10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

For the fiscal year ended December 31, 2002

Commission file number 001-13641

PINNACLE ENTERTAINMENT, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	95-3667491
(State or Other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification No.)

3800 Howard Hughes Parkway, Suite 1800

Las Vegas, Nevada 89109

(Address of Principal Executive Offices) (Zip Code)

(702) 784-7777

(Registrant’s Telephone Number, Including Area Code)

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

PINNACLE ENTERTAINMENT, INC.

Common Stock, $.10 par value

New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether 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, and (2) has been subject to such filing requirements for the past 90 days.  YES  x    NO  ¨

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

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).  YES  x    NO  ¨

The aggregate market value of the common stock held by non-affiliates (therefore excludes officers, directors and beneficial owners of 10% or more) of the registrant as of the last business day of the registrant’s most recently completed second fiscal quarter, was $267,911,000 based on a closing price of $10.63 per common share. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

The number of outstanding shares of the registrant’s common stock, as of the close of business on March 24, 2003: 25,934,261.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s definitive 2003 proxy statement, anticipated to be filed with the Securities and Exchange Commission within 120 days after the close of the Registrant’s fiscal year, are incorporated by reference into Part III of this Form 10-K.

PINNACLE ENTERTAINMENT, INC.

TABLE OF CONTENTS

PART I
Item 1.	Description of Business	1
	Company Overview	1
	Business Strategy	1
	Gaming Operations	2
	Lake Charles Project	5
	Belterra Project	5
	Competition	6
	Government Regulation and Gaming Issues	6
	Federal and State Income Tax Matters	6
	Employees	7
	Other Information	7
	Available Information	7
Item 2.	Properties	8
Item 3.	Legal Proceedings	9
Item 4.	Submission of Matters to a Vote of Security Holders	13
PART II
Item 5.	Market for the Registrant’s Common Equity and Related Stockholder Matters	14
Item 6.	Selected Financial Data	15
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
	Results of Operations	17
	Liquidity and Capital Resources	21
	Contractual Obligations and Commitments	24
	Factors Affecting Future Operating Results	24
	Critical Accounting Policies	26
	Recently Issued Accounting Standards	27
	Forward-looking Statements and Risk Factors	28
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 8.	Financial Statements	30
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosures	30
PART III
Item 10.	Directors and Executive Officers of the Registrant	30
Item 11.	Executive Compensation	30
Item 12.	Security Ownership of Certain Beneficial Owners and Management	30
Item 13.	Certain Relationships and Related Transactions	30
Item 14.	Controls and Procedures	31
PART IV
Item 15.	Exhibits, Financial Statement Schedules, and Reports on Form 8-K	31
Signatures		39

PART I

Item 1.    Description of Business

Pinnacle Entertainment, Inc. (the “Company” or “Pinnacle”), a Delaware corporation, is a leading owner and operator of gaming entertainment facilities. These include five properties in the United States, located in southeastern Indiana; Reno, Nevada; Bossier City and New Orleans, Louisiana; and Biloxi, Mississippi. In addition, the Company operates two casinos in Argentina and receives lease income from two card clubs in Southern California. The Company is also developing a hotel and casino in Lake Charles, Louisiana. The Company’s properties primarily cater to customers who live within driving distance of the properties.

The Company began in 1938 as the Hollywood Park thoroughbred racetrack in Inglewood, California. The Company acquired Boomtown, Inc. in 1997 and Casino Magic Corp. in 1998. In September 1999, the Company sold the Hollywood Park Race Track and retained the adjacent card club. In February 2000, the Company changed its name to Pinnacle Entertainment, Inc. In June 2000, the Company sold Turf Paradise, a horse racing facility it acquired in 1994, and since that time has not owned or operated horse racing facilities.

Company Overview

The following is an overview of the Company’s gaming operations as of December 31, 2002:

		Number of
Property	Principal Markets	Slot Machines	Table Games	Hotel Rooms
Operating Properties:
Boomtown New Orleans	Local	1,435	49	—
Casino Magic Biloxi	Alabama, North Florida, Georgia	1,285	31	378
Boomtown Reno	Northern California and local	1,307	30	318
Boomtown Bossier City	Dallas/Ft. Worth	1,138	36	188
Belterra Casino Resort	Cincinnati, Ohio and Louisville, Kentucky	1,441	43	308
Casino Magic Argentina(a)	Local and Regional tourist	620	50	—
Property Total		7,226	239	1,192
Card Clubs Leased(b):
Hollywood Park & Crystal Park	Local	—	141	237

(a) Includes the Neuquen facility (513 slot machines and 38 table games) and San Martin de los Andes facility (107 slot machines and 12 table games).

(b) The Company leases the Hollywood Park Casino (120 table games) and owns the Crystal Park Casino (21 table games and 237 hotel rooms). The Company leases/subleases both properties to an unaffiliated operator.

Business Strategy

Pinnacle’s strategy is to grow profitability through the strategic development of gaming properties in attractive gaming markets and a disciplined capital expenditure program at its existing locations. Management believes that the following key competitive strengths will contribute to the successful implementation of its strategy:

• High-Quality Properties in Attractive Locations    The Company owns high-quality casino properties in attractive locations. Most of the properties have either opened or been extensively refurbished within the past four years.

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• Geographically Diversified Portfolio    The Company owns and operates five U.S. properties, each in a distinct market. In the 12 months ended December 31, 2002, no one property accounted for more than one-third of Pinnacle’s property-level operating income.

• Experienced Management Team    Pinnacle’s management has extensive industry experience and an established record of developing, acquiring, integrating and operating gaming facilities.

Gaming Operations

Boomtown New Orleans opened in 1994 and is located in Harvey, Louisiana approximately ten miles from downtown New Orleans, across the Mississippi River in the West Bank suburban area. Boomtown New Orleans is a locals-oriented dockside riverboat gaming facility that features approximately 1,435 slot machines and 49 table games, as well as two restaurants, a deli, a 350-seat nightclub, 21,000 square feet of meeting space, an amusement center and 1,729 parking spaces.

In early 2002, Pinnacle completed a $10 million renovation, which included adding 300 new slot machines, construction of a high-limit table games area and the renovation of various food and beverage outlets in the adjoining building. In December 2002, the property opened its poker area, adding 54 gaming positions, and in 2003 it plans to add 60 additional slot machines.

Boomtown New Orleans competes with two other dockside riverboat casinos and the Harrah’s Jazz land-based casino and entertainment facility in downtown New Orleans. The Harrah’s Jazz casino has more than 3,600 gaming positions compared with the dockside operators, which are statutorily limited to approximately half that size. During 2002, according to the Louisiana Gaming Commission, gaming revenues were $554.7 million in the New Orleans market, of which 49.5% was accounted for by Harrah’s Jazz and 18.7% by Boomtown New Orleans.

Casino Magic Biloxi is located on the Mississippi Gulf Coast and features a dockside riverboat casino and hotel tower. The property, which began operations in 1993, is situated in the center of a cluster of three casinos known as “Casino Row”. In 1998, the Company opened a 378-guestroom hotel, including 86 suites. The property features a 49,260-square-foot casino providing approximately 1,285 slot machines and 31 table games. The facility also contains four restaurants, 6,600 square feet of convention space, a health club, and 1,315 parking spaces.

The property is smaller than some of the other area casinos, but offers superior quality guestrooms and facilities. In 2001, the property was awarded a four-diamond rating from AAA, the first hotel/casino in Mississippi to receive such a designation. In December 2002, Casino Magic Biloxi began renovating its high-roller area and casino entrance, which is expected to be completed in May 2003, at a cost of approximately $1.2 million.

Biloxi attracts gaming patrons from the local market as well as Alabama, Florida, Georgia and Southern Louisiana. According to the Mississippi Gaming Commission, the Gulf Coast market generated gaming revenues of $1.16 billion in 2002, a 1% increase over 2001 gaming revenues. Casino Magic grew its gaming revenue by approximately 9% in 2002. A competing casino located near the Casino Magic Biloxi property has announced a $79 million expansion project, including guestrooms, a restaurant and other amenities. Completion is expected in late 2004 or early 2005. Unlike Louisiana and Indiana, Mississippi law, as well as Nevada law, does not limit the number of gaming licenses that may be granted.

Boomtown Reno is a land-based facility that has been operating for over 35 years approximately nine miles west of Reno, Nevada, directly off Interstate 80, the primary highway connecting northern California to most of the rest of the continental U.S.

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The facility includes a 318-guestroom hotel and a 45,000 square-foot casino containing approximately 1,198 slot machines and 30 table games. In 1999, the Company completed a $30 million expansion and renovation project which added 196 guestrooms, including 24 luxury suites, and 10,250 square feet of new convention space, as well as the renovation of major portions of the casino space and certain restaurants. Other features at the property include four restaurants, an 80-seat lounge, a 25,000 square-foot amusement center and an indoor pool. In addition to the main casino/hotel, the property also includes a full-service truck stop with a satellite casino containing approximately 109 slot machines, a gas station/mini-mart, a 203-space RV park and 1,351 parking spaces.

Reno’s gaming market is primarily a drive-in market that attracts visitors from northern California. In March 2000, California voters passed Proposition 1A, a ballot initiative that allows Native American tribes to conduct various gaming activities, including slot machines, card games and lotteries. As a result, additional Native American gaming casinos have opened, expanded, are under construction or are being planned. This includes a $215 million casino under construction along Interstate 80 near Sacramento, expected to open in stages beginning in the second quarter of 2003. During 2002, the gaming revenues in Washoe County, the county in which the city of Reno and the Boomtown Reno are located, decreased 3.8% from the 2001 level. Management believes Boomtown, whose gaming revenues were flat in 2002, fared better than most other operators in the market because of its location along Interstate 80.

Boomtown Bossier City features a dockside riverboat casino and hotel tower. The property opened in October 1996 on a site directly off, and highly visible from, Interstate 20. The Bossier City/Shreveport region offers the closest casinos to the Dallas/Fort Worth metropolitan area, which is a three-hour drive away to the west along Interstate 20. The property offers approximately 1,138 slot machines and 36 table games. The property also includes a 188-guestroom hotel, including four master suites and 88 junior suites, three restaurants and 2,100 parking spaces.

In November 2002, the Company completed a $24 million renovation of the property. This renovation included re-branding the facility to the Boomtown name, adding new restaurants and re-designing the hotel lobby and porte-cochere.

According to the Louisiana Gaming Control Board, gaming revenues in the Bossier City/Shreveport region were $824 million in 2002, a 2.2% increase over 2001. The market currently consists of five dockside riverboat casino hotels, including Boomtown, which is the smallest based on the number of guestrooms. A racetrack located approximately eight miles east of Boomtown Bossier City is scheduled to offer approximately 900 slot machines in mid-2003, with additional machines planned to be added in 2004. Finally, a different competitor has announced a $50 million expansion, including guestrooms, a restaurant and other amenities. Completion is expected in 2004.

Belterra Casino Resort (“Belterra”) opened in October 2000 on 315 acres of land along to the Ohio River near Vevay, Indiana, approximately 45 miles southwest of downtown Cincinnati, Ohio and approximately 70 miles northeast of Louisville, Kentucky. The total population within 300 miles of Belterra is approximately 45 million people. By comparison, some 26 million people live within 300 miles of Las Vegas.

The property features a dockside riverboat casino with 38,000 square feet of casino space, approximately 1,441 slot machines and 43 table games. The property also features a 15-story, 308-guestroom hotel with 11 suites, six restaurants, a retail-shopping pavilion, a 1,500-seat entertainment showroom, a spa and an 18-hole championship golf course designed by Tom Fazio. The property provides 2,000 parking spaces, most of which are in a multi-level parking structure. In February 2003, the Company broke ground on a $37 million expansion project (see “Belterra Project” below), which is expected to be completed in the first half of 2004.

Indiana law was revised to permit dockside gaming operations, as of August 1, 2002, with a new graduated tax structure. Customers strongly prefer dockside operations due to the convenience of being able to enter and

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leave the casino at any time and the reduction of customer surges and the resultant lines at the facility’s restaurants, valet parking and other services that happen with cruising riverboat casinos. (See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors Affecting Future Operating Results” below for a detailed description of the new rate structure).

Belterra competes with four other dockside riverboats. According to the Indiana Gaming Commission, gross gaming revenues in 2002 from the five riverboats in this market grew 12.7% over 2001, to $997 million.

Casino Magic Argentina    The Company operates two land-based casinos in the Patagonia region of Argentina. The larger of the two casinos is located in the city of Neuquen and contains 38 table games, 513 slot machines and a 384-seat bingo facility. The smaller facility, located in the mountain resort of San Martin de los Andes, has 12 table games and 107 slot machines. The Company does not own any real property at these sites, but does own approximately 20 acres of vacant land in the city of Neuquen, which is being held for future development.

The casinos opened in 1995 and are operated under a 12-year concession agreement with the Province that expires in December 2006. In August 2001, the Company signed an agreement to extend the expiration date of the concession agreement to 2021, subject to the Company meeting certain conditions. In January 2003, due to political, social and economic instability in 2002, the Company reached an understanding, subject to definitive documentation to modify these conditions.

The Company’s current concession agreement with the Province of Neuquen provides for the exclusive operation of casinos within approximately 33 miles of its facilities. However, in the Province of Rio Negro, immediately adjacent to the Province of Neuquen, there is a casino approximately 10 miles from Casino Magic Argentina’s Neuquen operations. Such facility is smaller than and inferior to Casino Magic Argentina’s Neuquen facility. New owners of that casino have recently indicated they expect to expand and renovate such facility.

California Card Club Leases    The Company receives lease income from two card clubs in the Los Angeles, California, area: the Hollywood Park-Casino and the Crystal Park Casino. The Company leases the Hollywood Park-Casino from Churchill Downs Incorporated, and subleases it to an unaffiliated third-party operator. Pinnacle owns the furniture, fixtures, equipment and leasehold improvements within the Hollywood Park-Casino. The Crystal Park Casino is owned by the Company and is leased to an affiliate of the card club operator that leases and operates the Hollywood Park-Casino. The third party operator is not believed to have substantial assets other than the two card clubs. The lease payments under the year-to-year leases are believed to be a substantial portion of the card clubs’ income.

The Hollywood Park-Casino opened in 1994. The facility contains approximately 30,000 square feet of card club gaming space with 120 gaming tables and 30,000 square feet of retail and restaurant space.

The Crystal Park Casino opened in October 1996. The Crystal Park Casino contains approximately 40,000 square feet of gaming and banquet space with 21 gaming tables. The adjoining hotel contains 237 rooms, including 32 suites.

The Hollywood Park-Casino and the Crystal Park Casino face significant competition from other card club casinos, as well as competition from other forms of gaming in southern California, including horse racing and Native American gaming. Although the Company does not operate these card club casinos, the operator, who is the Company’s lessee, is affected by local market conditions. In 2001, the Company reduced the rent that the operator pays on the Crystal Park Casino.

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Lake Charles Project

In October 2001, the Company was selected by the Louisiana Gaming Control Board (the “Gaming Control Board”) to receive the fifteenth and final gaming license that can be issued in Louisiana under current law. The project has been designed as a destination resort that will include approximately 700 guestrooms (including suites), approximately 28,000 square feet of meeting space, five restaurants serving regional cuisine, a championship golf course, an expansive outdoor pool area, retail shops and a full-service spa. The dockside casino riverboat will be on one level, surrounded on three sides by the hotel and restaurants. The casino is expected to have over 1,500 slot machines and 60 table games.

Issuance of the license is subject to continued compliance with certain conditions finalized with the Gaming Control Board in November 2001, including, but not limited to, (i) approval by the Gaming Control Board of the construction contracts submitted on March 19, 2003; (ii) demonstrating the financial resources to commence the project within 10 days of the Gaming Control Board’s approval of the construction contracts (see Note 18 to the Consolidated Financial Statements); (iii) beginning construction within 30 days of the Gaming Control Board’s approval of the construction contracts (subject to customary permitting and U.S. Army Corp of Engineer approval); (iv) completing the project within 18 months of beginning construction; and (v) other construction milestone dates. Conditions satisfied in 2002 include, but are not limited to, (i) approval of the project by local voters; (ii) setting aside $22.5 million into a refundable investment account (to be used only for the project once construction commences); and (iii) approval of the detailed design plans from the Gaming Control Board. It is anticipated that the Gaming Control Board will complete its review of the construction contracts in the second quarter of 2003.

The Lake Charles gaming market currently consists of four properties, including two dockside riverboat casinos (each operating two boats at each of their respective locations); a large land-based Native American casino; and a nearby racetrack that offers slot machines. According to the Louisiana Gaming Control Board, gaming revenue for the Lake Charles market was $442 million in 2002, an increase of 19% over the prior year. Such published results do not include the gaming revenues of the Native American casino, which results are not generally publicly available. Management believes this Native American property to be the largest casino operation in the market even though it is approximately 50 miles further from Houston than the other Lake Charles facilities.

The Lake Charles gaming market draws primarily from Houston and local areas. Lake Charles is approximately a two-hour drive from the Houston metropolitan area of 4.5 million people. The local market in Lake Charles is comprised of the Lake Charles/Sulphur area with a population base of 72,000 people, and the Port Arthur and Beaumont areas with a combined population of 385,000 people. Houston is comparable in population to Dallas/Ft. Worth, but is located significantly closer to Lake Charles than Dallas/Ft. Worth is to Shreveport/Bossier (a two-hour vs. three-hour drive). The Company believes that the potential customer draw to the Lake Charles market is significantly larger than that of Shreveport/Bossier, even though today the gaming revenues of the Shreveport/Bossier market are believed to exceed those of Lake Charles. In addition, Lake Charles is the closest gaming alternative within reasonable driving distance for the Austin and San Antonio markets, each less than five hours away. These two cities have a combined population of 2 million people and are comparable in distance from Lake Charles as the highly populated areas of Southern California are from Las Vegas.

Belterra Project

On February 21, 2003, the Company broke ground on a $37 million Belterra Casino Resort expansion project that will add 300 guestrooms, for a total of 608, and will also give the property approximately 33,000 square feet of meeting and conference space, a year-round swimming pool and other amenities. The Company does not anticipate significant construction disruption to its existing operations during the construction of this expansion, which is expected to be completed in the first half of 2004.

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Competition

The Company faces significant competition in each of the jurisdictions in which it has established gaming operations. Such competition may intensify in some of these jurisdictions as new gaming operations enter these markets and existing competitors expand their operations. The Company’s properties compete directly with other gaming properties in Indiana, Louisiana, Mississippi, Nevada, and Argentina, as well as in states adjacent to the Company’s properties. To a lesser extent, the Company also competes for customers with other casino operators in North American markets, including casinos located on Native American reservations, and other forms of gaming, such as lotteries and Internet gaming. Many of the Company’s competitors are larger, have substantially greater name recognition and marketing resources, as well as access to lower cost sources of financing and sometimes, particularly for Native American casinos, lower or non-existent tax rates. Moreover, consolidation of companies in the gaming industry could increase the concentration of large gaming companies in the markets in which the Company operates, and may result in the Company’s competitors having even greater resources, name recognition and licensing prospects than such competitors currently enjoy. In addition, the Company believes that increased legalized gaming in other states, particularly in areas close to its existing gaming properties, such as Texas, Alabama, Arkansas, Ohio or Kentucky, or the expansion of Native American gaming in or near the states in which the Company operates, could create additional competition for the Company and could adversely affect its operations.

Government Regulation and Gaming Issues

The ownership and operation of gaming facilities are subject to extensive state and local regulation. The states and localities in which the Company and its subsidiaries conduct gaming operations require the Company to hold various licenses, findings of suitability, registrations, permits and approvals. The various regulatory authorities, including the Indiana Gaming Commission, the Louisiana Gaming Control Board, the Mississippi Gaming Commission, the Nevada State Gaming Control Board and the Nevada Gaming Commission, may, among other things, limit, condition, suspend, revoke or fail to renew a license or approval to own any of the gaming subsidiaries for any cause deemed reasonable by such licensing authorities. Substantial fines or forfeitures of assets for violations of gaming laws or regulations may be levied against the Company, its subsidiaries and the persons involved.

To date, the Company and its subsidiaries have obtained all governmental licenses, findings of suitability, registrations, permits and approvals necessary for the operation of its gaming facilities. However, there can be no assurance that the Company and its subsidiaries will be able to obtain any new licenses, findings of suitability, registrations, permits and approvals that may be required in the future or that existing ones will be renewed or will not be suspended or revoked. Any expansion of gaming operations in the existing jurisdictions or into new jurisdictions will require various additional licenses, findings of suitability, registrations, permits and approvals of the gaming authorities. The approval process can be time consuming and costly and has no assurance of success.

For a more detailed description of gaming regulations to which the Company is subject, see Exhibit 99.3 to this Form 10-K, “Government Regulation and Gaming Issues”, which is incorporated herein by reference.

Federal and State Income Tax Matters

The Company accounts for income taxes under Statement of Financial Accounting Standards No. 109 Accounting for Income Taxes, whereby deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases (see Notes 1 and 10 to the Consolidated Financial Statements).

During the year ended December 31, 2002, the Company incurred an approximate $48.7 million federal net operating loss (“NOL”). The Company intends to carry-back the 2002 NOL to earlier years and is expected to

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receive a federal tax refund of a minimum of $6 million to be received in 2003. As a result of the NOL carry-back, tax credits of approximately $11.0 million will be available for carry-forward to offset future federal taxes.

In October 2002, the Company settled with the Internal Revenue Service with respect to its examination of the Casino Magic entities for the income tax period 1992 through 1996, resulting in a final tax and interest payment of $4.2 million that had been accrued in prior years. At December 31, 2002, the Company’s federal NOL carry-forwards remaining from the Casino Magic acquisition in 1998 are approximately $12.2 million, net of the IRS audit adjustments. The NOL carry-forwards expire on various dates through 2018. The Company’s use of Casino Magic’s NOL carry-forwards is subject to limitations imposed by Section 382 of the Internal Revenue Code.

Employees

The following is a summary of the Company’s employees by property at December 31, 2002, some of which are part-time:

Property	Employees
Belterra	1,229
Boomtown Reno	1,011
Boomtown New Orleans	1,048
Casino Magic Biloxi	1,186
Boomtown Bossier City	1,215
Casino Magic Argentina	260
Corporate	45
Total	5,994

The Company does not employ the staff at the Hollywood Park-Casino or the Crystal Park Casino. Additionally, during busier months, each casino property supplements its permanent staff with seasonal employees.

The Company’s staff is non-union. The Company believes in general that it has excellent relationships with its employees.

Other Information

Compliance with federal, state and local provisions which have been enacted or adopted regulating the discharge of materials into the environment or otherwise relating to the protection of the environment have not had a material effect upon capital expenditures, earnings or the competitive position of the Company.

The Company operates two land-based casinos in Argentina. Casino Magic Argentina’s contribution to the Company’s net income is immaterial as compared with the contributions of the Company’s domestic gaming operations. Casino Magic Argentina’s assets held in Argentina were $7.1 million at December 31, 2002, or less than 1% of the Company’s consolidated assets on that date.

Available Information

The Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports are available as soon as reasonably practicable after they are filed or furnished to the Securities and Exchange Commission (SEC), through our Internet website, www.pinnacle-entertainment-inc.com. Our filings also are available through a database maintained by the SEC at www.sec.gov.

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Item 2.    Properties

The following describes the Company’s principal real estate properties:

Boomtown New Orleans    The Company owns approximately 54 acres in Harvey, Louisiana that are utilized by Boomtown New Orleans. The Company owns the facilities and associated improvements at the property, including the riverboat casino.

Casino Magic Biloxi    Casino Magic Biloxi is located on approximately 10.6 acres, of which 5.5 acres are owned and approximately 15.1 acres are leased. In addition, it leases approximately 6.4 acres of submerged tidelands leased from the state of Mississippi. The tidelands are under a 10-year lease that expires on May 31, 2003 with an option to extend the term for five years under the same terms and conditions, subject to the renegotiation of annual rent. In January 2002, the Company notified the Mississippi Secretary of State of its intent to exercise its option to extend the term of its Tidelands Lease Agreement. The Company expects the terms of the extension to be finalized in the second quarter of 2003. The remaining leased land is leased pursuant to leases that expire on June 30, 2003, each with options to extend the terms thereof for additional five-year periods. The Company owns the barge on which the casino is located and all of the land-based facilities, including the hotel.

Boomtown Reno    The Company owns 569 acres near Verdi, Nevada, with current operations presently utilizing approximately 61 acres. The Company owns all of the improvements and facilities at the property, including the casino, hotel, truck stop, recreational vehicle park and service station, along with the related water rights and sewage treatment plant.

During 2002, the property was annexed into the City of Reno, Nevada, which will allow the facility to be connected to the City of Reno’s municipal sewer system. Currently, development of the additional acreage is restricted by the existing sewage treatment plant. The City of Reno has contracted the design for the extension of the municipal sewer line to Boomtown. It is anticipated the sewer line will be completed in 2004, contingent upon city funding and various governmental approvals. Once Boomtown is connected to the municipal sewer system, it will cease to operate the existing sewage treatment plant that is on the Boomtown property. Development of the excess acres is contingent upon the submission (anticipated to be in mid-2003) and approval of a Development Standards Handbook to the City of Reno. Once approved, the Company anticipates it will be granted zoning approval for commercial and residential housing on the acreage. The Company may seek to sell or develop such acreage.

Boomtown Bossier City    The Company owns 23 acres on the banks of the Red River in Bossier City, Louisiana. The property contains a dockside riverboat casino, hotel, parking structure and other land-based facilities, all of which are owned by the Company. The Company also leases approximately one acre of water bottoms from the State of Louisiana pursuant to a lease due to expire in September 2006.

Belterra Casino Resort    The Company owns 167 acres and leases 148 acres that are utilized by Belterra Casino Resort. The Company owns the facilities and associated improvements at the property, including the dockside riverboat. In addition, the Company owns the Ogle Haus Inn, a 54-room hotel operation in Vevay, Indiana, approximately 10 miles from the Belterra Casino Resort. The Ogle Haus is used primarily for overflow capacity during peak visitation periods.

Casino Magic Argentina    The Company does not own any real property at the two locations it operates. In 2001, the Company acquired approximately 20 acres in the city of Neuquen, which is being held for future development.

Hollywood Park-Casino    The Company leases the Hollywood Park-Casino under a 10-year lease agreement and subleases the facility to an unaffiliated third-party tenant to operate the card club casino.

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Crystal Park Casino    The Company owns the approximately 20 acres on which the casino facility, adjoining hotel and parking is located.

Lake Charles, Louisiana    Pinnacle has entered into agreements with the Lake Charles Harbor and Terminal District (the “District”) to lease 227 acres of unimproved land from the District upon which the Lake Charles hotel and casino resort complex will be constructed. Effectiveness of the lease agreements are subject to the satisfaction of various conditions, including obtaining all of the necessary permits and approvals to construct the project. The leases call for annual payments of $835,600, commencing upon opening of the resort complex, with a maximum annual increase thereafter of 5%. Upon effectiveness, the leases have an initial terms of 10 years with six renewal options of ten years each. In addition, the Company entered into a Cooperative Endeavor Agreement with the City of Lake Charles, Calcasieu Parish and the District requiring the Company to make infrastructure improvements, including, among other things, a road extension and utility improvements, and pay non-specific impact fees, which, collectively, are expected to approximate $11.4 million. The Company has included such obligations in the $325 million project budget. In 2002, the Company also entered into an option to lease an additional 75 acres of unimproved land adjacent to the 227 acres. The lease option is for a one-year period, with three one-year renewal options. The terms of the lease, if the option is exercised, would be substantially similar to the terms of the leases for the 227 acres.

Pinnacle Entertainment, Inc.    The Company leases approximately 14,000 square feet for its corporate offices in Las Vegas, Nevada under lease agreements that expire in October 2005, with renewal options through 2011.

Undeveloped Land in St. Louis, Missouri    The Company owns approximately 3.5 acres of undeveloped land in St. Louis, Missouri. Casino Magic acquired the undeveloped land in the event Casino Magic elected to proceed with a riverboat gaming license in Missouri. The Company has no plans to develop such property and will consider reasonable offers to sell such property.

Warehouse Leases    The Company leases warehouse space at various locations close to its operating properties for various operating purposes.

Properties Held For Sale    The Company owns approximately 97 acres of unimproved land adjacent to the Hollywood Park Race Track in Inglewood, California. In June 2002, the Company entered into an agreement for the sale of 60 acres for $36 million in cash to Rothbart Development Corporation. The close of escrow is scheduled for the second half of 2003, subject to the buyer obtaining the necessary entitlements to develop the land. In addition, the buyer has the right to extend the close of escrow under certain circumstances.

In September 2002, the Company entered into an agreement for the sale of the remaining 37 acres for $22.2 million in cash to a home builder. The close of this escrow is scheduled for the second half of 2003, again subject to the buyer obtaining the necessary entitlements to develop the land.

Item 3.    Legal Proceedings

Astoria Entertainment Litigation    In November 1998, Astoria Entertainment, Inc. filed a complaint in the United States District Court for the Eastern District of Louisiana. Astoria, an unsuccessful applicant for a license to operate a riverboat casino in Louisiana, attempted to assert a claim under the Racketeer Influenced and Corrupt Organizations Act (“RICO”), seeking damages allegedly resulting from its failure to obtain a license. Astoria named several companies and individuals as defendants, including Hollywood Park, Inc. (the predecessor to Pinnacle Entertainment), Louisiana Gaming Enterprises, Inc. (“LGE”), a wholly-owned subsidiary of Pinnacle Entertainment, and an employee of Boomtown, Inc. The Company believed the RICO claim against it had no merit and, indeed, Astoria voluntarily dismissed its RICO claim against Hollywood Park, LGE, and the Boomtown employee. On March 1, 2001, Astoria amended its complaint. Astoria’s amended complaint added new legal claims, and named Boomtown, Inc. and LGE as defendants. Astoria claims that the defendants

9

(i) conspired to corrupt the process for awarding licenses to operate riverboat casinos in Louisiana, (ii) succeeded in corrupting the process, (iii) violated federal and Louisiana antitrust laws, and (iv) violated the Louisiana Unfair Trade Practices Act. The amended complaint asserts that Astoria would have obtained a license to operate a riverboat casino in Louisiana, but for these alleged improper acts. On August 21, 2001, the court dismissed Astoria’s federal claims with prejudice and its state claims without prejudice. On September 21, 2001, Astoria appealed those dismissals to the U.S. Court of Appeals for the Fifth Circuit. On October 3, 2001, Boomtown, Inc. and LGE filed a cross-appeal on the grounds that the state claims should have been dismissed with prejudice. Astoria subsequently voluntarily dismissed its appeal. In May 2002, Astoria refiled its state claims in the Civil District Court for the Parish of Orleans, Louisiana. On January 7, 2003, the Fifth Circuit Court of Appeals affirmed the lower court’s dismissal of plaintiff’s state law claims without prejudice. While the Company cannot predict the outcome of this litigation, management intends to defend it vigorously.

Poulos Lawsuit    A class action lawsuit was filed on April 26, 1994, in the United States District Court, Middle District of Florida (the “Poulos Lawsuit”), naming as defendants 41 manufacturers, distributors and casino operators of video poker and electronic slot machines, including Casino Magic. The lawsuit alleges that the defendants have engaged in a course of fraudulent and misleading conduct intended to induce people to play such games based on false beliefs concerning the operation of the gaming machines and the extent to which there is an opportunity to win. The suit alleges violations of RICO, as well as claims of common law fraud, unjust enrichment and negligent misrepresentation, and seeks damages in excess of $6 billion. On May 10, 1994, a second class action lawsuit was filed in the United States District Court, Middle District of Florida (the “Ahern Lawsuit”), naming as defendants the same defendants who were named in the Poulos Lawsuit and adding as defendants the owners of certain casino operations in Puerto Rico and the Bahamas, who were not named as defendants in the Poulos Lawsuit. The claims in the Ahern Lawsuit are identical to the claims in the Poulos Lawsuit. Because of the similarity of parties and claims, the Poulos Lawsuit and Ahern Lawsuit were consolidated into one case file (the “Poulos/Ahern Lawsuit”) in the United States District Court, Middle District of Florida. On December 9, 1994, a motion by the defendants for change of venue was granted, transferring the case to the United States District Court for the District of Nevada, in Las Vegas. In an order dated April 17, 1996, the court granted motions to dismiss filed by Casino Magic and other defendants and dismissed the complaint without prejudice. The plaintiffs then filed an amended complaint on May 31, 1996 seeking damages against Casino Magic and other defendants in excess of $1 billion and punitive damages for violations of RICO and for state common law claims for fraud, unjust enrichment and negligent misrepresentation.

At a December 13, 1996 status conference, the Poulos/Ahern Lawsuit was consolidated with two other class action lawsuits (one on behalf of a smaller, more defined class of plaintiffs and one against additional defendants) involving allegations substantially identical to those in the Poulos/Ahern Lawsuit (collectively, the “Consolidated Lawsuits”) and all pending motions in the Consolidated Lawsuits were deemed withdrawn without prejudice. The plaintiffs in the Consolidated Lawsuits filed a consolidated amended complaint on February 14, 1997, which the defendants moved to dismiss. On December 19, 1997, the court granted the defendants’ motion to dismiss certain allegations in the RICO claim, but denied the motion as to the remainder of such claim; granted the defendants’ motion to strike certain parts of the consolidated amended complaint; denied the defendants’ remaining motions to dismiss and to stay or abstain; and permitted the plaintiffs to substitute one of the class representatives. On January 9, 1998, the plaintiffs filed a second consolidated amended complaint containing claims nearly identical to those in the previously dismissed complaints. The defendants answered, denying the substantive allegations of the second consolidated amended complaint. On June 21, 2002, the court denied plaintiffs’ motion for class certification. On July 11, 2002, the plaintiffs’ filed a petition for permission to appeal the court’s denial of the plaintiffs’ motion for class certification. On August 15, 2002, the United States Court of Appeals for the Ninth Circuit granted plaintiffs’ petition. On August 23, 2002, the plaintiffs filed their notice of appeal with the U.S. District Court for the District of Nevada.

The claims are not covered under the Company’s insurance policies. While the Company cannot predict the outcome of this action, management intends to defend it vigorously.

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Casino America Litigation    On or about September 6, 1996, Casino America, Inc. commenced litigation in the Chancery Court of Harrison County, Mississippi, Second Judicial District, against Casino Magic Corp., and James Edward Ernst, its then Chief Executive Officer. In the complaint, as amended, the plaintiff claims, among other things, that the defendants (i) breached the terms of an agreement they had with the plaintiff; (ii) tortuously interfered with certain of the plaintiff’s contracts and business relations; and (iii) breached covenants of good faith and fair dealing they allegedly owed to the plaintiff, and seeks compensatory damages in an amount to be proven at trial as well as punitive damages. On November 30, 1999, the case was transferred to the Circuit Court for the Second Judicial District of Harrison County. The trial began on November 12, 2002. On November 21, 2002, the jury rendered a unanimous verdict in favor of the Company and Ed Ernst. On November 25, 2002, the court entered a judgement in favor of the defendants. On December 5, 2002, the plaintiff filed a motion for new trial. On March 11, 2003, the court denied plaintiff’s motion for a new trial. The Company’s insurer has essentially denied coverage of the claim against Mr. Ernst under the Company’s directors and officers insurance policy, but has reserved its right to review the matter as to tortuous interference at or following trial. The Company, who is indemnifying Mr. Ernst, believes that the insurer should not be permitted to deny coverage, although no assurances can be given that the insurer will change its position. While the Company cannot predict the outcome of this action, management intends to continue to defend it vigorously if plaintiff appeals the judgement.

Casino Magic Biloxi Patron Incident    On January 13, 2001, three Casino Magic Biloxi patrons sustained injuries as a result of an assault by another Casino Magic Biloxi patron, who then killed himself. Several other patrons sustained injuries while attempting to exit the casino. On August 1, 2001, two of the casino patrons injured during the January 13, 2001 incident filed a complaint in the Circuit Court of Harrison County, Mississippi, Second Judicial District. The complaint alleges that Biloxi Casino Corp. failed to exercise reasonable care to keep its patrons safe from foreseeable criminal acts of third persons and seeks unspecified compensatory and punitive damages. The plaintiffs filed an amended complaint on August 17, 2001. The amended complaint added an allegation that Biloxi Casino Corp. violated a Mississippi statute by serving alcoholic beverages to the perpetrator who was allegedly visibly intoxicated and that Biloxi Casino Corp.’s violation of the statute was the proximate cause of or contributing cause to plaintiffs’ injuries. On March 20, 2002, the third injured victim filed a complaint in the Circuit Court of Harrison County, Mississippi, Second Judicial District. The allegations in the complaint are substantially similar to those contained in the August 1, 2001 lawsuit. The trial for the August 1, 2001 lawsuit has been set for July 21, 2003. No trial date has been set for the subsequent suit. While the Company cannot predict the outcome of these actions, the Company, together with its applicable insurers, intends to defend them vigorously.

Actions by Greek Authorities    In 1995, a subsidiary of Casino Magic Corp., Casino Magic Europe B.V. (“CME”), performed management services for Porto Carras Casino, S.A. (“PCC”), a joint venture in which CME had a minority interest. Effective December 31, 1995, CME, with the approval of PCC, assigned its interests and obligations under the PCC management agreement to a Greek subsidiary, Casino Magic Hellas S.A. (“Hellas”). Hellas issued invoices to PCC for management fees which accrued during 1995, but had not been billed by CME.

In September 1996, local Greek tax authorities in Thessaloniki assessed a penalty of approximately $3.5 million against Hellas, and an equal amount against PCC, arising out of the presentation and payment of the invoices. The Thessaloniki tax authorities asserted that the Hellas invoices were fictitious, representing an effort to reduce the taxable income of PCC.

PCC and Hellas each appealed their respective assessments. The assessment of the fine against PCC was overturned by the Administrative Court of Thessaloniki on December 11, 2000. The court determined that the actions taken by Hellas and PCC were not fictitious but constituted a legitimate business transaction and accordingly overturned the assessment of the fine. Hellas’s appeal was dismissed for technical procedural failures and has not been reinstated; presumably, however, the rationale of the court in the PCC fine matter would apply equally to the Hellas fine matter, assuming the court’s decision is upheld on appeal (see below).

11

During the first quarter of 2001, the Greek taxing authorities appealed the December 11, 2000 decision by the Administrative Court of Thessaloniki overturning the assessment of the fine against PCC. No hearing date on such appeal has been set.

Under Greek law, shareholders are not liable for the liabilities of a Greek company in which they hold shares, even if the entity is later liquidated or dissolved, and assessments such as the PCC and Hellas fines generally are treated as liabilities of the company. Additionally, all of PCC’s stock was sold to an unrelated company in December of 1996, and the buyer assumed all of PCC’s liabilities. Therefore, management does not expect that this matter will have a materially adverse effect on the financial condition or results of operations of the Company.

In June 2000, Greek authorities issued a warrant to appear at a September 29, 2000 criminal proceeding to Marlin Torguson (a member of the Company’s board of directors and Chairman of the Board of CME in 1995) and Robert Callaway (former Associate General Counsel for the Company and, prior to its acquisition by the Company, CME’s General Counsel). They were charged under Greek law, and convicted in absentia, as being culpable criminally for corporate misconduct based solely on their status as alleged executive board members of PCC. The Company is advised that they are not, and have never been, managing (active) executive directors of PCC. Accordingly, the Company believes that they were improperly named in the proceedings. The defendants have a right of appeal for a de novo trial under Greek law.

On March 30, 2001, appeals on behalf of Messrs. Torguson and Callaway were filed. The hearing before the three-member Court of Misdemeanors of Thessaloniki was continued. The hearing is currently set to be heard on April 10, 2003.

The Company has been advised that the resolution of the related civil penalties may sometimes resolve criminal issues in Greece. The Company is actively working to resolve the civil and criminal actions related to this matter.

Indiana Settlement Agreement    On April 11, 2002, the Company announced that the Indiana Gaming Commission had begun an investigation into events surrounding, and claims underlying, lawsuits filed by two former Belterra Casino Resort employees and events surrounding a golf tournament at Belterra in June 2001. The lawsuits were settled during 2002.

In August 2002, the Company entered into a settlement agreement with the Indiana Gaming Commission. The Company agreed, among other things, to pay a fine of $2.26 million; suspend gaming operations at Belterra for three days in October 2002; pay estimated wages, tips, taxes and community development fees that would have been paid had the operation not been closed during the three-day closure period; build a planned 300-guestroom tower by July 2004; and establish a new compliance committee of the Company’s Board of Directors. Except for the guestroom tower, which is under construction, all elements of the settlement agreement have been completed.

The Company placed $5 million into an escrow account to ensure the completion of the new guestroom tower by July 2004, at which time the funds will be released back to the Company. In the event the Company does not complete the tower by July 2004 (subject to extension for events beyond the Company’s control upon approval by the Indiana Gaming Commission), the $5 million escrowed funds will be paid to the Indiana Gaming Commission.

Shareholder Derivative Action    On December 13, 2002, William T. Kelsey, an individual shareholder of the Company, filed a derivative lawsuit purportedly on behalf of the Company against the Company’s former Chairman R.D. Hubbard, former CEO Paul R. Alanis, Chairman and CEO Daniel R. Lee, various other current and former directors of the Company, and against the Company itself as a nominal defendant. The lawsuit, brought in California Superior Court in Los Angeles County, alleges, among other things, breaches of fiduciary

12

duty, negligence, mismangement and violations of the RICO Act by the defendants in connection with the events surrounding the June 2001 Belterra golf tournament. The complaint alleges that the Company is entitled to recover unspecified damages in excess of $10 million, plus exemplary, punitive and treble damages and the plaintiff’s fees and costs. The Company has empowered a Special Committee of three independent directors to perform an investigation and determine whether pursuit of this derivative lawsuit is in the best interests of the Company and its shareholders. The Court has entered a stay of the litigation until May 2003 to allow the directors to conduct a good faith investigation in this respect.

Alanis Suit    On or about December 3, 2002, Paul Alanis filed a lawsuit against the Company, R. D. Hubbard and Daniel R. Lee, claiming, among other things, wrongful termination and defamation. He seeks unspecified compensatory and punitive damages. On February 11, 2003, the court granted the Company’s motion to send the matter to arbitration, with the exception of the defamation claims against Mr. Lee, and stayed the entire action pending such arbitration. While the outcome of this action cannot be predicted, the Company and Mr. Lee intend to defend it vigorously.

New Hampshire Insurance Company Lawsuit    On July 31, 2000, a collision occurred between the M/V Miss Belterra and the M/V Elizabeth Ann riverboats. On or about August 15, 2002, New Hampshire Insurance Company filed suit against the Company in the U.S. District Court, District of California alleging, among other things, that New Hampshire Insurance Company overpaid the Company in excess of $2 million, on the Company’s business interruption claim arising out of the collision. The plaintiff is seeking restitution of the sums that it has allegedly overpaid the Company, a judicial declaration of the amount, if any, that it has overpaid the Company, a judicial declaration of the rights and duties of the parties and costs of suit. On October 4, 2002, the Company filed an answer, counterclaim and request for jury trial setting claim, among other things, that the plaintiff’s payments to the Company fall short of its obligation by at least $1.75 million, that plaintiff breached its insurance contract, that plaintiff has acted in bad faith and seeking a judicial determination of the respective rights and duties of the parties. The Company has also requested attorneys’ fees, costs of suit and interest. While the Company cannot predict the outcome of this action, it intends to defend it vigorously and pursue its counterclaims.

The Company is party to a number of other pending legal proceedings, though management does not expect that the outcome of such proceedings, either individually or in the aggregate, will have a material effect on the Company’s financial results.

Item 4.    Submission of Matters to a Vote of Security Holders

None

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PART II

Item 5.    Market for the Registrant’s Common Equity and Related Stockholder Matters

The Company’s common stock is listed on the New York Stock Exchange and is traded under the name Pinnacle Entertainment, Inc., identified by the symbol “PNK”. Prior to February 28, 2000, the Company’s common stock was traded on the New York Stock Exchange under the name Hollywood Park, Inc., identified by the symbol “HPK”.

The following table sets forth the high and low closing sales prices per common share of the Company’s common stock on the New York Stock Exchange.

	Price Range
	High		Low
2002
Fourth Quarter	$	7.70	$	5.22
Third Quarter		10.91		6.89
Second Quarter		12.36		6.48
First Quarter		8.50		5.02
2001
Fourth Quarter	$	7.23	$	5.50
Third Quarter		8.99		5.95
Second Quarter		10.60		7.35
First Quarter		13.81		9.70

As of March 24, 2003, there were 2,846 stockholders of record of the Company’s common stock.

Dividends    The Company did not pay any dividends in 2002 or 2001. The Company’s 9.25% Notes, 9.5% Notes and existing credit facility limit the amount of dividends that the Company is permitted to pay. The Board of Directors does not anticipate paying any cash dividends on the Company’s common stock in the foreseeable future, as its financial resources are being reinvested into its business.

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Item 6.    Selected Financial Data

The following selected financial information for the years 1998 through 2002 was derived from the consolidated financial statements of the Company. The information set forth below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, the consolidated financial statements and related notes thereto.

	For the years ended December 31,
	2002(a)			2001(b)			2000(c)			1999(d)			1998(e)
	(in thousands, except per share data)
Statement of Operations Data:
Revenues	$	514,001		$	508,043		$	549,602		$	673,967		$	409,449
Operating income (loss)		28,411			(5,723	)		171,904			144,204			44,503
(Loss) income before minority interest, income taxes, change in accounting principle and extraordinary item		(19,071	)		(50,555	)		131,888			86,660			21,985
(Loss) income before change in accounting principle and extraordinary item		(12,925	)		(28,649	)		79,492			44,047			13,169
Net (loss) income		(69,629	)		(28,649	)		76,839			44,047			13,169
Net (loss) income per common share:
Basic	$	(2.70	)	$	(1.11	)	$	2.92		$	1.70		$	0.50
Diluted		(2.70	)		(1.11	)		2.80			1.67			0.50
Other Data:
EBITDA(f), (g)
Continuing properties(h)	$	73,340		$	40,659		$	71,092		$	93,303		$	38,807
Sold properties		0			3,068			146,914			102,825			37,817
EBITDA(f), (g)	$	73,340		$	43,727		$	218,006		$	196,128		$	76,624
Cash flows provided by (used in):
Operating activities	$	39,030		$	39,517		$	(28,824	)	$	75,323		$	37,224
Investing activities		(76,740	)		(46,756	)		193,277			(51,063	)		(136,532	)
Financing activities		826			(12,442	)		(114,947	)		54,868			119,386
Capital expenditures		48,596			52,264			202,775			59,680			54,605
Balance Sheet Data (at December 31):
Cash and equivalents(i)	$	147,541		$	156,639		$	172,868		$	246,790		$	47,413
Total assets		840,438			919,349			961,475			1,045,408			894,339
Long term notes payable		491,079			493,493			497,162			618,698			527,619
Stockholders’ equity		248,486			319,516			361,176			280,876			230,976

(a) 2002 includes costs of $2,753,000 for asset write-offs, $6,609,000 for Indiana regulatory settlement and related costs, $1,601,000 for relocating corporate offices (see Notes 6, 11 and 12, respectively, to the Consolidated Financial Statements), and $541,000 for abandoned project costs. In addition, 2002 includes a $56,704,000 charge, net of tax benefit, related to the cumulative change in accounting principle (see Note 2 to the Consolidated Financial Statements).

