7	)	$	26.4
Management fee revenue – Rocky Gap		—			—			0.7			(0.7	)		—
Management fee expense – Rocky Gap		(0.7	)		—			—			0.7			—
Depreciation and amortization expense		(1.6	)		—			(0.1	)		—			(1.7	)
Earnings (loss) from operations		1.0			—			(2.3	)		—			(1.3	)
Interest expense		(0.6	)		—			—			—			(0.6	)
Six months ended June 30, 2013
Net revenue	$	5.4		$	6.4		$	0.2		$	(0.1	)	$	11.9
Management fee revenue – Rocky Gap		—			—			0.1			(0.1	)		—
Management fee expense – Rocky Gap		(0.1	)		—			—			0.1			—
Amortization of intangible assets related to Indian casino projects		—			(0.5	)		—			—			(0.5	)
Depreciation and amortization expense		(0.6	)		—			(0.1	)		—			(0.7	)
Earnings (loss) from operations		(5.0	)		5.6			(3.7	)		—			(3.1	)
Interest expense		(0.1	)		(0.4	)		—			—			(0.5	)
As of June 29, 2014
Total assets	$	37.5		$	—		$	108.8		$	—		$	146.3
Capital expenditures		3.5			—			—			—			3.5
Investment in unconsolidated investees		—			—			21.0			—			21.0
As of December 29, 2013
Total assets	$	34.4		$	—		$	112.9		$	—		$	147.3
Capital expenditures		20.6			—			0.1			—			20.7
Investment in unconsolidated investees		—			—			21.0			—			21.0

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Note 6 - Gaming License (Details) (USD $)	3 Months Ended	6 Months Ended	3 Months Ended		6 Months Ended		1 Months Ended
	Jun. 30, 2013	Jun. 30, 2013	Jun. 29, 2014 Licensing Agreements [Member]	Jun. 30, 2013 Licensing Agreements [Member]	Jun. 29, 2014 Licensing Agreements [Member]	Jun. 30, 2013 Licensing Agreements [Member]	Aug. 31, 2012 Rocky Gap Resort [Member]
Note 6 - Gaming License (Details) [Line Items]
Payments to Acquire Businesses, Gross							$ 6,800,000
Construction and Development Costs							35,000,000
Finite-Lived Intangible Asset, Useful Life					15 years
Amortization of Intangible Assets	$ 265,000	$ 529,000	$ 100,000	$ 100,000	$ 100,000	$ 100,000

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Note 5 - Property and Equipment, Net (Tables)

6 Months Ended

Jun. 29, 2014

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment [Table Text Block]

		June 29, 2014			December 29, 2013
Building and site improvements	$	24,618		$	24,611
Furniture and equipment		12,970			12,370
Construction in process		3,068			219
Property and equipment		40,656			37,200
Less accumulated depreciation		(7,140	)		(5,541	)
Property and equipment, net	$	33,516		$	31,659

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Note 2 - New Accounting Standard

6 Months Ended

Jun. 29, 2014

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

New Accounting Pronouncements and Changes in Accounting Principles [Text Block]

2.  New Accounting Standards

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers. This ASU is a comprehensive new revenue recognition model that requires a company to recognize revenue from the transfer of goods or services to customers in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. ASU 2014-09 will be effective for the Company’s first quarter of 2017. Lakes is evaluating the impact this new standard will have on its financial statements.

In July 2013, the FASB issued ASU No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. ASU 2013-11 requires entities to present an unrecognized tax benefit as a reduction of a deferred tax asset for a net operating loss (“NOL”) or tax credit carryforward whenever the NOL or tax credit carryforward would be available to reduce the additional taxable income or tax due if the tax position is disallowed. This ASU requires entities to assess whether to net the unrecognized tax benefit with a deferred tax asset as of the reporting date. ASU 2013-11 became effective as of March 30, 2014. The adoption of ASU 2013-11 did not have an impact on the Company’s consolidated financial statements.

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Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) (USD $) In Thousands, except Per Share data, unless otherwise specified	Jun. 29, 2014	Dec. 29, 2013
Common stock, par value (in Dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	200,000	200,000
Common stock, shares issued	26,777	26,721
Common stock, shares outstanding	26,777	26,721

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Note 13 - Earnings (Loss) Per Share

6 Months Ended

Jun. 29, 2014

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

13.  Earnings (Loss) per Share

For all periods, basic earnings (loss) per share (“EPS”) is calculated by dividing net earnings (loss) by the weighted-average common shares outstanding. Diluted EPS in profitable periods reflects the effect of all potentially dilutive common shares outstanding by dividing net earnings by the weighted-average of all common and potentially dilutive shares outstanding. Potentially dilutive stock options of 1,017,421 and 1,516,217 for the three and six months ended June 29, 2014, respectively and 1,710,645 and 1,912,481 for the three and six months ended June 30, 2013, respectively, were not used to compute diluted earnings (loss) per share because the effects would have been anti-dilutive.

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Document And Entity Information	6 Months Ended
	Jun. 29, 2014	Aug. 04, 2014
Document and Entity Information [Abstract]
Entity Registrant Name	LAKES ENTERTAINMENT INC
Document Type	10-Q
Current Fiscal Year End Date	--12-28
Entity Common Stock, Shares Outstanding		26,778,084
Amendment Flag	false
Entity Central Index Key	0001071255
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Smaller Reporting Company
Entity Well-known Seasoned Issuer	No
Document Period End Date	Jun. 29, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q2

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Note 14 - Income Taxes

6 Months Ended

Jun. 29, 2014

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

14.  Income Taxes

There was no income tax benefit for either the six months ended June 29, 2014 or June 30, 2013 because there is no remaining potential to carry back losses to prior years and future realization of the benefit is uncertain. The Company’s effective tax rate was 0% for each of the six months ended June 29, 2014 and June 30, 2013. The effective tax rate differs from the federal tax rate of 35% for both periods primarily due to the limitation of the income tax benefit due to the uncertainty of its future realization.