(b) 2001 includes $23,530,000 of asset impairment charges (see Note 6 to the Consolidated Financial Statements), a $500,000 gain on asset disposition, $610,000 of Belterra Casino Resort golf facility pre-opening costs and $464,000 of terminated merger reserve recovery benefit.

(c) 2000 includes the financial results of Belterra Casino Resort from its October 2000 opening. 2000 excludes the financial results of the Boomtown Biloxi and Casino Magic Bay St. Louis beginning August 2000 and Turf Paradise beginning June 2000 in connection with the sale of the operations. 2000 includes an $118,816,000 gain on sale of the casino and race track operations, as well as the sale of excess land (see Note 7 to the Consolidated Financial Statements). 2000 also includes $15,030,000 of Belterra Casino Resort pre-opening costs and $5,727,000 of terminated merger costs (see Note 15 to the Consolidated Financial Statements).

15

(d) 1999 excludes the financial results of the Hollywood Park race track and Hollywood Park-Casino beginning September 1999 in connection with the sale of the operations. 1999 includes a $62,507,000 gain on sale of the race track and card club casino operations and an asset impairment charge of $20,446,000 related to the write-down of the Hollywood Park-Casino. 1999 also includes $3,020,000 of Belterra Casino Resort pre-opening costs.

(e) 1998 includes the financial results of Casino Magic Corp. from its October 15, 1998 acquisition date.

(f) The Company defines EBITDA as earnings before net interest expense, provision for income taxes, depreciation, amortization, minority interest, cumulative change in accounting principle and extraordinary items. Included in EBITDA are certain items—see Note (g) below. For an additional explanation of matters concerning EBITDA, see “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Other Supplemental Data”. EBITDA is calculated by adding the provision for income taxes, minority interests, net interest expense, depreciation and amortization, cumulative change in accounting principle and extraordinary items to net income (loss). A reconciliation from net income (loss) to EBITDA is as follows:

	For the years ended December 31,
	2002			2001			2000		1999		1998
	(in thousands)
Net (loss) income	$	(69,629	)	$	(28,649	)	$	76,839	$	44,047	$	13,169
Cumulative change in accounting principle, net of income taxes		56,704			0			0		0		0
Extraordinary item, net of income tax benefit		0			0			2,653		0		0
Net (loss) income before cumulative change in accounting principle and extraordinary item		(12,925	)		(28,649	)		79,492		44,047		13,169
Income tax (benefit) expense		(6,146	)		(21,906	)		52,396		40,926		8,442
Minority interest		0			0			0		1,687		374
(Loss) income before cumulative change in accounting principle, extraordinary item, income taxes and minority interest		(19,071	)		(50,555	)		131,888		86,660		21,985
Interest expense, net of capitalized interest and interest income		47,482			44,832			40,016		57,544		22,518
Operating income (loss)		28,411			(5,723	)		171,904		144,204		44,503
Depreciation and amortization		44,929			49,450			46,102		51,924		32,121
EBITDA	$	73,340		$	43,727		$	218,006	$	196,128	$	76,624

(g) “Operating income (loss)” and “EBITDA” disclosed above include the following items:

	For the years ended December 31,
	2002		2001			2000			1999			1998
	(in thousands)
Asset write-offs	$	2,753	$	0		$	0		$	0		$	0
Regulatory settlement and related costs		6,609		0			0			0			0
Relocation costs		1,601		0			0			0			0
Abandoned project costs		541		0			0			0			0
Pre-opening costs, Belterra Casino Resort		0		610			15,030			3,020			821
Terminated merger reserve recovery benefit and costs		0		(464	)		5,727			0			0
Asset impairment write-down		0		23,530			0			0			0
(Gain) loss on disposition of assets, sold operations		0		(500	)		(118,816	)		(62,507	)		2,221
Asset impairment write-down, sold operations		0		0			0			20,446			0
REIT costs		0		0			0			0			419
	$	11,504	$	23,176		$	(98,059	)	$	(39,041	)	$	3,461

(h) Includes the five casinos the Company owns and operates in the United States, the two casinos the Company operates in Argentina, the two card clubs the Company leases to a third party operator in Los Angeles and corporate expenses.

(i) Includes $3,155,000 and $30,100,000 of Restricted Cash-Argentina and Restricted Cash at December 31, 2002, respectively, and $3,452,000 of Restricted Cash-Argentina at December 31, 2001 (see Note 1 to the Consolidated Financial Statements).

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

The following discussion and analysis of financial condition, results of operations, liquidity and capital resources should be read in conjunction with, and is qualified in its entirety by, the Company’s audited Consolidated Financial Statements and the notes thereto, and other filings with the Securities and Exchange Commission.

RESULTS OF OPERATIONS

The following table highlights the Company’s results of operations for the three years ended December 31, 2002, 2001 and 2000.

	For the years ended December 31,
	2002			2001			2000
	(in thousands)
Revenues
Boomtown New Orleans	$	100,403		$	99,927		$	94,240
Casino Magic Biloxi		86,500			82,997			86,451
Boomtown Reno		89,021			90,100			93,183
Boomtown Bossier City		102,680			101,019			124,308
Belterra Casino Resort		122,118			104,385			15,506
Casino Magic Argentina		7,039			20,159			22,092
Card Clubs		6,240			6,960			7,200
		514,001			505,547			442,980
Sold properties(a)		0			2,496			106,622
Total Revenues	$	514,001		$	508,043		$	549,602
Operating income (loss)
Boomtown New Orleans	$	20,470		$	21,553		$	20,849
Casino Magic Biloxi		10,570			9,169			10,512
Boomtown Reno		10,208			11,350			11,722
Boomtown Bossier City		5,568			987			25,953
Belterra Casino Resort(b)		2,616			(18,673	)		(21,501	)
Casino Magic Argentina		1,456			5,622			7,405
Card Clubs		3,622			2,855			2,504
Corporate(c)		(23,346	)		(18,124	)		(26,864	)
Asset write-offs and impairments(d)		(2,753	)		(23,530	)		0
		28,411			(8,791	)		30,580
Sold properties(a)		0			3,068			141,324
Operating income (loss)	$	28,411		$	(5,723	)	$	171,904
Revenue by Property as % of Total Revenue
Boomtown New Orleans		19.5	%		19.7	%		17.2	%
Casino Magic Biloxi		16.8	%		16.3	%		15.7	%
Boomtown Reno		17.3	%		17.7	%		17.0	%
Boomtown Bossier City		20.0	%		19.9	%		22.6	%
Belterra Casino Resort		23.8	%		20.5	%		2.8	%
Casino Magic Argentina		1.4	%		4.0	%		4.0	%
Card Clubs		1.2	%		1.4	%		1.3	%
		100.0	%		99.5	%		80.6	%
Sold Properties		0.0	%		0.5	%		19.4	%
		100.0	%		100.0	%		100.0	%
Operating margins(e)
Boomtown New Orleans		20.4	%		21.6	%		22.1	%
Casino Magic Biloxi		12.2	%		11.0	%		12.2	%
Boomtown Reno		11.5	%		12.6	%		12.6	%
Boomtown Bossier City		5.4	%		1.0	%		20.9	%
Belterra Casino Resort		2.1	%		(17.9	)%		(138.7	)%
Casino Magic Argentina		20.7	%		27.9	%		33.5	%
Card Clubs		58.0	%		41.0	%		34.8	%
Sold Properties		0	%		122.9	%		132.5	%

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(a) The 2001 and 2000 amounts reflect income from agreements with a Native American casino which terminated in June 2001. 2000 includes the Casino Magic Bay St. Louis and Boomtown Biloxi sold in August and Turf Paradise racetrack sold in June. Operating income for both periods includes gains on the dispositions of the assets.

(b) 2001 and 2000 includes pre-opening costs of $610,000 and $15,030,000, respectively.

(c) 2002 includes corporate relocation expenses, Indiana regulatory settlement costs and abandoned project costs totaling $8,751,000. 2001 includes a terminated merger reserve recovery benefit of $464,000. 2000 includes terminated merger costs of $5,727,000.

(d) 2002 asset write-offs of $2,753,000 reflect abandoned projects at Casino Magic Biloxi and Boomtown Bossier City. 2001 asset impairment charges of $23,530,000 reflect primarily the write-down of the Crystal Park Casino and the original cruising riverboat at Boomtown New Orleans.

(e) Operating margin by property is calculated by dividing operating income (loss) by revenue by location.

Comparisons of the Years Ended December 31, 2002, 2001 and 2000

Operating Results    Operating income increased $37,202,000 to $28,411,000 in 2002 from an operating loss of $8,791,000 in 2001, while revenues increased to $514,001,000 in 2002 versus $505,547,000, excluding properties sold. Operating income and revenues for 2000, again excluding sold properties, were $30,580,000 and $442,980,000, respectively. Operating income for 2002, 2001 and 2000 includes certain unusual costs of $11,504,000, $23,676,000 and $20,757,000, respectively (see note (h) to Item 6 above). When excluding such costs, operating income grew by 177.5% in 2002 versus 2001, and declined by 71.0% in 2001 versus 2000. Each property’s contribution to these results is as follows:

The Company’s Boomtown New Orleans property continues to produce consistent results. Revenues improved to $100,403,000 in 2002 from $99,927,000 in 2001. A full year benefit of slot machines added in June 2001 and dockside operations that began in April 2001 were offset by higher tax rates and unfavorable weather. Operating income declined slightly to $20,470,000 in 2002 compared to $21,553,000 for 2001. An increase in state gaming taxes at Boomtown New Orleans from 18.5% to 21.5% that became effective April 1, 2001 meant a higher tax rate during all of 2002 as compared to only nine months of 2001. Finally, the property incurred higher depreciation charges in 2002 due to improvements completed throughout 2001.

Also in 2002, the Company sold the property’s original riverboat casino. The boat had remained unused since February 1998, when it was replaced by the current larger and newer facility. Although the boat had been written down for book purposes in prior years, it still had a large tax basis. The sale generated a book gain of $190,000 and resulted in a tax loss of approximately $14,500,000. The Company expects to receive a tax refund or credit of approximately $5,200,000 related to the sale of the boat when it completes its 2002 income tax return.

Revenues and operating income at the property increased in 2001 by 6.0% and 3.4%, respectively, from 2000, as the property benefited from the 300 slot machines added in June 2001, offset by the increased gaming taxes beginning April 2001.

At Casino Magic Biloxi, revenues and operating income improved by 4.2% and 15.3%, respectively, for the year ended December 31, 2002 versus the year ended December 31, 2001. This was despite unfavorable weather, notably two hurricanes that closed the Biloxi property for approximately three days and the New Orleans property for approximately two days. The improvements in operating results are primarily from new casino marketing programs and cost control programs established in late 2001.

Revenues and operating income declined by 4.0% and 12.8%, respectively, in 2001 compared to 2000, primarily due to increased competition in the market. The year 2000 results also included approximately

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$800,000 of additional income from the settlement of a business interruption insurance claim resulting from Hurricane Georges in September 1998. The closures from the recent hurricane were not long enough to meet the deductibles for business interruption insurance coverage. When excluding the insurance claim in 2000, operating income declined by 5.6%.

At Boomtown Reno, 2002 gaming revenues were consistent with the prior year, while the overall Reno market was off almost 4%. Overall, revenues for the property for the year ended December 31, 2002 declined by 1.2%, principally due to the lower retail fuel prices at the property’s gas stations. Operating income was down 10.1%, principally due to increased medical insurance costs.

Boomtown Reno’s revenues declined by $3,083,000, or 3.3%, in 2001 versus 2000 primarily due to the adverse impact of the events of September 11, 2001 on travel along Interstate 80. Fuel prices in 2001 were also lower, affecting revenues from the two gas stations. The property’s management controlled costs to mirror the reduced drive-by business, and, as a result, the operating margin remained constant year-over-year.

On July 1, 2002, the Bossier City facility was re-branded “Boomtown Bossier City” from the former Casino Magic brand and motif. The renovation and expansion work was completed in the middle of the 2002 fourth quarter. Despite construction disruption for a majority of the year, revenues grew 1.6% to $102,680,000 in 2002 compared to $101,019,000 in 2001. Operating income grew much more dramatically in 2002 versus 2001, to $5,568,000 from $987,000. Re-branding charges in 2002 of $2,129,000 were offset by reduced marketing costs and the absence of a $2,600,000 working capital valuation charge that occurred in 2001. Boomtown Bossier City operating income for the year ended December 31, 2002 also benefited from the absence of approximately $1,602,000 of amortization of capitalized licensing expenses, related to the implementation of SFAS 142 on January 1, 2002, which costs were incurred in 2001 and prior.

For 2001, revenues and operating income declined by 18.7% and 96.2%, respectively, versus 2000. Revenue declines were primarily attributable to increased competition from the opening of a new casino hotel in December 2000 and the opening of a new hotel tower at another competitor in January 2001. The property also recorded a charge of approximately $2,600,000 for certain reserves and write-downs related to inventory, accounts receivable and working capital valuation matters.

Belterra Casino Resort proved to be the Company’s biggest gainer in 2002, growing operating income by $21,289,000 on revenue improvement of $17,733,000. The revenue growth reflects the continued maturation of the property, improved marketing programs and the benefits of commencing dockside operations on August 1, 2002. For the five months since dockside operations began, gaming revenues increased 31% period over period, compared to the also strong 16% year-over-year growth in the first seven months of 2002. In addition to growing revenues the property implemented cost containment measures in late 2001 that helped improve the operating margin.

Belterra Casino Resort opened in late October 2000. Revenues at this property increased significantly in 2001 due to a full year of operation, versus approximately two months of operations in 2000. The property incurred operating losses in both periods, although the losses per day were much less in the full year 2001 than they were in the partial period in 2000. In late 2001, a new general manager was hired, and steps were taken immediately to improve operations, including improved marketing programs and reduced staffing levels. The 2001 and 2000 operating losses also include pre-opening expenses of $610,000 and $15,030,000, respectively.

At Casino Magic Argentina, although the turmoil in the Argentine economy that began in late 2001 has continued, operations remain profitable. For 2002, revenues denominated in pesos increased 10.44% compared to the prior year period. Pesos denominated results are impacted by the Argentine inflation rate, which has been both high and volatile in recent periods.

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Operating results denominated in dollars have declined substantially from the year-earlier periods due to the devaluation of the Argentine currency. For the twelve months ended December 31, 2002, currency devaluation caused substantially all of the 65.1% and 74.1% decline in revenues and operating income, respectively.

Revenues and operating income at Casino Magic Argentina declined by 8.7% and 24.1%, respectively, in 2001 versus 2000, primarily due to the economic and political instability that began in Argentina in the third quarter of 2001.

Revenues from the Company’s Card Clubs declined in 2002 due to an $80,000 per month reduction in lease income from Crystal Park Casino, effective October 1, 2001. Operating income in 2002, however, benefited from the reduction of Crystal Park Casino’s depreciation expense of $1,438,000, as the asset was written down in the fourth quarter of 2001.

Revenues and operating income from “Card clubs” did not change significantly in 2001 from the prior year.

Corporate Costs    When excluding the Indiana settlement charges and relocation costs (see Notes 11 and 12, respectively, to the Consolidated Financial Statements), corporate costs decreased by $2,988,000, or 16.5%, in 2002 versus 2001, primarily due to reduced costs as a result of the management restructuring in April 2002 and lower professional service fees related to contracts that expired in 2001. Corporate costs declined by 32.5% in 2001 as compared to 2000, primarily due to the terminated merger costs incurred in 2000.

Sold Properties    The reduction in revenues and operating income from sold operations in 2002 compared to 2001 reflects the termination in June, 2001 of various lease agreements with a Native American tribe under which the Company derived income from the Legends Casino in Yakima, Washington. The reduction in revenues and operating income in 2001 versus 2000 reflects the sale of the two casinos in August 2000 and Turf Paradise racetrack June 2000.

Interest Income    Interest income for 2002 decreased by $2,815,000, or 56.1%, from 2001, primarily due to lower interest rates in 2002 versus 2001 and the early repayment of a promissory note from the Legends casino. Interest income decreased in 2001 versus 2000 by $7,583,000, or 60.2%, primarily due to lower investable funds and lower interest rates.

Interest Expense    Interest expense in 2002 before capitalized interest was approximately flat to 2001. Interest expense before capitalized interest declined by $10,434,000 for 2001 compared to 2000, due primarily to the redemption of the Casino Magic 13% Notes in August 2000. Capitalized interest was $995,000, $481,000 and $8,148,000 in 2002, 2001 and 2000, respectively.

Income Tax Expense (Benefit)    The effective tax rate used in 2002 was 32.2%, or a tax benefit of $6,146,000. A portion of the Indiana regulatory settlement costs was not tax deductible, resulting in a lower tax rate. The effective tax rate in 2001 was 43.3%, or a tax benefit of $21,906,000. The 2001 year includes a $3,705,000 tax benefit from the settlement of certain federal income tax matters. The effective tax rate in 2000 was 39.7%, or a tax expense of $52,396,000, which provision includes the taxes associated with the significant asset dispositions in that year. The Company estimates that its effective income tax rate will be approximately 36% in 2003.

Change in Accounting Principle    The charge in the first quarter of 2002 for the cumulative change in accounting principle of $56,704,000 related to the write-down of goodwill and other intangible assets. This charge reflected the adoption of SFAS 142 as of January 1, 2002. See Note 2 to the Consolidated Financial Statements.

Extraordinary Loss    The extraordinary loss of $2,653,000 recorded for the year ended December 31, 2000 related to the early redemption of the Casino Magic 13% Notes.

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LIQUIDITY AND CAPITAL RESOURCES

At December 31, 2002, the Company had $147,541,000 of cash, cash equivalents and restricted cash. At December 31, 2001, the Company had cash, cash equivalents and restricted cash of $156,639,000. Management currently estimates that approximately $45,000,000 is needed to fund the Company’s casino cages, slot machines, operating accounts or otherwise is used in day-to-day operations.

Included in such cash, cash equivalents and restricted cash at December 31, 2002 is restricted cash of $33,255,000. This is comprised of $22,500,000 set aside for future Lake Charles project construction costs, $5,000,000 in an escrow account to ensure the completion of a new 300-guestroom tower at Belterra Casino Resort, $2,600,000 for a cash-collateralized letter of credit for self-insurance purposes and $3,155,000 of funds held in Argentine banks. Included in cash, cash equivalents and restricted cash at December 31, 2001 is restricted cash of $3,452,000, all of which was held in the Argentine subsidiary. Cash held in the Argentine subsidiary is considered restricted by the Company due to the currency restrictions imposed by the Argentine government.

Working capital for the Company (current assets less current liabilities) was $85,119,000 at December 31, 2002, versus $135,170,000 at December 31, 2001, the decline being primarily attributed to the transfer of cash to the above-noted restricted cash accounts, all of which (other than the cash in Argentina) are long-term rather than short-term assets (see Note 1 “—Restricted Cash” to the Consolidated Financial Statements).

For the year ended December 31, 2002, cash generated from operations was $39,030,000, compared to $39,517,000 for the year ended December 31, 2001. Operating results were substantially improved in 2002 versus 2001; however, due to significant cash tax refunds in 2001, cash flow from operations was consistent year over year. In 2002, the Company benefited from cash generated from stock option exercises of $4,067,000 and the collection of a $1,000,000 note receivable. During the year, the Company invested $48,596,000 in property, plant and equipment and repaid $3,649,000 of debt. Unrestricted cash and cash equivalents were also reduced due to the transfer of $29,803,000 of cash to restricted cash as noted above, most of which effectively advances for planned future construction. The cash invested in current and future construction exceeded the cash generated from operations, resulting in a decline in cash and cash equivalents of $38,901,000.

For the year ended December 31, 2001, cash generated from operations and the collection of notes receivable of $39,517,000 and $8,636,000, respectively, was less than the cash invested in additions to property, plant and equipment, debt reductions and stock repurchases of $52,264,000, $3,447,000 and $9,820,000, respectively. Therefore, cash and equivalents declined by $19,681,000 for the year.

As of December 31, 2002, the Company’s debt consists principally of two issues of senior subordinated indebtedness: $350,000,000 principal amount of 9.25% Senior Subordinated Notes due February 2007, and $125,000,000 principal amount of 9.50% Senior Subordinated Notes due August 2007. The 9.50% notes became callable at a premium over their face amount on August 1, 2002; the 9.25% notes became callable at a premium over their face amount on February 15, 2003. Such premiums decline periodically as the bonds near their respective maturities. Neither series of notes has any required sinking fund or other principal payments prior to their maturities in 2007. Both series of notes permit the Company to have in the aggregate up to $350,000,000 of senior indebtedness, none of which is currently outstanding. The Company also has a $2,600,000 stand-by letter of credit outstanding at December 31, 2002, which letter of credit is cash collateralized and for the benefit of the Company’s self-insured workers compensation program.

In March 2003, two major banks agreed to lead syndication efforts to expand the Company’s existing credit facility to $225,000,000 from the current $110,000,000. The facility would amend and restate the bank credit facility (none of which has been drawn since February 1999) that matures December 2003 to a maturity date of approximately August 2006, which maturity date can be extended under certain circumstances. The facility would be used to finance the construction and opening of the Lake Charles casino resort, the 300-guestroom tower at Belterra Casino Resort and other general corporate purposes. Availability under the facility would be

21

significantly limited until the Company has deposited $40,000,000 of minimum cash proceeds from asset sales or other equity capital raising efforts into a completion reserve account. The Company expects that the source of these cash proceeds will be the two pending sales (aggregating $58,000,000) of unimproved land adjacent to the Hollywood Park Race Track. Among the alternatives, the Company could sell some or all of its surplus land in Reno, St. Louis or elsewhere. Under terms of the proposed credit facility, in the event the $40,000,000 in cash proceeds is not deposited by March 31, 2004, the unfunded revolving credit commitment would be cancelled and the facility would mature on June 30, 2004. In addition, the facility will have customary financial covenants and capital spending restrictions, be secured by all assets of the Company (other than Casino Magic Argentina) and require the Company to demonstrate sufficient liquidity to complete the Lake Charles project. The Company anticipates finalizing the proposed facility in April 2003. However, the proposed facility is subject to negotiation and execution of definitive documentation, among other conditions, and there can be no assurance the Company will complete the land sales in a timely manner or be able to finalize the proposed facility under terms and conditions favorable or acceptable to the Company.

The Company intends to continue to maintain its current properties in good condition and estimates that this will require maintenance and miscellaneous capital spending of approximately $20,000,000 to $25,000,000 per year. The Company is also adding a 300-guestroom hotel tower, conference and meeting facilities and a swimming pool area at its Belterra Casino Resort at an estimated cost of approximately $37,000,000, including capitalized interest. The Company does not expect the pre-opening costs for this project to be material. Finally, the Company has plans to build a major resort in Lake Charles, Louisiana, estimated to cost approximately $325,000,000, including capitalized interest and pre-opening costs, of which approximately $3,100,000 had been spent at December 31, 2002. The Company expects to break ground in the 2003 second quarter and open this resort in the fourth quarter of 2004. However, the Company does not intend, nor is it permitted under its agreement with the Louisiana Gaming Control Board (“Gaming Control Board”), to begin construction of the Lake Charles facility unless and until it has sufficient resources to complete the facility.

The Company currently believes that, for at least the next 12 months, its existing cash resources and cash flows from operations will be sufficient to fund operations, maintain existing properties, make necessary debt service payments and fund construction of the tower at the Belterra Casino Resort. The Company further believes that the availability under the proposed credit facility and planned asset sales will be more than sufficient to fund the construction costs anticipated over the next 12 months for the Lake Charles facility.

In October 2002, the Company’s shelf registration with the Securities and Exchange Commission became effective. This permits the Company to issue up to $500,000,000 of debt, equity or other securities, apart from the credit facility being expanded. There can be no assurance, however, that the Company will be able to issue any of such securities on terms acceptable to the Company.

The Company’s selection for the fifteenth and final Louisiana riverboat license is conditioned on its continued compliance with certain conditions designed to ensure that the Lake Charles facility is actually built and successfully opened. In November 2002, the Gaming Control Board approved the project’s detailed architectural plans. On March 19, 2003, as required, the Company submitted the project construction contracts to the Gaming Control Board and anticipates the Gaming Control Board will review such contracts at the regularly scheduled April 2003 meeting. If approved, the Company must demonstrate shortly thereafter that it has the resources to complete the facility (to consist in part of the amended and restated bank credit facility noted above) and begin construction 30 days after the approval of the contracts. The Company must then complete the facility within 18 months of the date that it starts construction. Management intends to continue to meet all of these conditions. There can be no assurance, however, that all conditions will be met. In the event that the Company does not meet all these conditions, the Gaming Control Board may opt to retract their selection of the Company for the fifteenth license.

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OTHER SUPPLEMENTAL DATA

Management believes EBITDA, which the Company defines as earnings before net interest expense, provision for income taxes, depreciation, amortization, minority interest, cumulative effect of change in accounting principle, and extraordinary items, to be a relevant and useful measure to compare operating results among its properties and between accounting periods. EBITDA is not a measure of financial performance under the promulgations of the accounting profession, known as “generally accepted accounting principles” or “GAAP.” EBITDA is presented because it is used as a performance measure to analyze the performance of the Company’s business segments (See Note 17 to the Consolidated Financial Statements). Additionally, management believes some investors consider EBITDA to be a useful measure in determining a company’s ability to service or incur indebtedness and for estimating a company’s underlying cash flow from operations before capital costs, taxes and capital expenditures. EBITDA is one of several comparative tools used by management to assist in the evaluation of operating performance and to measure cash flow generated by ongoing operations. Below is a reconciliation of operating income (loss), as presented in the “—Results of Operations” table above, to EBITDA. EBITDA is not calculated in the same manner by all companies and accordingly, may not be an appropriate measure for comparing performance amongst different companies. EBITDA should not be considered in isolation from, or as a substitute for, net income (loss), cash flows from operations or cash flow data prepared in accordance with GAAP. See Notes (f) and (g) to the “Selected Financial Data” for a reconciliation from net income (loss) to EBITDA and for details regarding certain costs that are included in this table.

	Operating Income (Loss)			Depreciation and Amortization		EBITDA
	(in thousands)
For the twelve months ended December 31, 2002
Boomtown New Orleans	$	20,470		$	6,585	$	27,055
Casino Magic Biloxi		10,570			7,520		18,090
Boomtown Reno		10,208			7,390		17,598
Boomtown Bossier City		5,568			7,395		12,963
Belterra Casino Resort		2,616			13,175		15,791
Casino Magic Argentina		1,456			486		1,942
Card Clubs		3,622			2,280		5,902
Corporate		(23,346	)		98		(23,248	)
Asset write-offs and impairments		(2,753	)		0		(2,753	)
	$	28,411		$	44,929	$	73,340
For the twelve months ended December 31, 2001
Boomtown New Orleans	$	21,553		$	6,012	$	27,565
Casino Magic Biloxi		9,169			6,799		15,968
Boomtown Reno		11,350			7,834		19,184
Boomtown Bossier City		987			8,410		9,397
Belterra Casino Resort		(18,673	)		12,898		(5,775	)
Casino Magic Argentina		5,622			1,447		7,069
Card Clubs		2,855			3,767		6,622
Corporate		(18,124	)		2,283		(15,841	)
Asset write-offs and impairments		(23,530	)		0		(23,530	)
		(8,791	)		49,450		40,659
Sold properties		3,068			0		3,068
	$	(5,723	)	$	49,450	$	43,727
For the twelve months ended December 31, 2000
Boomtown New Orleans	$	20,849		$	5,843	$	26,692
Casino Magic Biloxi		10,512			6,963		17,475
Boomtown Reno		11,722			7,683		19,405
Boomtown Bossier City		25,953			8,428		34,381
Belterra Casino Resort		(21,501	)		2,294		(19,207	)
Casino Magic Argentina		7,405			1,573		8,978
Card Clubs		2,504			3,937		6,441
Corporate		(26,864	)		3,791		(23,073	)
		30,580			40,512		71,092
Sold properties		141,324			5,590		146,914
	$	171,904		$	46,102	$	218,006

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CONTRACTUAL OBLIGATIONS AND OTHER COMMITMENTS

The following tables summarize our contractual obligations and other commitments as of December 31, 2002:

	Payments due by Period
Contractual Obligations	Total		Less than 1 year		1-3 years		4-5 years		After 5 years
	(in thousands)
Debt and capital lease obligations	$	493,498	$	2,419	$	4,721	$	480,275	$	6,083
Operating lease obligations		40,211		7,383		10,979		8,649		13,200
Design and development commitments (a)		10,023		3,805		6,218		—		—
Lake Charles contractual obligations (b)		11,400		6,275		5,125		—		—

(a) Primarily Lake Charles project.

(b) Infrastructure improvements and other commitments.

FACTORS AFFECTING FUTURE OPERATING RESULTS

Argentina    During the second half of 2001, the political and economic condition of Argentina deteriorated. In early 2002, the government also devalued the Argentine peso, which for over ten years previously had been pegged to be equal to the U.S. dollar. At December 31, 2002, the Argentine peso had declined to $0.29 from $1.00 on December 31, 2001.

Although the Company’s Argentine casinos continue to be profitable, such profits denominated in dollars are significantly lower than prior year results. The Company anticipates the economic instability will continue through 2003. At December 31, 2002, the Company’s assets in Argentina were $7,102,000, or less than 1% of the Company’s consolidated assets.

Legislation Regarding Dockside Gaming in Louisiana    Effective April 1, 2003, Boomtown Bossier City’s gaming tax rate will be increased one percentage point to 21.5% consistent with legislation enacted in April 2001 for all riverboats in parishes bordering the Red River.

Legislation Regarding Dockside Gaming in Indiana    Effective August 1, 2002, the Company converted its Belterra Casino Resort to dockside operation, which was the first date permitted by Indiana law enacted on July 1, 2002. Customers generally prefer the convenience of dockside operation because access to the casino is not tied to a cruising schedule. Such legislation also enacted a new graduated tax structure for dockside riverboats as follows:

• 15% of the first $25,000,000 of Adjusted Gross Receipts (“AGR”);

• 20% of AGR in excess of $25,000,000, but not exceeding $50,000,000;

• 25% of AGR in excess of $50,000,000, but not exceeding $75,000,000;

• 30% of AGR in excess of $75,000,000, but not exceeding $150,000,000; and,

• 35% of AGR in excess of $150,000,000.

In addition, such legislation set an admission fee of $3 per customer admitted to the dockside riverboat casino, replacing the per person per cruise fee previously required for cruising riverboat casinos.

Based on the Belterra Casino Resort’s recent operating results, the Company believes that at current revenue levels the graduated tax structure and the reduced admission fees resulted in an overall tax rate for the property similar to the combined prior tax and admission fee structure.

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Lake Charles    Pursuant to the continuing requirements by the Gaming Control Board, in March 2003, the Company submitted construction contracts consistent with the detailed plans approved in November 2002. The Gaming Control Board is expected to review those contracts at its next scheduled meeting. The Company intends to break ground within one month of receiving approval of the contracts and to open the new resort in late 2004.

In August 2002, the Company exercised its options to lease from the Lake Charles Harbor and Terminal District 227 acres of unimproved land upon which the proposed project will be constructed. Effectiveness of the lease agreements is subject to the satisfaction of various conditions, including obtaining all of the necessary permits and approvals to construct the project. The leases call for annual payments of $835,600, commencing upon opening of the resort complex, with a maximum annual increase thereafter of 5%. Upon effectiveness, the leases will have initial terms of ten years with six renewal options of ten years each. In addition, the Company entered into a Cooperative Endeavor Agreement with the City of Lake Charles, Calcasieu Parish and the District requiring the Company to make infrastructure improvements, including, among other things, a road extension and utility improvements, and pay non-specific impact fees, which, collectively, are expected to approximate $11,400,000. The Company has included such obligations in the $325 million project budget. The Company also entered into an option to lease an additional 75 acres of unimproved land adjacent to the 227 acres. The lease option is for a one-year period, with three one-year renewal options, at a cost of $37,500 per option period. The terms of the lease, if the option were exercised, would be substantially similar to the terms of the leases for the 227 acres.

Belterra Casino Resort    In February 2003, the Company broke ground on the $37,000,000 Belterra Casino Resort expansion project that will add 300 guestrooms, meeting and conference space and other amenities. The project is expected to be completed in the first half of 2004.

Assets Held for Sale    In June 2002, the Company announced that it had entered into an agreement with a national retail developer for the sale of 60 of the 97 acres of real property it currently owns adjacent to the Hollywood Park Race Track in Inglewood, California. The purchase price is $36,000,000. The close of escrow is scheduled for the second half of 2003, subject to the developer obtaining the necessary entitlements to develop the land. In addition, the buyer has the right to extend the close of escrow under certain circumstances. The Company has also entered into an agreement with a regional home builder for the sale of the remaining 37 acres for $22,200,000. The close of escrow is scheduled for the second half of 2003, again subject to the developer obtaining the necessary entitlements to develop the land.

Contingencies    The Company assesses its exposures to loss contingencies including legal and income tax matters and provides for an exposure if it is judged to be probable and estimable. If the actual loss from a contingency differs from management’s estimate, operating results could be impacted.

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CRITICAL ACCOUNTING POLICIES

The Consolidated Financial Statements were prepared in conformity with accounting principles generally accepted in the United States. Certain of the accounting policies require management to apply significant judgment in defining the estimates and assumptions for calculating financial estimates. These judgments are subject to an inherent degree of uncertainty. Management’s judgments are based on the Company’s historical experience, terms of various past and present agreements and contracts, industry trends, and information available from other sources, as appropriate. There can be no assurance that actual results will not differ from those estimates. Changes in these estimates could adversely impact the financial position or results of operations of the Company.

The Company has determined that the following accounting policies and related estimates are critical to the preparation of the Company’s consolidated financial statements:

Property, Plant and Equipment    The Company has a significant investment in long-lived property, plant and equipment, which represents approximately 70% of the Company’s total assets. Judgments are made in determining the estimated useful lives of assets, the salvage values to be assigned to assets and if or when an asset has been impaired. The accuracy of these estimates affects the amount of depreciation expense recognized in the financial results and whether to record a gain or loss on disposition of an asset. The Company reviews the carrying value of its property, plant and equipment whenever events or circumstances indicate that the carrying value of an asset may not be recoverable from estimated future undiscounted cash flows expected to result from its use and eventual disposition.

Self-insurance Reserves    The Company is self-insured up to certain limits for costs associated with general liability, workers’ compensation and employee medical coverage. Insurance claims and reserves include accruals of estimated settlements for claims. In estimating these accruals, the Company considers historical loss experience, makes judgments about the expected levels of cost per claim and relies on independent consultants.

Income Tax Assets and Liabilities    The Company utilizes estimates related to cash flow projections for the application of Statement of Financial Accounting Standard No. 109 to the realization of deferred income tax assets. The estimates are based upon recent operating results and budgets for future operating results. The determination of deferred income tax liabilities includes management’s judgments of expected settlements of audits by various tax authorities and the realization of tax deductions and credits expected to be realized in the future.

Asset Disposition Reserves    The Company had remaining asset disposition reserves of $4,049,000 at December 31, 2002 related to the sale of casino and race track assets in 1999 and 2000. The initial reserves were established for self-insured liabilities, tax matters and other pre-asset sale exposures. Management evaluates the reserve regularly based on estimates provided by independent consultants and historical experience.

Goodwill and Other Intangible Assets    In January 2002, the Company adopted SFAS No. 142 “Goodwill and Other Intangible Assets” which requires an annual review of goodwill and other nonamortizing intangible assets for impairment (see Note 2 to the Consolidated Financial Statements). The annual evaluation of goodwill and other nonamortizing intangible assets requires the use of estimates, including recent and future operating results, discount rates, risk premiums and terminal values, to determine the estimated fair values of the Company’s reporting units and gaming licenses.

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RECENTLY ISSUED ACCOUNTING STANDARDS

Recently issued accounting standards adopted by the Company in 2002 are in Note 1 to the Consolidated Financial Statements. The following recently issued accounting standards will be implemented in future periods.

Statement of Financial Accounting Standards No. 143 (“SFAS No. 143”)    In June 2001, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 143, “Accounting for Asset Retirement Obligations”. SFAS No. 143 establishes accounting standards for the recognition and measurement of an asset retirement obligation and its associated asset retirement costs. It also provides accounting guidance for legal obligations associated with the retirement of tangible long-lived assets. SFAS No. 143 is effective for financial statements issued for fiscal years beginning after June 15, 2002. The Company does not believe that the impact of SFAS No. 143 on its financial position and results of operations will be material.

Statement of Financial Accounting Standards No. 145 (“SFAS No. 145”)    In April 2002, the FASB issued SFAS No. 145, “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections”. The most significant provisions of this statement relate to the rescission of Statement No. 4, “Reporting Gains and Losses from Extinguishment of Debt”. Under this new statement, any gain or loss on extinguishment of debt that was classified as an extraordinary item in prior periods that does not meet certain defined criteria must be reclassified as non-extraordinary. The Company adopted this statement on January 1, 2003. The Company had no such extraordinary items in 2001 and 2002.

Statement of Financial Accounting Standards No. 146 (“SFAS No. 146”)    In June 2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities”. SFAS 146 addresses financial accounting and reporting for costs associated with exit or disposal activities. SFAS No. 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. An entity’s commitment to a plan, by itself, does not create a liability. The provisions of this statement are required for exit or disposal activities that are initiated after December 31, 2002. The Company does not believe that the impact of SFAS No. 146 on its financial position and results of operations will be material.

Financial Accounting Standards Board Interpretation No. 46 (“FIN 46”)    In January 2003, the FASB issued Interpretation No. 46 (“FIN 46”), “Consolidation of Variable Interest Entities.” FIN 46 addresses consolidation by business enterprises where equity investors do not bear the residual economic risks and rewards. These entities have been commonly referred to as “special purpose entities.” The Company does not have any such “special purpose entities and therefore the adoption of FIN 46 will not have a material impact on the Company’s financial position and results of operations.

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FORWARD-LOOKING STATEMENTS AND RISK FACTORS

Except for the historical information contained herein, the matters addressed in this Annual Report on Form 10-K may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. Words such as, but not limited to, “believes”, “expects”, “anticipates”, “estimates”, “intends”, “plans”, “could”, “may”, “should” and similar expressions are intended to identify forward-looking statements. Such forward-looking statements, which may include, without limitation, statements regarding expansion plans, cash needs, cash reserves, liquidity, operating and capital expenses, financing options, expense reductions, operating results and pending regulatory matters, are subject to a variety of risks and uncertainties that could cause actual results to differ materially from those anticipated by the Company. From time to time, oral or written forward-looking statements are also included in Pinnacle’s periodic reports on Forms 10-Q an 8-K, press releases and other materials released to the public.

Actual results may differ materially from those that might be anticipated from forward-looking statements. This can occur as a result of inaccurate assumptions or as a consequence of known or unknown risks and uncertainties. The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. Factors that may cause actual performance of the Company to differ materially from that contemplated by such forward-looking statements include, among others:

• any failure to comply with the conditions negotiated with the Louisiana Gaming Control Board for the Company’s casino development project in Lake Charles, Louisiana, and its ability to complete the project on time and on budget;

• development of the Lake Charles project, expansion of the Belterra Resort Casino and other capital intensive projects could strain financial resources and might not provide for a sufficient return;

• many factors, some of which are beyond the Company’s control, could prevent the Company from completing its construction and development projects within budget and on time, including:

(i) shortages of materials, including slot machines or other gaming equipment;

(ii) shortages of skilled labor or work stoppages;

(iii) unforeseen construction scheduling, engineering, environmental, geological or archaeological problems;

(iv) weather interference, floods, fires or other casualty losses;

(v) unanticipated cost increases, or incorrect cost estimates; and

(vi) the availability of sufficient funds under the Company’s credit facilities which is dependent upon satisfaction of covenants and conditions.

• the effectiveness of the planned new hotel tower and other expansion plans at the Belterra Casino Resort in enhancing Belterra Casino Resort’s status as a regional resort property and in increasing utilization of its casino and other facilities;

• additional costs in connection with the settlement of the Indiana Gaming Commission investigation, including a failure to complete on a timely basis the new 300-guestroom tower at Belterra Casino Resort;

• changes in gaming laws and regulations, including the expansion of legalized casino gaming in jurisdictions in which the Company operates or in nearby jurisdictions;

• the effectiveness of the renovation and re-branding project completed in 2002 at Boomtown Bossier City in drawing additional customers to the property despite significant competition in the local market;

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• failure to complete the sale of excess land in Inglewood, California on a timely basis, which could affect the Company’s ability to access funds under its proposed new bank credit facility;

• the effect of current and future weather conditions and other natural events affecting the Company’s key markets;

• any failure to complete the proposed bank credit facility, which facility would include financing for the Lake Charles project (see Note 18 to the Consolidated Financial Statements);

• concentration of suppliers in the slot machine manufacturing industry, which poses significant risk of higher prices and could result in increased costs to the Company;

• the impact of fuel and transportation costs on the willingness of customers to travel to the Company’s casino properties;

• any failure to obtain or retain gaming licenses or regulatory approvals, or the limitation, conditioning, suspension or revocation of any existing gaming license;

• risks associated with the Company’s substantial indebtedness, leverage and debt service;

• loss or retirement of key executives;

• risks related to pending litigation and the possibility of future litigation against the Company or the gaming industry in general;

• significant competition facing the Company in all of its markets, including from casino operators who have more resources and have built or are building competitive casino properties;

• increases in existing, or imposition of new, taxes or fees;

• adverse changes in the public perception and acceptance of gaming and the gaming industry;

• pursuit of strategic expansions or acquisitions that could have an adverse impact on its business if unsuccessful; and,

• other adverse changes in the gaming markets in which the Company operates.

In addition, these statements could be affected by general domestic and international economic and political conditions, including terrorism or war, slowdowns in the economy, uncertainty as to the future direction of the economy and vulnerability of the economy to domestic or international incidents, as well as market conditions in the Company’s industry.

The Private Securities Litigation Reform Act of 1995 (the “Act”) provides certain “safe harbor” provisions for forward-looking statements. All forward-looking statements made in this Annual Report on Form 10-K are made pursuant to the Act. For more information on the potential factors that could affect the Company’s operating results and financial condition, see “—Factors Affecting Future Operating Results” above and review the Company’s other filings with the Securities and Exchange Commission.

Item 7A.    Quantitative and Qualitative Disclosures About Market Risk

The Company’s primary exposures to market risk (or the risk of loss arising from adverse changes in market rates and prices, such as interest rates and foreign currency exchange rates) are with respect to the foreign currency exchange rate with Argentina due to the devaluation of the Argentine Peso in January 2002. Total assets of Casino Magic Argentina at December 31, 2002 were $7,102,000, or less than 1% of consolidated assets of the Company.

The Company also has potential interest rate risk associated with the short-term floating interest rate on borrowings under the Credit Facility and the proposed credit facility (see Note 8 to the Consolidated Financial

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Statements). At December 31, 2002, the Company had no outstanding borrowings under the Credit Facility, but anticipates using the proposed credit facility to fund construction of its Lake Charles project.

The table below provides the principal cash flows and related weighted average interest rates by contractual maturity dates for the Company’s debt obligations. The Company did not hold any investments in market risk sensitive instruments of the type described in Item 305 of Regulation S-K.

Liabilities	2003			2004			2005			2006			2007			Thereafter			Total			Fair Value
	(in thousands)
9.25% Notes	$	0		$	0		$	0		$	0		$	350,000		$	0		$	350,000		$	311,500
Fixed rate		0	%		0	%		0	%		0	%		9.25	%		0	%		9.25	%
9.5% Notes		0			0			0			0			125,000			0			125,000			111,875
Fixed rate		0	%		0	%		0	%		0	%		9.5	%		0	%		9.5	%
All Other(a)		2,419			2,339			2,382			2,564			2,711			6,083			18,498			18,498
Avg. interest rate		5.8	%		5.57	%		5.59	%		5.59	%		5.59	%		5.77	%		5.66	%

(a) Primarily the Hollywood Park-Casino capitalized lease obligation of $16.9 million with a fixed rate of 5.53%.

Item 8.    Financial Statements

Financial statements and accompanying footnotes are attached hereto.

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

In May 2002, a Form 8-K was filed with the SEC reporting that Arthur Andersen LLP had been dismissed as the Company’s Independent Accountants and in June 2002, a Form 8-K was filed indicating that Deloitte & Touche LLP had been engaged as the Company’s Independent Accountants.

PART III

Item 10.    Directors and Executive Officers of the Registrant

The information required under this item is incorporated by reference herein from the Company’s definitive 2003 proxy statement anticipated to be filed with the Securities and Exchange Commission within 120 days after December 31, 2002.

Item 11.    Executive Compensation

The information required under this item is incorporated by reference herein from the Company’s definitive 2003 proxy statement anticipated to be filed with the Securities and Exchange Commission within 120 days after December 31, 2002.

Item 12.    Security Ownership of Certain Beneficial Owners and Management

The information required under this item is incorporated by reference herein from the Company’s definitive 2003 proxy statement anticipated to be filed with the Securities and Exchange Commission within 120 days after December 31, 2002.

Item 13.    Certain Relationships and Related Transactions

The information required under this item is incorporated by reference herein from the Company’s definitive 2003 proxy statement anticipated to be filed with the Securities and Exchange Commission within 120 days after December 31, 2002.

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Item 14.    Controls and Procedures

The Company’s management, under the supervision and with the participation of the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), performed an evaluation of the effectiveness of the design and operation of the Company’s “disclosure controls and procedures” (as defined in Rule 13a-14(c) of the Exchange Act). Based on that evaluation, the CEO and CFO concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2002 (the “Evaluation Date”), and designed to ensure that all material information required to be filed in this annual report has been made known to them as appropriate to allow timely decisions regarding required disclosures.

There have been no significant changes in the Company’s internal controls or in other factors that could significantly affect internal controls subsequent to the Evaluation Date. Although there were no significant changes in the Company’s internal controls or in other factors that could significantly affect those controls subsequent to the Evaluation Date, the Company’s senior management, in conjunction with its Board of Directors, continuously reviews overall Company policies and improves documentation of important financial reporting and internal control matters. The Company is committed to continuously improving the state of its internal controls, corporate governance and financial reporting.