Lakes has recorded income taxes receivable of $2.2 million as of June 29, 2014 and December 29, 2013 related to the Company’s ability to carry back 2012 taxable losses to a prior year and receive a refund of taxes previously paid.

Deferred tax assets are evaluated by considering historical levels of income, estimates of future taxable income and the impact of tax planning strategies.  Management has evaluated all available evidence and has determined that negative evidence continues to outweigh positive evidence for the realization of deferred tax assets and as a result continues to provide a full valuation allowance against its deferred tax assets.

As of June 29, 2014, Lakes had approximately $72.3 million of federal net operating loss carryforwards, which will begin to expire in 2022, and approximately $96.5 million of state net operating loss carryforwards, which will expire at various times depending on specific state laws.

The Company is currently under IRS audit for the 2009-2012 tax years and the IRS has proposed certain adjustments to the 2009-2011 tax filings. However, Lakes believes it is more likely than not that it will prevail in challenging the proposed adjustments and maintains that the positions taken were proper and supported by applicable laws and regulations. While the outcome of this matter cannot be predicted with certainty, Lakes does not believe, when resolved, that this dispute will have a material effect on its consolidated financial statements. However, an unexpected adverse resolution could have a material effect on the consolidated financial statements in a particular quarter or fiscal year. The Company is currently under audit by the State of California for the 2010 tax year. No adjustments have been made as a result of the State of California audit. However, there is no assurance that the taxing authority will not propose adjustments that are different from the Company’s expected outcome and that may impact the provision for income taxes.

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Unaudited Consolidated Statements of Operations (USD $) Share data in Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 29, 2014	Jun. 30, 2013	Jun. 29, 2014	Jun. 30, 2013
Revenues:
Management fees		$ 3,650,000		$ 6,378,000
Gaming	11,068,000	3,188,000	21,388,000	3,188,000
Room	1,630,000	615,000	2,944,000	879,000
Food and beverage	1,566,000	703,000	2,825,000	901,000
Other operating	642,000	410,000	977,000	507,000
License fees and other	30,000	23,000	63,000	40,000
Gross revenues	14,936,000	8,589,000	28,197,000	11,893,000
Less promotional allowances	829,000	40,000	1,780,000	40,000
Net revenues	14,107,000	8,549,000	26,417,000	11,853,000
Costs and expenses:
Gaming	6,413,000	2,018,000	12,367,000	2,018,000
Room	173,000	214,000	283,000	325,000
Food and beverage	1,190,000	759,000	2,223,000	1,062,000
Other operating	419,000	418,000	661,000	633,000
Selling, general and administrative	5,723,000	4,613,000	11,463,000	8,380,000
Gain on sale of cost method investment	(1,000,000)		(1,000,000)
Preopening expenses		902,000		1,167,000
Amortization of intangible assets related to Indian casino projects		265,000		529,000
Loss (gain) on disposal of property and equipment	(1,000)	143,000	24,000	143,000
Depreciation and amortization	864,000	460,000	1,717,000	717,000
Total costs and expenses	13,781,000	9,792,000	27,738,000	14,974,000
Earnings (loss) from operations	326,000	(1,243,000)	(1,321,000)	(3,121,000)
Other income (expense):
Interest income	38,000	1,741,000	71,000	3,494,000
Interest expense	(308,000)	(264,000)	(626,000)	(472,000)
Other	1,000	10,000	165,000	10,000
Total other income (expense), net	(269,000)	1,487,000	(390,000)	3,032,000
Earnings (loss) before income taxes	57,000	244,000	(1,711,000)	(89,000)
Income tax benefit	0	0	0	0
Net earnings (loss)	57,000	244,000	(1,711,000)	(89,000)
Other comprehensive income	15,000		1,000
Comprehensive income (loss)	$ 72,000	$ 244,000	$ (1,710,000)	$ (89,000)
Weighted-average common shares outstanding
Basic (in Shares)	26,749	26,441	26,738	26,441
Dilutive impact of stock options (in Shares)	499	202
Diluted (in Shares)	27,248	26,643	26,738	26,441
Earnings (loss) per share
Basic (in Dollars per share)	$ 0.00	$ 0.01	$ (0.06)	$ 0.00
Diluted (in Dollars per share)	$ 0.00	$ 0.01	$ (0.06)	$ 0.00

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Note 7 - Investment in Rock Ohio Ventures, LLC

6 Months Ended

Jun. 29, 2014

Rock Ohio Ventures [Member]

Note 7 - Investment in Rock Ohio Ventures, LLC [Line Items]

Cost-method Investments, Description [Text Block]

7.  Investment in Rock Ohio Ventures, LLC     

Lakes has a 10% ownership investment in Rock Ohio Ventures, LLC (“Rock Ohio Ventures”), a privately-held company, that owns 80% of the Horseshoe Casino Cleveland in Cleveland, Ohio which opened to the public in May 2012; the Horseshoe Casino Cincinnati in Cincinnati, Ohio which opened in March 2013; the Thistledown Racino in North Randall, Ohio which added approximately 1,100 VLTs to its existing racetrack in April 2013; and Turfway Park, a thoroughbred horseracing track located in Florence, Kentucky. This investment is accounted for using the cost method since Lakes owns less than 20% of Rock Ohio Ventures and does not have the ability to significantly influence the operating and financial decisions of the entity. At June 29, 2014 and December 29, 2013, Lakes had invested a total of $21.0 million in Rock Ohio Ventures, which is included in investment in unconsolidated investee in the accompanying consolidated balance sheets.

The Company's cost method investment is evaluated, on at least a quarterly basis, for potential other-than-temporary impairment, or when an event or change in circumstances has occurred that may have a significant adverse effect on the fair value of the investment. Lakes monitors this investment for impairment by considering all information available to the Company including the economic environment of the markets served by the properties Rock Ohio Ventures owns; market conditions including existing and potential future competition; recent or expected changes in the regulatory environment; operational performance and financial results; known changes in the objectives of Rock Ohio Venture’s management; known or expected changes in ownership of Rock Ohio Ventures; and any other known significant factors relating to the business underlying the investment.

As part of the review of operational performance and financial results for considering if there are indications of impairment, the Company utilizes financial statements of Rock Ohio Ventures and its owned gaming properties to assess the investee’s ability to operate from a financial standpoint. The Company also analyzes Rock Ohio Ventures’ cash flows and working capital to determine if the Company’s investment in this entity has experienced an other-than-temporary impairment. As part of this process, the Company analyzes actual historical results compared to forecast and has periodic discussions with management of Rock Ohio Ventures to obtain additional information related to the Company’s investment in Rock Ohio Ventures to determine whether any events have occurred that would necessitate further analysis of the Company’s recorded investment in Rock Ohio Ventures for impairment. Based on these procedures, Lakes has determined that the Company’s investment in Rock Ohio Ventures has not experienced an other-than-temporary impairment as of June 29, 2014 and December 29, 2013. Lakes will continue to evaluate this investment at least quarterly.

The fair value of this cost method investment is considered impracticable to estimate.  The impracticability in developing such an estimate is due primarily to insufficient information necessary to prepare a valuation model to determine fair value.

Lakes has the right, but not the obligation, to make additional investments up to 10% of equity required by Rock Ohio Ventures to develop the properties it owns in return for a corresponding equity interest in those properties (see note 16, Commitments and Contingencies).

Dania Entertainment Holdings [Member]

Note 7 - Investment in Rock Ohio Ventures, LLC [Line Items]

Cost-method Investments, Description [Text Block]

8.  Investment in Dania Entertainment Center, LLC

On May 22, 2013, Dania Entertainment Center, LLC (“DEC”) purchased the Dania Jai Alai property located in Dania Beach, Florida, from Boyd Gaming Corporation, for $65.5 million.

As part of a previous plan to purchase the property, during 2011 Lakes loaned $4.0 million to DEC (the “Loan”) which was written down to zero during the third quarter of 2011 when the acquisition did not close. During 2013, the Loan was exchanged for a 20% ownership interest in Dania Entertainment Holdings, LLC (“DEH”).

The Company accounted for its investment in DEH as a cost method investment. At the time the Loan was exchanged for an equity investment in DEH, Lakes determined its value remained at zero due to the negative cash flows of the existing operations of the Dania Jai Alai property as well as uncertainty surrounding completion of the project. Therefore, there was no value recorded for this investment in the Company’s accompanying consolidated balance sheet.

On April 21, 2014, Lakes entered into a redemption agreement with DEH that resulted in DEH redeeming Lakes’ 20% ownership in DEH in exchange for DEH granting to Lakes 5% ownership in DEC. Concurrently, Lakes entered into an agreement with an unrelated third party, ONDISS Corp. (“ONDISS”), to sell its ownership in DEC to ONDISS for approximately $2.6 million. Lakes received $1.0 million on April 21, 2014, which is recorded as a gain on sale of cost method investment in the consolidated statements of operations. Also on April 21, 2014, 40% of Lakes’ ownership was transferred to ONDISS. The agreement also requires that ONDISS pay Lakes three installments of approximately $0.5 million each on October 21, 2014, April 21, 2015 and October 21, 2015, and on each date one-third of Lakes’ remaining ownership will be transferred to ONDISS. Lakes will account for the receipt of each of these payments as a gain on sale of cost method investment in the consolidated statements of operations on the dates the payments are received.

See note 15, Financial Instruments and Fair Value Measurements, for discussion of the fair value of this investment.

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Note 6 - Gaming License (Licensing Agreements [Member])

6 Months Ended

Jun. 29, 2014

Licensing Agreements [Member]

Note 6 - Gaming License [Line Items]

Intangible Assets Disclosure [Text Block]

6. Gaming License

In April 2012, the State of Maryland Video Lottery Facility Location Commission awarded a video lottery operation license (“Gaming License”) to the Company for the Rocky Gap Lodge & Golf Resort (“Rocky Gap”). In August 2012, Lakes acquired the assets of Rocky Gap for $6.8 million which included a hotel, convention center, spa, two restaurants and the only Jack Nicklaus signature golf course in Maryland. In connection with the acquisition of Rocky Gap, the Company entered into an operating lease for the underlying land (see note 16, Commitments and Contingencies).

After acquiring Rocky Gap, the Company converted the then-existing convention center into a gaming facility and renamed the property Rocky Gap Casino Resort. The gaming facility opened to the public on May 22, 2013 and features 577 video lottery terminals (“VLTs”), 15 table games including poker, a casino bar and a lobby food and beverage outlet. The AAA Four Diamond Award® winning resort also includes an event and conference center that opened during the fourth quarter of 2013, which is able to accommodate large groups and features multiple flexible use meeting rooms. The total cost of the Rocky Gap project was approximately $35.0 million, which included the initial acquisition cost.