The Company’s management, including the CEO and CFO, does not expect that our disclosure or internal controls will prevent all errors or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

PART IV

Item 15.    Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a)  Documents filed as a part of this report.

1. The consolidated financial statements are set forth in the index the Notes to Consolidated Financial Statements attached hereto.

2. Financial Statement Schedule II—Valuation and Qualifying Accounts is set forth on page      of this report.

3. Exhibits

Exhibit Number	Description of Exhibit
3.1	Restated Certificate of Incorporation of Pinnacle Entertainment, Inc., is hereby incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report, Form 10-Q for the quarter ended June 30, 2002.
3.2*	Restated By-laws of Pinnacle Entertainment, Inc., as amended.
3.3	Articles of Incorporation of HP/Compton, Inc., are hereby incorporated by reference to Exhibit 3.9 to the Company’s Amendment No. 1 to Form S-4 Registration dated October 30, 1997. (SEC File No. 333-34471).
3.4	By-laws of HP/Compton, Inc., are hereby incorporated by reference to Exhibit 3.10 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated October 30, 1997. (SEC File No. 333-34471).

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Exhibit Number	Description of Exhibit
3.5	Articles of Organization of Crystal Park Hotel and Casino Development Company, LLC, are hereby incorporated by reference to Exhibit 3.11 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated October 30, 1997. (SEC File No. 333-34471).
3.6	Operating Agreement of Crystal Park Hotel and Casino Development Company, LLC, are hereby incorporated by reference to Exhibit 3.12 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated October 30, 1997. (SEC File No. 333-34471).
3.7	Amended and Restated Certificate of Incorporation of Boomtown, Inc., is hereby incorporated by reference to Exhibit 3.17 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated October 30, 1997. (SEC File No. 333-34471).
3.8	By-laws of Boomtown, Inc., are hereby incorporated by reference to Exhibit 3.18 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated October 30, 1997. (SEC File No. 333-34471).
3.9	Certificate of Amended and Restated Articles of Incorporation of Boomtown Hotel & Casino, Inc., are hereby incorporated by reference to Exhibit 3.19 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated October 30, 1997. (SEC File No. 333-34471).
3.10	Revised and Restated By-laws of Boomtown Hotel & Casino, Inc., are hereby incorporated by reference to Exhibit 3.20 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated October 30, 1997. (SEC File No. 333-34471).
3.11	Articles of Incorporation of Bayview Yacht Club, Inc., are hereby incorporated by reference to Exhibit 3.21 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated October 30, 1997. (SEC File No. 333-34471).
3.12	By-laws of Bayview Yacht Club, Inc., are hereby incorporated by reference to Exhibit 3.22 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated October 30, 1997. (SEC File No. 333-34471).
3.13	Amended and Restated Agreement of Limited Partnership of Mississippi—I Gaming, L.P., is hereby incorporated by reference to Exhibit 10.31 to the Company’s Quarterly Report on Form 10-Q for quarter ended June 30, 1997. (SEC File No. 000-10619).
3.14	Articles of Incorporation of Louisiana Gaming Enterprises, Inc., are hereby incorporated by reference to Exhibit 3.25 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated October 30, 1997.
3.15	Second Amended and Restated Partnership Agreement of Louisiana—I Gaming, a Louisiana Partnership in Commendam, is hereby incorporated by reference to Exhibit 3.26 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
3.16	Certificate of Incorporation of HP Yakama Consulting, Inc., is hereby incorporated by reference to Exhibit 3.27 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
3.17	By-laws of HP Yakama Consulting, Inc., are hereby incorporated by reference to Exhibit 3.28 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
3.18	Articles of Incorporation of Casino Magic Corp., are hereby incorporated by reference to Exhibit 3.29 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
3.19	Amended By-laws of Casino Magic Corp., are hereby incorporated by reference to Exhibit 3.30 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.

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Exhibit Number	Description of Exhibit
3.20	Articles of Incorporation of Casino Magic American Corp., are hereby incorporated by reference to Exhibit 3.31 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
3.21	By-laws of Casino Magic American Corp., are hereby incorporated by reference to Exhibit 3.32 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
3.22	Articles of Incorporation of Biloxi Casino Corp., are hereby incorporated by reference to Exhibit 3.33 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
3.23	By-laws of Biloxi Casino Corp., are hereby incorporated by reference to Exhibit 3.34 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
3.24	Articles of Incorporation of Casino Magic Finance Corp., are hereby incorporated by reference to Exhibit 3.35 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
3.25	By-laws of Casino Magic Finance Corp., are hereby incorporated by reference to Exhibit 3.36 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
3.26	Articles of Incorporation of Casino One Corporation, are hereby incorporated by reference to Exhibit 3.37 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
3.27	By-laws of Casino One Corporation, are hereby incorporated by reference to Exhibit 3.38 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
3.28	Articles of Incorporation of Bay St. Louis Casino Corp., are hereby incorporated by reference to Exhibit 3.39 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
3.29	By-laws of Bay St. Louis Casino Corp., are hereby incorporated by reference to Exhibit 3.40 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
3.30	Articles of Incorporation of Mardi Gras Casino Corp., are hereby incorporated by reference to Exhibit 3.41 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
3.31	By-laws of Mardi Gras Casino Corp., are hereby incorporated by reference to Exhibit 3.42 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
3.32	Articles of Incorporation of Boomtown Hoosier, Inc., are hereby incorporated by reference to Exhibit 3.43 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
3.33	By-laws of Boomtown Hoosier, Inc., are hereby incorporate by reference to Exhibit 3.44 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
3.34	Articles of Organization of Indiana Ventures, LLC (subsequently renamed Belterra Resort Indiana, LLC), are hereby incorporated by reference to Exhibit 3.45 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
3.35	Operating Agreement of Indiana Ventures, LLC (subsequently renamed Belterra Resort Indiana, LLC), is hereby incorporated by reference to Exhibit 3.46 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
3.36	Articles of Incorporation of HP Casino, Inc., are hereby incorporated by reference to Exhibit 3.51 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.

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Exhibit Number	Description of Exhibit
3.37	By-laws of HP Casino, Inc., are hereby incorporated by reference to Exhibit 3.52 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
3.38	Articles of Incorporation of Casino Magic of Louisiana, Corporation are hereby incorporated by reference to Exhibit 3.44 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2000.
3.39	By-laws of Casino Magic of Louisiana, Corporation are hereby incorporated by reference to Exhibit 3.45 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2000.
3.40	Articles of Incorporation of Jefferson Casino Corporation are hereby incorporated by reference to Exhibit 3.46 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2000.
3.41	By-laws of Jefferson Casino Corporation are hereby incorporated by reference to Exhibit 3.47 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2000.
4.1	Hollywood Park 1996 Stock Option Plan is hereby incorporated by reference to Exhibit 10.24 to the Company’s Registration Statement on Form S-4 dated September 18, 1996. (SEC File No. 333-12253).
4.2	Hollywood Park 1993 Stock Option Plan is hereby incorporated by reference to Exhibit 4.2 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
4.3	Pinnacle Entertainment, Inc. 2001 Stock Option Plan is hereby incorporated by reference to Appendix A to the Company’s Definitive Proxy Statement filed with the SEC on April 11, 2001.
4.4	Pinnacle Entertainment, Inc. 2002 Stock Option Plan is hereby incorporated by reference to Appendix A to the Company’s Definitive Proxy Statement filed with the SEC on May 15, 2002.
4.5	Indenture, dated August 1, 1997, governing the 9.5% Senior Subordinated Notes due 2007 by and among the Company, Hollywood Park Operating Company, Hollywood Park Food Services, Inc., Hollywood Park Fall Operating Company, HP/Compton, Inc., Crystal Park Hotel and Casino Development Company, LLC, HP Yakama, Inc., Turf Paradise, Inc., Boomtown, Inc., Boomtown Hotel & Casino, Inc., Louisiana—I Gaming, Louisiana Gaming Enterprises, Inc., Mississippi—I Gaming, L.P., Bayview Yacht Club, Inc. and The Bank of New York, as trustee, is hereby incorporated by reference to Exhibit 10.37 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1997. (Sec File No. 000-10619).
4.6	First Supplemental Indenture, dated as of February 5, 1999, to Indenture dated as of August 1, 1997 governing the 9.5% Senior Subordinated Notes due 2007, by and among the Company and Hollywood Park Operating Company, as co-issuers, and Bayview Yacht Club, Inc., Boomtown Hotel & Casino, Inc., Boomtown, Inc., Crystal Park Hotel and Casino Development Company, LLC, Hollywood Park Fall Operating Company, Hollywood Park Food Services, Inc., Hollywood Park Operating Company, HP/Compton, Inc., HP Yakama, Inc., Louisiana Gaming Enterprises, Inc., Louisiana—I Gaming, a Louisiana Partnership in Commendam, Mississippi—I Gaming, LP, and Turf Paradise, Inc. as guarantors, and The Bank of New York, as trustee, is hereby incorporated by reference to Exhibit 4.4 to the Company’s S-4 Registration dated March 2, 1999.
4.7	Form of Series B 9.5% Senior Subordinated Notes due 2007 (included in Exhibit 4.5), is hereby incorporated by reference to the Company’s Amendment No. 1 to Registration Statement on Form S-4 dated October 30, 1997. (SEC File No. 333-34471).

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Exhibit Number	Description of Exhibit
4.8	Indenture, dated as of February 18, 1999, governing the 9.25% Senior Subordinated Notes due 2007, by and among the Company as issuer, and Bay St. Louis Casino Corp., Bayview Yacht Club, Inc., Biloxi Casino Corp., Boomtown Hoosier, Inc., Boomtown Hotel & Casino, Inc., Boomtown, Inc., Casino Magic American Corp., Casino Magic Corp., Casino Magic Finance Corp., Casino One Corporation, Crystal Park Hotel and Casino Development Company, LLC, Hollywood Park Fall Operating Company, Hollywood Park Food Services, Inc., Hollywood Park Operating Company, HP Casino, Inc., HP/Compton, Inc., HP Yakama, Inc., HP Yakama Consulting, Inc., Indiana Ventures LLC, Louisiana Gaming Enterprises, Inc., Louisiana—I Gaming, a Louisiana Partnership in Commendam, Mardi Gras Casino Corp., Mississippi—I Gaming, L.P., Pinnacle Gaming Development Corp., Switzerland County Development Corp., and Turf Paradise, Inc. as initial guarantors, and The Bank of New York, as trustee, is hereby incorporated by reference to Exhibit 4.6 to the Company’s S-4 Registration Statement dated March 2, 1999.
4.9	Form of Series B 9.25% Senior Subordinated Notes due 2007 (included in Exhibit 4.7), is hereby incorporated by reference to Exhibit 4.7 to the Company’s S-4 Registration Statement dated March 2, 1999.
10.1	Directors Deferred Compensation Plan for Hollywood Park, Inc. is hereby incorporated by reference to Exhibit 10.1 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
10.2	Aircraft Time Sharing Agreement dated June 2, 1998, by and between Hollywood Park, Inc. and R.D. Hubbard Enterprises, Inc. is hereby incorporated by reference to Exhibit 10.2 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
10.3	Operating Agreement for Crystal Park Hotel and Casino Development Company, LLC, a California Limited Liability Company, dated July 18, 1996, effective August 28, 1996 is hereby incorporated by reference to Exhibit 10.6 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2001.
10.4	Profit Participation Agreement, by and between Hollywood Park, Inc., and North American Sports Management, Inc., dated July 14, 1997, is hereby incorporated by reference to Exhibit 10.40 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1997 (SEC File No. 000-10619).
10.5	Voting Agreement, dated as of February 25, 1998, by and between Hollywood Park, Inc., and Marlin F. Torguson, is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed February 26, 1998 (SEC File No. 001-13641).
10.6	Purchase Agreement, dated as of February 25, 1998, among Hilton Gaming (Switzerland County) Corporation and Boomtown Hoosier, Inc., is hereby incorporated by reference to Exhibit 10.40 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
10.7	Amended and Restated Reducing Revolving Loan Agreement, dated October 14, 1998, among Hollywood Park, Inc., and the banks named therein, Societe Generale and Bank of Scotland (as Managing Agents), First National Bank of Commerce (as Co-Agent), and Bank of America National Trust and Savings Association (as Administrative Agent), is hereby incorporated by reference to Exhibit 2 of the Company’s Current Report on Form 8-K, filed October 30, 1998.
10.8	Amendment No. 1 to Amended and Restated Reducing Revolving Loan Agreement, dated June 2, 1999, is hereby incorporated by reference to Exhibit 10.42 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1999.

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Exhibit Number	Description of Exhibit
10.9	Amendment No. 2 to Amended and Restated Reducing Revolving Loan Agreement, dated September 24, 1999, is hereby incorporated by reference to Exhibit 10.43 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1999.
10.10	Amendment No. 3 to Amended and Restated Reducing Revolving Loan Agreement, dated September 15, 2000.
10.11	Amendment No. 4 to Amended and Restated Reducing Revolving Loan Agreement, dated March 16, 2001.
10.12	Amendment No. 5 to Amended and Restated Reducing Revolving Credit Loan Agreement and Waiver, dated July 23, 2001 is hereby incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the Quarter ended June 30, 2001.
10.13	Amendment No. 6 to Amended and Restated Reducing Revolving Credit Loan Agreement and Waiver, dated November 7, 2001 is hereby incorporated by reference to the Company’s Quarterly Report on From 10-Q for the Quarter ended September 30, 2001.
10.14	Asset Purchase Agreement, dated as of December 9, 1999, between BSL, Inc., and Casino Magic Corp. is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed December 21, 1999.
10.15	Asset Purchase Agreement, dated as of December 9, 1999, between BTN, Inc. and Boomtown, Inc. is hereby incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed December 21, 1999.
10.16	First Amendment to Asset Purchase Agreement, dated December 17, 1999, between BSL, Inc. and Casino Magic Corp. is hereby incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed December 21, 1999.
10.17	First Amendment to Asset Purchase Agreement, dated December 17, 1999, between BTN, Inc. and Boomtown, Inc. is hereby incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed December 21, 1999.
10.18	Guaranty issued by Hollywood Park in favor of BSL, Inc. entered into as of December 9, 1999 is hereby incorporated by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K filed December 21, 1999.
10.19	Guaranty issued by Hollywood Park in favor of BTN, Inc. entered into as of December 9, 1999 is hereby incorporated by reference to Exhibit 10.8 to the Company’s Current Report on Form 8-K filed December 21, 1999.
10.20	Lease and Agreement by and between Pinnacle Entertainment, Inc. and Century Gaming Management, Inc., dated September 10, 1999, is hereby incorporated by reference to Exhibit 10.38 to the Company’s Annual Report on Form 10-K/A for the year ended December 31, 1999, filed with the SEC on September 8, 2000.
10.21	First Amendment to Lease and Agreement by and between Pinnacle Entertainment, Inc. and Century Gaming Management, Inc. dated September 6, 2000, is hereby incorporated by reference to Exhibit 2.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2000.
10.22*	Second Amendment to Lease and Agreement, dated as of October 1, 2001, by and between Pinnacle Entertainment, Inc. and Century Gaming Management, Inc.
10.23*	Third Amendment to Lease and Agreement, dated as of December 4, 2002, by and between Pinnacle Entertainment, Inc. and Century Gaming Management, Inc.

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Exhibit Number	Description of Exhibit
10.24	First Amendment to the Pinnacle Entertainment, Inc. (formerly Hollywood Park, Inc.) Executive Deferred Compensation Plan dated March 15, 2000, is hereby incorporated by reference to Exhibit 10.55 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2001.
10.25	Second Amendment to the Pinnacle Entertainment, Inc. Executive Compensation Plan dated January 1, 2001 is hereby incorporated by reference to Exhibit 10.56 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2001.
10.26	Statement of Conditions to Riverboat Gaming License of PNK (Lake Charles), LLC dated November 20, 2001 is hereby incorporated by reference to Exhibit 10.57 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2001.
10.27*	Employment and Consulting Agreement, dated as of April 11, 2002, between the Company and G. Michael Finnigan.
10.28	Employment Agreement, dated as of April 10, 2002, between the Company and Daniel R. Lee is hereby incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2002.
10.29*	Employment Agreement, dated as of August 13, 2002, between the Company and John A. Godfrey.
10.30	Amended and Restated Lease, dated February 14, 2000, by and between Crystal Park Hotel and Casino Development Company, LLC and California Casino Management, Inc. is hereby incorporated by reference to Exhibit 10.7 to the Company Annual Report on Form 10-K/A for the year ended December 31, 1999, filed with the SEC on September 8, 2000.
10.31*	First Amendment of Amended and Restated Lease, dated as of October 1, 2001, between Crystal Park Hotel and Casino Development Company, LLC and California Casino Management, Inc.
10.32*	Second Amendment of Amended and Restated Lease, dated as of December 4, 2002, between Crystal Park Hotel and Casino Development Company, LLC and California Casino Management, Inc.
10.33*	Severance Agreement, dated May 16, 2002, between Pinnacle Entertainment, Inc. and Loren S. Osrow.
10.34	Lease Agreement, dated April 4, 1992, between G&W Enterprises, Inc. and Biloxi Casino Corp. is hereby incorporated by reference to Exhibit 10.7 to the Form S-1 Registration Statement (SEC File No. 333-51438) of Casino Magic Corp. dated August 28, 1992.
10.35*	Amendment to Lease Agreement, dated February 26, 1999, between G&W Enterprises, Inc. and Biloxi Casino Corp.
10.36	Lease Agreement, dated November 23, 1992, between Gary Gollott, Tommy Gollot, and Tyrone Gollott, and Biloxi Casino Corp. is hereby incorporated by reference to the Form S-4 Registration Statement (SEC File No. 33-71572) of Casino Magic Corp. dated November 12, 1993.
10.37*	Amendment to Lease Agreement, dated February 26, 1999, between Gary Gollott, Tommy Gollott and Tyrone Gollott, and Biloxi Casino Corp.
10.38	Public Trust Tidelands Lease, dated May 27, 1993, between Biloxi Casino Corp. and the State of Mississippi is hereby incorporated by reference to Exhibit 10.10 to the Form S-4 Registration Statement (SEC File No. 33-71572) of Casino Magic Corp. dated November 12, 1993.
10.39	Form of Lease by and between the Webster Family Limited Partnership and the Diuguid Family Limited Partnership, and Pinnacle Gaming Development Corp. (executed by the parties on December 11, 1998 and subsequently assigned by Pinnacle Gaming Development Corp. to Belterra Resort Indiana, LLC) is hereby incorporated by reference to Exhibit B contained in Exhibit 10.47 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1998.

37

Exhibit Number	Description of Exhibit
10.40	Form of Lease by and between Daniel Webster, Marsha S. Webster, William G. Diuguid, Sara T. Diuguid, J.R. Showers, III and Carol A. Showers, and Pinnacle Gaming Development Corp. (executed by the parties on December 11, 1998 and subsequently assigned by Pinnacle Gaming Corp. to Belterra Resort Indiana, LLC) is hereby incorporated by reference to Exhibit B contained in Exhibit 10.49 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1998.
10.41	Lease Agreement, dated September 29, 1995, between the State of Mississippi and Casino One Corporation, is hereby incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q (SEC File No. 000-20712) of Casino Magic Corp. for the quarter ended September 30, 1995.
11.1*	Statement re: Computation of Per Share Earnings
21.1*	Subsidiaries of Pinnacle Entertainment, Inc.
23.1*	Consent of Deloitte & Touche LLP
99.1*	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002—CEO.
99.2*	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002—CFO.
99.3*	Government Regulation and Gaming Issues

* Filed herewith.

(b)  Reports on Form 8-K

1.    On November 21, 2002 a Form 8-K was filed attaching a press release of the same date announcing Casino Magic Biloxi received a favorable verdict in the Isle of Capri litigation.

2.    On December 4, 2002 a Form 8-K was filed attaching a press release of the same date regarding a lawsuit that was filed against the Company by Paul Alanis, the Company’s former Chief Executive Officer.

3.    On December 13, 2002 a Form 8-K was filed indicating that a shareholder of the Company had filed a derivative lawsuit on behalf of the Company against certain former and current officers and directors.

38

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.

PINNACLE ENTERTAINMENT, INC .(Registrant)
By:	/s/    DANIEL R. LEE	Dated: March 26, 2003
	Daniel R. Lee
	Chairman of the Board and Chief Executive Officer (Principal Executive Officer)
By:	/s/    STEPHEN H. CAPP	Dated: March 26, 2003
	Stephen H. Capp
	Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)
By:	/s/    DANIEL R. LEE	Dated: March 26, 2003
	Daniel R. Lee
	Director
By:	/s/    JOHN V. GIOVENCO	Dated: March 26, 2003
	John V. Giovenco
	Director
By:	/s/    BRUCE A. LESLIE	Dated: March 26, 2003
	Bruce A. Leslie
	Director
By:	/s/    JAMES L. MARTINEAU	Dated: March 26, 2003
	James L. Martineau
	Director
By:	/s/    MICHAEL ORNEST	Dated: March 26, 2003
	Michael Ornest
	Director
By:	/s/    BONNIE M. REISS	Dated: March 26, 2003
	Bonnie M. Reiss
	Director
By:	/s/    TIMOTHY J. PARROTT	Dated: March 26, 2003
	Timothy J. Parrott
	Director
By:	/s/    LYNN P. REITNOUER	Dated: March 26, 2003
	Lynn P. Reitnouer
	Director
By:	/s/    MARLIN F. TORGUSON	Dated: March 26, 2003
	Marlin F. Torguson
	Director

39

CERTIFICATIONS

I, Daniel R. Lee, certify that:

1. I have reviewed this annual report on Form 10-K of Pinnacle Entertainment, Inc.;

2. Based on my knowledge, this annual 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 annual report;

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

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a. designed such disclosure controls and procedures 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 annual report is being prepared;

b. evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and

c. presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

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

a. all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

/s/    DANIEL R. LEE	Date: March 31, 2003
Daniel R. Lee Chairman of the Board and Chief Executive Officer

40

I, Stephen H. Capp, certify that:

1. I have reviewed this annual report on Form 10-K of Pinnacle Entertainment, Inc.;

2. Based on my knowledge, this annual 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 annual report;

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

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a. designed such disclosure controls and procedures 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 annual report is being prepared;

b. evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and

c. presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

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

a. all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

/s/    STEPHEN H. CAPP	Date: March 31, 2003
Stephen H. Capp Executive Vice President and Chief Financial Officer

41

PINNACLE ENTERTAINMENT, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Independent Auditors’ Report	43
Consolidated Statements of Operations for the years ended December 31, 2002, 2001 and 2000	44
Consolidated Balance Sheets as of December 31, 2002 and 2001	45
Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2002, 2001 and 2000	46
Consolidated Statements of Cash Flows for the years ended December 31, 2002, 2001 and 2000	47
Notes to Consolidated Financial Statements	48
Other Financial Data	83

42

INDEPENDENT AUDITORS’ REPORT

To the Board of Directors and Stockholders of

Pinnacle Entertainment, Inc.:

We have audited the accompanying consolidated balance sheets of Pinnacle Entertainment, Inc., (a Delaware corporation, formerly Hollywood Park, Inc.) and subsidiaries (the “Company”), as of December 31, 2002 and 2001, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2002. Our audits also included the financial statement schedule listed in the Index at Item 15. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Pinnacle Entertainment, Inc. and subsidiaries as of December 31, 2002 and 2001, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2002 in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 2 to the Consolidated Financial Statements, Pinnacle Entertainment Inc. changed its method of accounting for goodwill and other intangible assets to conform to Statement of Financial Standards No. 142, “Goodwill and Other Intangible Assets,” in 2002 and recorded a cumulative effect of a change in accounting principle in the first quarter of 2002.

/s/    DELOITTE & TOUCHE LLP

DELOITTE & TOUCHE LLP

Las Vegas, Nevada

February 21, 2003, except as to Note 18,  as to which the date is March 19, 2003

43

PINNACLE ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

	For the years ended December 31,
	2002			2001			2000
	(in thousands, except per share data)
Revenues:
Gaming	$	432,343		$	421,491		$	448,378
Food and beverage		29,751			30,952			31,920
Truck stop and service station		19,720			20,190			21,782
Hotel and recreational vehicle park		14,723			14,977			12,730
Other income		17,464			20,433			25,340
Racing		0			0			9,452
		514,001			508,043			549,602
Expenses:
Gaming		252,551			238,975			244,823
Food and beverage		34,034			38,799			35,180
Truck stop and service station		18,154			18,703			20,300
Hotel and recreational vehicle park		9,095			10,169			6,663
Racing		0			0			4,133
Selling, general and administrative		106,611			120,335			107,978
Depreciation and amortization		44,929			49,450			46,102
Other operating expenses		9,253			14,159			10,578
Asset write-offs and impairment write-downs		2,753			23,530			0
Indiana regulatory settlement and related costs		6,609			0			0
Corporate relocation and reorganization costs		1,601			0			0
Gain on disposition of assets		0			(500	)		(118,816	)
Pre-opening costs, Belterra Casino Resort		0			610			15,030
Terminated merger reserve recoveries and costs		0			(464	)		5,727
		485,590			513,766			377,698
Operating income (loss)		28,411			(5,723	)		171,904
Interest income		(2,206	)		(5,021	)		(12,604	)
Interest expense, net		49,688			49,853			52,620
(Loss) income before cumulative change in accounting principle, extraordinary item and income taxes		(19,071	)		(50,555	)		131,888
Income tax (benefit) expense		(6,146	)		(21,906	)		52,396
(Loss) income before cumulative change in accounting principle and extraordinary item		(12,925	)		(28,649	)		79,492
Cumulative effect of change in accounting principle, net of income tax benefit		56,704			0			0
Extraordinary item, net of income tax benefit		0			0			2,653
Net (loss) income	$	(69,629	)	$	(28,649	)	$	76,839
Net (loss) income per common share—basic
(Loss) income before cumulative change in accounting principle and extraordinary item, net of income taxes	$	(0.50	)	$	(1.11	)	$	3.02
Cumulative effect of change in accounting principle, net of income tax		(2.20	)		0.00			0.00
Extraordinary item, net of income tax benefit		(0.00	)		0.00			(0.10	)
Net (loss) income per common share—basic	$	(2.70	)	$	(1.11	)	$	2.92
Net (loss) income per common share—diluted
(Loss) income before cumulative change in accounting principle and extraordinary item, net of income taxes	$	(0.50	)	$	(1.11	)	$	2.90
Cumulative effect of change in accounting principle, net of income tax benefit		(2.20	)		0.00			0.00
Extraordinary item, net of income tax benefit		(0.00	)		0.00			(0.10	)
Net (loss) income per common share—diluted	$	(2.70	)	$	(1.11	)	$	2.80
Number of shares—basic		25,773			25,814			26,335
Number of shares—diluted		25,773			25,814			27,456

See accompanying notes to the consolidated financial statements.

44

PINNACLE ENTERTAINMENT, INC.

CONSOLIDATED BALANCE SHEETS

	December 31,
	2002			2001
	(in thousands, except share data)
ASSETS
Current Assets:
Cash and cash equivalents	$	114,286		$	153,187
Restricted cash—Argentina		3,155			3,452
Receivables, net of allowance for doubtful accounts of $2,364 and $2,365 as of December 31, 2002 and 2001, respectively		9,857			9,194
Income tax receivable		6,364			10,587
Inventories		5,320			4,264
Prepaid expenses and other assets		16,314			14,143
Deferred income taxes		5,549			4,712
Assets held for sale		12,160			18,285
Current portion of notes receivable		0			1,000
Total current assets		173,005			218,824
Restricted cash		30,100			0
Property, plant and equipment, net		586,083			576,299
Goodwill, net of amortization		19,558			68,727
Gaming licenses, net of amortization		21,944			36,588
Debt issuance costs, net of amortization		8,679			12,334
Other assets		1,069			6,577
	$	840,438		$	919,349
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	15,615		$	16,953
Accrued interest		17,129			17,423
Accrued compensation		17,208			13,737
Other accrued liabilities		35,515			31,887
Current portion of notes payable		2,419			3,654
Total current liabilities		87,886			83,654
Notes payable, less current maturities		491,079			493,493
Deferred income taxes		12,987			22,686
Stockholders’ Equity:
Capital stock—
Preferred—$1.00 par value, authorized 250,000 shares; none issued and outstanding in 2001 and 2000		0			0
Common—$0.10 par value, authorized 40,000,000 shares; 25,934,261 and 25,443,444 shares issued and outstanding in 2002 and 2001		2,615			2,545
Capital in excess of par value		224,195			219,613
Accumulated other comprehensive loss		(10,483	)		(4,430	)
Retained earnings		32,159			101,788
Total stockholders’ equity		248,486			319,516
	$	840,438		$	919,349

See accompanying notes to the consolidated financial statements.

45

PINNACLE ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

For the years ended December 31, 2002, 2001 and 2000

	Common Stock			Capital in Excess of Par Value			Accumulated Other Comprehensive Loss			Retained Earnings			Total Stockholders’ Equity
	(in thousands)
Balance as of January 1, 2000	$	2,624		$	224,654		$	0		$	53,598		$	280,876
Net income, comprehensive income		0			0			0			76,839			76,839
Executive stock option compensation		0			414			0			0			414
Common stock options exercised		20			2,302			0			0			2,322
Tax benefit associated with exercised common stock options		0			725			0			0			725
Balance as of December 31, 2000		2,644			228,095			0			130,437			361,176
Net loss		0			0			0			(28,649	)		(28,649	)
Foreign currency translation loss		0			0			(4,430	)		0			(4,430	)
Comprehensive loss														(33,079	)
Repurchase and retirement of common stock		(110	)		(9,710	)		0			0			(9,820	)
Executive stock option compensation		0			414			0			0			414
Common stock options exercised		11			469			0			0			480
Tax benefit associated with exercised common stock options		0			345			0			0			345
Balance as of December 31, 2001		2,545			219,613			(4,430	)		101,788			319,516
Net loss		0			0			0			(69,629	)		(69,629	)
Foreign currency translation loss		0			0			(6,053	)		0			(6,053	)
Comprehensive loss														(75,682	)
Executive stock option compensation		0			177			0			0			177
Common stock options exercised		70			3,997			0			0			4,067
Tax benefit associated with exercised common stock options		0			408			0			0			408
Balance as of December 31, 2002	$	2,615		$	224,195		$	(10,483	)	$	32,159		$	248,486

See accompanying notes to the consolidated financial statements.

46

PINNACLE ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the years ended December 31,
	2002			2001			2000
	(in thousands)
Cash flows from operating activities:
Net (loss) income	$	(69,629	)	$	(28,649	)	$	76,839
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Depreciation and amortization		44,929			49,450			46,102
Cumulative effect of change in accounting principle, net of income tax benefit		56,704			0			0
Write-off of unamortized premium and debt costs associated with 13% Notes, net		0			0			(3,340	)
Gain on disposition of assets		0			(500	)		(118,816	)
Asset write-offs and impairment write-downs		2,753			23,530			0
Other changes that (used) provided cash:
Receivables, net		(663	)		6,991			(2,017	)
Income tax receivable		4,223			(10,587	)		0
Prepaid expenses and other assets		(3,227	)		(2,495	)		(7,168	)
Accounts payable		(1,338	)		(2,396	)		(1,747	)
Accrued liabilities		7,099			(10,339	)		(8,351	)
Accrued interest		(294	)		(574	)		(8,083	)
Income taxes		(6,297	)		14,556			(6,271	)
All other, net		4,770			530			4,028
Net cash provided by (used in) operating activities		39,030			39,517			(28,824	)
Cash flows from investing activities:
Restricted cash		(29,803	)		(3,452	)		0
Additions to property, plant and equipment		(48,596	)		(52,264	)		(202,775	)
Receipts from dispositions of property, plant and equipment		659			324			266,925
Principal collected on notes receivable		1,000			8,636			5,699
Proceeds from short term investments		0			0			123,428
Net cash (used in) provided by investing activities		(76,740	)		(46,756	)		193,277
Cash flows from financing activities:
Redemption of Casino Magic 13% Notes		0			0			(112,875	)
Payment of notes payable		(3,649	)		(3,447	)		(5,119	)
Common stock options exercised		4,067			480			2,302
Common stock repurchase and retirement		0			(9,820	)		0
Other financing activities, net		408			345			745
Net cash provided by (used in) financing activities		826			(12,442	)		(114,947	)
Effect of exchange rate changes on cash		(2,017	)		0			0
(Decrease) increase in cash and cash equivalents		(38,901	)		(19,681	)		49,506
Cash and cash equivalents at the beginning of the year		153,187			172,868			123,362
Cash and cash equivalents at the end of the year	$	114,286		$	153,187		$	172,868
Supplemental Cash Flow Information:
Cash paid during the year for:
Interest	$	46,366		$	46,712		$	56,248
Income taxes (received) paid, net		(2,370	)		(23,088	)		64,600
Non-cash currency translation rate adjustment		6,053			4,430			0

See accompanying notes to the consolidated financial statement

47

PINNACLE ENTERTAINMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1—Summary of Significant Accounting Policies

General    Pinnacle Entertainment, Inc. (the “Company” or “Pinnacle Entertainment”) owns and operates gaming entertainment facilities in several gaming markets. These include five properties in the United States, located in southeastern Indiana (“Belterra Casino Resort”); Reno, Nevada (“Boomtown Reno”); Bossier City and New Orleans, Louisiana (“Boomtown Bossier City” and “Boomtown New Orleans”, respectively); and Biloxi, Mississippi (“Casino Magic Biloxi”). In addition, the Company operates two casinos in Argentina (“Casino Magic Argentina”) and receives lease income from two card clubs and owns 97 acres of vacant land in southern California. The Company is also developing a hotel and casino resort in Lake Charles, Louisiana.

The Belterra Casino Resort is near Cincinnati, Ohio and Louisville, Kentucky. The twin cities of Shreveport/Bossier City offer the most convenient casinos to the Dallas/Fort Worth metropolitan area. The Lake Charles region offers the closest casinos to the cities of Houston, Austin and San Antonio.

Basis of Presentation    The accompanying consolidated financial statements include the accounts of Pinnacle Entertainment, Inc. and its subsidiaries and have been prepared by the Company’s management in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and with the rules and regulations of the Securities and Exchange Commission (“SEC”). The consolidated financial statements include the accounts of Pinnacle Entertainment and its subsidiaries. All significant inter-company accounts and transactions have been eliminated.

Amortization of Debt Issuance Costs    Debt issuance costs incurred in connection with long-term debt and bank financing are capitalized and amortized, based on the straight-line method that approximates the effective interest method, to interest expense during the period the debt or loan commitments are outstanding. Amortization of debt issuance costs included in interest expense was $3,862,000, $3,742,000 and $3,062,000 for the years ended December 31, 2002, 2001 and 2000, respectively. Accumulated amortization as of December 31, 2002 and 2001 was $15,334,000 and $11,472,000 respectively.

Gaming Revenues and Promotional Allowances    Gaming revenues consist of the difference between gaming wins and losses. Revenues in the accompanying statements of operations exclude the retail value of food and beverage, hotel rooms, admission to riverboats and other items provided to patrons on a complimentary basis. The estimated cost of providing these promotional allowances (which is included in gaming expenses) was $36,623,000, $50,216,000 and $45,713,000 for the years ended December 31, 2002, 2001 and 2000, respectively.

Shelf Registration    The Company’s shelf registration statement, which had originally been filed in June 2002 with the Securities and Exchange Commission and became effective in October 2002, permits the issuance of up to $500,000,000 of debt, equity or other securities. There can be no assurance, however, that the Company will be able to issue any of such securities on terms acceptable to the Company. At December 31, 2002 costs totaling approximately $1,200,000 related to the shelf registration statement had been capitalized.

Use of Estimates    The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and (iii) the reported amounts of revenues and expenses during the reporting period. Estimates used by the Company include, among other things, (i) the evaluation of the non-impairment of property, plant, equipment and other long-term assets, (ii) the evaluation of the future realization of deferred tax assets, (iii) the adequacy of reserves associated with asset sales and the Indiana regulatory settlement, and in determining litigation reserves and other obligations, and (iv) the valuation of funds held in Argentine banks. Actual results could differ from those estimates.

48

PINNACLE ENTERTAINMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Cash and Cash Equivalents    Cash and cash equivalents consist of cash, certificates of deposit and short-term investments with original maturities of 90 days or less.

Restricted Cash—Argentina    Restricted cash—Argentina at December 31, 2002 and 2001 consists of the cash of Casino Magic Argentina maintained in Argentina, translated from the Argentine peso to the U.S. dollar. Argentina experienced political and economic disruption in the latter part of 2001, including the devaluation of its currency and the governmental restriction of transferring funds out of the country. As of December 31, 2002, the restriction of transferring funds out of the country remained in effect. Therefore, cash of Casino Magic Argentina maintained in Argentina is classified as Restricted Cash—Argentina on the Consolidated Balance Sheet. In the first quarter of 2003, some but not all of the government restrictions of transferring cash out of the country began to be lifted by the Argentine government. All assets, including cash, have been translated to U.S. dollars from the Argentine peso.

Restricted Cash    The long-term restricted cash of $30,100,000 at December 31, 2002 earns interest and consists of a $22,500,000 refundable investment account that was established as a requirement by the Louisiana Gaming Control Board for the Lake Charles construction project and will be released back to the Company once construction commences (see Note 5); a $5,000,000 escrow with the Indiana Gaming Commission as a requirement for the completion of the Belterra Casino Resort’s 300-guestroom tower expansion (see Note 11); and a $2,600,000 letter of credit for a workers’ compensation insurance deposit.

Inventories    Inventories, which consist primarily of food, beverage and operating supplies, are stated at the lower of cost or market value. Costs are determined using the first-in, first-out method.

Property, Plant and Equipment    Additions to property, plant and equipment and construction-in-progress are recorded at cost, including capitalized interest. Depreciation and amortization are provided based on the straight-line method over the assets’ estimated useful lives as follows:

	Years
Land improvements	5 to 40
Buildings and improvements	10 to 39
Vessels and barges	25 to 31
Equipment	3 to 10

Maintenance, repairs and assets purchased below $2,500 (or a group of like-type assets purchased below $5,000) are charged to expense, and betterments are capitalized. The costs of property sold or otherwise disposed of and their associated accumulated depreciation are eliminated from both the property and accumulated depreciation accounts.

Capitalization of Interest    The Company capitalizes interest expense on construction in progress based on an imputed interest rate estimating the Company’s average cost of borrowed funds. Capitalized interest is based on project costs at an imputed rate and was $995,000, $481,000 and $8,148,000 in fiscal 2002, 2001 and 2000, respectively. Such capitalized interest becomes part of the cost of the related asset and is depreciated over its estimated useful life.

Income Taxes    The Company accounts for income taxes under Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes (“SFAS No. 109”), whereby deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary

49

PINNACLE ENTERTAINMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

differences are expected to be recovered or settled. Under SFAS No. 109, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date.

Comprehensive Income    Statement of Financial Accounting Standards No. 130 Reporting Comprehensive Income (“SFAS No. 130”) requires that a company disclose other comprehensive income (loss) and the components of such income (loss). The objective of SFAS No. 130 is to report a measure of all changes in equity other than transactions with stockholders, such as the issuance or repurchase of shares. “Comprehensive income (loss)” is the sum of net income (loss) and other comprehensive income (loss).

The Company’s only such item was the foreign currency translation adjustments reported in the accompanying financial statements. Therefore, comprehensive income (loss) was computed as follows:

	For the years ended December 31,
	2002			2001			2000
	(in thousands)
Net (loss) income	$	(69,629	)	$	(28,649	)	$	76,839
Foreign currency translation loss		(6,053	)		(4,430	)		0
Comprehensive (loss) income	$	(75,682	)	$	(33,079	)	$	76,839

Earnings per Share    Basic earnings per share are based on net income less preferred stock dividend requirements divided by the weighted average common shares outstanding during the period. Diluted earnings per share assume exercise of in-the-money stock options (those options with exercise prices at or below weighted average market price for the periods presented) outstanding at the beginning of the year or at the date of the issuance, unless the assumed exercises are antidilutive.

The effect of stock options outstanding was not included in the diluted calculations for the years ended December 31, 2002 and 2001 as the Company incurred a net loss for those periods. The number of potentially dilutive options was 157,700 and 104,000 for the years ended December 31, 2002 and 2001, respectively. A reconciliation of income and shares for basic and diluted earnings per share (“EPS”) for the year ended December 31, 2000 is as follows:

	Income		Shares	Per Share Amount
	(in thousands, except per share data)
Basic EPS—Net income available to common stockholders	$	76,839	26,335	$	2.92
Effect of dilutive securities—Options		0	1,121		(0.12	)
Diluted EPS—Net income available to common stockholders plus assumed conversions	$	76,839	27,456	$	2.80

Accounting for Customer “Cash-back” Loyalty Programs    In 2001, the Emerging Issues Task Force (“EITF”) reached consensus on accounting for “Points” and Certain Other Time-Based Sales Incentive Offers, and Offers for Free Products or Services to Be Delivered in the Future. This EITF pronouncement requires that the cost of the cash back component of the Company’s customer loyalty programs be treated as a reduction in revenues. The Company rewards certain customers with cash, based upon their level of play on certain casino games (primarily slot machines). These costs were previously recorded as a casino expense. The EITF consensus was adopted by the Company in the quarter ended March 31, 2001. The Company reclassified (i.e., reduced

50

PINNACLE ENTERTAINMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

gaming revenue and gaming expense) the cash back component of its customer loyalty programs in the amount of $21,497,000 related to the year ended December 31, 2000 to be consistent with the years ended December 31, 2002 and 2001.

Goodwill and Other Intangible Assets    See Note 2.

Statement of Financial Accounting Standards No. 144 (“SFAS No. 144”)    In August 2001, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-lived Assets”, which the Company adopted on January 1, 2002.

SFAS No. 144 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the book value of an asset may not be recoverable. The Company reviews its long-lived assets at each balance sheet date. If a long-lived asset is to be retained, the Company assesses recoverability based on the asset’s future undiscounted cash flows over the remaining life compared to the asset’s book value. If an impairment exists, the asset is written down to fair value, based on quoted market prices or another valuation technique, such as discounted cash flow analysis. If a long-lived asset is to be sold, the asset is reported at the lower of carrying value or fair value.

Financial Accounting Standards Board Interpretation No. 45 (“FIN 45”)    In November 2002, the FASB issued Interpretation No. 45 (“FIN 45”), “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.” FIN 45 addresses financial accounting for, and disclosure of, guarantees. FIN 45 requires certain guarantees to be recorded at fair value, as opposed to the existing standard of recording a liability only when a loss is probable and reasonably estimable according to SFAS No. 5, “Accounting for Contingencies.” The initial recognition and initial measurement provisions apply on a prospective basis to guarantees issued or modified after December 31, 2002. The disclosure requirements in the Interpretation are effective for financial statements of interim or annual period ending after December 15, 2002. The Company believes that the adoption of the recognition and initial measurement provision of FIN 45 is not expected to have a material impact on the Company’s financial position and results of operations.

Statement of Financial Accounting Standards No. 148 (“SFAS No. 148”)    The Company accounts for its stock-based compensation under Accounting Principles Board Opinion No. 25 Accounting for Stock Issued to Employees and follows the disclosure provisions of SFAS No. 148. In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation—Transition and Disclosure—an Amendment of FASB Statement No. 123” to provide alternative methods of transition for a voluntary change to the fair-value-based method of accounting for stock-based employee compensation. SFAS No. 148 also requires disclosure in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reporting results. The transition guidance and annual disclosure provisions of SFAS No. 148 are effective for years ending after December 15, 2002, and the annual disclosure provisions are implemented below. The interim disclosure requirements will be implemented in the first quarter of 2003.

The Company estimated the fair market value of stock options using an option-pricing model taking into account, as of the date of grant, the exercise price and expected life of the option, the then current price of the underlying stock and its expected volatility, expected dividend on the stock, and the risk-free interest rate for the expected term of the options.

51

PINNACLE ENTERTAINMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In computing the stock-based compensation, the following assumptions were made:

	Risk-Free Interest Rate		Original Expected Life	Expected Volatility		Expected Dividends
Options granted in the following periods:
1998	4.5	%	3 to 10 years	40.1	%	None
1999	4.6	%	10 years	47.3	%	None
2001	4.7	%	7 years	50.4	%	None
2002	4.3	%	5 years	51.2	%	None

The following sets forth the pro forma financial results related to the Company’s employee stock-based compensation plans, with respect to the options’ estimated fair value, based on the Company’s stock price at the grant date:

	For the year ended December 31,
	2002			2001			2000
	(in thousands, except per share data)
(Loss) income before cumulative effect of change in accounting principle, extraordinary item and stock-based compensation expense	$	(12,925	)	$	(28,649	)	$	79,492
Stock-based compensation expense, net of taxes		1,327			716			760
Pro forma (loss) income before cumulative effect of change in accounting principle and extraordinary item		(14,252	)		(29,365	)		78,732
Cumulative effect of change in accounting principle		56,704			0			0
Extraordinary item, net of taxes		0			0			2,653
Pro forma (loss) income	$	(70,956	)	$	(29,365	)	$	76,079
Pro forma net (loss) income per common share—basic
Pro forma (loss) income before cumulative effect of change in accounting principle and extraordinary income	$	(0.55	)	$	(1.14	)	$	2.99
Cumulative effect of change in accounting principle		(2.20	)		0.00			0.00
Extraordinary item, net of tax benefit		0.00			0.00			(0.10	)
Pro forma net (loss) income per share—basic	$	(2.75	)	$	(1.14	)	$	2.89
Pro forma net (loss) income per common share—diluted
Pro forma (loss) income before cumulative effect of change in accounting principle and extraordinary income	$	(0.55	)	$	(1.14	)	$	2.87
Cumulative effect of change in accounting principle		(2.20	)		0.00			0.00
Extraordinary item, net of tax benefit		0.00			0.00			(0.10	)
Pro forma net (loss) income per share—diluted	$	(2.75	)	$	(1.14	)	$	2.77
Number of shares—basic		25,773			25,814			26,335
Number of shares—diluted		25,773			25,814			27,456

Reclassifications    Certain reclassifications, having no effect on net income, have been made to the 2001 and 2000 amounts to be consistent with the 2002 financial statement presentation. These reclassifications include costs associated with the Company’s coin coupon offerings that were previously recorded as a casino expense.

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PINNACLE ENTERTAINMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company has reclassified these amounts as a reduction of casino revenue. These amounts totaled $20,598,000 and $13,523,000 for the years ended December 31, 2001 and 2000, respectively.