Amortization of the Gaming License began on May 22, 2013, the date the gaming facility opened for public play. The Gaming License is being amortized over its 15 year term. Amortization expense related to the Gaming License was less than $0.1 million and approximately $0.1 million for the three and six months ended June 29, 2014, respectively, and less than $0.1 million for each of the three and six months ended June 30, 2013, respectively.

Information with respect to the Gaming License is as follows (in thousands):

	June 29, 2014			December 29, 2013
Original cost	$	2,100		$	2,100
Accumulated amortization		(155	)		(85	)
	$	1,945		$	2,015

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Note 4. Short-Term Investments (Tables)

6 Months Ended

Jun. 29, 2014

Investments, Debt and Equity Securities [Abstract]

Schedule of Available-for-sale Securities Reconciliation [Table Text Block]

	Amortized Cost		Fair Value		Unrealized Gain/(Loss)
June 29, 2014
Commercial paper	$	31,446	$	31,452	$	6
Corporate bonds		11,841		11,838		(3	)
Certificates of deposit		2,162		2,160		(2	)
Balances at June 29, 2014	$	45,449	$	45,450	$	1
December 29, 2013
Commercial paper	$	21,986	$	21,993	$	7
Corporate bonds		27,113		27,106		(7	)
Balances at December 29, 2013	$	49,099	$	49,099	$	—

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Note 15 - Financial Instruments and Fair Value Measurements

6 Months Ended

Jun. 29, 2014

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

15. Financial Instruments and Fair Value Measurements

Overview

Estimates of fair value for financial assets and liabilities are based on the framework established in the accounting guidance for fair value measurements. The framework defines fair value, provides guidance for measuring fair value, and requires certain disclosures. The framework discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow) and the cost approach (cost to replace the service capacity of an asset or replacement cost). The framework utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

● Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

● Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

● Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions.

The Company’s financial instruments consist of cash and cash equivalents, short-term investments, cost method investments, accounts payable and debt.

For the Company’s cash and cash equivalents, accounts payable and current portion of debt, the carrying amounts approximate fair value because of the short duration of these financial instruments. As of June 29, 2014 and December 29, 2013, the fair value of the Company’s long-term debt approximates the carrying value based upon the Company’s expected borrowing rate for debt with similar remaining maturities and comparable risk.     

Balances Measured at Fair Value on a Recurring Basis

The following table (in thousands) shows certain of the Company’s financial instruments measured at fair value on a recurring basis using Level 2 inputs, as they are priced principally by independent pricing services using observable inputs:

	June 29, 2014		December 29, 2013
Short-Term Investments
Commercial paper	$	31,452	$	21,993
Corporate bonds		11,838		27,106
Certificates of deposit		2,160		—

Balances Disclosed at Fair Value

The fair value of the Company’s investment in Rock Ohio Ventures, LLC was not estimated as of June 29, 2014 or December 29, 2013, as there were no events or changes in circumstances that may have a significant adverse effect on the fair value of the investment, and Lakes’ management determined that it was not practicable to estimate the fair value of the investment (see note 7, Investment in Rock Ohio Ventures, LLC). As of June 29, 2014, the fair value of the Company’s investment in Dania Entertainment Center, LLC was determined to be approximately $1.6 million, which was the negotiated sale price of Lakes’ remaining investment in DEC (see note 8, Investment in Dania Entertainment Center, LLC). The fair value of this investment was considered impracticable to estimate as of December 29, 2013 without incurring excessive costs relative to the materiality of the investment. 

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Note 11 - Promotional Allowances

6 Months Ended

Jun. 29, 2014

Promotional Allowances [Abstract]

Promotional Allowances [Text Block]

11. Promotional Allowances 

The retail value of rooms, food and beverage, and other services furnished to guests without charge is included in gross revenues and then deducted as promotional allowances. Guests may be given, on a discretionary basis, coupons to use towards the purchase of rooms, food and beverage, and other amenities. Lakes recognizes a reduction in revenue as a promotional allowance for these coupons when the coupons are redeemed. The estimated retail value of the promotional allowances is as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 29, 2014		June 30, 2013		June 29, 2014		June 30, 2013
Food and beverage	$	139	$	20	$	246	$	20
Rooms		677		20		1,485		20
Other		13		—		49		—
Total promotional allowances	$	829	$	40	$	1,780	$	40

The estimated cost of providing these promotional allowances, which are included in gaming costs and expenses, is as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 29, 2014		June 30, 2013		June 29, 2014		June 30, 2013
Food and beverage	$	72	$	15	$	125	$	15
Rooms		163		5		357		5
Other		35		—		77		—
Total promotional allowances	$	270	$	20	$	559	$	20

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Note 9 - Land

6 Months Ended

Jun. 29, 2014

Real Estate [Abstract]

Real Estate Disclosure [Text Block]

9.  Land

Lakes owns parcels of undeveloped land related to its previous involvement in a potential casino project with the Jamul Indian Village (the “Jamul Tribe”) near San Diego, California. During the third quarter of 2012, Lakes entered into a ten-year option agreement (“Original Option Agreement”) with Penn National Gaming, Inc. (“Penn National”) that granted Penn National the right to purchase this land for $7.0 million, increasing 1% each year, but Penn National had no obligation to purchase the land. The Original Option Agreement was amended on May 15, 2014 to reduce the purchase price of the land to $5.5 million but requires Penn National to purchase the land within ten days after the Jamul Tribe opens a casino on its reservation. Annual option payments of less than $0.1 million are required to be made by Penn National to Lakes. As of June 29, 2014 and December 29, 2013, this land is carried at approximately $1.0 million on the accompanying consolidated balance sheets.

Lakes also owns undeveloped land in Oklahoma related to its previous involvement in a potential casino project with the Iowa Tribe of Oklahoma. During the second quarter of 2014, Lakes engaged a broker to sell this land which was previously held for development. As a result, during the second quarter of 2014, Lakes reclassified the land as held for sale, which is included in other assets on the consolidated balance sheet as of June 29, 2014 and is carried at approximately $0.2 million, which is its estimated fair value less expected cost to sell. As of December 29, 2013, the land was classified as held for development and was carried at approximately $0.2 million on the accompanying consolidated balance sheet.

The Company performs an impairment analysis on the land it owns at least quarterly and determined that no impairment had occurred as of June 29, 2014 and December 29, 2013.

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Note 10 - Debt

6 Months Ended

Jun. 29, 2014

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

10. Debt

Loan Agreement

Lakes has a two-year interest-only $8.0 million revolving line of credit loan agreement (the “Loan Agreement”) with Centennial Bank that expires in October 2014. The Loan Agreement is collateralized by primarily all of Lakes’ interest in the real property it owns in Minnetonka, Minnesota. Amounts borrowed under the Loan Agreement, if any, bear interest at 8.95%. Lakes’ Chief Executive Officer, Lyle Berman, personally guaranteed the Loan Agreement on behalf of Lakes. As of June 29, 2014 and December 29, 2013, no amounts were outstanding under the Loan Agreement.

Financing Facility

In December 2012, Lakes closed on a $17.5 million financing facility with Centennial Bank (the “Financing Facility”) to finance a portion of Rocky Gap project costs. Approximately $13.4 million was drawn on the Financing Facility. Lakes was required to invest $17.5 million in the Rocky Gap project prior to drawing on the Financing Facility. The Financing Facility is collateralized by the leasehold estate and the furniture, fixtures and equipment of Rocky Gap. In addition, Lakes guaranteed repayment of the loan and granted a second mortgage on its real property located in Minnetonka, Minnesota. Effective November 1, 2013, Lakes amended the Financing Facility with Centennial Bank to reduce the interest rate from 10.5% to 5.5%. Monthly payments of principal and interest began on December 1, 2013 and continue for 84 months. Although Lakes does not currently plan to make further draws on the Financing Facility, Lakes has the ability to draw the remaining $4.1 million on the Financing Facility through December 31, 2018. As of June 29, 2014 and December 29, 2013, $12.5 million and $13.3 million of principal was outstanding under the Financing Facility, respectively.

As a result of the amendment of the Financing Facility with Centennial Bank effective November 1, 2013, Lakes recorded a $1.7 million gain on modification of debt during the fourth quarter of 2013. This amount included $2.0 million recorded as a discount to the principal amount of the Financing Facility, which is being accreted to interest expense over the term of the Financing Facility using the effective interest method, and $0.3 million of original debt issuance costs expensed at the time of the amendment. Accretion of the discount to interest expense was $0.1 million and $0.2 million for the three and six months ended June 29, 2014.

Summary of Outstanding Debt

Long-term debt, net of current maturities and discount, is comprised of the following (in thousands):

	June 29, 2014			December 29, 2013
Financing Facility	$	12,513		$	13,315
Capital lease obligations		123			182
Total debt		12,636			13,497
Less: current maturities, net of discount		(1,364	)		(1,251	)
Less: unamortized debt discount		(1,670	)		(1,925	)
Long-term debt, net of current maturities and discount	$	9,602		$	10,321

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Note 12 - Share-Based Compensation

6 Months Ended

Jun. 29, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

12.  Share-Based Compensation

Share-based compensation expense related to stock options for the three and six months ended June 29, 2014 and June 30, 2013 were as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 29, 2014		June 30, 2013		June 29, 2014		June 30, 2013
Total cost of share-based payment plans	$	72	$	162	$	143	$	283

The Company uses the Black Scholes option pricing model to estimate the fair value and compensation cost associated with employee incentive stock options which requires the consideration of historical employee exercise behavior data and the use of a number of assumptions including volatility of the Company’s stock price, the weighted average risk-free interest rate and the weighted average expected life of the options. There were 6,000 and 16,000 options granted during the three and six months ended June 29, 2014, respectively. The weighted-average grant-date fair value of the stock options issued during the three and six months ended June 29, 2014 were $2.41 and $2.45, respectively. There were zero and 443,500 options granted during the three and six months ended June 30, 2013, respectively. The weighted-average grant-date fair value of the stock options issued during the six months ended June 30, 2013 was $1.72.

The following table summarizes Lakes’ stock option activity during the six months ended June 29, 2014 and June 30, 2013:

	Number of Common Shares
	Options Outstanding			Exercisable		Available for Grant			Weighted-Average Exercise Price
2014
Balance at December 29, 2013		1,596,322			1,171,520		526,878		$	2.98
Forfeited/cancelled/expired		(40,423	)				38,423			2.48
Exercised		(55,682	)				—			2.37
Granted		16,000					(16,000	)		4.72
Balance at June 29, 2014		1,516,217			1,210,254		549,301			3.04
2013
Balance at December 30, 2012		1,528,039			1,298,809		875,627		$	3.04
Forfeited/cancelled/expired		(59,058	)				59,058			3.36
Granted		443,500					(443,500	)		3.07
Balance at June 30, 2013		1,912,481			1,267,339		491,185			2.95

As of June 29, 2014, the options outstanding had a weighted average remaining contractual life of 6.3 years, weighted average exercise price of $3.04 and aggregate intrinsic value of $2.8 million. The options exercisable have a weighted average exercise price of $2.99, a weighted average remaining contractual life of 5.8 years and aggregate intrinsic value of $2.3 million as of June 29, 2014.