Note 2—Goodwill, Intangibles and Adoption of Statement of Financial Accounting Standards No. 142

Goodwill    Goodwill consists of the excess of the acquisition cost over the fair value of the net assets acquired in business combinations and, prior to January 1, 2002, was being amortized on a straight-line basis over 40 years, except for the goodwill related to the acquisition of the 49% minority partner in Casino Magic Argentina, which was being amortized over the extended life of the concession agreement (see “—Gaming Licenses” below). Pursuant to the implementation of Statement of Financial Accounting Standards No. 142 (“SFAS No. 142”) (discussed below), there was no goodwill amortization in 2002. Goodwill amortization expense for the years 2001 and 2000 was $2,848,000 and $3,030,000, respectively. Goodwill as of December 31, 2002 is $19,558,000.

Gaming Licenses    Casino Magic Argentina. A portion of the acquisition price of Casino Magic Corp. in 1998 was allocated to a concession agreement to operate two casinos in Argentina. Such costs are being amortized, based on the straight-line method, over the extended life of the concession agreement through 2016. The original concession agreement expires in 2006, but an extension signed in 2001 extends this concession agreement through 2016, provided Casino Magic Argentina, among other things, pays admission taxes, makes annual contributions for scholarships and invests in the development of new facilities and related amenities in accordance with the terms of the extension agreement. The dollar-denominated cost of such investment has been reduced significantly to approximately $2,950,000 at December 31, 2002 as a result of the Argentine government’s conversion of all contracts into peso-denominated contracts in January 2002, and the subsequent devaluation of the Argentine currency. The extension also provided that the agreement would be extended an additional five years to 2021 if the Company elected to invest at least $1,475,000 (also converted from pesos) for construction of new hotel facilities.

In accordance with the guidance provided by SFAS No. 142 (see “Adoption of SFAS 142” below), the Company is amortizing the capitalized costs of the Argentina concession over the extended life of the concession agreement based on its expectation that it will receive benefits from the concession agreement through 2016, taking into account the following factors: (i) so long as the Company remains in compliance with the requirements of the extension agreement, which are within the Company’s control, the Company will be permitted to operate under the concession agreement through 2016; (ii) at the current time, the Company has remained in compliance with the terms of the extension agreement, except for certain changes and delays in the planning and construction schedules which have been verbally approved by the Province; (iii) the Company currently intends, and believes it is able, to continue to perform under the terms of the extension agreement; (iv) no other related assets of the Company limit the useful life of the concession agreement through 2016; (v) at the current time, the Company is not aware of any obsolescence, demand, competition or other economic factors that limit the viability of the Argentina gaming market through 2016, although the Company continues to monitor the ongoing political and economic instability in Argentina; and (vi) the only significant cost that the Company is required to incur in connection with the concession is construction of additional facilities, which the Company has the intent and ability to fund with cash currently held in Argentina and the anticipated operating cash flow of its Argentine operations.

The Company has been paying the required additional taxes and scholarship contributions, and, except as described in the next paragraph, is in compliance with the other provisions of the concession agreement and extension agreement.

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PINNACLE ENTERTAINMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In January 2003, the Company reached an understanding with the Province, subject to definitive documentation, to modify the conditions relating to the extension of the concession agreement to 2016 subject to construction of a new gaming and entertainment facility in the city of Neuquen, Argentina. In addition, among other things, these modifications will result in the Company receiving the ten-year extension of the agreement to 2016, provided that it makes an investment in new gaming facilities that exceeds the sum of approximately US$3,000,000 plus the net income generated by Casino Magic Argentina in 2003 through 2006. The Company currently has cash of approximately US$3,000,000 held in Argentine banks that is not needed for day-to-day operations. The Company anticipates entering into a written agreement reflecting the understanding with the Province in the second quarter. Under the understanding with the Province the concession agreement will be extended for an additional five years through 2021, if the Company invests at least 5,000,000 pesos in new hotel facilities.

The unamortized gaming license costs related to Casino Magic Argentina as of December 31, 2002 and 2001 were $2,079,000 and $4,949,000 (which amounts reflect the translation adjustment for Casino Magic Argentina assets and liabilities), respectively, and amortization expense was $354,000 and $237,000 for the years ended December 31, 2002 and 2001, respectively. Accumulated amortization was $1,257,000 and $903,000 at December 31, 2002 and 2001, respectively.

Boomtown Bossier City    In connection with the acquisition of Casino Magic Corp. in 1998, a portion of the purchase price was allocated to the Louisiana gaming license, which license permits the Company to conduct the gaming operations of Boomtown Bossier City. Through December 31, 2001, the cost of the gaming license was being amortized on the straight-line method over twenty-five years. In connection with the implementation of SFAS No. 142 effective January 1, 2002, the Company no longer amortizes the gaming license as the Company has classified such asset as a non-amortizing intangible asset with an indefinite useful life based on management’s assessment that no legal, regulatory, contractual, competitive, economic or other factors limit the useful life of the gaming license. In accordance with the guidance provided by SFAS No. 142, this assessment is based on the following pertinent factors: (i) the Company currently expects to use the gaming license indefinitely; (ii) no other related assets of the Company limit the useful life of the gaming license; (iii) the Company believes that it will continue to be able to renew the Bossier City license every five years without substantial cost or material modification, based in part upon the historic renewal experience of the Company and other holders of Louisiana casino licenses; (iv) because the Louisiana gaming industry is relatively mature and stable, and the exclusivity of Louisiana gaming licenses is currently protected by law, the Company believes that there are no known effects of obsolescence, demand, competition or other economic factors that limit the economic life of the Bossier City gaming license; and (v) the Company is not required to make any significant expenditures to maintain the Company’s intangible Bossier City license rights.

Based on the classification of the gaming license as a non-amortizing intangible asset and pursuant to the implementation of SFAS No. 142, there was no gaming license amortization expense related to the Boomtown Bossier City license in 2002. Amortization expense in each of 2001 and 2000 was $1,602,000. The remaining net book value of the Boomtown Bossier City gaming license as of December 31, 2002 is $19,865,000.

Adoption of SFAS No. 142    In June 2001, the Financial Accounting Standards Board issued SFAS No. 142, which was effective January 1, 2002, for the Company. SFAS No. 142 requires, among other things, that goodwill and other intangible assets with indefinite lives no longer be amortized, but rather be subject to at least an annual assessment for impairment by applying a fair-value-based test.

The Company implemented SFAS No. 142 effective January 1, 2002. During the three months ended March 31, 2002, the Company recorded a transition adjustment impairment charge of $56,704,000, including a goodwill impairment charge of $49,169,000 related to Casino Magic Biloxi, Boomtown Bossier City and Casino Magic Argentina and gaming license impairment charge of $7,535,000 (net of an income tax benefit of

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PINNACLE ENTERTAINMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

$4,239,000). In accordance with SFAS No. 142, such transition-adjustment charge was classified as a cumulative effect of a change in accounting principle, net of the income tax benefit.

The gaming license impairment charge was determined under the “relief from royalty” principle. This principle indicates that a license should not have a carrying value on the balance sheets if the licensee did not have to pay a significant fee to the licensing authority for the initial license and that law and common practice does not have significant fees for anticipated license renewals. While the Company does pay significant gaming taxes, it does not pay specific significant license fees except for the investigative and similar costs. The carrying amount of such licenses prior to the recent impairment charge resulted from an acquisition of the facility and was therefore similar to goodwill in nature.

The goodwill impairment results from the calculation of the fair value of Casino Magic Biloxi, Boomtown Bossier City and Casino Magic Argentina. The properties’ fair values were determined by averaging the values indicated by the market and income approaches. The market approach utilizes an analysis of publicly traded companies considered comparable to the Company with regard to service, performance and markets. The income approach requires a projection of future discounted earning capacity of the Company. The properties’ fair values were allocated to the properties’ tangible and intangible assets, net of working capital, until the fair values were completely allocated. The recorded impairment is the resulting difference between the carrying value of the property (including intangible assets) and its fair value, net of working capital.

Under these new rules, any future acquired intangible asset will be separately recognized if the benefit of the intangible is obtained through contractual or other legal rights, or if the intangible asset can be sold, transferred, licensed, rented, or exchanged, regardless of the acquirer’s intent to do so. Intangible assets with finite lives will be amortized over their useful lives.

The following summarizes the goodwill and gaming licenses activities between December 31, 2001 and December 31, 2002:

	Balance as of December 31, 2001		Less Impairment Losses(a)			Less Foreign Currency Adjustment and Amortization Expense(b)			Balance as of December 31, 2002
	(in thousands)
Goodwill:
Boomtown New Orleans	$	11,140	$	0		$	0		$	11,140
Boomtown Reno		8,418		0			0			8,418
Casino Magic Biloxi		18,609		(18,609	)		0			0
Boomtown Bossier City		19,320		(19,320	)		0			0
Casino Magic—Argentina		11,240		(11,240	)		0			0
	$	68,727	$	(49,169	)	$	0		$	19,558
Gaming Licenses:
Boomtown Bossier City non-amortizing gaming license(a)	$	31,639	$	(11,774	)	$	0		$	19,865
Casino Magic Argentina amortizing gaming license(b)		4,949		0			(2,870	)		2,079
Cumulative gaming licenses	$	36,588	$	(11,774	)	$	(2,870	)	$	21,944

(a) The Boomtown Bossier City gaming license impairment loss of $11,774,000 is before any income tax benefit from such loss. Net of the income tax benefit of $4,239,000, the cumulative impairment charges due to the implementation of SFAS No. 142 are $56,704,000.

(b) Reflects the foreign currency translation adjustment of approximately $2,503,000 and additional accumulated amortization of $367,000 related to the Casino Magic Argentina gaming license.

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PINNACLE ENTERTAINMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table sets forth the pro forma effect of the adoption of SFAS No. 142:

	For the year ended December 31,
	2001			2000
	(in thousands, except per share data)
Pro forma adjusted net income (loss)
Income (loss) before extraordinary item	$	(28,649	)	$	79,492
Reported net income (loss)	$	(28,649	)	$	76,839
Goodwill amortization expense, net of income taxes		1,820			1,939
Boomtown Bossier City gaming license amortization expense, net of income taxes		1,025			1,025
Pro forma adjusted net income (loss)	$	(25,804	)	$	79,803
Per share pro forma adjusted net income (loss)—basic
Per share income (loss) before extraordinary item	$	(1.11	)	$	3.02
Per share reported net income (loss)	$	(1.11	)	$	2.92
Per share goodwill amortization expense, net of income taxes		0.07			0.07
Per share Boomtown Bossier City gaming license amortization expense, net of taxes		0.04			0.04
Per share pro forma adjusted net income (loss)	$	(1.00	)	$	3.03
Per share pro forma adjusted net loss—diluted
Per share income (loss) before extraordinary item	$	(1.11	)	$	2.90
Per share reported net income (loss)	$	(1.11	)	$	2.80
Per share goodwill amortization expense, net of income taxes		0.07			0.07
Per share Boomtown Bossier City gaming license amortization expense, net of taxes		0.04			0.04
Per share pro forma adjusted net income (loss)	$	(1.00	)	$	2.91
Number of shares—basic		25,814			26,335
Number of shares—diluted		25,814			27,456

Note 3—Property, Plant and Equipment

Property, plant and equipment held at December 31, 2002 and 2001 consisted of the following:

	December 31,
	2002(a)		2001(a)
	(in thousands)
Land and land improvements	$	110,545	$	106,643
Buildings		327,990		327,864
Equipment		243,000		196,708
Vessel and barges		115,222		112,029
Construction in progress		2,958		12,129
		799,715		755,373
Less accumulated depreciation		213,632		179,074
	$	586,083	$	576,299

(a) Excludes $12,160,000 and $18,285,000 of assets held for sale as of December 31, 2002 and 2001, respectively (see Note 4).

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PINNACLE ENTERTAINMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Depreciation expense for the years ended December 31, 2002, 2001, and 2000 was $44,724,000, $43,595,000 and $39,635,000, respectively.

Note 4—Assets Held For Sale

At December 31, 2002 assets held for sale consisted of 97 acres of unimproved land adjacent to the Hollywood Park Race Track in Inglewood, California (the “Inglewood Land”). In June 2002, the Company entered into an agreement for the sale of 60 acres for $36,000,000 in cash, before income taxes, to Rothbart Development Corporation. The close of escrow is scheduled for the second half 2003, subject to the buyer obtaining the necessary entitlements to develop the land. In addition, the buyer has the right to extend the close of escrow under certain circumstance. The Company has also entered into an agreement to sell the remaining 37 acres for $22,200,000 in cash, before income taxes, to a regional home builder. The close of this escrow is scheduled for the second half of 2003, again subject to the buyer obtaining the necessary entitlements to develop the land. The approximate book value of the 97 acres of real property as of December 31, 2002 was $12,160,000.

Assets held for sale at December 31, 2001 consisted primarily of the Inglewood Land and the Crystal Park Casino in Compton, California. The Inglewood Land is included in corporate assets, while the Crystal Park Casino is included in the card clubs segment. Although the Company continues to seek a suitable buyer for the Crystal Park Casino, it was not successful in doing so during 2002 on terms acceptable to the Company and has reclassified the Casino to Property, Plant and Equipment at December 31, 2002.

Note 5—Expansion and Development

Lake Charles Project    In October 2001, the Company was selected by the Louisiana Gaming Control Board (the “Gaming Control Board”) to receive the fifteenth and final gaming license that can be issued under current law in Louisiana. The Company plans to build a destination resort that will include approximately 700 guestrooms (including suites), approximately 28,000 square feet of meeting space, five restaurants serving regional cuisine, a championship golf course, an expansive outdoor pool area, retail shops and a full-service spa. The dockside casino riverboat will be on one level, surrounded on three sides by the hotel and restaurant. The casino is expected to have over 1,500 slot machines and 60 table games.

Issuance of the license is subject to continued compliance with certain conditions finalized with the Gaming Control Board in November 2001, including, but not limited to: (i) submitting the major construction contracts in March 2003 (ii) demonstrating the financial resources to commence the project within ten days of the Gaming Control Board’s approval of the construction contracts; (iii) beginning construction within thirty days of the Gaming Control Board’s approval of the construction contracts (subject to customary permitting and U.S. Army Corp of Engineer approval); (iv) completing the project within 18 months of beginning construction; and (v) other construction milestone dates. Conditions satisfied in 2002 include, but are not limited to: (i) approval of the project by local voters; (ii) setting aside $22,500,000 into a short term investment account (to be used only for the project once construction commences); and (iii) approval of the detailed design plans from the Gaming Control Board. It is anticipated that the Gaming Control Board will complete its review of the construction contracts in the second quarter of 2003.

The Company believes the necessary approvals required to commence construction, and continue to satisfy the conditions of the Gaming Control Board, will be obtained in the second quarter of 2003. However, there are no assurances that the Company will be successful in obtaining all necessary approvals, or continue to satisfy the conditions. In the event the Company does not meet all of the conditions, the Gaming Control Board may retract their selection of the Company for the fifteenth license.

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PINNACLE ENTERTAINMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In August 2002, the Company exercised its options to lease from the Lake Charles Harbor and Terminal District (the “District”) 227 acres of unimproved land upon which the project will be constructed. Effectiveness of the lease agreements is subject to the satisfaction of various conditions, including obtaining all of the necessary permits and approvals to construct the project. The leases call for annual payments of $835,600, commencing upon opening of the resort complex, with a maximum annual increase thereafter of 5%. Upon effectiveness, the leases will have initial terms of ten years with six renewal options of ten years each. In addition, the Company entered into a Cooperative Endeavor Agreement with the City of Lake Charles, Calcasieu Parish and the District requiring the Company to make infrastructure improvements, including, among other things, a road extension and utility improvements, and pay non-specific impact fees, which, collectively, are expected to approximate $11,400,000. The Company has included such obligations in the $325,000,000 project budget. The Company also entered into an option to lease an additional 75 acres of unimproved land adjacent to the 227 acres. The lease option is for a one-year period, with three one-year renewal options, at a cost of $37,500 per option period. The terms of the lease, if the option were exercised, would be substantially similar to the terms of the leases for the 227 acres.

All costs incurred by the Company related to obtaining this license have been expensed as incurred.

Belterra    In February 2003, the Company broke ground on a $37,000,000 expansion project at the Belterra Casino Resort that will add 300 guestrooms, for a total of 608, and will also give the property approximately 33,000 square feet of meeting and conference space, a year-round swimming pool and other amenities. As part of the Settlement Agreement with the Indiana Gaming Control Board in August 2002, the Company agreed to complete this project by July 2004 and placed $5 million into a separate escrow account (see Note 11) that will be released back to the Company upon opening the new hotel tower. The Company does not anticipate significant construction disruption to its existing operations during the construction of this expansion, which is expected to be completed in the first half of 2004.

Note 6—Asset Write-downs and Impairments

In 2002, the Company wrote-off $2,753,000 of design and architecture plans, incurred in earlier years, for a casino riverboat and hotel tower at Boomtown Bossier City and a parking garage at Casino Magic Biloxi, projects that are not being pursued at the present time.

In 2001, the Company, under provisions of SFAS No. 121, determined that it would not be able to recover the net book value of the Crystal Park Casino card club on an undiscounted cash flow basis, as it had agreed to reduce the monthly rent paid by the tenant from $100,000 to $20,000 per month. As such, the Company recorded an impairment write-down of the long-lived assets at Crystal Park Casino card club of $20,358,000 representing the difference between its net book value of $26,358,000 and its estimated fair value less estimated costs to sell. Fair value was determined by management based on current real estate and market conditions of the property. In addition, the Company determined it would not be able to recover the net book value of an unused riverboat at Boomtown New Orleans and recorded an impairment write-down of approximately $1,808,000 representing the difference between its net book value of $1,932,000 and its estimated fair value less estimated selling costs. Fair value of the riverboat was based upon offers to purchase the asset for salvage value. The riverboat was sold in 2002 for a modest gain. Finally, in 2001, a breakwater and other assets at Casino Biloxi were written-down and the Company recorded an asset impairment charge of approximately $1,364,000.

Note 7—Assets Sold

Note Receivable    In 2001, the Company realized a pre-tax gain of approximately $639,000 from the early collection from a Native American tribe of a $6,300,000 note receivable and related agreements.

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PINNACLE ENTERTAINMENT, INC.

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Casino and Race Track Sales    In August 2000, the Company completed the sale of two of its casinos in Mississippi, Casino Magic Bay St. Louis and Boomtown Biloxi, for $195,000,000 in cash. The after-tax gain from these sales was approximately $35,538,000. In June 2000, the Company completed the sale of Turf Paradise, a horse racetrack in Phoenix, Arizona, for $53,000,000 in cash. The after-tax gain from the sale was approximately $21,262,000. 2000 condensed results of operations before income taxes for sold operations were:

	Casino Sale(a) 2000		Track Sale(b) 2000
	(in thousands)
Revenues(c)	$	93,668	$	10,665
Expenses		76,417		7,628
Operating income		17,251		3,037
Interest expense (income)		90		(49	)
Income before income taxes	$	17,161	$	3,086

(a) For the period January 1, 2000 to August 8, 2000, date of sale.

(b) For the period January 1, 2000 to June 13, 2000, date of sale.

(c) Revenues for the Casino sale include proceeds from the settlement of a business interruption claim of approximately $1,204,000 related to hurricane damage and casino closure in September 1998.

Land Sale    In March 2000, the Company completed the sale of approximately 42 acres of surplus land in Inglewood, California for $24,200,000 in cash. The after tax gain from this sale was approximately $15,322,000.

Note 8—Secured and Unsecured Notes Payable

Notes payable at December 31, 2002 and 2001 consisted of the following:

	December 31,
	2002		2001
	(in thousands)
Secured notes payable, Credit Facility	$	0	$	0
Unsecured 9.25% Notes		350,000		350,000
Unsecured 9.5% Notes		125,000		125,000
Hollywood Park-Casino debt obligation		16,866		18,847
Other secured notes payable		1,482		2,407
Other unsecured notes payable		150		893
		493,498		497,147
Less current maturities		2,419		3,654
	$	491,079	$	493,493

Secured Notes Payable, Bank Credit Facility    Subsequent to December 31, 2002, the Company secured underwriting agreements from a group of lenders for a $225,000,000 amended and restated bank credit facility (see Note 18). As of December 31, 2002 and 2001, the Company maintained a reducing revolving bank credit facility with a syndicate of banks in the amount of $110,000,000 (the “Credit Facility”). The Credit Facility expires December 31, 2003 and has scheduled commitment reductions of $6,667,000 on March 31, 2003 and $16,667,000 on each June 30 and September 30, 2003. During 2001, the commitment was reduced to the existing $110,000,000 from a balance of $170,000,000 at December 31, 2000. The Credit Facility has remained unused since February 1999. The Credit Facility provides for letters of credit up to $30,000,000 and swing line loans of up to $10,000,000.

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PINNACLE ENTERTAINMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Interest rates on borrowings under the Credit Facility are determined by adding a margin, which is based upon the Company’s debt to cash flow ratio (as defined in the Credit Facility), to either the LIBOR rate or Prime Rate (at the Company’s option). The Company also pays a quarterly commitment fee on the unused balance of the Credit Facility. The Credit Facility allows for interest rate swap agreements or other interest rate protection agreements. Presently, the Company does not use such financial instruments.

In 2001, the Company and the bank syndicate executed Amendments No. 5 and No. 6, which, among other things: (i) amended various financial covenant ratios to be more consistent with current operations, (ii) allowed for certain capital expenditures, including the Lake Charles project and Bossier City expansion, (iii) suspended any additional stock repurchase activity and, (iv) required the Company to utilize its cash (other than working capital and casino cash) prior to drawing on the facility.

Unsecured 9.25% and 9.5% Notes    In February of 1999, the Company issued $350,000,000 principal amount of 9.25% Senior Subordinated Notes due 2007 (the “9.25% Notes”), the proceeds from which were used to pay the outstanding borrowings on the Credit Facility, to fund current capital expenditures, and for other general corporate purposes.

In August of 1997, the Company issued $125,000,000 principal amount of 9.5% Senior Subordinated Notes due 2007 (the “9.5% Notes”). On January 29, 1999, the Company received the required number of consents to modify selected covenants associated with the 9.5% Notes. Among other things, the modifications lowered the required minimum consolidated coverage ratio for debt assumption and increased the size of allowed borrowings under the Credit Facility. The Company paid a consent fee of $50 per $1,000 principal amount of the 9.5% Notes which, combined with other transactional expenses, is being amortized over the remaining term of the 9.5% Notes.

The 9.25% and 9.5% Notes are redeemable, at the option of the Company, in whole or in part, on the following dates, at the following premium-to-face values:

9.25% Notes redeemable:		9.5% Notes redeemable:
After February 14	at a premium of	After July 31,	at a premium of
2003	104.625%	2002	104.750%
2004	103.083%	2003	102.375%
2005	101.542%	2004	101.188%
2006	100.000%	2005	100.000%
2007	maturity	2006	100.000%
		2007	maturity

Both the 9.25% and the 9.5% Notes are unsecured obligations of the Company, guaranteed by all material restricted subsidiaries of the Company, as defined in the indentures. The Casino Magic Argentina subsidiaries do not guaranty the debt. The indentures governing the 9.25% and 9.5% Notes, as well as the Credit Facility, contain certain covenants limiting the ability of the Company and its restricted subsidiaries to incur additional indebtedness, issue preferred stock, pay dividends or make certain distributions, repurchase equity interests or subordinated indebtedness, create certain liens, enter into certain transactions with affiliates, sell assets, issue or sell equity interests in its subsidiaries, or enter into certain mergers and consolidations. The Company is permitted, under both indentures, to amend, restate, modify or refinance its Credit Facility to a maximum of $350,000,000 of such debt outstanding. It is also permitted to put up to 50% of its undeveloped real estate, measured in acres, into an unrestricted subsidiary. The proceeds of any subsequent sale of the such land would also remain unrestricted. The Inglewood land currently under contracts to be sold comprises less than half of the Company’s undeveloped land. As of December 31, 2002, and based on quoted market values, the fair values of the 9.25% and 9.5% Notes are approximately $311,500,000 and $111,875,000, respectively. As of December 31, 2002, the Company was in compliance with the indenture covenants.

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PINNACLE ENTERTAINMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Redemption of Casino Magic 13% Notes and Extraordinary Item    In August 2000, the Company redeemed the Casino Magic 13% First Mortgage Notes at a redemption price of 106.5%. Upon deposit of principal, premium and accrued interest for such redemption, Casino Magic of Louisiana satisfied all conditions required to discharge its obligations under the indenture. In connection with the redemption, the Company recorded an extraordinary loss of $2,653,000, net of federal and state income taxes, or $0.10 per basic and diluted share. The extraordinary loss represents the payment of the redemption premium and the write-off of deferred finance and premium costs, net of the related federal and state income tax benefit of $1,493,000. Following the redemption, Casino Magic of Louisiana became a guarantor of the Credit Facility, the 9.25% Notes and the 9.5% Notes.

Hollywood Park-Casino Debt Obligation    In connection with the disposition of the Hollywood Park-Casino to Churchill Downs and sublease to a third-party operator in September 1999, the Company recorded a long-term lease obligation of $23,000,000 (equal to the Company’s gross investment in the lease). Annual lease payments to Churchill Downs of $3,000,000 are applied as a reduction of principal and interest expense. The debt obligation is being amortized, based on the effective interest method, over 10 years (the initial lease term with Churchill Downs). The Company’s net investment in the Hollywood Park-Casino is $18,017,000 and $19,550,000 at December 31, 2002 and 2001, respectively, and is included in Property, Plant and Equipment on the accompanying Consolidated Balance Sheets.

Annual Maturities    As of December 31, 2002, annual maturities of secured and unsecured notes payable (including the long-term lease obligation related to the Hollywood Park-Casino) are as follows:

	(in thousands)
Year ending December 31:
2003	$	3,296
2004		3,103
2005		3,107
2006		3,062
2007		478,149
Thereafter		6,765
		497,482
Less interest related to the long term lease obligation		(3,984	)
	$	493,498

Note 9—Lease Obligations

The Company has certain long term operating lease obligations, including corporate office space, land at Belterra Casino Resort, office equipment and gaming equipment. Minimum lease payments required under operating leases that have initial terms in excess of one year as of December 31, 2002 are as follows:

	(in thousands)
Period:
2003	$	7,383
2004		5,617
2005		5,361
2006		4,851
2007		3,798
Thereafter		13,200
	$	40,210

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Total rent expense for these long-term lease obligations for the years ended December 31, 2002, 2001 and 2000 was $6,291,000, $9,488,000 and $7,281,000, respectively.

The Company is also a party to a number of cancelable slot participation arrangements at its various casinos, which arrangements are customary for casino operations. The arrangements consist of either a fixed rent agreement on a per day basis or a percentage of each slot machines’ gaming revenue, generally payable at month-end. Slot participation expense was $16,273,000, $9,539,000 and $7,048,000 for the years ended December 31, 2002, 2001 and 2000, respectively.

Note 10—Income Taxes

The composition of the Company’s income tax expense (benefit) for the years ended December 31, 2002, 2001 and 2000 was as follows:

	Current			Deferred			Total
	(in thousands)
Year ended December 31, 2002:
U.S. Federal	$	(5,648	)	$	(3,287	)	$	(8,935	)
State		86			(2,457	)		(2,371	)
Foreign		922			0			922
	$	(4,640	)	$	(5,744	)	$	(10,384	)(b)
Year ended December 31, 2001:
U.S. Federal	$	(3,866	)	$	(16,200	)	$	(20,066	)
State		(607	)		(2,546	)		(3,153	)
Foreign		1,313			0			1,313
	$	(3,160	)	$	(18,746	)	$	(21,906	)
Year ended December 31, 2000:
U.S. Federal	$	52,545		$	(10,119	)	$	42,426
State		8,249			(2,125	)		6,124
Foreign		2,353			0			2,353
	$	63,147		$	(12,244	)	$	50,903	(a)

(a) Includes $1,493,000 of tax benefit of extraordinary item.

(b) Includes $4,238,000 of tax benefit of cumulative change in accounting principle (see Note 2).

The following table reconciles the Company’s income tax expense to the federal statutory tax rate of 35%:

	For the years ended December 31,
	2002			2001			2000
	(in thousands)
Federal income tax expense (benefit) at the statutory rate	$	(6,675	)	$	(17,694	)	$	46,161
State income taxes, net of federal tax benefits		(1,541	)		(2,781	)		6,124
Other expenses (income)		2,070			3,173			111
Reduction in valuation allowance		0			(4,604	)		0
Income tax expense (benefit) before extraordinary item		(6,146	)		(21,906	)		52,396
Tax benefit of extraordinary item		(4,238	)		0			(1,493	)
Income tax (benefit) expense	$	(10,384	)	$	(21,906	)	$	50,903

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PINNACLE ENTERTAINMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

At December 31, 2002 and 2001, the tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities were:

	For the years ended December 31,
	2002			2001
	(in thousands)
Deferred tax assets—current:
Workers’ compensation insurance reserve	$	298		$	487
General liability insurance reserve		535			75
Vacation and sick pay accrual		1,464			1,390
Legal and merger costs		1,640			1,840
Other		1,612			920
Net current deferred tax assets	$	5,549		$	4,712
Deferred tax assets—non-current:
Net operating loss carry-forwards	$	8,346		$	9,042
Excess tax basis over book value of acquired assets		6,504			11,736
Asset impairment write-downs		8,043			9,454
Los Angeles revitalization zone tax credits		9,967			9,967
Other		11,036			0
Less Valuation Allowance		(9,500	)		(9,500	)
		34,396			30,699
Deferred tax liabilities—non-current:
Depreciation, amortization, pre-opening expenses and other		(47,383	)		(53,385	)
Net non-current deferred tax liabilities	$	(12,987	)	$	(22,686	)

Prior to 2000, the Company earned a substantial amount of California tax credits related to the ownership and operation of the Hollywood Park Race Track and Hollywood Park-Casino as well as the ownership of the Crystal Park Card Club Casino, which were located in the Los Angeles Revitalization Tax Zone (LARZ). As of December 31, 2002, the Company had approximately $9,967,000 of Los Angeles Revitalization Zone (“LARZ”) tax credits. The LARZ tax credits can only be used to reduce certain California tax liabilities. A valuation allowance has been recorded with respect to the LARZ tax credits because the Company may not generate enough income subject to California tax to utilize the credits before they expire. The amount subject to carry-forward of these unused California tax credits (net of valuation allowance) was approximately $967,000. The LARZ credits will expire between 2007 to 2012.

During the year ended December 31, 2002, the Company incurred an approximate $48,675,000 federal net operating loss (“NOL”). The Company intends to carry-back the 2002 NOL to earlier years and is expected to receive a federal tax refund of a minimum of $6,000,000, to be received in 2003. As a result of the NOL carry-back, tax credits of approximately $11,000,000 will be available for carry-forwards to offset future federal taxes.

For the years ended 2002 and 2001, the Company received net cash tax refund of $2,370,000 and $23,088,000, respectively. For the year 2000, due to substantial asset sales in 2000 and 1999, the Company paid cash taxes of $64,600,000.

In October 2002, the Company settled with the Internal Revenue Service with respect to its examination of the Casino Magic entities for the income tax period 1992 through 1996, resulting in a final tax and interest

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payment of $4,230,000 that had been accrued in prior years. At December 31, 2002, the Company’s federal net operating loss (“NOL”) carry-forwards remaining from the Casino Magic acquisition in 1998 are approximately $12,157,000 net of the IRS audit adjustments. The NOL carry-forwards expire on various dates through 2018. The Company’s use of Casino Magic’s NOL carry-forwards is subject to restrictions imposed by Section 382 of the Internal Revenue Code.

Note 11—Commitments and Contingencies

Indiana Regulatory Settlement and Related Costs    In 2002 the Company incurred estimated regulatory, legal and other settlement costs of $6,609,000 in connection with an investigation by the Indiana Gaming Commission into events surrounding, and claims underlying, lawsuits filed by two former Belterra Casino Resort employees and events surrounding a golf tournament held in 2001. The lawsuits were settled during 2002.

In August 2002, the Company entered into a settlement agreement with the Indiana Gaming Commission. The Company agreed, among other things, to pay a fine of $2,260,000; suspend gaming operations at the Belterra Casino Resort for three days in October 2002; pay estimated wages, tips, taxes and community development fees that would have been paid had the operation not been closed during the three-day closure period; build a new 300-guestroom tower by July 2004; and establish a new compliance committee of the Company’s Board of Directors. Except for the guestroom tower, which is under construction, all elements of the settlement agreement have been completed.

The Company also placed $5,000,000 into an escrow account to ensure the completion of the new guestroom tower by July 2004, at which time the funds will be released back to the Company. In the event the Company does not complete the tower by July 29, 2004 (subject to extension for events beyond the Company’s control upon approval by the Indiana Gaming Commission), the $5,000,000 escrowed funds will be paid to the Indiana Gaming Commission.

Settlement costs in 2002 include the fine, investigation costs, estimated severance and settlement with former officers and estimated legal and other related costs. The estimated costs may be subject to revision upon final disposition of these matters after December 31, 2002.

Employment and Severance Agreement    The Company has employment agreements with four officers (including one whose employment began in January 2003) and three other key employees. The agreements grant the employee the right to receive his annual salary, and in some cases, a guaranteed incentive compensation, for up to the balance of the contract periods which have expiration dates between May 2003 and September 2007, plus extension of certain benefits and the immediate vesting of certain stock options, if the Company terminates the employee without cause or if the employee terminates the contract for good reason (both as defined in the employment agreement). The agreements have expiration dates between May 2003 and September 2007. In the event of a change in control (as defined in the employment agreement), followed by a diminution of duties, failure to pay a minimum bonus level during the first twelve months of the change of control, or termination (each a “Severance Trigger”), the employee is entitled to receive in some cases one year’s salary, and for others the remaining portion of the contract amount including the guaranteed incentive compensation, plus extension of certain benefits and the immediate vesting of all stock options. In the case of the Company’s CEO, the Severance Trigger is not applicable. At December 31, 2002, the maximum contingent liability for salary and incentive compensation under these agreements was approximately $8,587,000.

City Annexation Costs    During 2002, the 569 acres owned by the Company at Boomtown Reno, of which approximately 60 acres are currently used in the operation, were annexed into the City of Reno, Nevada. The City has contracted the design for an extension of the municipal sewer line to the Boomtown property. The

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Company estimates the sewer hook-up fees to Boomtown could approximate $1,500,000. When the project is completed in 2004 the annual sewer service fee could be approximately $250,000 higher than the costs incurred in 2002 to operate the Company’s own sewage treatment plant. In addition, the Company anticipates the annual city licenses and taxes will be an additional $350,000 over such costs before the annexation. The determination of the final hook-up fees, the annual sewer service fees, licenses and city taxes will be determined by various factors in the future. At the time Boomtown Reno is connected to the municipal sewer system, it will cease to operate the existing sewer treatment plant on the property. The annexation of the property by the City of Reno and the extension of city services, particularly sewage treatment capability, make it considerably more feasible to develop the Company’s surplus land. The Company has not determined whether it will develop such land itself, sell such land to others who may develop it, or a combination of the two.

Construction Commitments    The Company is in the early stages of developing and building projects in Louisiana and Indiana, described in Note 5. The total costs of such projects are estimated to be $362,000,000, inclusive of capitalized interest and pre-opening costs. At December 31, 2002, the Company had expended approximately $4,446,000 of this amount and had entered into agreements related to design, development and construction for approximately $10,023,000.

Self Insurance Reserves    The Company self-insures various levels of general liability, property, workers’ compensation and medical coverage. Insurance reserves include accruals of estimated settlements for known claims, as well as accruals of estimates of incurred but not reported claims.

Legal

Astoria Entertainment Litigation    In November 1998, Astoria Entertainment, Inc. filed a complaint in the United States District Court for the Eastern District of Louisiana. Astoria, an unsuccessful applicant for a license to operate a riverboat casino in Louisiana, attempted to assert a claim under the Racketeer Influenced and Corrupt Organizations Act (“RICO”), seeking damages allegedly resulting from its failure to obtain a license. Astoria named several companies and individuals as defendants, including Hollywood Park, Inc. (the predecessor to Pinnacle Entertainment), Louisiana Gaming Enterprises, Inc. (“LGE”), a wholly-owned subsidiary of Pinnacle Entertainment, and an employee of Boomtown, Inc. The Company believed the RICO claim against it had no merit and, indeed, Astoria voluntarily dismissed its RICO claim against Hollywood Park, LGE, and the Boomtown employee.

On March 1, 2001, Astoria amended its complaint. Astoria’s amended complaint added new legal claims, and named Boomtown, Inc. and LGE as defendants. Astoria claims that the defendants (i) conspired to corrupt the process for awarding licenses to operate riverboat casinos in Louisiana, (ii) succeeded in corrupting the process, (iii) violated federal and Louisiana antitrust laws, and (iv) violated the Louisiana Unfair Trade Practices Act. The amended complaint asserts that Astoria would have obtained a license to operate a riverboat casino in Louisiana, but for these alleged improper acts. On August 21, 2001, the court dismissed Astoria’s federal claims with prejudice and its state claims without prejudice. On September 21, 2001, Astoria appealed those dismissals to the U.S. Court of Appeals for the Fifth Circuit. On October 3, 2001, Boomtown, Inc. and LGE filed a cross-appeal on the grounds that the state claims should have been dismissed with prejudice. Astoria subsequently voluntarily dismissed its appeal. In May 2002, Astoria refiled its state claims in the Civil District Court for the Parish of Orleans, Louisiana. On January 7, 2003, the Fifth Circuit Court of Appeals affirmed the lower court’s dismissal of plaintiff’s state law claims without prejudice. While the Company cannot predict the outcome of this litigation, management intends to defend it vigorously.

Poulos Lawsuit    A class action lawsuit was filed on April 26, 1994, in the United States District Court, Middle District of Florida (the “Poulos Lawsuit”), naming as defendants 41 manufacturers, distributors and

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PINNACLE ENTERTAINMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

casino operators of video poker and electronic slot machines, including Casino Magic. The lawsuit alleges that the defendants have engaged in a course of fraudulent and misleading conduct intended to induce people to play such games based on false beliefs concerning the operation of the gaming machines and the extent to which there is an opportunity to win. The suit alleges violations of RICO, as well as claims of common law fraud, unjust enrichment and negligent misrepresentation, and seeks damages in excess of $6 billion. On May 10, 1994, a second class action lawsuit was filed in the United States District Court, Middle District of Florida (the “Ahern Lawsuit”), naming as defendants the same defendants who were named in the Poulos Lawsuit and adding as defendants the owners of certain casino operations in Puerto Rico and the Bahamas, who were not named as defendants in the Poulos Lawsuit. The claims in the Ahern Lawsuit are identical to the claims in the Poulos Lawsuit. Because of the similarity of parties and claims, the Poulos Lawsuit and Ahern Lawsuit were consolidated into one case file (the “Poulos/Ahern Lawsuit”) in the United States District Court, Middle District of Florida. On December 9, 1994 a motion by the defendants for change of venue was granted, transferring the case to the United States District Court for the District of Nevada, in Las Vegas. In an order dated April 17, 1996, the court granted motions to dismiss filed by Casino Magic and other defendants and dismissed the complaint without prejudice. The plaintiffs then filed an amended complaint on May 31, 1996 seeking damages against Casino Magic and other defendants in excess of $1 billion and punitive damages for violations of RICO and for state common law claims for fraud, unjust enrichment and negligent misrepresentation.

At a December 13, 1996 status conference, the Poulos/Ahern Lawsuit was consolidated with two other class action lawsuits (one on behalf of a smaller, more defined class of plaintiffs and one against additional defendants) involving allegations substantially identical to those in the Poulos/Ahern Lawsuit (collectively, the “Consolidated Lawsuits”) and all pending motions in the Consolidated Lawsuits were deemed withdrawn without prejudice. The plaintiffs in the Consolidated Lawsuits filed a consolidated amended complaint on February 14, 1997, which the defendants moved to dismiss. On December 19, 1997, the court granted the defendants’ motion to dismiss certain allegations in the RICO claim, but denied the motion as to the remainder of such claim; granted the defendants’ motion to strike certain parts of the consolidated amended complaint; denied the defendants’ remaining motions to dismiss and to stay or abstain; and permitted the plaintiffs to substitute one of the class representatives. On January 9, 1998, the plaintiffs filed a second consolidated amended complaint containing claims nearly identical to those in the previously dismissed complaints. The defendants answered, denying the substantive allegations of the second consolidated amended complaint. On June 21, 2002, the court denied plaintiffs’ motion for class certification. On July 11, 2002, the plaintiffs’ filed a petition for permission to appeal the court’s denial of the plaintiffs’ motion for class certification. On August 15, 2002, the United States Court of Appeals for the Ninth Circuit granted plaintiffs’ petition. On August 23, 2002, the plaintiffs filed their notice of appeal with the U.S. District Court for the District of Nevada.

The claims are not covered under the Company’s insurance policies. While the Company cannot predict the outcome of this action, management intends to defend it vigorously.

Casino America Litigation    On or about September 6, 1996, Casino America, Inc. commenced litigation in the Chancery Court of Harrison County, Mississippi, Second Judicial District, against Casino Magic Corp., and James Edward Ernst, its then Chief Executive Officer. In the complaint, as amended, the plaintiff claims, among other things, that the defendants (i) breached the terms of an agreement they had with the plaintiff; (ii) tortuously interfered with certain of the plaintiff’s contracts and business relations; and (iii) breached covenants of good faith and fair dealing they allegedly owed to the plaintiff, and seeks compensatory damages in an amount to be proven at trial as well as punitive damages. On November 30, 1999 the case was transferred to the Circuit Court for the Second Judicial District of Harrison County. The trial began on November 12, 2002. On November 21, 2002, the jury rendered a unanimous verdict in favor of the Company and Ed Ernst. On November 25, 2002, the court entered a judgement in favor of the defendants. On December 5, 2002, plaintiff filed a motion for new trial. On March 11, 2003, the court denied plaintiff’s motion for a new trial. The Company’s insurer has essentially

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PINNACLE ENTERTAINMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

denied coverage of the claim against Mr. Ernst under the Company’s directors and officer’s insurance policy, but has reserved its right to review the matter as to tortuous interference at or following trial. The Company, who is indemnifying Mr. Ernst, believes that the insurer should not be permitted to deny coverage, although no assurances can be given that the insurer will change its position. While the Company cannot predict the outcome of this action, management intends to continue to defend it vigorously if plaintiff appeals the judgement.

Casino Magic Biloxi Patron Incident    On January 13, 2001, three Casino Magic Biloxi patrons sustained injuries as a result of an assault by another Casino Magic Biloxi patron, who then killed himself. Several other patrons sustained injuries while attempting to exit the casino. On August 1, 2001, two of the casino patrons injured during the January 13, 2001 incident filed a complaint in the Circuit Court of Harrison County, Mississippi, Second Judicial District. The complaint alleges that Biloxi Casino Corp. failed to exercise reasonable care to keep its patrons safe from foreseeable criminal acts of third persons and seeks unspecified compensatory and punitive damages. The plaintiffs filed an amended complaint on August 17, 2001. The amended complaint added an allegation that Biloxi Casino Corp. violated a Mississippi statute by serving alcoholic beverages to the perpetrator who was allegedly visibly intoxicated and that Biloxi Casino Corp.’s violation of the statute was the proximate cause of or contributing cause to plaintiffs’ injuries. On March 20, 2002, the third injured victim filed a complaint in the Circuit Court of Harrison County, Mississippi, Second Judicial District. The allegations in the complaint are substantially similar to those contained in the August 1, 2001 lawsuit. The trial for the August 1, 2001 lawsuit has been set for July 21, 2003. No trial date has been set for the subsequent suit. While the Company cannot predict the outcome of these actions, the Company, together with its applicable insurers, intends to defend them vigorously.

Actions by Greek Authorities    In 1995, a subsidiary of Casino Magic Corp., Casino Magic Europe B.V. (“CME”), performed management services for Porto Carras Casino, S.A. (“PCC”), a joint venture in which CME had a minority interest. Effective December 31, 1995, CME, with the approval of PCC, assigned its interests and obligations under the PCC management agreement to a Greek subsidiary, Casino Magic Hellas S.A. (“Hellas”). Hellas issued invoices to PCC for management fees that accrued during 1995, but had not been billed by CME.

In September 1996, local Greek tax authorities in Thessaloniki assessed a penalty of approximately $3.5 million against Hellas, and an equal amount against PCC, arising out of the presentation and payment of the invoices. The Thessaloniki tax authorities asserted that the Hellas invoices were fictitious, representing an effort to reduce the taxable income of PCC.

PCC and Hellas each appealed their respective assessments. The assessment of the fine against PCC was overturned by the Administrative Court of Thessaloniki on December 11, 2000. The court determined that the actions taken by Hellas and PCC were not fictitious but constituted a legitimate business transaction and accordingly overturned the assessment of the fine. Hellas’s appeal was dismissed for technical procedural failures and has not been reinstated; presumably, however, the rationale of the court in the PCC fine matter would apply equally to the Hellas fine matter, assuming the court’s decision is upheld on appeal (see below).

During the first quarter of 2001, the Greek taxing authorities appealed the December 11, 2000 decision by the Administrative Court of Thessaloniki overturning the assessment of the fine against PCC. No hearing date on such appeal has been set.

Under Greek law, shareholders are not liable for the liabilities of a Greek company in which they hold shares, even if the entity is later liquidated or dissolved, and assessments such as the PCC and Hellas fines generally are treated as liabilities of the company. Additionally, all of PCC’s stock was sold to an unrelated company in December of 1996, and the buyer assumed all of PCC’s liabilities. Therefore, management does not expect that this matter will have a materially adverse effect on the financial condition or results of operations of the Company.

67

PINNACLE ENTERTAINMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In June 2000, Greek authorities issued a warrant to appear at a September 29, 2000 criminal proceeding to Marlin Torguson (a member of the Company’s board of directors and Chairman of the Board of CME in 1995) and Robert Callaway (former Associate General Counsel for the Company and, prior to its acquisition by the Company, CME’s General Counsel). They were charged under Greek law, and convicted inabsentia, as being culpable criminally for corporate misconduct based solely on their status as alleged executive board members of PCC. The Company is advised that they are not, and have never been, managing (active) executive directors of PCC. Accordingly, the Company believes that they were improperly named in the proceedings. The defendants have a right of appeal for a de novo trial under Greek law.

On March 30, 2001, appeals on behalf of Messrs. Torguson and Callaway were filed. The hearing before the three-member Court of Misdemeanors of Thessaloniki was continued. The hearing is currently set to be heard on April 10, 2003.

The Company has been advised that the resolution of the related civil penalties may sometimes resolve criminal issues in Greece. The Company is actively working to resolve the civil and criminal actions related to this matter.