There were 48,682 and 55,682 options exercised during the three and six months ended June 29, 2014, respectively and no options exercised during the three and six months ended June 30, 2013. The total intrinsic value of options exercised during each of the three and six months ended June 29, 2014 was $0.1 million. Lakes’ unrecognized share-based compensation expense related to stock options was approximately $0.4 million as of June 29, 2014, which is expected to be recognized over a weighted-average period of 1.7 years.

Lakes issues new shares of common stock upon the exercise of options.

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Note 4. Short-Term Investments (Details) - Short-Term Investments (USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 29, 2014	Dec. 29, 2013
Note 4. Short-Term Investments (Details) - Short-Term Investments [Line Items]
Amortized Cost	$ 45,449	$ 49,099
Fair Value	45,450	49,099
Unrealized Gain (Loss)	1	0
Commercial Paper, Not Included with Cash and Cash Equivalents [Member]
Note 4. Short-Term Investments (Details) - Short-Term Investments [Line Items]
Amortized Cost	31,446	21,986
Fair Value	31,452	21,993
Unrealized Gain (Loss)	6	7
Corporate Bond Securities [Member]
Note 4. Short-Term Investments (Details) - Short-Term Investments [Line Items]
Amortized Cost	11,841	27,113
Fair Value	11,838	27,106
Unrealized Gain (Loss)	(3)	(7)
Certificates of Deposit [Member]
Note 4. Short-Term Investments (Details) - Short-Term Investments [Line Items]
Amortized Cost	2,162
Fair Value	2,160
Unrealized Gain (Loss)	$ (2)

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Note 16 - Commitments and Contingencies (Details) (USD $)	3 Months Ended		6 Months Ended			13 Months Ended				3 Months Ended	1 Months Ended	6 Months Ended	10 Months Ended	6 Months Ended
	Jun. 29, 2014	Jun. 30, 2013	Jun. 29, 2014	Jun. 30, 2013	Dec. 29, 2013	Jun. 29, 2014 Gaming Revenue [Member] Rocky Gap State Park [Member] Maryland DNR [Member]	Jun. 29, 2014 Surcharge Revenue [Member] Rocky Gap State Park [Member] Maryland DNR [Member]	Jun. 29, 2014 Per Room Per Night [Member] Rocky Gap State Park [Member] Maryland DNR [Member]	Jun. 29, 2014 Per Round of Golf [Member] Rocky Gap State Park [Member] Maryland DNR [Member]	Jun. 29, 2014 Jerry Argovitz Litigation [Member]	Jul. 01, 2012 Quest Media Group, LLC Litigation [Member]	Jun. 29, 2014 Rocky Gap State Park [Member] Maryland DNR [Member] acre	May 22, 2013 Rocky Gap State Park [Member] Maryland DNR [Member]	Jun. 29, 2014 Rock Ohio Ventures [Member]	Dec. 29, 2013 Rock Ohio Ventures [Member]
Note 16 - Commitments and Contingencies (Details) [Line Items]
Lessee Leasing Arrangements, Operating Leases, Term of Contract												40 years
Area of Real Estate Property (in Acres)												268
Lessee Leasing Arrangements, Operating Leases, Renewal Term												20 years
Operating Leases, Rent Expense	$ 79,000	$ 89,000	$ 171,000	$ 184,000		$ 275,000	$ 150,000						$ 150,000
Operating Leases, Income Statement, Percent Revenue, Percent						0.90%
Operating Lease, Lease Terms, Base Revenue						275,000	150,000
Operating Leases, Surcharge Revenue, Per Unit								3.00	1.00
Cost Method Investments Ownership Percentage														10.00%
Cost Method Investments	20,997,000		20,997,000		20,997,000									21,000,000	21,000,000
Cost Method Investment Future Investments Into Equity														4,100,000
Cost Method Investment Initial Payment														2,800,000
Loss Contingency, Damages Sought, Value										$ 2,700,000	$ 25,000

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Note 17 - Related Party Transaction

6 Months Ended

Jun. 29, 2014

Related Party Transactions [Abstract]

Related Party Transactions Disclosure [Text Block]

17.  Related Party Transaction

In March 2013, Lakes transferred to Lyle Berman, Lakes' Chairman of the Board and Chief Executive Officer, a $250,000 secured note from an unrelated third party company in exchange for a cash payment of $150,000 from Mr. Berman. The secured note was in default and related to a fiscal 2012 potential business development opportunity that Lakes decided not to pursue. The note receivable was written down to $150,000 in fiscal 2012.

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Note 10 - Debt (Tables)

6 Months Ended

Jun. 29, 2014

Debt Disclosure [Abstract]

Schedule of Long-term Debt Instruments [Table Text Block]

	June 29, 2014			December 29, 2013
Financing Facility	$	12,513		$	13,315
Capital lease obligations		123			182
Total debt		12,636			13,497
Less: current maturities, net of discount		(1,364	)		(1,251	)
Less: unamortized debt discount		(1,670	)		(1,925	)
Long-term debt, net of current maturities and discount	$	9,602		$	10,321

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Note 15 - Financial Instruments and Fair Value Measurements (Details) (Dania Entertainment Holdings [Member], USD $) In Millions, unless otherwise specified	Jun. 29, 2014
Dania Entertainment Holdings [Member]
Note 15 - Financial Instruments and Fair Value Measurements (Details) [Line Items]
Investment Owned, at Fair Value	$ 1.6