Shareholder Derivative Action    On December 13, 2002, William T. Kelsey, an individual shareholder of the Company, filed a derivative lawsuit purportedly on behalf of the Company against the Company’s former Chairman R.D. Hubbard, former CEO Paul R. Alanis, Chairman and CEO Daniel R. Lee, various other current and former directors of the Company, and against the Company itself as a nominal defendant. The lawsuit, brought in California Superior Court in Los Angeles County, alleges, among other things, breaches of fiduciary duty, negligence, mismangement and violations of the RICO Act by the defendants in connection with the events surrounding a golf tournament held at the Company’s Belterra Casino Resort in June 2001. The complaint alleges that the Company is entitled to recover unspecified damages in excess of $10 million, plus exemplary, punitive and treble damages and the plaintiff’s fees and costs. The Company has empowered a Special Committee of three independent directors to perform an investigation and determine whether pursuit of this derivative lawsuit is in the best interests of the Company and its shareholders. The Court has entered a stay of the litigation until May to allow the directors to conduct a good faith investigation in this respect.

Alanis Suit    On or about December 3, 2002, Paul Alanis filed a lawsuit against the Company, R. D. Hubbard and Daniel R. Lee, claiming, among other things, wrongful termination and defamation. He seeks unspecified compensatory and punitive damages. On February 11, 2003, the court granted the Company’s motion to send the matter to arbitration, with the exception of the defamation claims against Mr. Lee, and stayed the entire action pending such arbitration. While the outcome of this action cannot be predicted, the Company and Mr. Lee intend to defend it vigorously.

New Hampshire Insurance Company Lawsuit    On July 31, 2000, a collision occurred between the M/V Miss Belterra and the M/V Elizabeth Ann riverboats. On or about August 15, 2002, New Hampshire Insurance Company filed suit against the Company in the U.S. District Court, District of California alleging, among other things, that New Hampshire Insurance Company overpaid the Company in excess of $2 million dollars, on the Company’s business interruption claim arising out of the collision. The plaintiff is seeking restitution of the sums that it has allegedly overpaid the Company, a judicial declaration of the amount, if any, that it has overpaid the Company, a judicial declaration of the rights and duties of the parties and costs of suit. On October 4, 2002, the Company filed an answer, counterclaim and request for jury trial setting claim, among other things, that the plaintiff’s payments to the Company fall short of its obligation by at least $1.75 million, that plaintiff breached its insurance contract, that plaintiff has acted in bad faith and seeking a judicial determination of the respective rights and duties of the parties. The Company has also requested attorneys’ fees, costs of suit and interest. While the Company cannot predict the outcome of this action, it intends to defend it vigorously and pursue its counterclaims.

68

PINNACLE ENTERTAINMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Other    The Company is party to a number of other pending legal proceedings, though management does not expect that the outcome of such proceedings, either individually or in the aggregate, will have a material effect on the Company’s financial results.

Note 12—Corporate Relocation

In December, 2002, the Corporate headquarters were moved to Las Vegas, Nevada from Glendale, California. The costs to relocate, including severance payments to employees, costs for the remaining lease term of the Glendale office lease and other moving expenses, were $1,601,000 and were expensed in the fourth quarter of 2002.

Note 13—Employee Benefit Plans

Stock Options Plans    The Company accounts for its stock-based compensation under Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and follows the disclosure provisions of Financial Accounting Standards Board’s Statement of Financial Accounting Standards No. 123 Accounting for Stock-Based Compensation. The Company has four stock option plans (the “Stock Option Plans”) that provide for the granting of stock options to officers, key employees and consultants. The objectives of these plans include attracting and retaining the best personnel, providing for additional performance incentives, and promoting the success of the Company. In 2002, shareholders of the Company adopted the 2002 stock option plan, which provides for the issuance of up to 1,000,000 shares. In 2001, 1996 and 1993, shareholders of the Company adopted stock options plans for the issuance of up to 2,425,000 shares. Except for the provisions governing the number of shares issuable and the provisions which reflect changes in tax and securities laws, the provisions of the plans are substantially similar to one another. In addition, Boomtown, Inc. and Casino Magic Corp. had stock option plans prior to their acquisition by the Company and under terms of each merger, the options in those companies were converted to options in the Company.

The Stock Options Plans are administered and terms of option grants are established by the Board of Directors’ Compensation Committee. Under the terms of the Stock Option Plans, options alone, or coupled with stock appreciation rights, may be granted to select key employees, directors, consultants and advisors of the Company. Options become exercisable ratably over a vesting period as determined by the Compensation Committee and expire over terms not exceeding ten years from the date of grant, and generally one to three months after termination of employment, or one year after the death or permanent disability of the optionee. The purchase price for all shares granted under the Stock Option Plans shall be determined by the Compensation Committee, but in the case of incentive stock options, the price will not be less than the fair market value of the common stock at the date of grant.

As of December 31, 2002, there were approximately 213,000 options remaining available for grant under the various stock option plans.

In 2002, the Company granted options for the purchase of 765,801 shares (at an exercise price of $8.45, the then-share price) to the Chairman and CEO of the Company outside the Stock Option Plans. In 1998, the Company granted options for the purchase of 817,500 shares (625,000 at an exercise price of $10.1875, and 192,500 at an exercise price of $18.00) outside of the Stock Option Plans to a group of executives. As of December 31, 2002, 150,000 of the options granted in 1998 outside the plans have been exercised, while 450,000 have been forfeited.

69

PINNACLE ENTERTAINMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table summarizes information related to shares under option and shares available for grant (exclusive of the pre-merger plans discussed below):

	Number of Shares		Weighted Average Exercise Price
Options outstanding at January 1, 2000	1,689,343	(a)	$	12.08
Granted	0		$	0.00
Exercised	(99,127	)	$	13.27
Forfeited	(17,132	)	$	15.05
Options outstanding at December 31, 2000	1,573,084		$	12.13
Granted	595,000		$	9.85
Exercised	(40,000	)	$	9.86
Forfeited	(87,583	)	$	11.96
Options outstanding at December 31, 2001	2,040,501		$	11.52
Granted	2,463,801		$	8.08
Exercised	(150,000	)	$	10.19
Forfeited	(727,534	)	$	11.70
Options outstanding at December 31, 2002	3,626,768		$	9.23
Options exercisable at:
December 31, 2002	1,180,300		$	11.18
December 31, 2001	1,326,257		$	12.20
December 31, 2000	995,912		$	12.23
Weighted-average fair value of options granted during the year:
December 31, 2001	595,000		$	5.67
December 31, 2002	2,463,801		$	8.08

(a) Includes options for the purchase of shares issued outside of the Stock Option Plans.

The following table summarizes information about stock options (exclusive of the pre-merger plans discussed below):

	Outstanding		Exercisable
	Number of Shares at Exercise	Weighted Average Exercise Price	Number of Shares at Exercise	Weighted Average Range of 12/31/02 Price
$  5.95–$10.19	3,010,267	$  8.40	721,798	$  9.32
$10.65–$14.75	539,001	$12.55	381,002	$17.94
$14.81–$20.25	77,500	$18.29	77,500	$28.16
	3,626,768	$  9.23	1,180,300	$11.18

The weighted average remaining contractual life of the outstanding options (exclusive of the pre-merger plans discussed below) as of December 31, 2002 is approximately 8.26 years.

70

PINNACLE ENTERTAINMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In addition to the above options to purchase shares, 250,380 shares (all of which are vested and have a weighted average exercise price of $10.01 per share) of Pinnacle Entertainment common stock are issuable upon exercise of options granted under pre-merger stock option plans of Boomtown and 76,305 shares (all of which are vested and have a weighted average exercise price of $28.11 per share) of Pinnacle Entertainment common stock are issuable upon exercise of options granted under pre-merger stock options plans of Casino Magic. Options issued under these plans expire over remaining terms not exceeding 5.5 years.

	Boomtown Pre-Merger Options		Casino Magic Pre-Merger Options
Options outstanding at January 1, 2000	721,074		256,124
Granted	0		0
Exercised	(59,064	)	(38,184	)
Cancelled	(4,790	)	(40,811	)
Options outstanding at December 31, 2000	657,220		177,129
Granted	0		0
Exercised	(72,090	)	(352	)
Cancelled	0		(2,464	)
Options outstanding at December 31, 2001	585,130		174,313
Granted	0		0
Exercised	(331,313	)	(9,504	)
Cancelled	(3,437	)	(88,504	)
Options outstanding at December 31, 2002	250,380		76,305

Executive Compensation    Non-cash compensation charges of $177,000 for 2002 and $414,000 for each of 2001 and 2000 were incurred in connection with the granting of stock options to certain executives outside the Stock Option Plans in 2002 and 1998. As the options granted outside the plans were subject to shareholder approval, a compensation charge equal to the difference between the stock option exercise price and the share price on date of shareholder approval is calculated and expensed ratably over the shorter of (i) the life of the employee’s service agreement or (ii) the stock option agreement. Charges related to the 1998 option grants concluded in 2001, while the charges related to the 2002 grants will continue through 2006.

Other Benefit Plans    The Company maintains the Pinnacle Entertainment, Inc. 401(k) Investment Plan, as amended and restated, (the “401(k) Plan”). The 401(k) Plan is an employee benefit plan subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and is intended to be a qualified plan under Section 401(a) of the Internal Revenue Code of 1986, as amended (the “Code”). Employees of the Company who complete 500 Hours of Service within a 12 month period are eligible to participate in the 401(k) Plan; except that employees who are (i) neither citizens nor a residents of the United States and who derive no earned income from the Company, (ii) covered by a collective bargaining agreement, or (iii) individuals whom the Company previously classified as an independent contractor but whom the Internal Revenue Service later determines is a common-law employee are not eligible to participate in the 401(k) Plan. Participants of the 401(k) Plan may contribute up to 100% of pretax income, subject to the legal limitation of $12,000 for 2003. In addition, effective January 1, 2003, participants who are age 50 or older may make an additional contribution to the 401(k) Plan, commonly referred to as a catch-up contribution, equal to $2,000 for 2003. The Company offers discretionary matching contributions under the 401(k) Plan, which vest ratably over 5 years. For the years ended December 31, 2002, 2001 and 2000, matching contributions to the 401(k) Plan totaled $1,058,000, $567,000 and $1,027,000, respectively.

71

PINNACLE ENTERTAINMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

On January 1, 2000, the Company established a nonqualified Executive Deferred Compensation Plan (the “Deferred Plan”) to permit certain key employees to defer receipt of current compensation in order to provide retirement benefits on behalf of such employees. The Company does not make matching contributions to the Deferred Plan. The Deferred Plan is not qualified under Section 401(a) of the Code. Participants in the Deferred Plan are general creditors of the Company. The Company has the right to amend, modify or terminate the Deferred Plan.

On January 1, 2003, the Company adopted the Pinnacle Entertainment, Inc. Executive Health Expense Plan (the “Executive Health Plan”), an employee welfare benefit plan subject to the provisions of ERISA. The Executive Health Plan reimburses eligible employees, including officers, Directors and their dependants, for their medical, dental and vision expenses, subject to certain exclusions, benefit maximums and benefit limitations. There are approximately 27 participants, plus their dependants, in the Executive Health Plan.

Note 14—Related Party Transactions

In 2002, the Company’s current Chairman was reimbursed $9,000 for business use of an aircraft he owns. In 2001 and 2000, the Company’s then-Chairman received reimbursement for the business use of aircraft he owns in the amount of $55,000 and $97,000, respectively.

Timothy J. Parrott (a director and member of the Executive Committee, and, from late 2000 to early 2003, a member of the Audit Committee of the Company’s Board of Directors) purchased Boomtown common stock in 1988 in connection with the acquisition of Boomtown Hotel & Casino, Inc. (Boomtown). In 1997, with the acquisition of Boomtown by the Company, these shares were exchanged for 162,027 of the Company’s shares. Mr. Parrott paid an aggregate purchase price for the common stock of $222,000, of which $1,000 was paid in cash and $221,000 was paid by a promissory note. In 1998, Mr. Parrott resigned his position as Chairman of Boomtown, and the Company retained him for a three-year period, as a consultant to provide services relating to gaming and other business issues for an annual retainer of $350,000 with health and disability benefits equivalent to those he received as Chairman of Boomtown. Mr. Parrott’s $221,000 note was also forgiven in three equal parts on each anniversary of the consulting agreement.

Marlin Torguson, who beneficially owned approximately 21.5% of the outstanding common shares of Casino Magic in 1998, agreed, in connection with the Casino Magic acquisition, to vote his Casino Magic shares in favor of the acquisition by the Company. In addition, Mr. Torguson agreed to continue to serve as an employee of Casino Magic for three years following the acquisition, and during such three year period, not to compete with the Company or Casino Magic in any jurisdiction in which either the Company or Casino Magic operates. The Company appointed Mr. Torguson to its Board of Directors. The Company issued to Mr. Torguson 60,000 shares of the Company’s common stock as compensation for his three-year service as an employee and paid him $300,000 for each year for his non-compete agreement. In addition, the Company issued Mr. Torguson options to acquire 30,000 shares of the Company’s common stock, priced at the closing price of the Company’s common stock on that date.

Note 15—Terminated Merger Agreement

In April 2000, the Company entered into a definitive agreement with a subsidiary of Harveys Casino Resorts (“PHCR”), pursuant to which PHCR would have acquired by merger all of the outstanding capital stock of Pinnacle Entertainment for cash consideration. Consummation of the merger was subject to numerous conditions. In January 2001, upon mutual agreement, the proposed merger was terminated. During 2000, the Company incurred total merger related costs of $5,727,000. During 2001, $464,000 of previously recorded reserves were reversed.

72

PINNACLE ENTERTAINMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Note 16—Consolidating Condensed Financial Information

The Company’s subsidiaries (excluding Casino Magic Argentina and certain non-material subsidiaries) have fully and unconditionally guaranteed the payment of all obligations under the 9.25% Notes and the 9.5% Notes. Separate financial statements and other disclosures regarding the subsidiary guarantors are not included herein because management has determined that such information is not material to investors. In lieu thereof, the Company includes the following:

	Pinnacle Entertainment, Inc.			Wholly Owned Guarantor Subsidiaries(a)			Wholly Owned Non- Guarantor Subsidiaries(b)			Consolidating and Eliminating Entries			Pinnacle Entertainment, Inc. Consolidated
	(in thousands)
Balance Sheet
As of and for the year ended December 31, 2002
Current assets	$	101,865		$	67,116		$	4,024		$	0		$	173,005
Property, plant and equipment, net		22,850			562,233			1,000			0			586,083
Other non-current assets		38,779			29,642			2,078			10,851			81,350
Investment in subsidiaries		512,877			(927	)		0			(511,950	)		0
Inter-company		171,028			52,159			0			(223,187	)		0
	$	847,399		$	710,223		$	7,102		$	(724,286	)	$	840,438
Current liabilities	$	37,652		$	48,142		$	2,092		$	0		$	87,886
Notes payable, long term		489,846			1,233			0			0			491,079
Other non-current liabilities		25,193			0			0			(12,206	)		12,987
Inter-company		46,222			171,028			5,937			(223,187	)		0
Equity		248,486			489,820			(927	)		(488,893	)		248,486
	$	847,399		$	710,223		$	7,102		$	(724,286	)	$	840,438
Statement of Operations
Revenues:
Gaming	$	0		$	425,850		$	6,493		$	0		$	432,343
Food and beverage		0			29,249			502			0			29,751
Equity in subsidiaries		16,716			1,005			0			(17,721	)		0
Other		6,000			45,863			44			0			51,907
		22,716			501,967			7,039			(17,721	)		514,001
Expenses:
Gaming		0			249,993			2,558			0			252,551
Food and beverage		0			33,537			497			0			34,034
Administrative and other		22,979			129,516			1,581			0			154,076
Depreciation and amortization		2,378			42,065			486			0			44,929
		25,357			455,111			5,122			0			485,590
Operating income (loss)		(2,641	)		46,856			1,917			(17,721	)		28,411
Interest expense (income), net		48,171			(679	)		(10	)		0			47,482
Income (loss) before inter-company activity, taxes and change in accounting principle		(50,812	)		47,535			1,927			(17,721	)		(19,071	)
Management fee & inter-company interest expense (income)		(19,046	)		19,046			0			0			0
Income tax (benefit) expense		(7,068	)		0			922			0			(6,146	)
Income (loss) before change in accounting principle		(24,698	)		28,489			1,005			(17,721	)		(12,925	)
Change in accounting principle, net of taxes		44,931			11,773			0			0			56,704
Net income (loss)	$	(69,629	)	$	16,716		$	1,005		$	(17,721	)	$	(69,629	)

73

PINNACLE ENTERTAINMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	Pinnacle Entertainment, Inc.			Wholly Owned Guarantor Subsidiaries(a)			Wholly Owned Non- Guarantor Subsidiaries(b)			Consolidating and Eliminating Entries			Pinnacle Entertainment, Inc. Consolidated
	(in thousands)
Statement of Cash Flows
For the year ended December 31, 2002
Net cash provided by (used in) operating activities	$	(4,413	)	$	43,461		$	(18	)	$	0		$	39,030
Net cash provided by (used in) investing activities		(33,661	)		(43,186	)		107			0			(76,740	)
Net cash provided by (used in) financing activities		1,751			(925	)		0			0			826
Effect of exchange rate changes on cash		0			0			(2,017	)		0			(2,017	)
Balance Sheet
As of and for the year ended December 31, 2001
Current assets	$	140,407		$	70,992		$	7,425		$	0		$	218,824
Property, plant and equipment, net		21,753			552,633			1,913			0			576,299
Other non-current assets		20,796			57,631			4,949			40,850			124,226
Investment in subsidiaries		542,202			5,280			0			(547,482	)		0
Inter-company		156,082			20,360			0			(176,442	)		0
		$881,240		$	706,896		$	14,287		$	(683,074	)	$	919,349
Current liabilities	$	34,816		$	46,223		$	2,615		$	0		$	83,654
Notes payable, long term		492,016			1,477			0			0			493,493
Other non-current liabilities		34,892			0			0			(12,206	)		22,686
Inter-company		0			170,050			6,392			(176,442	)		0
Equity		319,516			489,146			5,280			(494,426	)		319,516
	$	881,240		$	706,896		$	14,287		$	(683,074	)	$	919,349
Statement of Operations
Revenues:
Gaming	$	0		$	402,889		$	18,602		$	0		$	421,491
Food and beverage		0			29,524			1,428			0			30,952
Equity in subsidiaries		(16,308	)		4,622			0			11,686			0
Other		6,000			49,471			129			0			55,600
		(10,308	)		486,506			20,159			11,686			508,043
Expenses:
Gaming		0			233,991			4,984			0			238,975
Food and beverage		0			37,665			1,134			0			38,799
Administrative and other		15,119			141,421			6,972			0			163,512
Asset impairment write down		0			23,030			0			0			23,030
Depreciation and amortization		2,684			44,203			1,447			1,116			49,450
		17,803			480,310			14,537			1,116			513,766
Operating (loss) income		(28,111	)		6,196			5,622			10,570			(5,723	)
Interest expense (income), net		46,129			(984	)		(313	)		0			44,832
(Loss) income before inter-company activity and income taxes		(74,240	)		7,180			5,935			10,570			(50,555	)
Management fee & inter-company interest expense (income)		(23,488	)		23,488			0			0			0
Income tax (benefit) expense		(23,219	)		0			1,313			0			(21,906	)
Net (loss) income	$	(27,533	)	$	(16,308	)	$	4,622		$	10,570		$	(28,649	)
Statement of Cash Flows
Net cash provided by (used in) operating activities	$	(11,862	)	$	48,297		$	1,966		$	1,116		$	39,517
Net cash provided by (used in) investing activities		(264	)		(41,461	)		(5,031	)		0			(46,756	)
Net cash provided by (used in) financing activities		(11,591	)		(851	)		0			0			(12,442	)

74

PINNACLE ENTERTAINMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	Pinnacle Entertainment, Inc.			Wholly Owned Guarantor Subsidiaries(a)			Wholly Owned Non- Guarantor Subsidiaries(b)			Consolidating and Eliminating Entries			Pinnacle Entertainment, Inc. Consolidated
	(in thousands)
Statement of Operations
For the year ended December 31, 2000
Revenues:
Gaming	$	0		$	427,980		$	20,398		$	0		$	448,378
Food and beverage		1,056			29,300			1,564			0			31,920
Racing		9,452			0			0			0			9,452
Equity in subsidiaries		63,703			5,150			0			(68,853	)		0
Other		6,157			53,565			130			0			59,852
		80,368			515,995			22,092			(68,853	)		549,602
Expenses:
Gaming		0			239,042			5,781			0			244,823
Food and beverage		892			32,952			1,336			0			35,180
Racing		4,133			0			0			0			4,133
Administrative and other		24,351			135,928			5,997			0			166,276
(Gain) loss on disposition of assets		(119,718	)		902			0			0			(118,816	)
Depreciation and amortization		3,336			39,798			1,573			1,395			46,102
		(87,006	)		448,622			14,687			1,395			377,698
Operating income (loss)		167,374			67,373			7,405			(70,248	)		171,904
Interest expense (income), net		39,279			1,017			(280	)		0			40,016
Income (loss) before taxes and extraordinary item		128,095			66,356			7,685			(70,248	)		131,888
Income tax expense		49,861			0			2,535			0			52,396
Income (loss) before extraordinary item		78,234			66,356			5,150			(70,248	)		79,492
Extraordinary item, net of taxes		0			2,653			0			0			2,653
Net income (loss)	$	78,234		$	63,703		$	5,150		$	(70,248	)	$	76,839
Statement of Cash Flows
Net cash provided by (used in) operating activities	$	(337,197	)	$	303,312		$	3,757		$	1,304		$	(28,824	)
Net cash provided by (used in) investing activities		388,466			(194,008	)		(1,181	)		0			193,277
Net cash provided by (used in) financing activities		(5,119	)		(109,828	)		0			0			(114,947	)

(a) The following subsidiaries are treated as guarantors of both the 9.5% Notes and 9.25% Notes: Belterra Resort Indiana LLC, Boomtown, Inc., Boomtown Hotel & Casino, Inc., Louisiana—I Gaming, Louisiana Gaming Enterprises, Inc., Casino Magic Corp., Biloxi Casino Corp., PNK (Bossier City), Inc., Casino One Corporation, Casino Parking, Inc., St. Louis Casino Corp., HP/Compton, Inc. and Crystal Park Hotel and Casino Development Company, LLC.

(b) The Company’s only material non-guarantor of both the 9.5% Notes and the 9.25% Notes is Casino Magic Neuquen S.A. and its subsidiary Casino Magic Support Services.

75

PINNACLE ENTERTAINMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Note 17—Segment Information

The following table reconciles the Company’s segment activity to its consolidated results of operations and financial position as of and for the years ended December 31, 2002, 2001 and 2000.

	For years ended December 31,
	2002		2001			2000
	(in thousands)
Revenues and expenses
Boomtown New Orleans
Revenues	$	100,403	$	99,927		$	94,240
Expenses, excluding depreciation, amortization and asset impairment write-down		73,348		72,362			67,548
Depreciation and amortization		6,585		6,012			5,843
Asset impairment write-down		0		1,801			0
Net operating income—Boomtown New Orleans	$	20,470	$	19,752		$	20,849
Casino Magic Biloxi
Revenues	$	86,500	$	82,997		$	86,451
Expenses, excluding depreciation, amortization and asset impairment write-down		68,410		67,029			68,976
Depreciation and amortization		7,520		6,799			6,963
Asset impairment write-down		518		1,371			0
Net operating income—Casino Magic Biloxi	$	10,052	$	7,798		$	10,512
Boomtown Reno
Revenues	$	89,021	$	90,100		$	93,183
Expenses, excluding depreciation, and amortization		71,423		70,916			73,778
Depreciation and amortization		7,390		7,834			7,683
Net operating income—Boomtown Reno	$	10,208	$	11,350		$	11,722
Boomtown Bossier City
Revenues	$	102,680	$	101,019		$	124,308
Expenses, excluding depreciation, amortization and asset impairment write-down		89,717		91,622			89,927
Depreciation and amortization		7,395		8,410			8,428
Asset impairment write-down		2,235		0			0
Net operating income—Boomtown Bossier City	$	3,333	$	987		$	25,953
Belterra Casino Resort
Revenues	$	122,118	$	104,385			15,506
Expenses, excluding depreciation and amortization		106,327		110,160			34,713
Depreciation and amortization		13,175		12,898			2,294
Net operating income (loss)—Belterra Casino Resort	$	2,616	$	(18,673	)	$	(21,501	)

76

PINNACLE ENTERTAINMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	For years ended December 31,
	2002			2001			2000
	(in thousands)
Casino Magic Argentina
Revenues	$	7,039		$	20,159		$	22,092
Expenses, excluding depreciation and amortization		5,097			13,090			13,114
Depreciation and amortization		486			1,447			1,573
Net operating income—Casino Magic Argentina	$	1,456		$	5,622		$	7,405
Card Clubs
Revenues	$	6,240		$	6,960		$	7,200
Expenses, excluding depreciation, amortization and asset impairment write-down		338			338			759
Depreciation and amortization		2,280			3,767			3,937
Asset impairment write-down		0			20,358			0
Net operating income (loss)—Card Clubs	$	3,622		$	(17,503	)	$	2,504
Sold Properties
Revenues	$	0		$	2,496		$	106,622
Expenses, excluding depreciation and amortization		0			(572	)		(40,292	)
Depreciation and amortization		0			0			5,590
Net operating income—Sold Properties	$	0		$	3,068		$	141,324
Total Reportable Segments
Revenues	$	514,001		$	508,043		$	549,602
Expenses, excluding depreciation and amortization		414,660			424,945			308,523
Depreciation and amortization		44,831			47,167			42,311
Asset impairment write-down		2,753			23,530			0
Net operating income—Total Reportable Segments	$	51,757		$	12,401		$	198,768
Reconciliation to Consolidated Net Income
Total net operating income for reportable segments	$	51,757		$	12,401		$	198,768
Unallocated income and expenses
Corporate expense		23,346			18,124			26,864
Interest income		(2,206	)		(5,021	)		(12,604	)
Interest expense, net of capitalized interest		49,688			49,853			52,620
(Loss) income before income taxes and extraordinary item		(19,071	)		(50,555	)		131,888
Income tax (benefit) expense		(6,146	)		(21,906	)		52,396
(Loss) income before extraordinary item		(12,925	)		(28,649	)		79,492
Cumulative change in accounting principle, net of taxes		56,704			0			0
Extraordinary item, net income tax benefit		0			0			2,653
Net (loss) income	$	(69,629	)	$	(28,649	)	$	76,839

77

PINNACLE ENTERTAINMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	For years ended December 31,
	2002			2001			2000
	(in thousands)
EBITDA(a)
Boomtown New Orleans	$	27,055		$	27,565		$	26,692
Casino Magic Biloxi		18,090			15,968			17,475
Boomtown Reno		17,598			19,184			19,405
Boomtown Bossier City		12,963			9,397			34,381
Belterra Casino Resort		15,791			(5,775	)		(19,207	)
Casino Magic Argentina		1,942			7,069			8,978
Card Clubs		5,902			6,622			6,441
Corporate and other(a)		(26,001	)		(39,371	)		(23,073	)
		73,340			40,659			71,092
Sold Properties(a)		0			3,068			146,914
	$	73,340		$	43,727		$	218,006

(a) The Company defines EBITDA as earnings before net interest expense, provision for income taxes, depreciation, amortization, cumulative effect of change in accounting principle and extraordinary items. Corporate and other EBITDA includes corporate overhead and asset write-down and impairment charges. Certain costs that the Company believes are likely to be non-recurring have nevertheless been deducted to calculate EBITDA. Sold property EBITDA includes the asset sale gains. EBITDA is presented because it is used as a performance measure to analyze the performance of the Company’s business segments. Additionally, the Company believes some investors consider EBITDA to be a useful measure in determining a company’s ability to service or incur indebtedness and for estimating a company’s underlying cash flow from operations before capital costs, taxes and capital expenditures. EBITDA is not a measure of financial performance under the promulgations of the accounting profession known as “generally accepted accounting principles” or “GAAP.” The following table is a reconciliation of net income to EBITDA:

	For the year ended December 31,
	2002			2001			2000
	(in thousands)
Net (loss) income	$	(69,629	)	$	(28,649	)	$	76,839
Cumulative change in accounting principle, net of income tax benefit		56,704			0			0
Extraordinary item, net of income tax benefit		0			0			2,653
(Loss) income before cumulative change in accounting principle and extraordinary item		(12,925	)		(28,649	)		79,492
Income tax (benefit) expense		(6,146	)		(21,906	)		52,396
(Loss) income before cumulative change in accounting principle, extraordinary item and income taxes		(19,071	)		(50,555	)		131,888
Interest expense, net of capitalized interest and interest income		47,482			44,832			40,016
Operating income (loss)		28,411			(5,723	)		171,904
Depreciation and amortization		44,929			49,450			46,102
EBITDA	$	73,340		$	43,727		$	218,006

78

PINNACLE ENTERTAINMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	For years ended December 31,
	2002		2001		2000
	(in thousands)
Capital Expenditures
Boomtown New Orleans	$	4,657	$	14,018	$	3,752
Casino Magic Biloxi		3,888		7,857		4,663
Boomtown Bossier City		26,610		8,941		1,131
Belterra Casino Resort		4,732		11,573		192,157
Boomtown Reno		4,958		4,617		5,588
Casino Magic Argentina		190		1,585		1,181
Card Clubs		0		3,407		57
Sold Properties		0		0		4,356
Lake Charles		3,151		0		0
Corporate		410		266		(10,110	)
Total Reportable Segments and Corporate	$	48,596	$	52,264	$	202,775

	December 31,
	2002		2001
	(in thousands)
Total Assets
Boomtown New Orleans	$	82,010	$	85,632
Casino Magic Biloxi		103,814		109,053
Boomtown Bossier City		133,822		129,127
Belterra Casino Resort		221,979		226,228
Boomtown Reno		90,159		91,479
Casino Magic Argentina		7,102		20,417
Card Clubs		6,100		29,988
Sold Properties		0		0
Corporate		195,452		227,425
Total Reportable Segments and Corporate	$	840,438	$	919,349

Note 18—Subsequent Events

Proposed Credit Facility    On March 2, 2003, two major banks agreed to lead syndication efforts for a $225,000,000 bank credit facility, comprised of a $100,000,000 reducing revolver and a $125,000,000 term loan (the “Proposed Credit Facility”). The facility would mature in August 2006, which maturity date can be extended under certain circumstances. The facility would amend and restate the existing $110,000,000 bank credit facility. The Proposed Credit Facility would be used to finance the construction and opening of the Lake Charles casino resort, the 300-guestroom tower expansion at Belterra Casino Resort and general corporate purposes. Availability under the Proposed Credit Facility would be significantly limited until the Company has deposited $40,000,000 of minimum cash proceeds from asset sales or equity capital raising efforts into a completion reserve account. The Company expects that the source of these cash proceeds will be the two pending sales (aggregating $58,000,000) of unimproved land adjacent to the Hollywood Park Race Track. Among other alternatives, the Company could sell some or all of its surplus land in Reno, St. Louis or elsewhere, although the Company cannot ensure that it will be able to do so on a timely basis or on favorable terms. Under terms of the Proposed Credit Facility, in the event that such $40,000,000 in cash proceeds is not deposited by March 31, 2004, the unfunded revolving credit commitment would be cancelled and the facility would mature on June 30, 2004. In addition, the Proposed Credit Facility will

79

PINNACLE ENTERTAINMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

have, among other things, customary financial covenants and capital spending restrictions, be secured by all the assets of the Company (other than the Argentine subsidiaries) and require the Company to demonstrate sufficient liquidity to complete the Lake Charles project. Finally, interest rates on borrowings under the Proposed Credit Facility will be based on customary financial ratios tied to the LIBOR or the Prime Rate. The Company anticipates finalizing the Proposed Credit Facility in April. However, the new facility is subject to negotiation and execution of definitive documentation, among other conditions. There can be no assurance the Company will finalize the Proposed Credit Facility under terms and conditions acceptable to the Company.

Contract Submission    On March 19, 2003, the Company submitted for consideration the significant design and construction contracts for the Lake Charles project to the Louisiana Gaming Control Board. (See Note 5).

Employment Contracts    On March 14, 2003, the Company entered into employment agreements with thirteen officers and employees, which contracts range between two to four years. Such group did not include the Company’s Chief Executive Officer, Chief Financial Officer, Chief Operating Officer and General Counsel, who are already parties to employment agreements with the Company (see Note 11). The agreements grant the employee the right to receive their annual salary for up to the balance of the employment agreement, plus extension of certain benefits and the immediate vesting of stock options, if the employee terminates his or her employment for good reason or the Company terminates the employee without cause (both as defined in the respective agreements). In the event of a Severance Trigger following a change in control (as defined in the agreements), the employee (i) is entitled to a lump sum payment equal to two times the largest annual salary and incentive compensation that was paid to the employee during the two years preceding the change in control, (ii) the extension of certain benefits for one year after termination, and (iii) the immediate vesting of the employee’s stock options. The aggregate amount to be paid to this group of employees in the event of a change in control and subsequent Severance Trigger is approximately $5,238,000.

80

Quarterly Information and Supplementary Financial Information (Unaudited)

The following is a summary of unaudited quarterly financial data for the years ended December 31, 2002 and 2001:

	2002
	Dec. 31,			Sept. 30,		June 30,			Mar. 31,
	(in thousands, except per share data)
Revenues	$	125,015		$	139,405	$	126,076		$	123,505
Loss on asset impairment/disposition, net		2,753			0		0			0
Operating income		1,423			15,545		3,035			8,408
Cumulative effect of change in accounting principle		0			0		0			56,704
Net income	$	(6,693	)	$	2,481	$	(6,415	)	$	(59,002	)
Per Share Data
Net (loss) income per share—basic	$	(0.26	)	$	0.10	$	(0.25	)	$	(2.32	)
Net (loss) income per share—diluted(a)	$	(0.26	)	$	0.09	$	(0.25	)	$	(2.32	)

	2001
	Dec. 31,			Sept. 30,		June 30,			Mar. 31,
	(in thousands, except per share data)
Revenues	$	119,773		$	134,681	$	126,377		$	127,212
Loss (gain) on asset impairment/disposition, net		23,530			81		(581	)		0
Pre-opening costs, Belterra Casino Resort		0			0		412			198
Terminated merger		0			0		(464	)		0
Operating (loss) income		(22,879	)		7,390		2,621			7,145
Net (loss) income	$	(22,244	)	$	1,003	$	(5,287	)	$	(2,121	)
Per Share Data:
Net (loss) income per share-basic and diluted(a)	$	(0.87	)	$	0.04	$	(0.20	)	$	(0.08	)

(a) Net (loss) income per share calculations for each quarter are based on the weighted average number of shares outstanding during the respective periods; accordingly, the sum of the quarters may not equal the full year (loss) income per share.

Below are the material unusual and infrequent occurring items that impacted the 2002 and 2001 quarterly financial results:

• Effective January 1, 2002 the Company implemented SFAS No. 142 resulting in an impairment charge of $56,704,000 relating to its Goodwill and intangible gaming license and no longer amortizes goodwill (see Note 2).

• In June 2002, the Company recorded a $6,493,000 charge for estimated regulatory, legal, investigation, severance and other costs related to a settlement reached with The Indiana Gaming Commission. An additional costs of $83,000 and $33,000 in the third and fourth quarters of 2002 respectively (see Note 11).

• In December 2002, the Corporate headquarters were moved to Las Vegas, Nevada from Glendale, California and the costs related to such move including severance, future lease payments for the vacated offices and moving expenses were $1,601,000 (see Note 12).

• In December 2001, the Company wrote down certain assets, including a card club in Compton, California, a riverboat casino in Harvey, Louisiana and a breakwater reef in Biloxi, Mississippi, and accordingly recorded asset impairment charges of $23,530,000 (see Note 6).

81

• In June 2001, the Company received an early pay-off of the promissory note related to the HP Yakama operations and payment for the early termination of the Master Lease and Sublease, and after deducting for cash participation receivables through June 30, 2001, and certain closing costs, the Company’s pre-tax gain from the transaction was approximately $639,000 (see Note 7).

• In June 2001, the Company opened the championship golf course at Belterra Casino Resort, and in October 2000, the Company opened the Belterra Casino Resort. Pre-opening costs associated with the completion of the golf course in 2001 and the development and construction of the resort in 2000 were $610,000 and $15,030,000 for the years ended December 31, 2001 and 2000, respectively.

82

PINNACLE ENTERTAINMENT, INC.

SELECTED FINANCIAL DATA BY PROPERTY

	For the three months ended,												For the year ended December 31, 2002
	December 31, 2002			September 30, 2002			June 30, 2002			March 31, 2002
	(unaudited)
	(in thousands, except per share data)
Revenues:
Belterra Casino Resort	$	31,091		$	33,281		$	30,165		$	27,580		$	122,117
Boomtown Reno		19,759			27,120			23,768			18,374			89,021
Boomtown New Orleans		24,734			24,883			24,996			25,791			100,404
Casino Magic Biloxi		20,189			22,884			21,531			21,896			86,500
Boomtown Bossier City		25,977			27,966			22,483			26,254			102,680
Casino Magic Argentina		1,705			1,711			1,573			2,050			7,039
Card Clubs and Sold Properties		1,560			1,560			1,560			1,560			6,240
Pinnacle Entertainment, Inc.-Corporate		0			0			0			0			0
		125,015			139,405			126,076			123,505			514,001
Expenses:
Belterra Casino Resort		27,213			27,906			26,011			25,197			106,327
Boomtown Reno		17,344			19,590			18,166			16,004			71,104
Boomtown New Orleans		17,877			18,614			18,117			18,794			73,402
Casino Magic Biloxi		17,872			17,227			16,644			16,695			68,438
Boomtown Bossier City		22,628			23,248			19,994			21,691			87,561
Casino Magic Argentina		778			1,096			1,401			1,822			5,097
Card Clubs and Sold Properties		77			87			87			87			338
Pinnacle Entertainment, Inc.-Corporate		4,031			3,878			3,593			3,536			15,038
		107,820			111,646			104,013			103,826			427,305
Non-recurring income (expenses):
Gain (loss) on disposition of assets, net		(151	)		(113	)		0			0			(264	)
Impairment write-down of assets		(2,753	)		0			0			0			(2,753	)
Re-branding costs, Bossier City		0			(786	)		(1,234	)		(109	)		(2,129	)
Regulatory settlement and related costs		(33	)		(83	)		(6,493	)		0			(6,609	)
Re-location costs, Corporate		(1,601	)		0			0			0			(1,601	)
		(4,538	)		(982	)		(7,727	)		(109	)		(13,356	)
Depreciation and amortization:
Belterra Casino Resort		3,326			3,299			3,308			3,242			13,175
Boomtown Reno		1,855			1,916			1,819			1,800			7,390
Boomtown New Orleans		1,685			1,690			1,657			1,553			6,585
Casino Magic Biloxi		1,889			1,876			1,895			1,860			7,520
Boomtown Bossier City		1,788			1,705			1,975			1,927			7,395
Casino Magic Argentina		103			96			111			176			486
Card Clubs and Sold Properties		568			627			509			576			2,280
Pinnacle Entertainment, Inc.-Corporate		20			23			27			28			98
		11,234			11,232			11,301			11,162			44,929
Operating (loss) income		1,423			15,545			3,035			8,408			28,411
Interest income		(504	)		(536	)		(532	)		(634	)		(2,206	)
Interest expense, net of capitalized interest		12,532			12,204			12,319			12,633			49,688
Income (loss) before income taxes		(10,605	)		3,877			(8,752	)		(3,591	)		(19,071	)
Income tax (benefit) expense		(3,912	)		1,396			(2,337	)		(1,293	)		(6,146	)
Income (loss) before change in accounting principle		(6,693	)		2,481			(6,415	)		(2,298	)		(12,925	)
Cumulative change in accounting principle, net of income tax benefit		0			0			0			(56,704	)		(56,704	)
Net (loss) income	$	(6,693	)	$	2,481		$	(6,415	)	$	(59,002	)	$	(69,629	)
Net (loss) income per common share:
Net (loss) income before change in accounting principle-basic	$	(0.26	)	$	0.10		$	(0.25	)	$	(0.09	)	$	(0.50	)
Net (loss) income before change in accounting principle-diluted	$	(0.26	)	$	0.09		$	(0.25	)	$	(0.09	)	$	(0.50	)
Net (loss) income—basic	$	(0.26	)	$	0.10		$	(0.25	)	$	(2.32	)	$	(2.70	)
Net (loss) income—diluted	$	(0.26	)	$	0.09		$	(0.25	)	$	(2.32	)	$	(2.70	)
Number of shares—basic		25,929			25,911			25,804			25,444			25,773
Number of shares—diluted		25,929			26,120			25,804			25,444			25,773

83

PINNACLE ENTERTAINMENT, INC.

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS

For the years ended December 31, 2000, 2001 and 2002

(in thousands)

	As of 1/1/00		2000					As of 12/31/00		2001				As of 12/31/01		2002					As of 12/31/02
Reserve Description			Additions		Deductions					Additions		Deductions				Additions		Deductions
Allowance for doubtful accounts	$	1,865	$	2,008	$	(1,136	)	$	2,737	$	1,219	(1,591	)	$	2,365	$	917	$	(918	)	$	2,364
Self-insurance reserves		10,018		21,529		(27,873	)		3,674		17,984	(17,100	)		4,558		342		(502	)		4,398
Legal and other		4,552		2,602		(3,583	)		3,571		1,892	(2,498	)		2,965		4,368		(612	)		6,721
Asset sale reserves		2,300		11,185		(3,519	)		9,966		250	(3,765	)		6,451		—		(2,402	)		4,049
Terminated merger costs		—		2,027		—			2,027		—	(2,027	)		—		—		—			—

84

PINNACLE ENTERTAINMENT, INC.

EXHIBIT INDEX

Exhibit Number	Description of Exhibit
3.1	Restated Certificate of Incorporation of Pinnacle Entertainment, Inc., is hereby incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report, Form 10-Q for the quarter ended June 30, 2002.
3.2*	Restated By-laws of Pinnacle Entertainment, Inc., as amended.
3.3	Articles of Incorporation of HP/Compton, Inc., are hereby incorporated by reference to Exhibit 3.9 to the Company’s Amendment No. 1 to Form S-4 Registration dated October 30, 1997. (SEC File No. 333-34471).
3.4	By-laws of HP/Compton, Inc., are hereby incorporated by reference to Exhibit 3.10 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated October 30, 1997. (SEC File No. 333-34471).
3.5	Articles of Organization of Crystal Park Hotel and Casino Development Company, LLC, are hereby incorporated by reference to Exhibit 3.11 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated October 30, 1997. (SEC File No. 333-34471).
3.6	Operating Agreement of Crystal Park Hotel and Casino Development Company, LLC, are hereby incorporated by reference to Exhibit 3.12 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated October 30, 1997. (SEC File No. 333-34471).
3.7	Amended and Restated Certificate of Incorporation of Boomtown, Inc., is hereby incorporated by reference to Exhibit 3.17 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated October 30, 1997. (SEC File No. 333-34471).
3.8	By-laws of Boomtown, Inc., are hereby incorporated by reference to Exhibit 3.18 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated October 30, 1997. (SEC File No. 333-34471).
3.9	Certificate of Amended and Restated Articles of Incorporation of Boomtown Hotel & Casino, Inc., are hereby incorporated by reference to Exhibit 3.19 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated October 30, 1997. (SEC File No. 333-34471).
3.10	Revised and Restated By-laws of Boomtown Hotel & Casino, Inc., are hereby incorporated by reference to Exhibit 3.20 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated October 30, 1997. (SEC File No. 333-34471).
3.11	Articles of Incorporation of Bayview Yacht Club, Inc., are hereby incorporated by reference to Exhibit 3.21 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated October 30, 1997. (SEC File No. 333-34471).
3.12	By-laws of Bayview Yacht Club, Inc., are hereby incorporated by reference to Exhibit 3.22 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated October 30, 1997. (SEC File No. 333-34471).
3.13	Amended and Restated Agreement of Limited Partnership of Mississippi—I Gaming, L.P., is hereby incorporated by reference to Exhibit 10.31 to the Company’s Quarterly Report on Form 10-Q for quarter ended June 30, 1997. (SEC File No. 000-10619).
3.14	Articles of Incorporation of Louisiana Gaming Enterprises, Inc., are hereby incorporated by reference to Exhibit 3.25 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated October 30, 1997.

1

Exhibit Number	Description of Exhibit
3.15	Second Amended and Restated Partnership Agreement of Louisiana—I Gaming, a Louisiana Partnership in Commendam, is hereby incorporated by reference to Exhibit 3.26 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
3.16	Certificate of Incorporation of HP Yakama Consulting, Inc., is hereby incorporated by reference to Exhibit 3.27 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
3.17	By-laws of HP Yakama Consulting, Inc., are hereby incorporated by reference to Exhibit 3.28 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
3.18	Articles of Incorporation of Casino Magic Corp., are hereby incorporated by reference to Exhibit 3.29 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
3.19	Amended By-laws of Casino Magic Corp., are hereby incorporated by reference to Exhibit 3.30 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
3.20	Articles of Incorporation of Casino Magic American Corp., are hereby incorporated by reference to Exhibit 3.31 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
3.21	By-laws of Casino Magic American Corp., are hereby incorporated by reference to Exhibit 3.32 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
3.22	Articles of Incorporation of Biloxi Casino Corp., are hereby incorporated by reference to Exhibit 3.33 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
3.23	By-laws of Biloxi Casino Corp., are hereby incorporated by reference to Exhibit 3.34 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
3.24	Articles of Incorporation of Casino Magic Finance Corp., are hereby incorporated by reference to Exhibit 3.35 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
3.25	By-laws of Casino Magic Finance Corp., are hereby incorporated by reference to Exhibit 3.36 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
3.26	Articles of Incorporation of Casino One Corporation, are hereby incorporated by reference to Exhibit 3.37 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
3.27	By-laws of Casino One Corporation, are hereby incorporated by reference to Exhibit 3.38 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
3.28	Articles of Incorporation of Bay St. Louis Casino Corp., are hereby incorporated by reference to Exhibit 3.39 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
3.29	By-laws of Bay St. Louis Casino Corp., are hereby incorporated by reference to Exhibit 3.40 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
3.30	Articles of Incorporation of Mardi Gras Casino Corp., are hereby incorporated by reference to Exhibit 3.41 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
3.31	By-laws of Mardi Gras Casino Corp., are hereby incorporated by reference to Exhibit 3.42 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.

2

Exhibit Number	Description of Exhibit
3.32	Articles of Incorporation of Boomtown Hoosier, Inc., are hereby incorporated by reference to Exhibit 3.43 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
3.33	By-laws of Boomtown Hoosier, Inc., are hereby incorporate by reference to Exhibit 3.44 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
3.34	Articles of Organization of Indiana Ventures, LLC (subsequently renamed Belterra Resort Indiana, LLC), are hereby incorporated by reference to Exhibit 3.45 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
3.35	Operating Agreement of Indiana Ventures, LLC (subsequently renamed Belterra Resort Indiana, LLC), is hereby incorporated by reference to Exhibit 3.46 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
3.36	Articles of Incorporation of HP Casino, Inc., are hereby incorporated by reference to Exhibit 3.51 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
3.37	By-laws of HP Casino, Inc., are hereby incorporated by reference to Exhibit 3.52 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
3.38	Articles of Incorporation of Casino Magic of Louisiana, Corporation are hereby incorporated by reference to Exhibit 3.44 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2000.
3.39	By-laws of Casino Magic of Louisiana, Corporation are hereby incorporated by reference to Exhibit 3.45 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2000.
3.40	Articles of Incorporation of Jefferson Casino Corporation are hereby incorporated by reference to Exhibit 3.46 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2000.
3.41	By-laws of Jefferson Casino Corporation are hereby incorporated by reference to Exhibit 3.47 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2000.
4.1	Hollywood Park 1996 Stock Option Plan is hereby incorporated by reference to Exhibit 10.24 to the Company’s Registration Statement on Form S-4 dated September 18, 1996. (SEC File No. 333-12253).
4.2	Hollywood Park 1993 Stock Option Plan is hereby incorporated by reference to Exhibit 4.2 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
4.3	Pinnacle Entertainment, Inc. 2001 Stock Option Plan is hereby incorporated by reference to Appendix A to the Company’s Definitive Proxy Statement filed with the SEC on April 11, 2001.
4.4	Pinnacle Entertainment, Inc. 2002 Stock Option Plan is hereby incorporated by reference to Appendix A to the Company’s Definitive Proxy Statement filed with the SEC on May 15, 2002.
4.5	Indenture, dated August 1, 1997, governing the 9.5% Senior Subordinated Notes due 2007 by and among the Company, Hollywood Park Operating Company, Hollywood Park Food Services, Inc., Hollywood Park Fall Operating Company, HP/Compton, Inc., Crystal Park Hotel and Casino Development Company, LLC, HP Yakama, Inc., Turf Paradise, Inc., Boomtown, Inc., Boomtown Hotel & Casino, Inc., Louisiana—I Gaming, Louisiana Gaming Enterprises, Inc., Mississippi—I Gaming, L.P., Bayview Yacht Club, Inc. and The Bank of New York, as trustee, is hereby incorporated by reference to Exhibit 10.37 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1997. (Sec File No. 000-10619).

3

Exhibit Number	Description of Exhibit
4.6	First Supplemental Indenture, dated as of February 5, 1999, to Indenture dated as of August 1, 1997 governing the 9.5% Senior Subordinated Notes due 2007, by and among the Company and Hollywood Park Operating Company, as co-issuers, and Bayview Yacht Club, Inc., Boomtown Hotel & Casino, Inc., Boomtown, Inc., Crystal Park Hotel and Casino Development Company, LLC, Hollywood Park Fall Operating Company, Hollywood Park Food Services, Inc., Hollywood Park Operating Company, HP/Compton, Inc., HP Yakama, Inc., Louisiana Gaming Enterprises, Inc., Louisiana—I Gaming, a Louisiana Partnership in Commendam, Mississippi—I Gaming, LP, and Turf Paradise, Inc. as guarantors, and The Bank of New York, as trustee, is hereby incorporated by reference to Exhibit 4.4 to the Company’s S-4 Registration dated March 2, 1999.
4.7	Form of Series B 9.5% Senior Subordinated Notes due 2007 (included in Exhibit 4.5), is hereby incorporated by reference to the Company’s Amendment No. 1 to Registration Statement on Form S-4 dated October 30, 1997. (SEC File No. 333-34471).
4.8	Indenture, dated as of February 18, 1999, governing the 9.25% Senior Subordinated Notes due 2007, by and among the Company as issuer, and Bay St. Louis Casino Corp., Bayview Yacht Club, Inc., Biloxi Casino Corp., Boomtown Hoosier, Inc., Boomtown Hotel & Casino, Inc., Boomtown, Inc., Casino Magic American Corp., Casino Magic Corp., Casino Magic Finance Corp., Casino One Corporation, Crystal Park Hotel and Casino Development Company, LLC, Hollywood Park Fall Operating Company, Hollywood Park Food Services, Inc., Hollywood Park Operating Company, HP Casino, Inc., HP/Compton, Inc., HP Yakama, Inc., HP Yakama Consulting, Inc., Indiana Ventures LLC, Louisiana Gaming Enterprises, Inc., Louisiana—I Gaming, a Louisiana Partnership in Commendam, Mardi Gras Casino Corp., Mississippi—I Gaming, L.P., Pinnacle Gaming Development Corp., Switzerland County Development Corp., and Turf Paradise, Inc. as initial guarantors, and The Bank of New York, as trustee, is hereby incorporated by reference to Exhibit 4.6 to the Company’s S-4 Registration Statement dated March 2, 1999.
4.9	Form of Series B 9.25% Senior Subordinated Notes due 2007 (included in Exhibit 4.7), is hereby incorporated by reference to Exhibit 4.7 to the Company’s S-4 Registration Statement dated March 2, 1999.
10.1	Directors Deferred Compensation Plan for Hollywood Park, Inc. is hereby incorporated by reference to Exhibit 10.1 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
10.2	Aircraft Time Sharing Agreement dated June 2, 1998, by and between Hollywood Park, Inc. and R.D. Hubbard Enterprises, Inc. is hereby incorporated by reference to Exhibit 10.2 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.
10.3	Operating Agreement for Crystal Park Hotel and Casino Development Company, LLC, a California Limited Liability Company, dated July 18, 1996, effective August 28, 1996 is hereby incorporated by reference to Exhibit 10.6 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2001.
10.4	Profit Participation Agreement, by and between Hollywood Park, Inc., and North American Sports Management, Inc., dated July 14, 1997, is hereby incorporated by reference to Exhibit 10.40 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1997 (SEC File No. 000-10619).
10.5	Voting Agreement, dated as of February 25, 1998, by and between Hollywood Park, Inc., and Marlin F. Torguson, is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed February 26, 1998 (SEC File No. 001-13641).
10.6	Purchase Agreement, dated as of February 25, 1998, among Hilton Gaming (Switzerland County) Corporation and Boomtown Hoosier, Inc., is hereby incorporated by reference to Exhibit 10.40 to the Company’s Amendment No. 1 to Form S-4 Registration Statement dated March 26, 1999.

4

Exhibit Number	Description of Exhibit
10.7	Amended and Restated Reducing Revolving Loan Agreement, dated October 14, 1998, among Hollywood Park, Inc., and the banks named therein, Societe Generale and Bank of Scotland (as Managing Agents), First National Bank of Commerce (as Co-Agent), and Bank of America National Trust and Savings Association (as Administrative Agent), is hereby incorporated by reference to Exhibit 2 of the Company’s Current Report on Form 8-K, filed October 30, 1998.
10.8	Amendment No. 1 to Amended and Restated Reducing Revolving Loan Agreement, dated June 2, 1999, is hereby incorporated by reference to Exhibit 10.42 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1999.
10.9	Amendment No. 2 to Amended and Restated Reducing Revolving Loan Agreement, dated September 24, 1999, is hereby incorporated by reference to Exhibit 10.43 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1999.
10.10	Amendment No. 3 to Amended and Restated Reducing Revolving Loan Agreement, dated September 15, 2000.
10.11	Amendment No. 4 to Amended and Restated Reducing Revolving Loan Agreement, dated March 16, 2001.
10.12	Amendment No. 5 to Amended and Restated Reducing Revolving Credit Loan Agreement and Waiver, dated July 23, 2001 is hereby incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the Quarter ended June 30, 2001.
10.13	Amendment No. 6 to Amended and Restated Reducing Revolving Credit Loan Agreement and Waiver, dated November 7, 2001 is hereby incorporated by reference to the Company’s Quarterly Report on From 10-Q for the Quarter ended September 30, 2001.
10.14	Asset Purchase Agreement, dated as of December 9, 1999, between BSL, Inc., and Casino Magic Corp. is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed December 21, 1999.
10.15	Asset Purchase Agreement, dated as of December 9, 1999, between BTN, Inc. and Boomtown, Inc. is hereby incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed December 21, 1999.
10.16	First Amendment to Asset Purchase Agreement, dated December 17, 1999, between BSL, Inc. and Casino Magic Corp. is hereby incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed December 21, 1999.
10.17	First Amendment to Asset Purchase Agreement, dated December 17, 1999, between BTN, Inc. and Boomtown, Inc. is hereby incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed December 21, 1999.
10.18	Guaranty issued by Hollywood Park in favor of BSL, Inc. entered into as of December 9, 1999 is hereby incorporated by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K filed December 21, 1999.
10.19	Guaranty issued by Hollywood Park in favor of BTN, Inc. entered into as of December 9, 1999 is hereby incorporated by reference to Exhibit 10.8 to the Company’s Current Report on Form 8-K filed December 21, 1999.
10.20	Lease and Agreement by and between Pinnacle Entertainment, Inc. and Century Gaming Management, Inc., dated September 10, 1999, is hereby incorporated by reference to Exhibit 10.38 to the Company’s Annual Report on Form 10-K/A for the year ended December 31, 1999, filed with the SEC on September 8, 2000.

5

Exhibit Number	Description of Exhibit
10.21	First Amendment to Lease and Agreement by and between Pinnacle Entertainment, Inc. and Century Gaming Management, Inc. dated September 6, 2000, is hereby incorporated by reference to Exhibit 2.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2000.
10.22*	Second Amendment to Lease and Agreement, dated as of October 1, 2001, by and between Pinnacle Entertainment, Inc. and Century Gaming Management, Inc.
10.23*	Third Amendment to Lease and Agreement, dated as of December 4, 2002, by and between Pinnacle Entertainment, Inc. and Century Gaming Management, Inc.
10.24	First Amendment to the Pinnacle Entertainment, Inc. (formerly Hollywood Park, Inc.) Executive Deferred Compensation Plan dated March 15, 2000, is hereby incorporated by reference to Exhibit 10.55 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2001.
10.25	Second Amendment to the Pinnacle Entertainment, Inc. Executive Compensation Plan dated January 1, 2001 is hereby incorporated by reference to Exhibit 10.56 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2001.
10.26	Statement of Conditions to Riverboat Gaming License of PNK (Lake Charles), LLC dated November 20, 2001 is hereby incorporated by reference to Exhibit 10.57 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2001.
10.27*	Employment and Consulting Agreement, dated as of April 11, 2002, between the Company and G. Michael Finnigan.
10.28	Employment Agreement, dated as of April 10, 2002, between the Company and Daniel R. Lee is hereby incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2002.
10.29*	Employment Agreement, dated as of August 13, 2002, between the Company and John A. Godfrey.
10.30	Amended and Restated Lease, dated February 14, 2000, by and between Crystal Park Hotel and Casino Development Company, LLC and California Casino Management, Inc. is hereby incorporated by reference to Exhibit 10.7 to the Company Annual Report on Form 10-K/A for the year ended December 31, 1999, filed with the SEC on September 8, 2000.
10.31*	First Amendment of Amended and Restated Lease, dated as of October 1, 2001, between Crystal Park Hotel and Casino Development Company, LLC and California Casino Management, Inc.
10.32*	Second Amendment of Amended and Restated Lease, dated as of December 4, 2002, between Crystal Park Hotel and Casino Development Company, LLC and California Casino Management, Inc.
10.33*	Severance Agreement, dated May 16, 2002, between Pinnacle Entertainment, Inc. and Loren S. Osrow.
10.34	Lease Agreement, dated April 4, 1992, between G&W Enterprises, Inc. and Biloxi Casino Corp. is hereby incorporated by reference to Exhibit 10.7 to the Form S-1 Registration Statement (SEC File No. 333-51438) of Casino Magic Corp. dated August 28, 1992.
10.35*	Amendment to Lease Agreement, dated February 26, 1999, between G&W Enterprises, Inc. and Biloxi Casino Corp.
10.36	Lease Agreement, dated November 23, 1992, between Gary Gollott, Tommy Gollot, and Tyrone Gollott, and Biloxi Casino Corp. is hereby incorporated by reference to the Form S-4 Registration Statement (SEC File No. 33-71572) of Casino Magic Corp. dated November 12, 1993.

6

Exhibit Number	Description of Exhibit
10.37*	Amendment to Lease Agreement, dated February 26, 1999, between Gary Gollott, Tommy Gollott and Tyrone Gollott, and Biloxi Casino Corp.
10.38	Public Trust Tidelands Lease, dated May 27, 1993, between Biloxi Casino Corp. and the State of Mississippi is hereby incorporated by reference to Exhibit 10.10 to the Form S-4 Registration Statement (SEC File No. 33-71572) of Casino Magic Corp. dated November 12, 1993.
10.39	Form of Lease by and between the Webster Family Limited Partnership and the Diuguid Family Limited Partnership, and Pinnacle Gaming Development Corp. (executed by the parties on December 11, 1998 and subsequently assigned by Pinnacle Gaming Development Corp. to Belterra Resort Indiana, LLC) is hereby incorporated by reference to Exhibit B contained in Exhibit 10.47 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1998.
10.40	Form of Lease by and between Daniel Webster, Marsha S. Webster, William G. Diuguid, Sara T. Diuguid, J.R. Showers, III and Carol A. Showers, and Pinnacle Gaming Development Corp. (executed by the parties on December 11, 1998 and subsequently assigned by Pinnacle Gaming Corp. to Belterra Resort Indiana, LLC) is hereby incorporated by reference to Exhibit B contained in Exhibit 10.49 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1998.
10.41	Lease Agreement, dated September 29, 1995, between the State of Mississippi and Casino One Corporation, is hereby incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q (SEC File No. 000-20712) of Casino Magic Corp. for the quarter ended September 30, 1995.
11.1*	Statement re: Computation of Per Share Earnings
21.1*	Subsidiaries of Pinnacle Entertainment, Inc.
23.1*	Consent of Deloitte & Touche LLP
99.1*	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002—CEO.
99.2*	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002—CFO.
99.3*	Government Regulation and Gaming Issues

* Filed herewith.

7

EX-3.2

Exhibit  3.2

PINNACLE ENTERTAINMENT, INC.

RESTATED BYLAWS

AS OF

APRIL 13, 1998

(as Amended 3/29/99, 9/15/00 and 2/16/01)

TABLE OF CONTENTS

			Page
ARTICLE I -  STOCKHOLDERS			1
	Section 1.	Annual Meeting	1
	Section 2.	Special Meetings:  Notice	3
	Section 3.	Notice of Meetings	3
	Section 4.	Quorum	3
	Section 5.	Organization	4
	Section 6.	Conduct of Business	4
	Section 7.	Proxies and Voting	4
	Section 8.	Stock List	5
	Section 9.	Consent of Stockholders in Lieu of Meeting	5
ARTICLE II -  BOARD OF DIRECTORS			6
	Section 1.	Number, Election and Term of Directors	6
	Section 2.	Newly Created Directorships and Vacancies	6
	Section 3.	Regular Meetings	7
	Section 4.	Special Meetings	7
	Section 5.	Quorum	7
	Section 6.	Participation in Meetings By Conference Telephone	7
	Section 7.	Conduct of Business	7
	Section 8.	Powers	8
	Section 9.	Compensation of Directors	8
	Section 10.	Director Emeritus	9
ARTICLE III -  COMMITTEES			9
	Section 1.	Committees of the Board of Directors	9
	Section 2.	Conduct of Business	10
	Section 3.	Standing Executive Committee	10
	Section 4.	Audit Committee	11
	Section 5.	Compensation Committee	12
ARTICLE IV -  OFFICERS			12
	Section 1.	Generally	12
	Section 2.	Chairman of the Board	12
	Section 3.	Vice Chairman of the Board	13
	Section 4.	President	13
	Section 5.	Chief Operating Officer	14
	Section 6.	Vice Presidents	14
	Section 7.	Treasurer	14
	Section 8.	Assistant Treasurer	15
	Section 9.	Secretary	15

- i -

			Page
	Section 10.	Assistant Secretary	15
	Section 11.	Controller	15
	Section 12.	Delegation of Authority	16
	Section 13.	Removal	16
	Section 14.	Resignations	16
	Section 15.	Action with Respect to Securities of Other Corporations	16
ARTICLE V -  STOCK			16
	Section 1.	Certificates of Stock	16
	Section 2.	Transfers of Stock	16
	Section 3.	Record Date	17
	Section 4.	Lost, Stolen or Destroyed Certificates	18
	Section 5.	Regulations	18
ARTICLE VI -  NOTICES			18
	Section 1.	Notices	18
	Section 2.	Waivers	18
ARTICLE VII -  MISCELLANEOUS			19
	Section 1.	Facsimile Signatures	19
	Section 2.	Corporate Seal	19
	Section 3.	Reliance upon Books, Reports and Records	19
	Section 4.	Fiscal Year	19
	Section 5.	Time Periods	19
ARTICLE VIII -  INDEMNIFICATION OF DIRECTORS AND OFFICERS			19
	Section 1.	Right to Indemnification	19
	Section 2.	Right to Advancement of Expenses	20
	Section 3.	Right of Indemnitee to Bring Suit	20
	Section 4.	Non-Exclusivity of Rights	21
	Section 5.	Insurance	21
	Section 6.	Indemnification of Employees and Agents of the Corporation	22
ARTICLE IX -  AMENDMENTS			22

- ii -

RESTATED BYLAWS

OF

HOLLYWOOD PARK, INC.
(hereinafter referred to as the “Corporation”)

ARTICLE I -  STOCKHOLDERS

          Section 1.           Annual Meeting.

          (1)          An annual meeting of the stockholders, for the election of directors to succeed those whose terms expire and for the transaction of such other business as may properly come before the meeting, shall be held at such place, on such date, and at such time as the Board of Directors shall each year fix, which date shall be within 13 months of the last annual meeting of stockholders.

          (2)          Nominations of persons for election to the Board of Directors of the Corporation and the proposal of business to be considered by the stockholders may be made at an annual meeting of stockholders (a) pursuant to the Corporation’s notice of meeting, (b) by or at the direction of the Board of Directors or (c) by any stockholder of the Corporation who was a stockholder of record at the time of giving of the notice provided for in this bylaw, who is entitled to vote at the meeting and who complied with the notice procedures set forth in this bylaw.

          (3)          For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (c) of paragraph (2) of this bylaw, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation.  To be timely, a stockholder’s notice shall be delivered to the Secretary at the principal executive offices of the Corporation not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is advanced by more than 30 days or delayed by more than 60 days from such anniversary date, notice by the stockholder to be timely must be so delivered not earlier than the 120th day prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made by the Corporation.  Such stockholder’s notice shall set forth (a) as to each person whom the stockholder proposes to nominate for election or reelection as a director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected); (b) as to any other business that the stockholder proposes to bring before the meeting, a brief

description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made; and (c) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (i) the name and address of such stockholder, as they appear on the Corporation’s books, and of such beneficial owner and (ii) the class and number of shares of the capital stock of the Corporation which are owned beneficially and of record by such stockholder and such beneficial owner.

          (4)          Notwithstanding anything in the second sentence of paragraph (3) of this bylaw to the contrary, in the event that the number of directors to be elected to the Board of Directors of the Corporation is increased and there is no public announcement naming all of the nominees for director or specifying the size of the increased Board of Directors made by the Corporation at least 70 days prior to the first anniversary of the preceding year’s annual meeting, a stockholder’s notice required by this bylaw shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the 10th day following the day on which such public announcement is first made by the Corporation.

          (5)          Only such persons who are nominated in accordance with the procedures set forth in these Bylaws shall be eligible to serve as directors and only such business shall be conducted at an annual meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in these Bylaws.  The chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made in accordance with the procedures set forth in these Bylaws and, if any proposed nomination or business is not in compliance with these Bylaws, to declare that such defective proposed nomination or business shall be disregarded.

          (6)          For purposes of these Bylaws, “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or a comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.

          (7)          Notwithstanding the foregoing provisions of this bylaw, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this bylaw.  Nothing in this bylaw shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.

- 2 -

          Section 2.           Special Meetings:  Notice.

          Special meetings of the stockholders, other than those required by statute, may be called at any time by the Chairman of the Board or by a majority of directors then in office pursuant to a resolution approved by the Board of Directors.  Notice of every special meeting, stating the place, date, time and purpose, shall be given by mailing, postage prepaid, at least 10 but not more than 60 days before each such meeting, a copy of such notice addressed to each stockholder of the Corporation at his post office address as recorded on the books of the Corporation.  The Board of Directors may postpone or reschedule any previously scheduled special meeting.

          Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting.

          Section 3.           Notice of Meetings.

          Written notice of the place, date, and time of all meetings of the stockholders shall be given, not less than 10 nor more than 60 days before the date on which the meeting is to be held, to each stockholder entitled to vote at such meeting, except as otherwise provided herein or required by law (meaning, here and hereinafter, as required from time to time by the Delaware General Corporation Law or the Certificate of Incorporation of the Corporation).

          When a meeting is adjourned to another place, date or time, written notice need not be given of the adjourned meeting if the place, date and time thereof are announced at the meeting at which the adjournment is taken; provided, however, that if the date of any adjourned meeting is more than 30 days after the date for which the meeting was originally noticed, or if a new record date is fixed for the adjourned meeting, written notice of the place, date, and time of the adjourned meeting shall be given in conformity herewith.  At any adjourned meeting, any business may be transacted which might have been transacted at the original meeting.

          Section 4.           Quorum.

          At any meeting of the stockholders, the holders of one-third (1/3) of all of the shares of the stock entitled to vote at the meeting, present in person or by proxy, shall constitute a quorum for all purposes, unless or except to the extent that the presence of a larger number may be required by law or the rules of the principal stock exchange upon which the Corporation’s securities are listed.  Where a separate vote by a class or classes is required, one-third (1/3) of the outstanding shares of such class or classes, present in person or represented by proxy, shall constitute a quorum entitled to take action with respect to that vote on that matter unless or except to the extent that the presence of a larger number may be required by law or the rules of the principal stock exchange upon which the Corporation’s securities are listed.

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          If a quorum shall fail to attend any meeting, the chairman of the meeting may adjourn the meeting to another place, date, or time.

          Section 5.           Organization.

          Such person as the Board of Directors may have designated or, in the absence of such a person, the Chairman of the Board or, in his or her absence, the Chief Executive Officer of the Corporation or, in his or her absence, the President of the Corporation or, in his or her absence, such person as may be designated by the Chairman of the Board or the President or, in the absence of such a person, any other officer of the Corporation or, in the absence of such a person, such person as may be chosen by the holders of one-third (1/3) of the shares entitled to vote who are present, in person or by proxy, shall call to order any meeting of the stockholders and act as chairman of the meeting.  In the absence of the Secretary of the Corporation, the secretary of the meeting shall be such person as the person acting as chairman of the meeting appoints.

          Section 6.           Conduct of Business.

          The chairman of any meeting of stockholders shall determine the order of business and the procedure at the meeting, including such regulation of the manner of voting and the conduct of discussion as seem to him or her in order.  The chairman shall have the power to adjourn the meeting to another place, date and time.  The date and time of the opening and closing of the polls for each matter upon which the stockholders will vote at the meeting shall be announced at the meeting.

          Section 7.           Proxies and Voting.

          At any meeting of the stockholders, every stockholder entitled to vote may vote in person or by proxy authorized by an instrument in writing or by a transmission permitted by law filed in accordance with the procedure established for the meeting.  Any copy, facsimile telecommunication or other reliable reproduction of the writing or transmission created pursuant to this paragraph may be substituted or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used, provided that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or transmission.

          All voting, including on the election of directors but excepting where otherwise required by law, may be by a voice vote; provided, however, that upon demand therefore by a stockholder entitled to vote or by his or her proxy, a stock vote shall be taken.  Every stock vote shall be taken by ballots, each of which shall state the name of the stockholder or proxy voting and such other information as may be required under the procedure established for the meeting.

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          The Corporation may, and to the extent required by law, shall, in advance of any meeting of stockholders, appoint one or more inspectors to act at the meeting and make a written report thereof.  The Corporation may designate one or more persons as alternate inspectors to replace any inspector who fails to act.  If no inspector or alternate is able to act at a meeting of stockholders, the person presiding at the meeting may, and to the extent required by law, shall, appoint one or more inspectors to act at the meeting.  Each inspector, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability.  Every vote taken by ballots shall be counted by a duly appointed inspector or inspectors.

          All elections shall be determined by a plurality of the votes cast, and except as otherwise required by law, all other matters shall be determined by a majority of the votes cast affirmatively or negatively.

          Section 8.           Stock List.

          A complete list of stockholders entitled to vote at any meeting of stockholders, arranged in alphabetical order for each class of stock and showing the address of each such stockholder and the number of shares registered in his or her name, shall be open to the examination of any such stockholder, for any purpose germane to the meeting, during ordinary business hours for a period of at least 10 days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or if not so specified, at the place where the meeting is to be held.

          The stock list shall also be kept at the place of the meeting during the whole time thereof and shall be open to the examination of any such stockholder who is present.  This list shall presumptively determine the identity of the stockholders entitled to vote at the meeting and the number of shares held by each of them.

          Section 9.           Consent of Stockholders in Lieu of Meeting.

          Unless otherwise provided in the Certificate of Incorporation, any action required to be taken at any annual or special meeting of stockholders of the Corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the Corporation by delivery to its registered office in Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded.  Delivery

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made to the Corporation’s registered office shall be made by hand or certified or registered mail, return receipt requested.

          Every written consent shall bear the date of signature of each stockholder who signs the consent and no written consent shall be effective to take the corporate action referred to therein unless, within 60 days of the date of the earliest dated consent delivered to the Corporation, a written consent or consents signed by a sufficient number of holders to take action are delivered to the Corporation in the manner prescribed in the preceding paragraph.

          Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing.

ARTICLE II -  BOARD OF DIRECTORS

          Section 1.           Number, Election and Term of Directors.

          The Board of Directors shall consist of one (1) or more members.  Except as required by law, and subject to the rights of the holders of any series of preferred stock to elect directors under specified circumstances, the number of directors shall be fixed and may be changed from time to time exclusively by the Board of Directors or the Executive Committee thereof pursuant to a resolution duly adopted by the Board of Directors or the Executive Committee.  Directors shall be elected by the holders of record of a plurality of the votes cast at annual meetings of stockholders, and each director so elected shall hold office until the next annual meeting and until his or her successor is duly elected and qualified, or until his or her earlier resignation or removal.  Any director may resign at any time upon written notice to the Corporation.  Directors need not be stockholders.

          Section 2.           Newly Created Directorships and Vacancies.

          Except as required by law, and subject to the rights of the holders of any series of preferred stock with respect to such series of preferred stock, and unless the Board of Directors otherwise determines, newly created directorships resulting from any increase in the authorized number of directors or any vacancies on the Board of Directors resulting from death, resignation, retirement, disqualification, removal from office or other cause shall be filled only by a majority vote of the directors then in office, though less than a quorum, and directors so chosen shall hold office for a term expiring at the next annual meeting of stockholders and until such director’s successor shall have been duly elected and qualified.  No decrease in the number of authorized directors constituting the entire Board of Directors shall shorten the term of any incumbent director.

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          Section 3.           Regular Meetings.

          A regular meeting of the Board of Directors shall be held without other notice than this bylaw, immediately following and at the same place as the annual meeting of stockholders, unless otherwise provided by the Board of Directors.  Additional regular meetings of the Board of Directors shall be held at such place or places, on such date or dates, and at such time or times as shall have been established by the Board of Directors and publicized among all directors.  A notice of each regular meeting shall not be required.

          Section 4.           Special Meetings.

          Special meetings of the Board of Directors may be called by the Chairman of the Board, or by the President or by a majority of directors then in office and shall be held at such place, on such date, and at such time as they or he or she shall fix.  Notice of the place, date, and time of each such special meeting shall be given each director by whom it is not waived by mailing written notice not less than four (4) days before the meeting or by hand delivery to the recipient thereof or by recognized overnight delivery service or by telephone or by telegraphing or telexing or by facsimile transmission of the same not less than 24 hours before the meeting.  Unless otherwise indicated in the notice thereof, any and all business may be transacted at a special meeting.

          Section 5.           Quorum.

          At any meeting of the Board of Directors, a quorum for all purposes shall consist of the greater of (i) a majority of directors then in office or (ii) one-third (l/3) of the total number of directors including vacancies.  If a quorum shall fail to attend any meeting, a majority of those present may adjourn the meeting to another place, date, or time, without further notice or waiver thereof.

          Section 6.           Participation in Meetings By Conference Telephone.

          Members of the Board of Directors, or of any committee thereof, may participate in a meeting of such Board or committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other and such participation shall constitute presence in person at such meeting.

          Section 7.           Conduct of Business.

          At any meeting of the Board of Directors, business shall be transacted in such order and manner as the Board may from time to time determine, and all matters shall be determined by the vote of a majority of the directors present, except as otherwise provided herein or required by law.  Action may be taken by the Board of Directors

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without a meeting if all members thereof consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board of Directors.

          Section 8.           Powers.

          The Board of Directors may, except as otherwise required by law, exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, including, without limiting the generality of the foregoing, the unqualified power:

          (1)          To declare dividends from time to time in accordance with law;

          (2)          To purchase or otherwise acquire any property, rights or privileges on such terms as it shall determine;

          (3)          To authorize the creation, making and issuance, in such form as it may determine, of written obligations of every kind, negotiable or non-negotiable, secured or unsecured, and to do all things necessary in connection therewith;

          (4)          To remove any officer of the Corporation with or without cause, and from time to time to devolve the powers and duties of any officer upon any other person for the time being;

          (5)          To confer upon any officer of the Corporation the power to appoint, remove and suspend subordinate officers, employees and agents;

          (6)          To adopt from time to time such stock option, stock purchase, bonus or other compensation plans for directors, officers, employees and agents of the Corporation and its subsidiaries as it may determine;

          (7)          To adopt from time to time such insurance, retirement, and other benefit plans for directors, officers, employees and agents of the Corporation and its subsidiaries as it may determine; and

          (8)          To adopt from time to time regulations, not inconsistent with these Bylaws, for the management of the Corporation’s business and affairs.

          Section 9.           Compensation of Directors.

          Unless otherwise restricted by the Certificate of Incorporation, the Board of Directors shall have the authority to fix the compensation of the directors.  The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the

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Board of Directors or paid a stated salary or paid other compensation as director.  No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor.  Members of special or standing committees may be allowed like compensation for attending committee meetings.

          Section 10.           Director Emeritus.

          The Board of Directors, may designate any person who has served as a director of this Corporation as Director Emeritus, upon resignation or other retirement or termination of any such director’s tenure of office.  Any Director Emeritus shall be extended thereafter all of the incidental courtesies of Hollywood Turf Club usually extended to active directors, and so long as such person shall desire the same, each such person shall be known as a Director Emeritus.  Such courtesies shall include the use of a director’s badge, together with the use of the Director’s Lounge and similar incidental privileges.  The Director Emeritus shall not, however, be entitled to attend any meetings of the Board of Directors or of any committee thereof without special invitation nor shall such Director Emeritus have any vote or voice in management other than merely as a stockholder, if he be such a stockholder.  The privileges and position of a Director Emeritus hereunder shall be personal, non-transferable and shall cease entirely upon his death and may be revoked by the Board of Directors with or without cause at any time.

ARTICLE III -  COMMITTEES

          Section 1.           Committees of the Board of Directors.

          The Board of Directors may designate one (1) or more committees, each committee to consist of one (1) or more of the directors of the Corporation appointed by the Board of Directors or the Chairman of the Board.  The Board of Directors or the Chairman of the Board may appoint one (1) or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee.  In the absence or disqualification of a member of a committee, the member or members present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.  Any such committee, to the extent provided in the resolution of the Board of Directors, or in these Bylaws, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to the following matters:  (i) approving or adopting, or recommending to the stockholders, any action or matter expressly required by Delaware General Corporation Law to be submitted to stockholders for approval or (ii) adopting, amending or repealing any bylaw of the Corporation.

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          Section 2.           Conduct of Business.

          Each committee may determine the procedural rules for meeting and conducting its business and shall act in accordance therewith, except as otherwise provided herein or required by law.  Adequate provision shall be made for notice to members of all meetings; one-third (1/3) of the members shall constitute a quorum unless the committee shall consist of one (1) or two (2) members, in which event one (1) member shall constitute a quorum; and all matters shall be determined by a majority vote of the members present.  Action may be taken by any committee without a meeting if all members thereof consent thereto in writing, and the writing or writings are filed with the minutes of the proceedings of such committee.

          Section 3.           Standing Executive Committee.

          The Board of Directors shall appoint at least three (3) members of the Board to comprise an Executive Committee.  The Executive Committee shall have and exercise all the powers and authority of the full Board of Directors in the management of the business and affairs of the Corporation to the fullest extent authorized by the Delaware General Corporation Law, and these Bylaws.

          For a period of three (3) years after the effective date of the Merger, the Executive Committee of the Corporation’s Board of Directors will consist of six (6) members, comprised of four (4) Parent Directors (the “Parent Committee Members”) and two (2) Boomtown Directors (the “Boomtown Committee Members”); provided that if one of the initial Parent Committee Members ceases to be a member of the Executive Committee for any reason or for no reason, the Executive Committee will consist of five (5) members, comprised of three (3) Parent Committee Members and two (2) Boomtown Committee Members.  The number of members of the Executive Committee shall not be greater than six (6) members (or five (5) members if one of the initial Parent Committee Members ceases to be a member of the Executive Committee) at any time during such three (3) year period without the consent of the majority of the Boomtown Committee Members.  The initial Boomtown Committee Members will be Timothy J. Parrott and Richard J. Goeglein.  If either Messrs. Parrott or Goeglein shall be unavailable to serve, any replacement Boomtown Committee Members shall be selected by a majority of the Boomtown Directors then on the Corporation’s Board of Directors.  The initial Parent Committee Members shall be R.D. Hubbard and three (3) other Parent Directors selected by a majority of the Parent Directors then on the Corporation’s Board of Directors.  Subject to the proviso set forth in the first sentence of this paragraph, if either Mr. Hubbard or one or more of such other initial Parent Committee Members shall be unavailable to serve, any replacement Parent Committee Member shall be selected by a majority of the Parent Directors then on the Corporation’s Board of Directors.  Notice of meetings of the Executive Committee shall state the place, date and hour of the meeting and shall be given to each member of the Executive Committee personally, by mail, courier, telephone, telecopy or telegram on not less than 24 hours’ notice.

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Members of the Executive Committee may participate in such meetings by means of conference telephone.  Meetings of the Executive Committee may be held without notice if all the members thereof are present or if all those not present waive such notice in writing whether before or after the meeting.

          This Section 3 may not be amended for a period of three (3) years from the effective date of the Merger without the approval of a majority of Boomtown Directors then on the Corporation’s Board of Directors.

          Section 4.           Audit Committee.

          The Corporation’s Board of Directors shall have an Audit Committee comprised of at least three (3) members, all of whom shall consist solely of non-officer directors who shall meet the standards for membership as set forth in Rule 303.00 of the New York Stock Exchange (“NYSE”) Company Guide or any successor rule adopted by the NYSE with respect to such membership. 

          In addition to such other responsibilities as may be delegated to the Audit Committee from time to time, the Audit Committee shall: (i) review and approve all related party transactions between the Corporation or any of its subsidiaries and any officer or director (or their affiliates) having a total value of more than $60,000 (or such higher amount as may be specified from time to time by applicable rules and regulations of the Securities and Exchange Commission (“SEC”) as the threshold at which disclosure of such transactions is required in the Corporation’s annual report, proxy statement or other periodic filing), other than compensation arrangements, incentive plans, stock options plans or similar plans or arrangements, and transactions that are subject to approval by another committee of the Board of Directors consisting of a majority of directors who are disinterested in the subject transaction; (ii) require the Corporation’s internal audit department to review, at least annually, all such related party transactions and report thereon to the Audit Committee; (iii) report annually on all related party transactions as required by the SEC’s proxy rules and shall, at least quarterly, report on any related party transaction involving $2 Million or more, either in the Corporation’s quarterly report on Form 10-Q or in its quarterly shareholders report; (iv) recommend an independent firm of certified public accountants to conduct the audit of the Corporation’s annual financial statements, and confer with the selected firm as to the scope and procedures of its audit; (v) require the Corporation’s independent auditors, as a part of their engagement, to render to the Corporation a “Report to Management” as to the Corporation’s system of internal financial and accounting controls.  The Audit Committee shall review that report and any response thereto by management.  At the conclusion of the annual audit, the Audit Committee shall receive a copy of the report of the independent auditors, and review that report as well as any concerns, comments or suggestions that the auditors may provide; (vi) on at least an annual basis, review the Corporation’s internal financial and accounting controls with the Corporation’s financial and accounting officers, and report thereon to the

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Corporation’s Board of Directors with any recommendations for improvement or correction as the Audit Committee may determine appropriate.  Thereafter, the Audit Committee shall supervise the implementation of any recommendations of the Board with respect thereto; and (vii) review, at least annually, the adequacy and competency of the Corporation’s accounting and financial staff and internal audit department.

          The Audit Committee may retain independent experts, including legal counsel and investment counsel, at its discretion and at the Corporation’s expense.

          Section 5.           Compensation Committee.

          The Corporation’s Board of Directors shall have a Compensation Committee comprised of at least one (1) member.  In addition to such other responsibilities and authority as may be delegated to the Compensation Committee from time to time, the Compensation Committee shall have the authority to (i) assist with the administration of the Corporation’s compensation plans including recommendations to the Board of Directors with respect to the establishment of such plans and the terms and provisions thereof, (ii) make recommendations to the Board of Directors with respect to the annual salaries and other compensation of the officers of the Corporation, and (iii) provide assistance and recommendations to the Board of Directors with respect to the compensation policies and practices of the Corporation.

ARTICLE IV -  OFFICERS

          Section 1.           Generally.

          The officers of the Corporation shall be elected by the Board of Directors and shall consist of a Chairman of the Board, one or more Vice Chairmen of the Board, a President, one or more Vice Presidents, a Secretary, and a Treasurer.  The Board of Directors may also appoint an Executive Vice President, a Controller, one or more Assistant Secretaries and Assistant Treasurers, a Chief Operating Officer, a General Manager of the Corporation’s racing operations and such other officers as it shall deem necessary from time to time.  The principal officers of the Corporation shall be chosen annually by the Board and shall hold office until his or her successor is elected and qualified or until his or her earlier resignation or removal.  Any number of offices may be held by the same person unless the Certificate of Incorporation or these Bylaws otherwise provide.

          Section 2.           Chairman of the Board.

          The Chairman of the Board shall be the Chief Executive Officer of the Corporation and shall, if present, preside at all meetings of the stockholders and of the Board of Directors.  If the Chairman of the Board is unable or declines to act as Chief Executive Officer, then the Vice Chairman of the Board shall be Chief Executive Officer.  If there is more than one Vice Chairman of the Board appointed,

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then the Vice Chairman with the longest continuous service on the Board shall assume the duties of Chief Executive Officer in the absence of the Chairman of the Board.  If both the Chairman of the Board and any Vice Chairman of the Board are unable or decline to act as Chief Executive Officer, then the President shall become the Chief Executive Officer of the Corporation.  The Chief Executive Officer shall be the principal executive officer of the Corporation and shall in general supervise and control all of the business and affairs of the Corporation.  He shall preside at all meetings of the stockholders and of the Board of Directors and shall see that orders and resolutions of the Board of Directors are carried into effect.  He may sign bonds, mortgages, certificates for shares and all other contracts and documents whether or not under the seal of the Corporation except in cases where the signing and execution thereof shall be expressly delegated by law, by the Board of Directors or by these Bylaws to some other officer or agent of the Corporation.  He shall have general powers of supervision and shall be the final arbiter of all differences between officers of the Corporation and his decision as to any matter affecting the Corporation shall be final and binding between the officers of the Corporation subject only to actions of the Board of Directors.  He may also delegate such of his duties to the Vice Chairman of the Board or the President or such other officers as the Chairman of the Board from time to time deems appropriate.

          Section 3.           Vice Chairman of the Board.

          The Board of Directors may appoint one or more Vice Chairman of the Board any of whom shall, in the absence of the Chairman of the Board or in the event of his inability or refusal to act, perform the duties of the Chairman of the Board and Chief Executive Officer and when so acting, shall have all the powers of and be subject to all the restrictions upon the Chairman of the Board and Chief Executive Officer.  If more than one Vice Chairman is appointed the Vice Chairman shall assume the duties of the Chairman of the Board in order of their continuous service on this Board with the person having the longest continuous service being the first to act.  The Vice Chairman shall perform such other duties as the Chief Executive Officer or the Board of Directors shall prescribe.

          Section 4.           President.

          In the absence of any Chief Executive Officer as the succession to that position is prescribed in these Bylaws or in the event of the inability or refusal of any such Chief Executive Officer to act, the President shall perform the duties of the Chief Executive Officer, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Chief Executive Officer.  He shall, at all times, have concurrent power with the Chief Executive Officer to sign bonds, mortgages, certificates for shares and other contracts and documents whether or not under the seal of the Corporation except in cases where the signing and execution thereof shall be expressly delegated by law, by the Board of Directors, or by these Bylaws to some other officer or agent of the Corporation.  The President shall also perform such other

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duties as the Chief Executive Officer or the Board of Directors may from time to time prescribe.

          Section 5.           Chief Operating Officer.

          The Chief Operating Officer shall be an employee of this Corporation and shall serve at the pleasure of the Board of Directors.  The Chief Operating Officer may, but need not be, a member of the Board of Directors, but in either event, shall be reportable to and act under the direction of the Chairman of the Board and Board of Directors.  The Chief Operating Officer shall supervise the daily operations and affairs of the Corporation under the direction of the Chairman of the Board or such other persons as the Chairman of the Board may appoint from time to time for that purpose and shall, within the limits specified in this Section, control all of this corporation’s racing activities, supervise its employees and personnel, administer this Corporation’s operating policies, and make such daily operating decisions as are reasonably necessary for effective management.  The Chief Operating Officer shall have no authority to sign bonds, mortgages, certificates for shares or other documents or to obligate this Corporation for any sum in excess of $25,000.00 except as shall be expressly delegated by the Board of Directors or by these Bylaws.  The Chief Operating Officer shall make such reports to the Board of Directors and to the Chairman of the Board as may be directed by those entities and shall make a detailed report to the Chairman of the Board and to the Board of Directors on the results of racing operations and on the financial affairs of this Corporation no less frequently than monthly.

          Section 6.           Vice Presidents.

          In the absence of the President or in the event of his inability or refusal to act, the Vice President, if one has been elected by the Board, (or in the event there be more than one Vice President, the Executive Vice President or in the event there is no Executive Vice President, the Vice President with the longest continuous service on the Board of Directors of this Corporation) shall perform the duties of the President, and when so acting, shall have all the power of and be subject to all the restrictions upon the President.  The Vice Presidents shall perform such other duties as the Chief Executive Officer or the Board of Directors may from time to time prescribe.

          Section 7.           Treasurer.

          The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors.  He shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the Chairman of the Board and the Board of

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Directors, at its regular meetings, or when the Board of Directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation.

          Section 8.           Assistant Treasurer.

          The Assistant Treasurer shall, in the absence of the Treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the Treasurer and shall perform such other duties as the Chairman of the Board or the Board of Directors may from time to time prescribe or perform such duties of the Treasurer as the Treasurer of this Corporation may delegate from time to time.

          Section 9.           Secretary.

          The Secretary (or Assistant Secretary if appropriately delegated) shall attend all meetings of the Board of Directors and all meetings of the stockholders and record all the proceedings of the meetings of the Corporation and of the Board of Directors in a book for that purpose and shall perform like duties for the standing committee when required.  He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors or the Chief Executive Officer.  He shall have custody of the corporate seal of the Corporation, and he, or an Assistant Secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or such Assistant Secretary.  The Chairman of the Board or the Board of Directors may give general authority to any other officer to affix the seal of the Corporation and to attest the affixing by his signature.

          Section 10.           Assistant Secretary.

          The Assistant Secretary shall, in the absence of the Secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the Secretary and shall perform such other duties as the Chairman of the Board or the Board of Directors, or the Secretary may from time to time prescribe.

          Section 11.           Controller.

          The Controller shall keep or cause to be kept correct records of the business and transactions of the Corporation and shall, upon request, at all reasonable times exhibit or cause to be exhibited such records to any of the directors of the Corporation at the place where such records are maintained.  He shall perform such other duties as from time to time may be assigned to him by the Chairman of the Board or the Board of Directors.

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          Section 12.           Delegation of Authority.

          The Board of Directors may from time to time delegate the powers or duties of any officer to any other officers or agents, notwithstanding any provision hereof.

          Section 13.           Removal.

          Any officer of the Corporation may be removed at any time, with or without cause, by the Board of Directors.

          Section 14.           Resignations.

          Any officer of the Corporation may resign at any time by giving written notice of his resignation to the Board or the Chairman of the Board or the Secretary.  Any such resignation shall take effect at the time specified therein, or if the time when it shall become effective shall not be specified therein, then it shall take effect immediately upon its receipt by the Board or the Chairman of the Board or Secretary; and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

          Section 15.           Action with Respect to Securities of Other Corporations.

          Unless otherwise directed by the Board of Directors, the Chairman of the Board or the President or any officer of the Corporation authorized by the Chairman of the Board or the President shall have power to vote and otherwise act on behalf of the Corporation, in person or by proxy, at any meeting of stockholders of or with respect to any action of stockholders of any other corporation in which this Corporation may hold securities and otherwise to exercise any and all rights and powers which this Corporation may possess by reason of its ownership of securities in such other corporation.

ARTICLE V -  STOCK

          Section 1.           Certificates of Stock.

          Each stockholder shall be entitled to a certificate signed by, or in the name of the Corporation by, the Chairman of the Board, President or a Vice President, and by the Secretary or an Assistant Secretary, or the Treasurer or an Assistant Treasurer, certifying the number of shares owned by him or her.  Any or all of the signatures on the certificate may be by facsimile.

          Section 2.           Transfers of Stock.

          Transfers of stock shall be made only upon the transfer books of the Corporation kept at an office of the Corporation or by transfer agents designated to transfer shares of the stock of the Corporation.  Except where a certificate is issued in

- 16 -

accordance with Section 4 of this Article V, an outstanding certificate for the number of shares involved shall be surrendered for cancellation before a new certificate is issued therefor.

          Section 3.           Record Date.