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Note 10 - Debt (Details) - Long-Term Debt (USD $) In Thousands, unless otherwise specified	Jun. 29, 2014	Dec. 29, 2013
Long-Term Debt [Abstract]
Financing Facility	$ 12,513	$ 13,315
Capital lease obligations	123	182
Total debt	12,636	13,497
Less: current maturities, net of discount	(1,364)	(1,251)
Less: unamortized debt discount	(1,670)	(1,925)
Long-term debt, net of current maturities and discount	$ 9,602	$ 10,321

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Unaudited Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 29, 2014	Jun. 30, 2013
OPERATING ACTIVITIES:
Net loss	$ (1,711)	$ (89)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	1,717	717
Amortization of debt issuance costs, accretion of debt discount and imputed interest on contract acquisition costs	261	389
Accretion and amortization of discounts and premiums on short-term investments and accretion of interest and additions to long-term interest receivable	162	(2,562)
Amortization of intangible assets related to Indian casino projects		529
Share-based compensation	143	283
Loss on disposal of property and equipment	24	143
Changes in operating assets and liabilities:
Management fees receivable		1,925
Other current assets	(496)	(1,856)
Income taxes receivable		(5)
Accrued taxes, other than income taxes	114
Accounts payable and accrued expenses	937	952
Net cash provided by operating activities	1,151	426
INVESTING ACTIVITIES:
Purchase of short-term investments	(52,390)
Sales and maturities of short-term investments	55,729
Payments to acquire investment in unconsolidated investee		(836)
Changes in long-term management fees receivable and other		178
Purchase of property and equipment	(3,536)	(15,808)
Proceeds from disposal of property and equipment	17	25
Changes in other assets	23
Net cash used in investing activities	(157)	(16,441)
FINANCING ACTIVITIES:
Repayments of borrowings	(860)	(3)
Proceeds from borrowings		11,291
Proceeds from issuance of common stock	133
Contract acquisition costs payable		(1,000)
Net cash provided by (used in) financing activities	(727)	10,288
Net increase (decrease) in cash and cash equivalents	267	(5,727)
Cash and cash equivalents - beginning of period	37,897	32,480
Cash and cash equivalents - end of period	38,164	26,753
Cash paid received during the period for:
Interest	361	5
Noncash investing activities:
Capital expenditures in accounts payable and accrued expenses	$ 1,216	$ 906

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Note 5 - Property and Equipment, Net

6 Months Ended

Jun. 29, 2014

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment Disclosure [Text Block]

5. Property and Equipment, net

The following table summarizes the components of property and equipment, at cost (in thousands):

		June 29, 2014			December 29, 2013
Building and site improvements	$	24,618		$	24,611
Furniture and equipment		12,970			12,370
Construction in process		3,068			219
Property and equipment		40,656			37,200
Less accumulated depreciation		(7,140	)		(5,541	)
Property and equipment, net	$	33,516		$	31,659

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Note 11 - Promotional Allowances (Tables)

6 Months Ended

Jun. 29, 2014

Promotional Allowances [Abstract]

Estimated Retail Value for Promotional Allowances [Table Text Block]

	Three Months Ended				Six Months Ended
	June 29, 2014		June 30, 2013		June 29, 2014		June 30, 2013
Food and beverage	$	139	$	20	$	246	$	20
Rooms		677		20		1,485		20
Other		13		—		49		—
Total promotional allowances	$	829	$	40	$	1,780	$	40

Cost of Promotional Allowances [Table Text Block]

	Three Months Ended				Six Months Ended
	June 29, 2014		June 30, 2013		June 29, 2014		June 30, 2013
Food and beverage	$	72	$	15	$	125	$	15
Rooms		163		5		357		5
Other		35		—		77		—
Total promotional allowances	$	270	$	20	$	559	$	20

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Note 7 - Investment in Rock Ohio Ventures, LLC (Details) (USD $)							12 Months Ended
	Jun. 29, 2014	Dec. 29, 2013	Apr. 21, 2014 Dania Entertainment Center [Member] Ownership Redemmed [Member]	Apr. 21, 2014 Dania Entertainment Center [Member] Investment Sold [Member]	Apr. 21, 2014 Dania Entertainment Center [Member] Payments Received [Member]	Apr. 21, 2014 Dania Entertainment Center [Member] Ownership Transfered [Member]	Jan. 01, 2012 Dania Entertainment Center [Member]	Apr. 21, 2014 Dania Entertainment Holdings [Member] Ownership Redemmed [Member]	Dec. 29, 2013 Dania Entertainment Holdings [Member]	Apr. 21, 2014 Future Event, October 21, 2014 [Member] ONDISS [Member]	Apr. 21, 2014 Future Event, April 21, 2015 [Member] ONDISS [Member]	Apr. 21, 2014 Future Event, October 21, 2015 [Member] ONDISS [Member]	Dec. 29, 2013 Dania Entertainment Holdings [Member]	Jun. 29, 2014 Rock Ohio Ventures [Member]	Dec. 29, 2013 Rock Ohio Ventures [Member]
Note 7 - Investment in Rock Ohio Ventures, LLC (Details) [Line Items]
Noncontrolling Interest, Ownership Percentage by Parent														10.00%
Cost Method Investments	$ 20,997,000	$ 20,997,000		$ 2,600,000	$ 1,000,000				$ 0					$ 21,000,000	$ 21,000,000
Advances on Notes Receivable							4,000,000
Notes, Loans and Financing Receivable, Net, Current							0
Investment Owned, Percent of Net Assets			5.00%			40.00%		20.00%					20.00%
Installment Payment										$ 500,000	$ 500,000	$ 500,000

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Note 16 - Commitments and Contingencies

6 Months Ended

Jun. 29, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

16. Commitments and Contingencies

Operating Lease with the Maryland Department of Natural ResourcesRelated to Rocky Gap

In connection with the closing of the acquisition of Rocky Gap, Lakes entered into a 40-year operating ground lease (the “Lease Agreement”) with the Maryland Department of Natural Resources for approximately 268 acres in the Rocky Gap State Park on which Rocky Gap is situated. The Lease Agreement contains an option to renew for 20 years after the initial 40-year term.