          (1)          In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders, or to receive payment of any dividend or other distribution or allotment of any rights or to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may, except as otherwise required by law, fix a record date, which record date shall not precede the date on which the resolution fixing the record date is adopted and which record date shall not be more than 60 nor less than 10 days before the date of any meeting of stockholders, nor more than 60 days prior to the time for such other action as hereinbefore described; provided, however, that if no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held, and, for determining stockholders entitled to receive payment of any dividend or other distribution or allotment of rights or to exercise any rights of change, conversion or exchange of stock or for any other purpose, the record date shall be at the close of business on the day on which the Board of Directors adopts a resolution relating thereto.  A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

          (2)          In order that the Corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than 10 days after the date upon which the resolution fixing the record date is adopted by the Board of Directors.  Any stockholder of record seeking to have the stockholders authorize or take corporate action by written consent shall, by written notice to the Secretary, request the Board of Directors to fix a record date.  The Board of Directors shall promptly, but in all events within 10 days after the date on which such a request is received, adopt a resolution fixing the record date.  If no record date has been fixed by the Board of Directors within 10 days of the date on which such a request is received, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by applicable law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation in the manner prescribed by Article I, Section 9

- 17 -

of these Bylaws.  If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by applicable law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the date on which the Board of Directors adopts the resolution taking such prior action.

          Section 4.           Lost, Stolen or Destroyed Certificates.

          In the event of the loss, theft or destruction of any certificate of stock, another may be issued in its place pursuant to such regulations as the Board of Directors may establish concerning proof of such loss, theft or destruction and concerning the giving of a satisfactory bond or bonds of indemnity.

          Section 5.           Regulations.

          The issue, transfer, conversion and registration of certificates of stock shall be governed by such other regulations as the Board of Directors may establish.

ARTICLE VI -  NOTICES

          Section 1.           Notices.

          Except as otherwise specifically provided herein or required by law, all notices required to be given to any stockholder, director, officer, employee or agent shall be in writing and may in every instance be effectively given by hand delivery to the recipient thereof, by depositing such notice in the mails, postage paid, recognized overnight delivery service or by sending such notice by facsimile, receipt acknowledged, or by prepaid telegram or mailgram.  Any such notice shall be addressed to such stockholder, director, officer, employee or agent at his or her last known address as the same appears on the books of the Corporation.  The time when such notice is received, if hand delivered, or transmitted or dispatched, if delivered through the mails or by facsimile, telegram or mailgram, shall be the time of the giving of the notice.

          Section 2.           Waivers.

          A written waiver of any notice, signed by a stockholder, director, officer, employee or agent, whether before or after the time of the event for which notice is to be given, shall be deemed equivalent to the notice required to be given to such stockholder, director, officer, employee or agent.  Neither the business nor the purpose of any meeting need be specified in such a waiver.  Attendance at any meeting shall constitute waiver of notice except attendance for the sole purpose of objecting to the timeliness of notice.

- 18 -

ARTICLE VII -  MISCELLANEOUS

          Section 1.           Facsimile Signatures.

          In addition to the provisions for use of facsimile signatures elsewhere specifically authorized in these Bylaws, facsimile signatures of any officer or officers of the Corporation may be used whenever and as authorized by the Board of Directors or a committee thereof.

          Section 2.           Corporate Seal.

          The Board of Directors may provide a suitable seal, containing the name of the Corporation, which seal shall be in the charge of the Secretary.  If and when so directed by the Board of Directors or a committee thereof, duplicates of the seal may be kept and used by the Treasurer or by an Assistant Secretary or Assistant Treasurer.

          Section 3.           Reliance upon Books, Reports and Records.

          Each director, each member of any committee designated by the Board of Directors, and each officer of the Corporation shall, in the performance of his or her duties, be fully protected in relying in good faith upon the books of account or other records of the Corporation and upon such information, opinions, reports or statements presented to the Corporation by any of its officers or employees, or committees of the Board of Directors so designated, or by any other person as to matters which such director, committee member, or officer reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation.

          Section 4.           Fiscal Year.

          The fiscal year of the Corporation shall be as fixed by the Board of Directors.

          Section 5.           Time Periods.

          In applying any provision of these Bylaws which requires that an act be done or not be done a specified number of days prior to an event or that an act be done during a period of a specified number of days prior to an event, calendar days shall be used, the day of the doing of the act shall be excluded, and the day of the event shall be included.

ARTICLE VIII -  INDEMNIFICATION OF DIRECTORS AND OFFICERS

          Section 1.           Right to Indemnification.

          Each person who was or is made a party or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding, whether civil, criminal,

- 19 -

administrative or investigative (hereinafter a “proceeding”), by reason of the fact that he or she is or was a director or an officer of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan (hereinafter an “indemnitee”), whether the basis of such proceeding is an alleged action in an official capacity as a director, officer, employee or agent or in any other capacity while serving as a director, officer, employee or agent, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than such law permitted the Corporation to provide prior to such amendment), against all expense, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered by such indemnitee in connection therewith; provided, however, that, except as provided in Section 3 of this Article VIII with respect to proceedings to enforce rights to indemnification, the Corporation shall indemnify any such indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the Board of Directors of the Corporation.

          Section 2.           Right to Advancement of Expenses.

          The right to indemnification conferred in Section 1 of this Article VIII shall include the right to be paid by the Corporation the expenses (including attorney’s fees) incurred in defending any such proceeding in advance of its final disposition (hereinafter an “advancement of expenses”); provided, however, that, if the Delaware General Corporation Law requires, an advancement of expenses incurred by an indemnitee in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such indemnitee, including, without limitation, service to an employee benefit plan) shall be made only upon delivery to the Corporation of an undertaking (hereinafter an “undertaking”), by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal (hereinafter a “final adjudication”) that such indemnitee is not entitled to be indemnified for such expenses under this Section 2 or otherwise.  The rights to indemnification and to the advancement of expenses conferred in Sections 1 and 2 of this Article VIII shall be contract rights and such rights shall continue as to an indemnitee who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the indemnitee’s heirs, executors and administrators.

          Section 3.           Right of Indemnitee to Bring Suit.

          If a claim under Section 1 or 2 of this Article VIII is not paid in full by the Corporation within 60 days after a written claim has been received by the

- 20 -

Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be 20 days, the indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim.  If successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the indemnitee shall also be entitled to be paid the expense of prosecuting or defending such suit.  In (i) any suit brought by the indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the indemnitee to enforce a right to an advancement of expenses) it shall be a defense that, and (ii) in any suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Corporation shall be entitled to recover such expenses upon a final adjudication that, the indemnitee has not met any applicable standard for indemnification set forth in the Delaware General Corporation Law.  Neither the failure of the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such suit that indemnification of the indemnitee is proper in the circumstances because the indemnitee has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) that the indemnitee has not met such applicable standard of conduct, shall create a presumption that the indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the indemnitee, be a defense to such suit.  In any suit brought by the indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this Article VIII or otherwise shall be on the Corporation.

          Section 4.           Non-Exclusivity of Rights.

          The rights to indemnification and to the advancement of expenses conferred in this Article VIII shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, the Corporation’s Certificate of Incorporation or Bylaws, any agreement, or by vote of the Corporation’s stockholders or disinterested directors or otherwise.

          Section 5.           Insurance.

          The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the Delaware General Corporation Law.

- 21 -

          Section 6.           Indemnification of Employees and Agents of the Corporation.

          The Corporation may, to the extent authorized from time to time by the Board of Directors, grant rights to indemnification and to the advancement of expenses to any employee or agent of the Corporation to the fullest extent of the provisions of this Article with respect to the indemnification and advancement of expenses of directors and officers of the Corporation.

ARTICLE IX -  AMENDMENTS

          In furtherance and not in limitation of the powers conferred by law, the Board of Directors is expressly authorized to make, alter, amend and repeal these Bylaws subject to the power of the holders of capital stock of the Corporation to alter, amend or repeal the Bylaws; provided, however, that, with respect to the powers of holders of capital stock to make, alter, amend and repeal Bylaws of the Corporation, notwithstanding any other provision of these Bylaws or any provision of law which might otherwise permit a lesser vote or no vote, but in addition to any affirmative vote of the holders of any particular class or series of the capital stock of the Corporation required by law, these Bylaws or any preferred stock, the affirmative vote of the holders of at least 66 K% of the voting power of all of the then-outstanding shares entitled to vote generally in the election of directors, voting together as a single class, shall be required to make, alter, amend or repeal any provision of these Bylaws.

- 22 -

EX-10.22

                                                                   EXHIBIT 10.22

                     SECOND AMENDMENT TO LEASE AND AGREEMENT

     This Second Amendment to Lease and Agreement (this "Amendment") is made and
entered into as of October 1, 2001, by and between Pinnacle Entertainment, Inc.,
a Delaware corporation, successor by merger with Hollywood Park, Inc.
("Landlord"), and Century Gaming Management, Inc. a California corporation
("Tenant").

     A. Landlord and Tenant entered into that certain Lease and Agreement dated
as of September 10, 1999, and amended by that certain First Amendment to Lease
and Agreement dated September 6, 2000 (together, the "Lease"), whereby Tenant
leases from Landlord that certain real property in Inglewood, California upon
which Tenant operates The Hollywood Park-Casino (the "Premises").

     B. Landlord and Tenant desire to amend the Lease as set forth below.

     NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Landlord and Tenant agree as follows:

     1. Defined Terms. Capitalized terms used herein, but not defined herein,
shall have the meanings ascribed to such terms in the Lease.

     2. Term. The Term of this Lease shall commence on the Commencement Date and
shall continue until the earlier of (i) December 31, 2002, or (ii) the
expiration or earlier termination of the CDC Lease, unless sooner terminated
pursuant to any provision hereof.

     3. Relationship to Lease. This Amendment supercedes any inconsistent
provisions contained in the Lease. Except as amended hereby, the Lease remains
in full force and effect.

     4. Further Assurances. Each of the parties hereto shall execute and deliver
such other and further documents and do such other and further acts as may be
reasonably required to effectuate the intent of the parties and carry out the
terms of this Amendment.

     5. Counterparts. This Amendment may be executed in counterparts, which,
when taken together shall be one and the same instrument.

IN WITNESS WHEREOF, this Amendment has been executed as of the date first above
written.

LANDLORD                                    TENANT

Pinnacle Entertainment, Inc.,               Century Gaming Management, Inc.,
a Delaware corporation                      a California corporation

By:  /s/ G. Michael Finnigan                By: /s/ Leo Chu
Its: Authorized Signatory                   Its:President

EX-10.23

                                                                   EXHIBIT 10.23

                     THIRD AMENDMENT TO LEASE AND AGREEMENT

     This Third Amendment to Lease and Agreement (this "Amendment") is made and
entered into as of December 4, 2002, by and between Pinnacle Entertainment,
Inc., a Delaware corporation, successor by merger with Hollywood Park, Inc.
("Landlord"), and Century Gaming Management, Inc. a California corporation
("Tenant").

     A. Landlord and Tenant entered into that certain Lease and Agreement dated
as of September 10, 1999, as amended by (i) that certain First Amendment to
Lease and Agreement dated September 6, 2000, and (ii) that certain Second
Amendment to Lease and Agreement dated as of October 1, 2001 (together, the
"Lease"), whereby Tenant leases from Landlord that certain real property in
Inglewood, California upon which Tenant operates The Hollywood Park-Casino (the
"Premises").

     B. Landlord and Tenant desire to amend the Lease as set forth below.

     NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Landlord and Tenant agree as follows:

     1. Defined Terms. Capitalized terms used herein, but not defined herein,
shall have the meanings ascribed to such terms in the Lease.

     2. Term. The Term of this Lease shall commence on the Commencement Date and
shall continue until the earlier of (i) December 31, 2003, or (ii) the
expiration or earlier termination of the CDC Lease, unless sooner terminated
pursuant to any provision hereof or otherwise amended pursuant to future
amendments hereof.

     3. Division of Gambling Control. The terms of this Amendment shall be
subject to approval by the Division of Gambling Control.

     4. Relationship to Lease. This Amendment supercedes any inconsistent
provisions contained in the Lease. Except as amended hereby, the Lease remains
in full force and effect.

     5. Further Assurances. Each of the parties hereto shall execute and deliver
such other and further documents and do such other and further acts as may be
reasonably required to effectuate the intent of the parties and carry out the
terms of this Amendment.

     6. Counterparts. This Amendment may be executed in counterparts, which,
when taken together shall be one and the same instrument.

(remainder of page intentionally left blank)




IN WITNESS WHEREOF, this Amendment has been executed as of the date first above
written.

LANDLORD                                    TENANT


Pinnacle Entertainment, Inc.,               Century Gaming Management, Inc.,
a Delaware corporation                      a California corporation

By: /s/ Daniel R. Lee                       By: /s/ Leo Chu
Its:CEO                                     Its: President

EX-10.27

                                                                   Exhibit 10.27

                       EMPLOYMENT AND CONSULTING AGREEMENT

     This Employment and Consulting Agreement (the "Agreement") is entered into
between Pinnacle Entertainment, Inc., a Delaware corporation (the "Company"),
and G. Michael Finnigan ("Finnigan") as of April 11, 2002 in accordance with the
parties' mutual desire to extend Finnigan's current employment relationship with
a subsidiary of the Company through December 31, 2002 and thereafter to convert
Finnigan's relationship with the Company into a consulting relationship.

     1. Finnigan's current employment as President and Chief Executive Officer
of Realty Investment Group, Inc. will continue on the same terms as those
currently applicable to such employment until December 31, 2002. Upon
termination of such employment on such date, Finnigan will be eligible to
receive such bonus or additional option grants, if any, as the Board of
Directors of the Company may determine to award in its sole discretion.

     2. Effective January 1, 2003, Finnigan will be retained by the Company
hereunder as a consultant for a five-year term ending December 31, 2007. As
consideration for Finnigan's services and for the promises described in this
Agreement, the Company shall compensate Finnigan at the rate of $400,000 per
year, payable monthly. In addition, Finnigan shall be eligible to receive such
bonus or additional option grants, if any, as the Board of Directors of the
Company may determine to award in its sole discretion. Finnigan's existing
options to purchase shares of the Company's common stock (and any new grants)
shall remain outstanding throughout the term of the consultancy and shall be
exercisable in accordance with their terms and for a three year term thereafter
(or the remaining life of the options, if shorter). In addition, during the term
of the consultancy, Finnigan will continue to receive at the Company's expense
such fringe and health benefits and perquisites as are available to Finnigan
currently. If continued participation in one or more of these fringe benefits is
not possible due to legal or other constraints, the Company shall provide
Finnigan with sufficient funds on a monthly basis to enable Finnigan to secure
fringe benefits, on an after-tax basis, substantially similar to those to which
Finnigan was entitled immediately prior to termination of his employment.

     3. During the term of the consultancy, Finnigan will provide to the Company
and its affiliates executive consulting services similar in nature to services
previously provided by Finnigan at such times and in such locations as the
Company and Finnigan may mutually agree. The Company acknowledges and agrees
that Executive shall be free to accept other employment during the term of the
consultancy and that his inability or unwillingness to perform consulting
services requested by the Company due to conflicting work, personal commitments
or otherwise shall not be cause for termination of this agreement. To the extent
travel is required in connection with Finnigan's services, such travel shall be
at the Company's expense.

     4. Finnigan agrees that, during the duration of the consultancy, he will be
bound by the same rules and duties, including the duty of loyalty, as are
employees of the Company generally. In addition, Finnigan agrees that he will
not engage in any activities





which are directly or indirectly inconsistent with his status as a consultant to
the Company nor will he disclose during the period of the consultancy or
thereafter any confidential or proprietary information gained during or as a
result of his employment by or consultancy with the Company. Finnigan also
agrees that, when his consultancy with the Company under this Agreement ends, he
will immediately deliver to the Company any documents and materials, of whatever
nature, relating to the Company, its products and/or its services which he
acquired during the period of his consultancy or which were otherwise in his
possession.

     5. During the term of the consultancy, Finnigan may pursue other business
interests but shall not directly or indirectly compete as an officer, director,
employee, consultant or shareholder of any gaming company which competes with
the Company's gaming businesses. Notwithstanding the foregoing, Finnigan may
have passive interests not to exceed 3% in each case in publicly traded
companies engaged in the gaming business.

     6. Finnigan shall have the right at any time to designate any person(s) or
trust(s) as beneficiaries to whom any benefits payable under this Agreement
shall be made in the event of Finnigan's death prior to the distribution of all
benefits due Finnigan under this Agreement. Each beneficiary designation shall
be effective only when filed in writing with the Company during Finnigan's
lifetime. If Finnigan designates more than one beneficiary, distributions of
cash payments shall be made in equal proportions to each beneficiary unless
otherwise provided for in Finnigan's beneficiary designation. The filing of a
new beneficiary designation shall cancel all designations previously filed. Any
finalized marriage or divorce (other than common law marriage) of Finnigan's
subsequent to the date of filing a beneficiary designation shall revoke such
designation unless (a) in the case of divorce, the previous spouse was not
designated as beneficiary, and (b) in the case of marriage, Finnigan's new
spouse had previously been designated as beneficiary. If Finnigan fails to
designate a beneficiary as provided for above, or if the beneficiary designation
is revoked by marriage, divorce or otherwise without execution of a new
designation, or if the beneficiary designated by Finnigan dies prior to
distribution of the benefits due Finnigan under this Agreement, the Company
shall direct the distribution of any benefits due under this Agreement to
Finnigan's estate.

     7. In the event of a "change of control" with respect to the Company, any
unvested options then held by Finnigan shall immediately become exercisable and
Finnigan may terminate this Agreement by written notice to the Company at
anytime thereafter. Upon such termination, the Company shall pay to Finnigan a
lump sum payment of the amounts payable to Finnigan pursuant to paragraph 2
through the end of the term of this Agreement (whether or not a change of
control occurs prior to commencement of the consultancy portion of this
agreement). For purposes of this Agreement, a change of control shall mean (a) a
sale of all or substantially all of the property of the Company; (b) a sale to
any one person, corporation, entity or group of stock possessing more than
thirty percent (30%) of the aggregate voting power of the then outstanding stock
of the Company to another person, corporation or entity; (c) a change in the
majority of the Board of Directors which is not approved by a majority of the
members of the Board of Directors as





of the date of this Agreement or directors whose election or appointment to the
Board of Directors is approved by directors; (d) the dissolution for liquidation
of the Company; or (e) the reorganization, merger or combination of the Company
with one or more corporations or entities unless the Company's shareholders
immediately before such reorganization, merger or combination own stock or
equity possessing more than 50% of the voting power of the stock or equity of
the surviving corporation or entity in substantially the same proportions after
such reorganization, merger or combination as they owned in the Company
immediately before such reorganization, merger, or combination.

     8. The Company may assign its rights and delegate its duties under this
Agreement. Finnigan may assign his rights under this Agreement only with the
Company's prior written consent or as provided herein. Finnigan may not delegate
his duties. This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective heirs, legal representatives,
successors and assigns, except as otherwise provided herein.

     9. At the end of the consultancy, Finnigan may purchase any of the
furniture or equipment he has been principally using at its then depreciated
book value.

     10. This Agreement constitutes the total and complete agreement of the
parties and supersedes all prior and contemporaneous understandings and
agreements heretofore made, and there are no other representations,
understandings or agreements. The provisions of this Agreement may not be
waived, altered, amended or repealed in whole or in part except by the signed
written consent of the parties sought to be bound by such waiver, alteration,
amendment or repeal. The failure or delay on the part of the Company or Finnigan
to exercise any right or remedy, power or privilege hereunder shall not operate
as a waiver thereof. A waiver, to be effective, must be in writing and signed by
the party making the waiver. A written waiver of default shall not operate as a
waiver of any other default or of the same type of default on a future occasion.

     11. This Agreement and all subsequent agreements between the parties shall
be governed by and interpreted, construed and enforced in accordance with the
laws of the State of California.

     12. This Agreement may be executed in one of more counterparts, each of
which shall be deemed and original, but all of which shall together constitute
one and the same instrument.




     Executed May 14, 2002 and effective as of the 10th day of April, 2002.

                                 PINNACLE ENTERTAINMENT, INC.

                                 /s/ Daniel R. Lee
                                 ---------------------------------------
                                 By:  Daniel R. Lee
                                 Its: Chief Executive Officer



                                 /s/ G. Michael Finnigan
                                 ----------------------------------------
                                 G. Michael Finnigan


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

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

                                                      Address for notices

EX-10.29

                                                                   Exhibit 10.29

                              EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (the "Agreement") is made effective as of August
13, 2002, by and between PINNACLE ENTERTAINMENT, INC., a Delaware corporation
("Company"), and JOHN A. GODFREY, an individual ("Executive"), with respect to
the following facts and circumstances:

                                    RECITALS

     Company desires to employ Executive as of the date hereof and to retain
Executive as Senior Vice President and General Counsel of Company commencing on
or about August 28, 2002, on the terms and conditions set forth herein.
Executive desires to be retained by Company in such capacities, on the terms and
conditions and for the consideration set forth below.

     NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements set forth herein, the parties hereto agree as follows:

                                   ARTICLE 1

                               EMPLOYMENT AND TERM

     1.1 Employment. Company agrees to employ Executive and to engage Executive
in the capacity as Senior Vice President & General Counsel of the Company, and
Executive hereby accepts such engagement by Company upon the terms and
conditions specified below

     1.2 Term. The term of this Agreement (the "Term") shall commence on the
date hereof and shall continue in force until September 1, 2007, unless earlier
terminated under Article 6 below.

                                   ARTICLE 2

                               DUTIES OF EXECUTIVE

     2.1 Duties. Executive shall perform all the duties and obligations
generally associated with the position of Senior Vice President & General
Counsel, as chief legal officer with responsibility for supervision of the
legal, regulatory and compliance functions of the Company and its affiliates,
including any parent(s) thereof, subject to the control and supervision of the
Chief Executive Officer, and such other executive duties consistent with the
foregoing as may be assigned to him from time to time by the Chief Executive
Officer of Company. Executive shall report to the Chief Executive Officer and
shall be appointed by the Board of Directors as a corporate executive officer of
the Company at all times during the Term Executive shall perform the services
contemplated herein faithfully, diligently, to the best of his ability and in
the best interests of Company. Executive shall devote all his business time and
efforts to the rendition of such services. Executive shall, at all times perform
such services in compliance with, and to the extent of his authority, shall to
the best


                                     - 1 -



of his ability cause Company to be in compliance with any and all laws, rules
and regulations applicable to Company of which Executive is aware. Executive
shall, at all times during the Term, in all material respects adhere to and obey
any and all written internal rules and regulations governing the conduct of
Company's employees, as established or modified from time to time; provided,
however, in the event of any conflict between the provisions of this Agreement
and any such rules or regulations, the provisions of this Agreement shall
control.

     2.2 Location of Services. Executive's principal place of employment shall
be at Company's office in Las Vegas, Nevada, or at such other location as
Executive and the Chief Executive Officer shall agree upon. Executive
understands he will be required to travel to Company's various operations and
offices as part of his employment.

     2.3 Exclusive Service. Except as otherwise expressly provided herein,
Executive shall devote his entire business time, attention, energies, skills,
learning and best efforts to the business of Company. Executive may participate
in social, civic, charitable, religious, business, educational or professional
associations and, with the prior approval of the Chief Executive Officer, serve
on the boards of directors of companies, so long as such participation does not
materially interfere with the duties and obligations of Executive hereunder.
This Section 2.3, however, shall not be construed to prevent Executive from
making passive outside investments so long as such investments do not require
material time of Executive or otherwise interfere with the performance of
Executive's duties and obligations hereunder. Executive shall not make any
investment in an enterprise that competes with Company without the prior written
approval of Company after full disclosure of the facts and circumstances;
provided, however, that this sentence shall not preclude Executive from owning
up to one percent (1%) of the securities of a publicly traded entity (a
"Permissible Investment"). During the Term, Executive shall not directly or
indirectly work for or provide services to or, except as permitted above, own an
equity interest in any person, firm or entity engaged in the casino gaming, card
club or horse racing business. In this regard, Executive acknowledges that the
gaming industry is national in scope and that accordingly this covenant shall
apply throughout the United States. This Section 2.3. shall also not be
construed to prevent Executive from consulting with and assisting the law firm
of Schreck Brignone Godfrey or its successor (the "Firm") for a reasonable
period of time in transitioning cases, files and client matters that Executive
has been working on or been responsible for while a partner with the Firm,
provided, however, that Executive shall not be involved in any matters with the
Firm that conflict with or are adverse to the Company's business.

                                   ARTICLE 3

                                  COMPENSATION

3.1 Salary. In consideration for Executive's services hereunder, Company shall
pay Executive an annual salary at the rate of $360,000 per year during each of
the years of the Term; payable in accordance with Company's regular payroll
schedule from time to time (less any deductions required for Social Security,
state, federal and local withholding taxes, and any other authorized or mandated
withholdings), such salary to commence on the date


                                     - 2 -



Executive becomes Senior Vice President and General Counsel of the Company. From
the date hereof until such date Executive shall be paid the lump sum of $500,
subject to applicable withholdings.

     3.2 Bonus. Executive shall be entitled to earn bonuses with respect to each
year of the Term during which Executive is employed under this Agreement of up
to $180,000 per year in the discretion of the Chief Executive officer or Board
of Directors, as applicable, provided, however, that for the first two years of
Executive's employment, Executive shall be entitled to receive a bonus of at
least $100,000 per year. Any such bonuses received or earned by Executive shall
be paid annually within ninety (90) days after the conclusion of Company's
fiscal year. The amount of and criteria for earning bonuses may be adjusted by
mutual agreement of Executive and the Company. Bonuses relative to partial years
(or a termination caused by death or disability) shall be prorated.

     3.3 Stock Options. As an additional element of compensation to Executive,
in consideration of the services to be rendered hereunder, Company shall grant
to Executive options to purchase 250,000 shares of the Company's common stock
which shall have an exercise price equal to the fair market value of such stock
on the date hereof. The options shall vest in five equal consecutive annual
installments of 20% each, with the first 20% vested on the first anniversary of
the date hereof. In the event of a termination caused by death or disability,
the options shall vest as of the date of death or disability (in addition to any
vesting that previously occurred) with respect to a percentage of the shares
subject to this Option determined by multiplying 20% by a fraction, the
numerator of which is the number of days from the first day of the year in which
such death or disability occurs until the date of such death or disability, and
the denominator of which is 365. The terms and conditions of such options shall
be governed by the stock option agreement of even date herewith.

                                   ARTICLE 4

                               EXECUTIVE BENEFITS

     4.1 Vacation. In accordance with the general policies of Company applicable
generally to other senior executives of Company pursuant to Company's personnel
policies from time to time, Executive shall be entitled to four weeks vacation
each calendar year, without reduction in compensation.

     4.2 Company Employee Benefits. Executive shall receive all group insurance
and pension plan benefits and any other benefits on the same basis as they are
available generally to other senior executives of Company under Company
personnel policies in effect from time to time.

     4.3 Conferences and Seminars. Executive will attend conferences and
seminars from time to time as a representative of the Company upon the approval
of the Chief Executive Officer, including, but not limited to, continuing legal
education events and the annual conference of the International Association of
Gaming Attorneys. The Company


                                     - 3 -



shall pay on behalf of Executive, or reimburse Executive for, all reasonable
costs and expenses of Executive in connection with such conferences, seminars
and events.

     4.4 Benefits. Executive shall receive all other such fringe benefits as
Company may offer to any other senior executive of Company under Company
personnel policies in effect from time to time, such as health and disability
insurance coverage and paid sick leave. In the event that the Company's group
health plan does not cover the annual physical examination of Executive the
Company shall bear the cost of such examinations.

     4.5 Indemnification. Executive shall have the benefit of indemnification to
the fullest extent permitted by applicable law, which indemnification shall
continue after the termination of this Agreement for such period as may be
necessary to continue to indemnify Executive for his acts during the term
hereof. Company shall cause Executive to be covered by the current policies of
directors and officers liability insurance covering directors and officers of
Company, copies of which have been provided to Executive, in accordance with
their terms, to the maximum extent of the coverage available for any director or
officer of Company. Company shall use commercially reasonable efforts to cause
the current policies of directors and officers liability insurance covering
directors and officers of Company to be maintained throughout the term of
Executive's employment with Company and for such period thereafter as may be
necessary to continue to cover acts of Executive during the term of his
employment (provided that Company may substitute therefor, or allow to be
substituted therefor, policies of at least the same coverage and amounts
containing terms and conditions which are, in the aggregate, no less
advantageous to the insured in any material respect).

                                   ARTICLE 5

                           REIMBURSEMENT FOR EXPENSES

     5.1 Executive shall be reimbursed by Company for all ordinary and necessary
expenses incurred by Executive in the performance of his duties or otherwise in
furtherance of the business of Company in accordance with the policies of
Company in effect from time to time. Executive shall keep accurate and complete
records of all such expenses, including but not limited to, proof of payment and
purpose. Executive shall account fully for all such expenses to Company.

                                   ARTICLE 6

                                   TERMINATION

     6.1 Termination for Cause. Without limiting the generality of Section 6.2,
Company shall have the right to terminate Executive's employment, without
further obligation or liability to Executive, upon the occurrence of any one or
more of the following events, which events shall be deemed termination for
cause.

          6.1.1 Failure to Perform Duties. If Executive neglects to perform the
material duties of his employment under this Agreement in a professional and
businesslike


                                     - 4 -



manner after having received written notice specifying such failure to perform
and a reasonable opportunity to perform.

          6.1.2 Willful Breach. If Executive willfully commits a material breach
of this Agreement or a material willful breach of his fiduciary duty to Company.

          6.1.3 Wrongful Acts. If Executive is convicted of a felony involving
acts of moral turpitude or commits fraud, misrepresentation, embezzlement or
other acts of material misconduct against the Company (including violating or
condoning the violation of any material rules or regulations of gaming
authorities which could have a material adverse effect on the Company) that
would make the continuance of his employment by Company materially detrimental
to Company.

          6.1.4 Disability. If Executive is physically or mentally disabled from
the performance of a major portion of his duties for a continuous period of 120
days or greater, which determination shall be made in the reasonable exercise of
Company's judgment, provided, however, if Executive's disability is the result
of a serious health condition as defined by the federal Family and Medical Leave
Act (or its Nevada equivalent) ("FMLA"), Executive's employment shall not be
terminated due to such disability at any time during or after any period of
FMLA-qualified leave except as permitted by FMLA. If there should be a dispute
between Company and Executive as to Executive's physical or mental disability
for purposes of this Agreement, the question shall be settled by the opinion of
an impartial reputable physician or psychiatrist agreed upon by the parties or
their representatives, or if the parties cannot agree within ten days after a
request for designation of such party, then a physician or psychiatrist designed
by the Los Angeles County Medical Association. The certification of such
physician or psychiatrist as to the questioned dispute shall be final and
binding upon the parties hereto.

          6.1.5 Failure To Be Licensed. Executive shall apply for all applicable
gaming licenses within 90 days of the date hereof. If Executive fails to be
licensed in all jurisdictions in which the Company or its subsidiaries has
gaming facilities within the date required by any jurisdiction, or if any of
such licenses shall be revoked or suspended at any time during the Term, then
the Company may by written notice to Executive terminate the Agreement for
cause. Executive agrees to promptly submit to the licensing requirements of all
jurisdictions in which the Company or its subsidiaries does business. The
Company shall bear all expenses incurred in connection with such licenses.

     6.2 Termination Without Cause. Notwithstanding anything to the contrary
herein, Company shall have the right to terminate Executive's employment under
this Agreement at any time without cause by giving notice of such termination to
Executive.

     6.3 Termination by Executive for Good Reason. Executive may terminate his
employment under this Agreement on thirty (30) days prior notice to Company for
good reason. For purposes of this Agreement, "good reason" shall mean and be
limited to (a) a material breach of this Agreement by Company (including without
limitation any material reduction in the authority or duties of Executive, or
any relocation of his or its principal place of business outside the greater Las
Vegas metropolitan area (without Executive's


                                     - 5 -



consent) and the failure of Company to remedy such breach within thirty (30)
days after written notice (or as soon thereafter as practicable so long as it
commences effectuation of such remedy within such time period and diligently
pursues such remedy to completion as soon as practicable); or (b) a "change of
control" with respect to the Company followed by (i) any diminution of
Executive's authority, duties or responsibilities as set forth in Section 2.1;
(ii) during the first twelve (12) months following a change in control, the
failure of the Company to award Executive an annual bonus equal to at least
seventy-five percent (75%) of the average amount of the annualized bonus paid to
Executive for the last two (2) full years; or (iii) his termination by the
Company. For purposes of this Agreement, a change of control shall mean (i) a
sale of all or substantially all of the property of the Company (ii) a sale to
any one person, corporation, entity or group of stock possessing more than
thirty percent (30%) of the aggregate voting power of the then outstanding stock
of Company to another person, corporation or entity, (iii) a change in the
majority of the Board of Directors which is not approved by a majority of the
members of the Board of Directors as of the date of this Agreement or directors
whose election or appointment to the Board of Directors is approved by
directors; (iv) the dissolution for liquidation of Company; or (v) the
reorganization, merger or combination of the Company with one or more
corporations or entities unless the Company's shareholders immediately before
such reorganization, merger or combination own stock or equity possessing more
than 50% of the voting power of the stock or equity of the surviving corporation
or entity in substantially the same proportions after such reorganization,
merger or combination as they owned in the Company immediately before such
reorganization, merger, or combination.

     6.4 Effectiveness on Notice. Any termination under this Section 6 shall be
effective upon receipt of notice by Executive or Company, as the case may be, of
such termination or upon such other later date as may be provided herein or
specified by Company or Executive in the notice (the "Termination Date"), except
as otherwise provided in this Section 6.

     6.5 Effect of Termination.

          6.5.1 Payment of Salary and Expenses Upon Termination. If the Term of
this Agreement is terminated, all benefits provided to Executive by Company
hereunder shall thereupon cease and Company shall pay or cause to be paid to
Executive all accrued but unpaid salary and vacation benefits. In addition,
promptly upon submission by Executive of his unpaid expenses incurred prior to
the Termination Date and owing to Executive pursuant to Article 5, reimbursement
for such expenses shall be made. If the Term of the Agreement is terminated for
"cause," Executive shall not be entitled to receive any payments other than as
specified in this Section 6.5.1, and provided that Executive may exercise any
vested options.

               (a)  Termination for Disability. In the event of a termination
                    under Section 6.1.4 (for disability), Executive may be
                    eligible for benefits under the applicable State Disability
                    Insurance program for his first six months of disability. In
                    addition, Executive shall be eligible for benefits provided
                    for and shall


                                     - 6 -



                    immediately thereafter be eligible for the benefits under
                    any long term disability insurance policy which Company may
                    have as in effect from time to time. Eligibility and
                    benefits with regard to either insurance program shall be
                    governed by the provisions of the insurance program or
                    policy and shall not be the responsibility of Company. In
                    the event of a termination under Section 6.1.4, the
                    "Covenant Not to Compete" set forth in Section 7.4 below
                    shall not apply in any respect to Executive and the term of
                    the "No Hire Away Policy" in Section 7.5 shall be limited to
                    six months from the date of termination.

          6.5.2 Termination Without Cause or Termination by Executive for Good
Reason. If Company terminates Executive without cause or Executive terminates
for good reason, the following shall apply:

               (a)  So long as Executive does not compete with Company or its
                    subsidiaries in the gaming business prior to the end of the
                    Term, Executive shall be entitled to receive an amount equal
                    to $360,000 per year (plus unpaid guaranteed bonuses
                    applicable to the first two years of Executive's employment,
                    plus, in the event of a "change in control" of the Company
                    as defined in Section 6.3(b) in the middle of a year, any
                    bonus or prorated portion thereof that Executive is
                    otherwise entitled to for that year) through the end of the
                    Term, or, if the remaining portion of the Term is less than
                    one year, for one year (the "Severance Benefit"), payable in
                    accordance with Company's regular salary payment schedule
                    from time to time, plus any amounts payable under Section
                    6.5.1 above, plus a continuation of health and disability
                    insurance coverage as specified in Section 6.5.2(c),
                    provided that in the event Executive's employment is
                    terminated by the Company or by Executive after a "change in
                    control" of the Company, as defined in Section 6.3(b)
                    followed by (i) Executive's termination by the Company, or
                    (ii) any diminution of Executive's authority, duties or
                    responsibilities as set forth in Section 2.1, or (iii)
                    during the first twelve (12) months following a change in
                    control, the failure of the Company to award Executive an
                    annual bonus equal to at least seventy-five percent (75%) of
                    the average amount of the annualized bonus paid to Executive
                    for the last two full years, the Severance Benefit shall be
                    payable to Executive in a lump sum as soon as practicable,
                    but in no event later than thirty (30) days after the
                    termination of Executive's employment. If the Company
                    terminates Executive without cause other than in connection
                    with a "change in control" of the Company, shall have an


                                     - 7 -



                    affirmative obligation to mitigate his Severance Benefit,
                    except with respect to two year's base salary plus one
                    year's guaranteed bonus to the extent such guaranteed
                    bonuses have not already been paid to Executive. Executive
                    shall have no obligation to mitigate to the extent he is
                    entitled to receive a lump sum Severance Benefit]. Should
                    Executive compete with Company or its subsidiaries prior to
                    the end of the Term, Executive shall not be entitled to
                    receive any additional payments from Company with respect to
                    periods after the commencement of any such competitive
                    activity under this Section 6.5.3 or otherwise and all such
                    obligations shall be extinguished.

               (b)  In addition to those already vested, all unvested stock
                    options held by Executive shall be deemed immediately and
                    fully vested and exercisable by Executive;

               (c)  So long as Executive does not compete with Company or its
                    subsidiaries in the gaming business prior to the end of the
                    Term, Executive will also be entitled to receive health
                    benefits coverage for Executive and his dependents, and
                    disability insurance coverage for Executive, under the same
                    plan(s) or arrangement(s) under which Executive was were
                    covered immediately before his termination of employment or
                    plan(s) established or arrangement(s) provided by the
                    Company or any of its Subsidiaries thereafter for the
                    benefit of senior executives. Such health benefits and
                    disability coverage shall be paid for by the Company to the
                    same extent as if Executive were still employed by the
                    Company, and Executive will be required to make such
                    payments as Executive would be required to make if Executive
                    were still employed by the Company. The benefits provided
                    under this Section 6.5.2(c) shall continue until the earlier
                    of (a) the end of the Term, or, if the remaining portion of
                    the Term is less than one year, for one year following
                    Executive's termination of employment with the Company and
                    all of its Subsidiaries, (b) the date Executive becomes
                    covered under any other group health plan or group
                    disability plan (as the case may be) not maintained by the
                    Company or any of its Subsidiaries; provided, however, that
                    if such other group health plan excludes any pre-existing
                    condition that Executive or Executive's dependents may have
                    when coverage under such group health plan would otherwise
                    begin, coverage under this Section 6.5.2(c) shall continue
                    (but not beyond the period described in clause (a) of this
                    sentence) with respect to such pre-existing condition until
                    such exclusion under such other group health plan lapses or
                    expires.


                                     - 8 -



                    In the event Executive is required to make an election under
                    Sections 601 through 607 of the Employee Retirement Income
                    Security Act of 1974, as amended (commonly known as COBRA)
                    to qualify for the benefits described in this Section
                    6.5.2(c), the obligations of the Company and its
                    Subsidiaries under this Section 6.5.2(c) shall be
                    conditioned upon Executive's timely making such an election.

               (d)  The "Covenant Not to Compete" set forth in Section 7.4 below
                    shall not apply in any respect to Executive (except as the
                    same may affect his entitlement to payments under Section
                    6.5.3(a) hereof) and the term of the "No Hire Away Policy"
                    in Section 7.5 shall be limited to six months from the date
                    of termination.

     6.6 Suspension. In lieu of terminating Executive's employment hereunder for
cause under Section 6.1, Company shall have the right, at its sole election, to
suspend the performance of duties by Executive under this Agreement during the
continuance of events or circumstances under Section 6.1 for an aggregate of not
more than 30 days during the Term (the "Default Period") by giving Executive
written notice of Company's election to do so at any time during the Default
Period. Company shall have the right to extend the Term beyond its normal
expiration date by the period(s) of any suspension(s). Company's exercise of its
right to suspend the operation of this Agreement shall not preclude Company from
subsequently terminating Executive's employment hereunder. Executive shall not
render services to any other person, firm or corporation in the casino business
during any period of suspension. Executive shall be entitled to continued
compensation and benefits pursuant to the provisions of this Agreement during
the Default Period.

     6.7 Exercisability of Options. As provided in the stock option agreements,
all vested options will terminate on the earlier of (a) the expiration of the
ten (10) year term of such options, or (b) one (1) year after the termination of
Executive's employment with the Company, regardless of the cause of such
termination, except that, in the event of a termination for "Cause" or
Executive's termination without good reason, all vested options will terminate
on the earlier of (I) the expiration of the ten (10) year term of such options,
or (II) ninety (90) days after the termination. As provided in the stock option
agreements, unvested options will terminate on the termination of Executive's
employment with the Company, except to the extent that such options become
vested as a result of such termination under the terms of the governing stock
option agreement.

                                   ARTICLE 7

                                 CONFIDENTIALITY

     7.1 Nondisclosure of Confidential Material. In the performance of his
duties, Executive may have access to confidential records, including, but not
limited to, development, marketing, organizational, financial, managerial,
administrative and sales information, data, specifications and processes
presently owned or at any time hereafter


                                     - 9 -



developed or used by Company or its agents or consultants that is not otherwise
part of the public domain (collectively, the "Confidential Material"). All such
Confidential Material is considered secret and is disclosed to Executive in
confidence. Executive acknowledges that the Confidential Material constitutes
proprietary information of Company which draws independent economic value,
actual or potential, from not being generally known to the public or to other
persons who could obtain economic value from its disclosure or use, and that
Company has taken efforts reasonable under the circumstances, of which this
Section 7.1 is an example, to maintain its secrecy. Except in the performance of
his duties to Company or as required by a court order, Executive shall not,
directly or indirectly for any reason whatsoever, disclose, divulge,
communicate, use or otherwise disclose any such Confidential Material, unless
such Confidential Material ceases to be confidential because it has become part
of the public domain (not due to a breach by Executive of his obligations
hereunder). Executive shall also take all reasonable actions appropriate to
maintain the secrecy of all Confidential Information. All records, lists,
memoranda, correspondence, reports, manuals, files, drawings, documents,
equipment, and other tangible items (including computer software), wherever
located, incorporating the Confidential Material, which Executive shall prepare,
use or encounter, shall be and remain Company's sole and exclusive property and
shall be included in the Confidential Material. Upon termination of this
Agreement, or whenever requested by Company, Executive shall promptly deliver to
Company any and all of the Confidential Material, not previously delivered to
Company, that is in the possession or under the control of Executive.

     7.2 Assignment of Intellectual Property Rights. Any ideas, processes,
know-how, copyrightable works, maskworks, trade or service marks, trade secrets,
inventions, developments, discoveries, improvements and other matters that may
be protected by intellectual property rights, that relate to Company's business
and are the results of Executive's efforts during the Term (collectively, the
"Executive Work Product"), whether conceived or developed alone or with others,
and whether or not conceived during the regular working hours of Company, shall
be deemed works made for hire and are the property of Company. In the event that
for whatever reason such Executive Work Product shall not be deemed a work made
for hire, Executive agrees that such Executive Work Product shall become the
sole and exclusive property of Company, and Executive hereby assigns to Company
his entire right, title and interest in and to each and every patent, copyright,
trade or service mark (including any attendant goodwill), trade secret or other
intellectual property right embodied in Executive Work Product. Company shall
also have the right, in its sole discretion to keep any and all of Executive
Work Product as Company's Confidential Material. The foregoing work made for
hire and assignment provisions are and shall be in consideration of this
agreement of employment by Company, and no further consideration is or shall be
provided to Executive by Company with respect to these provisions. Executive
agrees to execute any assignment documents Company may require confirming
Company's ownership of any of Executive Work Product. Executive also waives any
and all moral rights with respect to any such works, including without
limitation any and all rights of identification of authorship and/or rights of
approval, restriction or limitation on use or subsequent modifications.
Executive promptly will disclose to Company any Executive Work Product.


                                     - 10 -



     7.3 No Unfair Competition After Termination of Agreement. Executive hereby
acknowledges that the sale or unauthorized use or disclosure of any of Company's
Confidential Material obtained by Executive by any means whatsoever, at any time
before, during or after the Term shall constitute unfair competition. Executive
shall not engage in any unfair competition with Company either during the Term
or at any time thereafter.

     7.4 Covenant Not to Compete. In the event this Agreement is terminated by
Company for cause under Section 6.1 above, or by Executive, for a reason other
than one specified in Section 6.3 above, then for a period of one year after the
effective date of such termination, Executive shall not, directly or indirectly,
work for or provide services to or own an equity interest (except for a
Permissible Investment) in any person, firm or entity engaged in the casino
gaming, card club or horseracing business which competes against Company in any
"market" in which Company owns or operates a casino, card club or horseracing
facility. For purposes of this Agreement, "market" shall be defined as the area
within a 100 mile radius of any casino, card club or horseracing facility owned
or operated by Company. This Section 7.4 shall not apply to the private practice
of law by Executive, provided that Executive shall not provide legal services
for any person, firm or entity in any matter that conflicts with or is adverse
to the Company during such one-year period.

     7.5 No Hire Away Policy. In the event this Agreement is terminated prior to
the normal expiration of the Term, either by Company for cause under Section 6.1
above, or by Executive, for a reason other than one specified in Section 6.3
above, then for a period of one year after the effective date of such
termination, Executive shall not, directly or indirectly, for himself or on
behalf of any entity with which he is affiliated or employed, hire any person
known to Executive to be an employee of Company or any of its subsidiaries (or
any person known to Executive to have been such an employee within six months
prior to such occurrence). Executive shall not be deemed to hire any such person
so long as he did not directly or indirectly engage in or encourage such hiring.

     7.6 No Solicitation. During the Term and for a period of one year
thereafter, or for a period of one year after earlier termination of this
Agreement prior to expiration of the Term, and regardless of the reason for such
termination (whether by Company or Executive), Executive shall not directly or
indirectly, for himself or on behalf of any entity with which he is affiliated
or employed, solicit any employee of Company or any of its subsidiaries (or any
person who was such an employee within six months prior to such occurrence) or
encourage any such employee to leave the employment of Company or any of its
subsidiaries.

     7.7 Non-Solicitation of Customers. During the Term and for a period of one
year thereafter, or for a period of one year after the earlier termination of
this Agreement prior to the expiration of the Term, and regardless of the reason
for such termination (whether by Company or Executive), Executive shall not use
customer lists or Confidential Material to solicit any customers of Company or
its subsidiaries or any of their respective casinos or card clubs, or knowingly
encourage any such customers to leave Company's casinos or card clubs or
knowingly encourage any such customers to use the facilities or services of any
competitor of Company or its subsidiaries.


                                     - 11 -



     7.8 Irreparable Injury. The promised service of Executive under this
Agreement and the other promises of this Article 7 are of special, unique,
unusual, extraordinary, or intellectual character, which gives them peculiar
value, the loss of which cannot be reasonably or adequately compensated in
damages in an action at law.