From August 3, 2012 and until the casino opened for public play on May 22, 2013, rent in the form of surcharges was due and payable with a minimum annual payment of $150,000. From May 22, 2013 through the remaining term of the Lease Agreement, rent payments are due and payable annually in the amount of $275,000 plus 0.9% of any gross operator share of gaming revenue (as defined in the Lease Agreement) in excess of $275,000, and $150,000 plus any surcharge revenue in excess of $150,000. Surcharge revenue consists of amounts billed to and collected from guests and are $3.00 per room per night and $1.00 per round of golf. Rent expense for the three and six months ended June 29, 2014 and June 30, 2013 were as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 29, 2014		June 30, 2013		June 29, 2014		June 30, 2013
Rent expense	$	79	$	89	$	171	$	184

Future minimum lease payments under the Lease Agreement at June 29, 2014 are as follows (in thousands):

		2015		2016		2017		2018		2019		Thereafter
Minimum lease payment	$	425	$	425	$	425	$	425	$	425	$	13,600

Rock Ohio Ventures, LLC

Lakes has a 10% ownership in Rock Ohio Ventures and as of June 29, 2014, Lakes has contributed approximately $21.0 million as required (see note 7, Investment in Rock Ohio Ventures, LLC). Lakes may contribute additional capital up to $4.1 million as needed to maintain its equity position in Rock Ohio Ventures. If Lakes chooses not to fund any additional amounts, it will maintain an ownership position in Rock Ohio Ventures in a pro rata amount of what its $2.8 million initial payment is to the total amount of equity funded to develop casino operations, and all equity funded in excess of the initial $2.8 million is required to be repurchased at an amount equal to the price paid. Payment to Lakes in the event of such repurchase would be deferred and paid in accordance with the terms of the Rock Ohio Ventures First Amended and Restated Operating Agreement.

Jerry Argovitz Litigation

On March 12, 2014, Lakes received a demand for arbitration from Jerry Argovitz (“Argovitz”) relating to a Consent and Agreement to Buyout and Release by and between Argovitz  and Lakes KAR Shingle Springs, LLC (“LKAR”), Lakes Entertainment, Inc., and Lakes Shingle Springs, Inc. dated January 30, 2003 (“Buyout Agreement”).  The Buyout Agreement provided that LKAR was to make certain payments to Argovitz for so long as LKAR was managing the Red Hawk Casino for the Shingle Springs Tribe.  Lakes made the payments required under the Buyout Agreement while it was managing the Red Hawk Casino, and discontinued the payments after its management contract to manage the Red Hawk Casino was terminated.  Argovitz has asserted claims for breach of the Buyout Agreement and the implied covenant of good faith and fair dealing relating to the payments he alleges he is entitled to receive after the management agreement was terminated.  He seeks damages of approximately $2.7 million, plus interest, costs, and attorney fees.  The arbitration action names as defendants Lakes Entertainment, Inc. and Lakes Shingle Springs, Inc.  The arbitration has been scheduled for August 20, 2014.  Lakes believes the arbitration to be without merit and is vigorously defending itself in this matter.

Quest Media Group, LLC Litigation

On May 17, 2012, Lakes received service of a breach of contract lawsuit filed in the Franklin County Court of Common Pleas, Franklin County, Ohio by Quest Media Group, LLC (“Quest”) with respect to an  agreement (the “Agreement”) entered into between Lakes Ohio Development, LLC (a wholly owned subsidiary of Lakes) (“Lakes Ohio Development”) and Quest on March 9, 2010.  The Agreement relates to Quest assisting Lakes Ohio Development in partnering with Rock Ohio Ventures, LLC and Penn Ventures, LLC (“Penn Ventures”) with respect to funding the proposed citizen-initiated referendum in November 2009 to amend the Ohio constitution to permit one casino each in Cleveland, Cincinnati, Toledo and Columbus, Ohio. The lawsuit alleged, among other things, that Lakes breached the Agreement by selling Lakes Ohio Development’s interest in the Toledo and Columbus, Ohio casino projects to Penn Ventures, failing to pay the proper fee to Quest as a result of such sale, and incorrectly calculating the costs that are to be offset against Quest’s fee.  The lawsuit sought unspecified compensatory damages in excess of $25,000, punitive damages, declaratory and injunctive relief.  The lawsuit named as defendants Lakes Entertainment, Inc., Lakes Ohio Development, LLC and Lyle Berman, Chairman and CEO of Lakes. Lakes removed the case to federal court, answered the pleadings and filed a motion to dismiss the claims against all defendants.  Prior to the judge’s ruling on the motion to dismiss, the parties settled all but one of Quest’s claims (including obtaining a dismissal of Lyle Berman from the lawsuit) at no out-of-pocket expense to Lakes.  The judge subsequently granted Lakes’ motion to dismiss and dismissed the remaining claims against Lakes. 

Miscellaneous Legal Matters

Lakes and its subsidiaries 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, and although unable to estimate the minimum costs, if any, to be incurred in connection with these matters, management currently believes that the likelihood of an unfavorable outcome is remote, and is not likely to have a material adverse effect upon Lakes’ unaudited consolidated financial statements. Accordingly, no provision has been made with regard to these matters.