     7.9 Remedies for Breach. Executive agrees that money damages will not be a
sufficient remedy for any breach of the obligations under this Article 7 and
Article 2 hereof and that Company shall be entitled to injunctive relief (which
shall include, but not be limited to, restraining Executive from directly or
indirectly working for or having an ownership interest (except for a Permissible
Investment in any person engaged in the casino, gaming or horseracing businesses
in any market which Company or its affiliates owns or operates any such
business, using or disclosing the Confidential Material) and to specific
performance as remedies for any such breach. Executive agrees that Company shall
be entitled to such relief, including temporary restraining orders, preliminary
injunctions and permanent injunctions, without the necessity of proving actual
damages and without the necessity of posting a bond or making any undertaking in
connection therewith. Any such requirement of a bond or undertaking is hereby
waived by Executive and Executive acknowledges that in the absence of such a
waiver, a bond or undertaking might otherwise be required by the court. Such
remedies shall not be deemed to be the exclusive remedies for any breach of the
obligations in this Article 7, but shall be in addition to all other remedies
available at law or in equity.

                                   ARTICLE 8

                                   ARBITRATION

     8.1 General. Except for a claim for injunctive relief under Section 7.9,
any controversy, dispute, or claim between the parties to this Agreement,
including any claim arising out of, in connection with, or in relation to the
formation, interpretation, performance or breach of this Agreement shall be
settled exclusively by arbitration, before a single arbitrator, in accordance
with this Article 8 and the then most applicable rules of the American
Arbitration Association. Judgment upon any award rendered by the arbitrator may
be entered by any state or federal court having jurisdiction thereof. Such
arbitration shall be administered by the American Arbitration Association.
Arbitration shall be the exclusive remedy for determining any such dispute,
regardless of its nature. Notwithstanding the foregoing, either party may in an
appropriate matter apply to a court for provisional relief, including a
temporary restraining order or a preliminary injunction, on the ground that the
award to which the applicant may be entitled in arbitration may be rendered
ineffectual without provisional relief. Unless mutually agreed by the parties
otherwise, any arbitration shall take place in the City of Los Angeles,
California.

     8.2 Selection of Arbitrator. In the event the parties are unable to agree
upon an arbitrator, the parties shall select a single arbitrator from a list of
nine arbitrators drawn by the parties at random from the "Independent" (or "Gold
Card") list of retired judges or, at the option of Executive, from a list of
nine persons (which shall be retired judges or corporate or litigation attorneys
experienced in executive employment agreements) provided by the office of the
American Arbitration Association having jurisdiction over Los Angeles,


                                     - 12 -



California. If the parties are unable to agree upon an arbitrator from the list
so drawn, then the parties shall each strike names alternately from the list,
with the first to strike being determined by lot. After each party has used four
strikes, the remaining name on the list shall be the arbitrator. If such person
is unable to serve for any reason, the parties shall repeat this process until
an arbitrator is selected.

     8.3 Applicability of Arbitration; Remedial Authority. This agreement to
resolve any disputes by binding arbitration shall extend to claims against any
parent, subsidiary or affiliate of each party, and, when acting within such
capacity, any officer, director, stockholder, employee or agent of each party,
or of any of the above, and shall apply as well to claims arising out of state
and federal statutes and local ordinances as well as to claims arising under the
common law. In the event of a dispute subject to this paragraph the parties
shall be entitled to reasonable discovery subject to the discretion of the
arbitrator. The remedial authority of the arbitrator (which shall include the
right to grant injunctive or other equitable relief) shall be the same as, but
no greater than, would be the remedial power of a court having jurisdiction over
the parties and their dispute. The arbitrator shall, upon an appropriate motion,
dismiss any claim without an evidentiary hearing if the party bringing the
motion establishes that he or it would be entitled to summary judgement if the
matter had been pursued in court litigation. In the event of a conflict between
the applicable rules of the American Arbitration Association and these
procedures, the provisions of these procedures shall govern.

     8.4 Fees and Costs. Any filing or administrative fees shall be borne
initially by the party requesting arbitration. The Company shall be responsible
for the costs and fees of the arbitration, unless Executive wishes to contribute
(up to 50%) of the costs and fees of the arbitration. Notwithstanding the
foregoing, the prevailing party in such arbitration, as determined by the
arbitrator, and in any enforcement or other court proceedings, shall be
entitled, to the extent permitted by law, to reimbursement from the other party
for all of the prevailing party's costs (including but not limited to the
arbitrator's compensation), expenses, and attorneys' fees.

     8.5 Award Final and Binding. The arbitrator shall render an award and
written opinion, and the award shall be final and binding upon the parties. If
any of the provisions of this paragraph, or of this Agreement, are determined to
be unlawful or otherwise unenforceable, in whole or in part, such determination
shall not affect the validity of the remainder of this Agreement, and this
Agreement shall be reformed to the extent necessary to carry out its provisions
to the greatest extent possible and to insure that the resolution of all
conflicts between the parties, including those arising out of statutory claims,
shall be resolved by neutral, binding arbitration. If a court should find that
the arbitration provisions of this Agreement are not absolutely binding, then
the parties intend any arbitration decision and award to be fully admissible in
evidence in any subsequent action, given great weight by any finder of fact, and
treated as determinative to the maximum extent permitted by law.

                                   ARTICLE 9

                                  MISCELLANEOUS


                                     - 13 -



     9.1 Amendments. The provisions of this Agreement may not be waived,
altered, amended or repealed in whole or in part except by the signed written
consent of the parties sought to be bound by such waiver, alteration, amendment
or repeal.

     9.2 Entire Agreement. This Agreement and the Non-Qualified Stock Option
Agreement of even date herewith constitute the total and complete agreement of
the parties and supersedes all prior and contemporaneous understandings and
agreements heretofore made, and there are no other representations,
understandings or agreements.

     9.3 Counterparts. This Agreement may be executed in one of more
counterparts, each of which shall be deemed an original, but all of which shall
together constitute one and the same instrument. Facsimile signatures shall be
deemed original so long as the manually executed signature is delivered as soon
as practicable.

     9.4 Severability. Each term, covenant, condition or provision of this
Agreement shall be viewed as separate and distinct, and in the event that any
such term, covenant, condition or provision shall be deemed by an arbitrator or
a court of competent jurisdiction to be invalid or unenforceable, the court or
arbitrator finding such invalidity or unenforceability shall modify or reform
this Agreement to give as much effect as possible to the terms and provisions of
this Agreement. Any term or provision which cannot be so modified or reformed
shall be deleted and the remaining terms and provisions shall continue in full
force and effect.

     9.5 Waiver or Delay. The failure or delay on the part of Company, or
Executive to exercise any right or remedy, power or privilege hereunder shall
not operate as a waiver thereof. A waiver, to be effective, must be in writing
and signed by the party making the waiver. A written waiver of default shall not
operate as a waiver of any other default or of the same type of default on a
future occasion.

     9.6 Successors and Assigns. This Agreement shall be binding on and shall
inure to the benefit of the parties to it and their respective heirs, legal
representatives, successors and assigns, except as otherwise provided herein.

     9.7 No Assignment or Transfer by Executive. Neither this Agreement nor any
of the rights, benefits, obligations or duties hereunder may be assigned or
transferred by Executive. Any purported assignment or transfer by Executive
shall be void.

     9.8 Necessary Acts. Each party to this Agreement shall perform any further
acts and execute and deliver any additional agreements, assignments or documents
that may be reasonably necessary to carry out the provisions or to effectuate
the purpose of this Agreement.

     9.9 Governing Law. This Agreement and all subsequent agreements between the
parties shall be governed by and interpreted, construed and enforced in
accordance with the laws of the State of Nevada.


                                     - 14 -



     9.10 Notices. All notices, requests, demands and other communications to be
given under this Agreement shall be in writing and shall be deemed to have been
duly given on the date of service, if personally served on the party to whom
notice is to be given, or 48 hours after mailing, if mailed to the party to whom
notice is to be given by certified or registered mail, return receipt requested,
postage prepaid, and properly addressed to the party at his address set forth as
follows or any other address that any party may designate by written notice to
the other parties:

                  To Executive:
                                      John A. Godfrey
                                      8744 Double Eagle Drive
                                      Las Vegas, NV 89117
                                      Telephone:        702 255 6288
                                      Facsimile:        702 243 9019


                  To Company:
                                      Pinnacle Entertainment, Inc.
                                      330 North Brand Boulevard, Suite 1100
                                      Glendale, CA 9123-2308
                                      Telephone:        818 662 5900
                                      Facsimile:        818 662 5901
                  with copy to:
                                      Irell & Manella LLP
                                      1800 Avenue of the Stars, Suite 900
                                      Los Angeles, CA 90067-4276
                                      Attn:  Al Segel
                                      Telephone:        310 277 1010
                                      Facsimile:        310 284 3052

     9.11 Headings and Captions. The headings and captions used herein are
solely for the purpose of reference only and are not to be considered as
construing or interpreting the provisions of this Agreement.

     9.12 Construction. All terms and definitions contained herein shall be
construed in such a manner that shall give effect to the fullest extent possible
to the express or implied intent of the parties hereby.

     9.13 Counsel. Executive has been advised by Company that he should consider
seeking the advice of counsel in connection with the execution of this Agreement
and Executive has had an opportunity to do so. Executive has read and
understands this Agreement, and has sought the advice of counsel to the extent
he has determined appropriate. The Company shall reimburse Executive for the
reasonable fees and expenses of Executive's counsel in connection with this
Agreement.


                                     - 15 -



     9.14 Withholding of Compensation. Executive hereby agrees that Company may
deduct and withhold from the compensation or other amounts payable to Executive
hereunder or otherwise in connection with Executive's employment any amounts
required to be deducted and withheld by Company under the provisions of any
applicable Federal, state and local statute, law, regulation, ordinance or
order.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date first written above.

EXECUTIVE                           COMPANY

JOHN A. GODFREY                     PINNACLE ENTERTAINMENT, INC.

/s/ John A. Godfrey                 /s/ Daniel R. Lee
- -------------------------           -----------------------------------
                                    By:      Daniel R. Lee
                                    Its: Chief Executive Officer


                                     - 16 -

EX-10.31

                                                                   EXHIBIT 10.31

                                 FIRST AMENDMENT

     This First Amendment (this "Amendment") is made and entered into as of
October 1, 2001, by and between Crystal Park Hotel and Casino Development
Company, LLC, a California limited liability company ("Landlord"), and
California Casino Management, Inc., a California corporation ("Tenant").

     A. Landlord and Tenant entered into that certain Amended and Restated Lease
dated as of February 14, 2000 (the "Lease"), whereby Tenant leases from Landlord
that certain real property in Compton, California upon which Tenant operates the
Crystal Park Casino (the "Premises").

     B. Landlord and Tenant desire to amend the Lease as set forth below.

     NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Landlord and Tenant agree as follows:

     1. Defined Terms. Capitalized terms used herein, but not defined herein,
shall have the meanings ascribed to such terms in the Lease.

     2. Expiration Date. Article 2, Section 2.01, first sentence, is hereby
deleted and replaced with the following:

     "The term of this Lease shall commence on the date upon which Tenant opens
     the Card Club for business to the general public (the "Commencement Date")
     and shall continue until midnight on December, 31, 2002 (the "Expiration
     Date") unless sooner terminated pursuant to any provision hereof (the
     "Term" or "the term of this Lease")."

     3. Monthly Rent. Effective as of October 1, 2001 through the Expiration
Date, the Monthly Rent shall be $20,000.

     4. Division of Gambling Control. The terms of this Amendment, including,
without limitation, the Monthly Rent, shall be subject to approval by the
Division of Gambling Control.

     5. Relationship to Lease. This Amendment supercedes any inconsistent
provisions contained in the Lease. Except as amended hereby, the Lease remains
in full force and effect.

     6. Further Assurances. Each of the parties hereto shall execute and deliver
such other and further documents and do such other and further acts as may be
reasonably required to effectuate the intent of the parties and carry out the
terms of this Amendment.

     7. Counterparts. This Amendment may be executed in counterparts, which,
when taken together shall be one and the same instrument.



IN WITNESS WHEREOF, this Amendment has been executed as of the date first above
written.


LANDLORD                                    TENANT

Crystal Park Hotel and Casino               California Casino Management, Inc.,
Development Company, LLC,                   a California corporation
a California limited liability company

By:  /s/ G. Michael Finnigan                By:   /s/ Leo Chu
Its: Authorized Signatory                   Its:  President


                                       -2-

EX-10.32

                                                                   EXHIBIT 10.32

                                SECOND AMENDMENT

     This Second Amendment (this "Amendment") is made and entered into as of
December 4, 2002, by and between Crystal Park Hotel and Casino Development
Company, LLC, a California limited liability company ("Landlord"), and
California Casino Management, Inc., a California corporation ("Tenant").

     A. Landlord and Tenant entered into that certain Amended and Restated Lease
dated as of February 14, 2000, as amended by that certain First Amendment dated
as of October 1, 2001 (together, the "Lease"), whereby Tenant leases from
Landlord that certain real property in Compton, California upon which Tenant
operates the Crystal Park Casino (the "Premises").

     B. Landlord and Tenant desire to amend the Lease as set forth below.

     NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Landlord and Tenant agree as follows:

     1. Defined Terms. Capitalized terms used herein, but not defined herein,
shall have the meanings ascribed to such terms in the Lease.

     2. Expiration Date. Article 2, Section 2.01, first sentence, is hereby
deleted and replaced with the following:

     "The term of this Lease shall commence on the date upon which Tenant opens
     the Card Club for business to the general public (the "Commencement Date")
     and shall continue until midnight on December, 31, 2003 (the "Expiration
     Date") unless sooner terminated pursuant to any provision hereof or
     otherwise amended pursuant to future amendments hereof. (the "Term" or "the
     term of this Lease")."

     3. Division of Gambling Control. The terms of this Amendment shall be
subject to approval by the Division of Gambling Control.

     4. Relationship to Lease. This Amendment supercedes any inconsistent
provisions contained in the Lease. Except as amended hereby, the Lease remains
in full force and effect.

     5. Further Assurances. Each of the parties hereto shall execute and deliver
such other and further documents and do such other and further acts as may be
reasonably required to effectuate the intent of the parties and carry out the
terms of this Amendment.

     6. Counterparts. This Amendment may be executed in counterparts, which,
when taken together shall be one and the same instrument.

                  (remainder of page intentionally left blank)



IN WITNESS WHEREOF, this Amendment has been executed as of the date first above
written.



LANDLORD                                    TENANT

Crystal Park Hotel and Casino               California Casino Management, Inc.,
Development Company, LLC,                   a California corporation
a California limited liability company

By: HP/Compton, Inc.                        By:  /s/ Leo Chu
Its: sole member                            Its: President

        By:  /s/ Daniel R. Lee
        Its: CEO

                                       -2-

EX-10.33

                                                                   EXHIBIT 10.33

                                  May 16, 2002

Mr. Daniel R. Lee
Chairman and Chief Executive Officer
Pinnacle Entertainment,Inc.
330 N. Brand Boulevard, Suite 1100
Glendale, California 91203

Dear Dan:

     I very much enjoyed our recent conversations. It provides a framework for a
long term relationship between me and Pinnacle Entertainment, Inc. ("Pinnacle")
that I am quite comfortable with. The purpose of this letter is to memorialize
our agreement:

     1.   I will continue to be employed by Pinnacle on an at-will basis.

     2.   If I voluntarily terminate my employment with Pinnacle and give at
          least three months prior written notice of such termination to
          Pinnacle, I shall be entitled to receive a severance equal to one
          year's base salary (payable in monthly installments) plus a pro rated
          bonus for the year, assuming other senior corporate officers receive a
          bonus for the year. The bonus, if any, will be paid at the same time
          other corporate officers receive their bonuses.

     3.   The same severance payments will be made to me if Pinnacle terminates
          my employment for any reason other than for "cause" which shall mean
          and be limited to the matters specified in sections 6.1.1, 6.1.2 and
          6.1.3 of my former employment agreement with Pinnacle, as follows:

          a)   Failure to Perform Duties. If I neglect to perform the duties of
               my employment in a professional and businesslike manner after
               having received written notice specifying such failure to perform
               and a reasonable opportunity, not to exceed ten days, to perform
               or if such performance cannot be completed within such time
               period, commenced within such period and diligently pursued to
               completion as soon as practical thereafter.

          b)   Willful Breach. If I willfully commit a material breach of my
               fiduciary duty to Pinnacle.



Mr. Daniel R. Lee
May 16,2002
Page 2


          c)   Wrongful Acts. If I am convicted of a felony or any other serious
               crime, commit a serious wrongful act or engage in other
               misconduct involving acts of moral turpitude that would make the
               continuance of my employment by Pinnacle materially detrimental
               to Pinnacle, which determination shall be made in the reasonable
               exercise of Pinnacle's judgment.

          I understand that Pinnacle need not give me prior notice of
          termination.

     4.   In the event of any termination of my employment for which severance
          is payable under 2 and 3 above:

          a)   Pinnacle will continue employee health insurance coverage to me
               and my domestic partner for a period of one (1) year from and
               after the termination of my employment;

          b)   With respect to any unvested options held by me at the date of
               termination, Pinnacle will vest me, as of the date of separation,
               in such options that were otherwise scheduled to become vested
               during the twelve month period following the date of termination;

          c)   All vested options, including those vesting under 4. b) would be
               exercisable within three (3) years following the date of my
               termination.

          d)   I would receive payment for any accrued but unused paid time off
               (vacation).

     5.   I acknowledge that the severance payments to be made under Sections 2
          and 3 and the other consideration contemplated under Section 4 are in
          full satisfaction of all rights and claims I may have against Pinnacle
          arising out of or in connection with my employment by it or its
          affiliates (other than my rights of indemnity which shall survive) and
          I shall deliver a general release to Pinnacle as a condition precedent
          to receiving my severance payments.

     Provided that a new option plan is approved by Pinnacle stockholders at the
upcoming shareholder meeting, I understand that you will recommend to the
Compensation Committee a grant to me of 100,000 options, exercisable at the
closing share price on the date of grant and vesting 20% per year over five
years.



Mr. Daniel R. Lee
May 16,2002
Page 2

     6.   In the event of a Change of Control (as defined below), all unvested
          stock options which were otherwise scheduled to become vested during
          the thirty six month period following the Change of Control shall be
          deemed immediately and fully vested and exercisable. A Change of
          Control shall be defined as:

          a)   (i) a sale of all or substantially all of the property of the
               Company (ii) a sale to any one person, corporation, entity or
               group of stock possessing more than thirty percent (30%) of the
               aggregate voting power of the then outstanding stock of Company
               to another person, corporation or entity, (iii) a change in the
               majority of the Board of Directors which is not approved by a
               majority of the members of the Board of Directors as of the date
               of this Agreement or directors whose election or appointment to
               the Board of Directors is approved by directors; (iv) the
               dissolution for liquidation of Company; or (v) the
               reorganization, merger or combination of the Company with one or
               more corporations or entities unless the Company's shareholders
               immediately before such reorganization, merger or combination own
               stock or equity possessing more than 50% of the voting power of
               the stock or equity of the surviving corporation or entity in
               substantially the same proportions after such reorganization,
               merger or combination as they owned in the Company immediately
               before such reorganization, merger, or combination.

     Dan, I appreciate your thoughtfulness in this matter. I look forward to
working with you for many years to come.

                                        Very truly yours,


                                        /s/ Loren S. Ostrow
                                        Loren S. Ostrow

Agreed to and accepted this 16th
day of May, 2002

Pinnacle Entertainment, Inc.

By:  /s/ Daniel R. Lee
     ------------------------------
     Daniel R. Lee, Chairman & CEO

EX-10.35

                                                                   EXHIBIT 10.35

STATE OF MISSISSIPPI
COUNTY OF HARRISON
SECOND JUDICIAL DISTRICT


                               AMENDMENT TO LEASE

     This agreement is entered into this 26th day of February, 1999, by and
between Biloxi Casino Corp. ("Biloxi") and G&W Enterprises, Inc. ("G&W").
Hereinafter, G&W and Biloxi may be referred to collectively as "Parties."

     WHEREAS, on April 4, 1992, Biloxi and G&W entered into an agreement whereby
Biloxi agreed to lease approximately 4.2 acres of real property located south of
U.S. Highway 90 in Biloxi, Mississippi (the document shall hereinafter be
referred to as the "Lease" and the land subject to the Lease as the "Leasehold
Estate"); and

     WHEREAS, on April 3, 1998, G&W through an agreement with Secretary of State
Eric Clark in his capacity as Trustee of the Public Trust Tidelands, confirmed
the ownership of G&W to certain parcels of land abutting the Leasehold Estate
("Confirmed Parcels"); and

     WHEREAS, a portion of the Confirmed Parcels were previously leased by
Biloxi from the State of Mississippi through Secretary of State Clark and not
from G&W; and

     WHEREAS, the Confirmed Parcels are described on Exhibit A; and

     WHEREAS, the Parties now desire to amend the Lease by added the Confirmed
Parcels to the Leasehold Estate and by providing for an additional lease payment
from Biloxi to G&W.

     NOW, THEREFORE, in consideration of the mutual promises and agreements set
forth herein, the sufficiency of which is acknowledged by G&W and Biloxi, the
Parties agree as follows:

     1.   The above recitals are true and each is hereby incorporated as if
          fully set forth herein.

     2.   The Lease shall be amended only as follows:

          (i)  The Confirmed Parcels shall be added to the Leasehold Estate;



          (ii)  Commencing in June 1998, Biloxi shall pay G&W annually the sum
                of $44,000 as and for the lease of the Confirmed Parcels, with
                such sum to be adjusted annually by the CPI.

          (iii) G&W, through the term of the Lease, agrees to execute any and
                all documents relating to the Leasehold Estate that may be
                required by Biloxi or its affiliates in conjunction with any
                third party business transaction, including but not limited to
                estoppel certificates and landlord consents required for any
                loans with Bank of America, so long as the execution of any such
                document does not subordinate title to the Leasehold Estate or
                the right of G&W to receive any lease payment therefore.

     3.   Other than as amended herein and except for provision 33 therein, all
          provisions of the Lease shall remain in full force and effect.


G&W Enterprises                                   Biloxi Casino Corp.

/s/ Tyrone Gollott                                /s/ Robert A. Callaway
- ------------------------------                    ------------------------------

President                                         Secretary
- ------------------------------                    ------------------------------
Title                                             Title

EX-10.37

                                                                   EXHIBIT 10.37

STATE OF MISSISSIPPI
COUNTY OF HARRISON
SECOND JUDICIAL DISTRICT


                               AMENDMENT TO LEASE

     This agreement is entered into this 26th day of February, 1999, by and
between Biloxi Casino Corp. ("Biloxi") and Gary Gollott, Tommy Gollott and
Tyrone Gollott (the "Gollotts"). Hereinafter, Gollotts and Biloxi may be
referred to collectively as "Parties."

     WHEREAS, on November 23, 1992, Biloxi and the Gollotts entered into an
agreement whereby Biloxi agreed to lease a thirty (30) foot by three hundred
(300) foot parcel of real property located south of U.S. Highway 90 in Biloxi,
Mississippi (the document shall hereinafter be referred to as the "Lease" and
the land subject to the Lease as the "Leasehold Estate"); and

     WHEREAS, on December 31, 1997, the Gollotts through an agreement with
Secretary of State Eric Clark in his capacity as Trustee of the Public Trust
Tidelands, confirmed the ownership of the Gollotts to a certain parcel of land
abutting the Leasehold Estate ("Confirmed Parcels'); and

     WHEREAS, a portion of the Confirmed Parcels were previously leased by
Biloxi from the State of Mississippi through Secretary of State Clark and not
from the Gollotts; and

     WHEREAS, the Confirmed Parcels are described on Exhibit A; and

     WHEREAS, the Parties now desire to amend the Lease by added the Confirmed
Parcels to the Leasehold Estate and by providing for an additional lease payment
from Biloxi to the Gollotts.

     NOW, THEREFORE, in consideration of the mutual promises and agreements set
forth herein, the sufficiency of which is acknowledged by the Gollotts and
Biloxi, the Parties agree as follows:

     1.   The above recitals are true and each is hereby incorporated as if
          fully set forth herein.

     2.   The Lease shall be amended only as follows:

          (i)  The Confirmed Parcel shall be added to the Leasehold Estate;



          (ii)  Commencing in June 1998, Biloxi shall pay the Gollotts annually
                the sum of $3,000 as and for the lease of the Confirmed Parcel,
                with such sum to be adjusted annually by the CPI.

          (iii) The Gollotts, through the term of the Lease, agree to execute
                any and all documents relating to the Leasehold Estate that may
                be required by Biloxi or its affiliates in conjunction with any
                third party business transaction, including but not limited to
                estoppel certificates and landlord consents required for any
                loans with Bank of America, so long as the execution of any such
                document does not subordinate title to the Leasehold Estate or
                the right of the Gollotts to receive any lease payment
                therefore.

     3.   Other than as amended herein and except for provision 33 therein, all
          provisions of the Lease shall remain in full force and effect.


                                                  Biloxi Casino Corp.

/s/ Gary Gollott                                  /s/ Robert A. Callaway
- ------------------------------                    ------------------------------
Gary Gollott

/s/ Tommy Gollott                                 Secretary
- ------------------------------                    ------------------------------
Tommy Gollott                                     Title

/s/ Tyrone Gollott
- ------------------------------
Tyrone Gollott

EX-11.1

Exhibit 11.1

PINNACLE ENTERTAINMENT INC.

COMPUTATION OF PER SHARE EARNINGS

	For the three months ended December 31,
	Basic									Diluted (a)
	2002			2001			2000			2002			2001			2000
	(in thousands, except per share data – unaudited)
Average number of common shares outstanding		25,929			25,444			26,421			25,929			25,444			26,421
Average common shares due to assumed conversion of stock options		0			0			0			0			79			1,085
Total shares		25,929			25,444			26,421			25,929			25,523			27,506
Net (loss) income	($	6,693	)	($	22,244	)	($	6,141	)	($	6,693	)	($	22,244	)	($	6,141	)
Net (loss) income per share	($	0.26	)	($	0.87	)	($	0.23	)	($	0.26	)	($	0.87	)	($	0.22	)

	For the twelve months ended December 31,
	Basic									Diluted (a)
	2002			2001			2000			2002			2001			2000
	(in thousands, except per share data – unaudited)
Average number of common shares outstanding		25,773			25,814			26,335			25,773			25,814			26,335
Average common shares due to assumed conversion of stock options		0			0			0			158			104			1,121
Total shares		25,773			25,814			26,335			25,931			25,918			27,456
Net (loss) income before extraordinary item	($	12,925	)	($	28,649	)	$	79,492		($	12,925	)	($	28,649	)	$	79,492
Cumulative effect of change in accounting principle, net of income tax		56,704			0			0			56,704			0			0
Extraordinary item, net of income tax		0			0			2,653			0			0			2,653
Net (loss) income after extraordinary item	($	69,629	)	($	28,649	)	$	76,839		($	69,629	)	($	28,649	)	$	76,839
Net (loss) income before extraordinary item per share	($	0.50	)	($	1.11	)	$	3.02		($	0.50	)	($	1.11	)	$	2.90
Cumulative effect of change in accounting principle, net of income tax		(2.20	)		0.00			0.00			(2.19	)		0.00			0.00
Extraordinary item per share, net of income taxes		0.00			0.00			(0.10	)		0.00			0.00			(0.10	)
Net (loss) income after extraordinary item per share	($	2.70	)	($	1.11	)	$	2.92		($	2.69	)	($	1.11	)	$	2.80

(a) When the computed diluted values are anti-dilutive, the basic per share values are presented on the face of the consolidated statements of operations.

EX-21.1

EXHIBIT 21.1
List of Subsidiaries

Subsidiary	State Of Organization
Belterra Resort Indiana, LLC	Nevada
Biloxi Casino Corp.	Mississippi
Boomtown Hotel & Casino, Inc.	Nevada
Boomtown, Inc.	Delaware
Casino Magic Buenos Aires, SA	Argentina
Casino Magic Corp.	Minnesota
Casino Magic Europe, BV Netherlands	Europe
Casino Magic Helles, SA (Greece)	Europe
Casino Magic Management Services Corp.	Minnesota
Casino Magic Neuquen SA	Argentina
Casino Magic Support Services SA	Argentina
Casino One Corporation	Mississippi
Casino Parking, Inc.	Mississippi
Crystal Park Hotel and Casino Development Company, LLC	California
HP/Compton, Inc.	California
Louisiana Gaming Enterprises, Inc.	Louisiana
Louisiana – I Gaming	Louisiana
Ogle Haus, LLC	Indiana
PNK (Lake Charles), LLC	Louisiana
Realty Investment Group, Inc.	Delaware
St. Louis Casino Corp.	Missouri
PNK (Biloxi), LLC	Mississippi
PNK (Bossier City), Inc. (fka Casino Magic of Louisiana)	Louisiana
PNK Development 1, Inc.	Delaware
PNK Development 2, Inc.	Delaware
PNK Development 3, Inc.	Delaware

EX-23.1

EXHIBIT 23.1

INDEPENDENT AUDITORS’ CONSENT

We consent to the incorporation by reference in Registration Statement no. 333-90426 of Pinnacle Entertainment, Inc. filed on Form S-3, and Registration Statements on Form S-8 with respect to (A) the registration of shares issued (i) upon exercise of options granted pursuant to the 1996 Stock Option Plan of Hollywood Park, Inc. and (ii) upon exercise of options to purchase an aggregate of 20,000 shares of Common Stock granted to certain directors of Hollywood Park, Inc.; (B) the registration of shares issued upon exercise of options granted pursuant to the 1990 Stock Option Plan and the 1992 Director Option Plan of Boomtown, Inc.; (C) the registration of shares issued (i) upon exercise of options granted pursuant to the 1992 Incentive Stock Option Plan of Casino Magic Corp. and (ii) upon exercise of options granted to certain employees and directors of Casino Magic Corp.; (D) the registration of (i) options and stock appreciation rights granted under the 1993 Stock Option Plan of Hollywood Park, Inc. and (ii) shares issued upon exercise of such options and/or stock appreciation rights; (E) the registration of shares issued (i) pursuant to the Amended and Restated Directors Deferred Compensation Plan and (ii) upon exercise of options to purchase an aggregate of 822,500 shares of Common Stock granted to certain directors and officers of Hollywood Park, Inc.; (F) the registration of Deferred Compensation Obligations issued pursuant to the Executive Deferred Compensation Plan of Hollywood Park, Inc.; (G) the registration of shares issued upon exercise of options granted pursuant to the 2001 Stock Option Plan of Pinnacle Entertainment, Inc.; and (H) the registration of shares offered under the Second Amendment and Restatement of the Pinnacle Entertainment, Inc. 401(k) Investment Plan and the interests in such plan, of our report dated February 21, 2003 except note 18, as to which the date is March 19, 2003, (which report expresses an unqualified opinion and includes an explanatory paragraph relating to Pinnacle Entertainment, Inc.’s change in accounting for goodwill and other intangible assets to conform to the Statement of Financial Standards No. 142 “Goodwill and Other Intangible Assets”) appearing in this annual report on Form 10-K of Pinnacle Entertainment, Inc. for the year ended December 31, 2002.

/s/    DELOITTE & TOUCHE LLP

Las Vegas, Nevada

March 28, 2003

EX-99.1

EXHIBIT 99.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Pinnacle Entertainment, Inc. (the “Company”) on Form 10K for the period ending December 31, 2002, as filed with the Securities and Exchange Commission (the “Report”), I, Daniel R. Lee, Chairman of the Board and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. section 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 result of operations of the Company.

March 31, 2003	/s/    DANIEL R. LEE
	Daniel R. Lee Chairman of the Board and Chief Executive Officer

EX-99.2

EXHIBIT 99.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Pinnacle Entertainment, Inc. (the “Company”) on Form 10K for the period ending December 31, 2002, as filed with the Securities and Exchange Commission (the “Report”), I, Stephen H. Capp, Sr. Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. section 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 result of operations of the Company.

March 31, 2003	/s/    STEPHEN H. CAPP
	Stephen H. Capp Executive Vice President and Chief Financial Officer

EX-99.3

EXHIBIT 99.3

GOVERNMENT REGULATION AND GAMING ISSUES

Indiana    The ownership and operation of riverboat casinos at Indiana-based sites are subject to extensive state regulation under the Indiana Riverboat Gaming Act (“Indiana Act”), as well as regulations which the Indiana Gaming Commission (the “Indiana Commission”) has adopted pertaining to the Indiana Act. The Indiana Act grants broad and pervasive regulatory powers and authorities to the Indiana Commission. The comprehensive regulations cover ownership, reporting, rules of game and operational matters; thus, the Indiana Act and regulations are significant to the Company’s prospects for successfully operating the Belterra facility. The Indiana Act has been challenged based on its constitutionality on two occasions. The Indiana Act was found constitutional on both occasions.

The Indiana Act authorizes the issuance of up to eleven Riverboat Owner’s Licenses to be operated from counties that are contiguous to the Ohio River, Lake Michigan and Patoka Lake. In October 2000, Belterra, the tenth riverboat, commenced operations. Five of the riverboats are in counties contiguous to the Ohio River and five are in counties contiguous to Lake Michigan. The Indiana Commission has not considered an application for a license to be sited in a county contiguous to Patoka Lake since Patoka Lake is a project of the U.S. Army Corps of Engineers (“Corps”) and the Corps has determined Patoka Lake is unsuitable for a riverboat project. A riverboat owner’s license is a revocable privilege and is not a property right under the Indiana Act. An Indiana license entitles the licensee to own and operate one riverboat. A company may own 100% of one licensee and up to 10% of a second licensee. An Indiana riverboat owner’s license has an initial effective period of five years; thereafter, a license is subject to annual renewal. After the grant of the initial license, the Indiana Commission will conduct a complete re-investigation every three years, but the Indiana Commission reserves the right to investigate licenses at any times it deems necessary. The Indiana Commission has broad discretion over the initial issuance of licenses and over the renewal, revocation, suspension, restriction and control of riverboat owner’s licenses. Belterra will be subject to a reinvestigation in 2003 to ensure it continues to be in compliance with the Indiana Act. Officers, directors and principal owners of the actual license holder and employees who are to work on the riverboat are subject to substantial disclosure requirements as a part of securing and maintaining necessary licenses.

Contracts to which Belterra is party are subject to disclosure and approval processes imposed by the regulations. A riverboat owner’s licensee may not enter into or perform any contract or transaction in which it transfers or receives consideration which is not commercially reasonable or which does not reflect the fair market value of the goods or services rendered or received. All contracts are subject to approval by the Indiana Commission. Suppliers of gaming equipment and materials must also be licensed under the Indiana Act.

Licensees are statutorily required to disclose to the Indiana Commission the identity of all directors, officers and persons holding direct or indirect beneficial interests of 1% or greater. The Indiana Commission also requires a broad and comprehensive disclosure of financial and operating information on licensees and their principal officers, their parent corporations and other upstream owners. The Indiana Act prohibits contributions to a candidate for a state, legislative, or local office, to a candidate’s committee or to a regular party committee by the holder of a riverboat owner’s license or a supplier’s license, by an officer of a licensee, by an officer of a person that holds at least a 1% interest in the licensee or by a person holding at least a 1% interest in the licensee. The Indiana Commission has promulgated a rule requiring quarterly reporting of such licensees, officers, and persons.

In June 2002, the Indiana General Assembly authorized riverboats to either continue conducting excursions or to implement a flexible boarding schedule or dockside gaming. Belterra began dockside operation on August 1, 2002.

Under the Indiana Act, “adjusted gross receipts” (“AGR”) means the total of all cash and property received from gaming less cash paid out as winnings and uncollectible gaming receivables (not to exceed 2%). A wagering tax of 22.5% is imposed on those riverboats that continue to conduct excursions. Those riverboats

electing to operate dockside will be subject to the following graduated wagering tax based on a state fiscal year (July 1 of one year through June 30 of the following year):

• 15% of the first $25 million of AGR.

• 20% of AGR in excess of $25 million, but not exceeding $50 million.

• 25% of AGR in excess of $50 million, but not exceeding $75 million.

• 30% of AGR in excess of $75 million, but not exceeding $150 million.

• 35% of AGR in excess of $150 million.

The Indiana Act also prescribes an additional tax for admissions, based on $3 per person. Those riverboats conducting excursions must pay the admissions on a passenger per excursion basis which requires payment of the admission tax on carryover patrons. Those riverboats conducting dockside operations pay the admission tax on each person admitted to the riverboat. The carryover patron calculation is, thus, eliminated with the commencement of dockside operations.

Real Property taxes are imposed on riverboats at rates determined by local taxing authorities. Income to the Company from Belterra is subject to the Indiana adjusted gross income tax. Sales on a riverboat and at related resort facilities are subject to applicable use, excise and retail taxes. The Indiana Act requires a riverboat owner licensee to directly reimburse the Indiana Commission for the costs of inspectors and agents required to be present while authorized gaming is conducted.

Through the establishment of purchasing goals, the Indiana Act encourages minority and women’s business enterprise participation in the riverboat gaming industry. Each riverboat licensee must establish goals of expending at least 10% of total dollar value of the licensee’s qualified contracts for goods and services with minority business enterprises and 5% with women business enterprises. The Indiana Commission may suspend, limit or revoke the owner’s license or impose a fine for failure to comply with the statutory goals. The Indiana Commission has indicated it will be vigilant in monitoring attainment of these goals. The Company is currently in compliance with such purchasing goals, but has failed to achieve such goals at various times in the past. The Company has adopted an Action Plan to insure compliance with the purchasing goals. The Action Plan has been reviewed and approved by the Indiana Commission.

Minimum and maximum wagers on games on the riverboat are left to the discretion of the licensee. Wagering may not be conducted with money or other negotiable currency. There are no statutory restrictions on extending credit to patrons; however, the matter of credit continues to be a matter of potential legislative action.

If an institutional investor acquires 5% or more of any class of voting securities of a holding company of a licensee, the investor is required to notify the Indiana Commission and to provide additional information, and may be subject to a finding of suitability. Institutional investors who acquire 15% or more of any class of voting securities are subject to a finding of suitability. Any other person who acquired 5% or more of any class of voting securities of a holding company of a licensee is required to apply to the Indiana Commission for a finding of suitability. A riverboat licensee or an affiliate may not enter into a debt transaction of $1,000,000 or more without approval of the Indiana Commission. The Indiana Commission has taken the position that a “debt transaction” includes increases in maximum amount available under reducing revolving credit facilities. A riverboat owner’s license is a revocable privilege and is not a property right under the Indiana Act. A riverboat owner licensee or any other person may not lease, hypothecate, borrow money against or loan money against or otherwise securitize a riverboat owner’s license.

A licensee, or its parent company, that is publicly traded must notify the Indiana Commission of a public offering that will be registered with the SEC. The licensee must notify the Indiana Commission within 10 business days of the initial filing of a registration statement with the SEC. An ownership interest in a licensee may only be transferred in accordance with the Indiana Act and rules promulgated thereunder.

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The Indiana Commission has promulgated a rule that prohibits distributions, excluding distributions for the payment of taxes, by a licensee to its partners, shareholders, itself or any affiliated entity if the distribution would impair the financial viability of the riverboat gaming operation. The Indiana Commission has also promulgated a rule mandating licensees to maintain a cash reserve against defaults in gaming debts. The cash reserve must be equal to licensee’s average payout for a three-day period based on the riverboat’s performance the prior calendar year. The cash reserve can consist of cash on hand, cash maintained in Indiana bank accounts and cash equivalents not otherwise committed or obligated.

Louisiana    The ownership and operation of a riverboat gaming vessel is subject to the Louisiana Riverboat Economic Development and Gaming Control Act (the “Louisiana Act”). As of May 1, 1996, gaming activities are regulated by the Louisiana Gaming Control Board (the “Board”). The Board is responsible for issuing the gaming license and enforcing the laws, rules and regulations relative to riverboat gaming activities. The Board is empowered to issue up to fifteen licenses to conduct gaming activities on a riverboat of new construction in accordance with applicable law. However, no more than six licenses may be granted to riverboats operating from any one designated waterway. An initial license to conduct gaming operations is valid for a term of five years. The Louisiana Act provides for successive five year renewals after the initial five year term.

The laws and regulations of Louisiana seek to: (i) prevent unsavory or unsuitable persons from having any direct or indirect involvement with gaming at any time or in any capacity; (ii) establish and maintain responsible accounting practices and procedures; (iii) maintain effective control over the financial practices of licensees, including establishing procedures for reliable record keeping and making periodic reports to the Board; (iv) prevent cheating and fraudulent practices; (v) provide a source of state and local revenues through fees; and (vi) ensure that gaming licensees, to the extent practicable, employ and contract with Louisiana residents, women and minorities. The Louisiana Act specifies certain restrictions and conditions relating to the operation of riverboat gaming, including, but not limited to, the following: (i) in parishes bordering the Red River, such as the Company’s Boomtown property in Bossier City, gaming may be conducted dockside; however, prior to the passage of legislation legalizing dockside gaming effective April 1, 2001 in the 2001 Special Session of the Louisiana Legislature, in all other authorized locations such as Boomtown New Orleans, gaming is not permitted while a riverboat is docked, other than for forty-five minutes between excursions, unless dangerous weather or water conditions exist; (ii) prior to the passage of legislation legalizing dockside gaming effective April 1, 2001 in the 2001 Special Session of the Louisiana Legislature, each round trip riverboat cruise may not be less than three nor more than eight hours in duration, subject to specified exceptions; (iii) agents of the Board are permitted on board at any time during gaming operations; (iv) gaming devices, equipment and supplies may be purchased or leased from permitted suppliers; (v) gaming may only take place in the designated river or waterway; (vi) gaming equipment may not be possessed, maintained, or exhibited by any person on a riverboat except in the specifically designated gaming area, or a secure area used for inspection, repair, or storage of such equipment; (vii) wagers may be received only from a person present on a licensed riverboat; (viii) persons under 21 are not permitted in designated gaming areas; (ix) except for slot machine play, wagers may be made only with tokens, chips, or electronic cards purchased from the licensee aboard a riverboat; (x) licensees may only use docking facilities and routes for which they are licensed and may only board and discharge passengers at the riverboat’s licensed berth; (xi) licensees must have adequate protection and indemnity insurance; (xii) licensees must have all necessary federal and state licenses, certificates and other regulatory approvals prior to operating a riverboat; and (xiii) gaming may only be conducted in accordance with the terms of the license and the rules and regulations adopted by the Board.

No person may receive any percentage of the profits from the Company’s operations in Louisiana without first being found suitable. In March 1994, Boomtown New Orleans, its officers, key personnel, partners and persons holding a 5% or greater interest in the partnership were found suitable by the predecessor to the Board. In April 1996, the Board’s predecessor confirmed that Boomtown Bossier City’s officers, key personnel, partners and persons holding a 5% or greater interest in the corporation were suitable and authorized to acquire an existing licensee. In July 1999, the Board renewed Boomtown New Orleans’ license to conduct gaming operations. In May 2001, the Board renewed Boomtown Bossier City’s license to conduct gaming operations. A

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gaming license is deemed to be a privilege under Louisiana law and as such may be denied, revoked, suspended, conditioned or limited at any time by the Board. In issuing a license, the Board must find that the applicant is a person of good character, honesty and integrity and the applicant is a person whose prior activities, criminal record, if any, reputation, habits and associations do not pose a threat to the public interest of the State of Louisiana or to the effective regulation and control of gaming, or create or enhance the dangers of unsuitable, unfair or illegal practices, methods, and activities in the conduct of gaming or the carrying on of business and financial arrangements in connection therewith. The Board will not grant any licenses unless it finds that: (i) the applicant is capable of conducting gaming operations, which means that the applicant can demonstrate the capability, either through training, education, business experience, or a combination of the above, to operate a gaming casino; (ii) the proposed financing of the riverboat and the gaming operations is adequate for the nature of the proposed operation and from a source suitable and acceptable to the Board; (iii) the applicant demonstrates a proven ability to operate a vessel of comparable size, capacity and complexity to a riverboat in its application for a license; (v) the applicant designates the docking facilities to be used by the riverboat; (vi) the applicant shows adequate financial ability to construct and maintain a riverboat; (vii) the applicant has a good faith plan to recruit, train and upgrade minorities in all employment classifications; and (viii) the applicant is of good moral character.

The Board may not award a license to any applicant who fails to provide information and documentation to reveal any fact material to qualification or who supplies information which is untrue or misleading as to a material fact pertaining to the qualification criteria; who has been convicted of or pled nolo contendere to an offense punishable by imprisonment of more than one year; who is currently being prosecuted for or regarding whom charges are pending in any jurisdiction of an offense punishable by more than one year imprisonment; if any holder of 5% or more in the profits and losses of the applicant has been convicted of or pled guilty or nolo contendere to an offense which at the time of conviction is punishable as a felony.

The transfer of a license is prohibited; however, the sale, assignment, transfer, pledge, or disposition of securities which represent 5% or more of the total outstanding shares issued by a holder of a license may be transferred, subject to prior Board approval. A security issued by a holder of a license must generally disclose these restrictions.

Section 2501 of the regulations enacted by the Louisiana State Police Riverboat Gaming Division pursuant to the Louisiana Act (the “Regulations”) requires prior written approval of the Board of all persons involved in the sale, purchase, assignment, lease, grant or foreclosure of a security interest, hypothecation, transfer, conveyance or acquisition of an ownership interest (other than in a corporation) or economic interest of five percent (5%) or more in any licensee.

Section 2523 of the Regulations requires notification to and prior approval from the Board of the: (a) application for, receipt, acceptance or modification of a loan, the (b) use of any cash, property, credit, loan or line of credit, or the (c) guarantee or granting of other forms of security for a loan by a licensee or person acting on a licensee’s behalf. Exceptions to prior written approval include, without limitation, any transaction for less than $2,500,000 in which all of the lending institutions are federally regulated, the transaction modifies the terms of an existing, previously approved loan transaction, or if the transaction involves publicly registered debt and securities sold pursuant to a firm underwriting agreement.

The failure of a licensee to comply with the requirements set forth above may result in the suspension or revocation of that licensee’s gaming license. Additionally, if the Board finds that the individual owner or holder of a security of a corporate license or intermediary company or any person with an economic interest in a licensee is not qualified under the Louisiana Act, the Board may require, under penalty of suspension or revocation of the license, that the person not: (a) receive dividends or interest on securities of the corporation, (b) exercise directly or indirectly a right conferred by securities of the corporation, (c) receive remuneration or economic benefit from the licensee, or (d) continue in an ownership or economic interest in the licensee.

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A licensee must periodically report the following information to the Board, which is not confidential and is to be available for public inspection: (a) the licensee’s net gaming proceeds from all authorized games; (b) the amount of net gaming proceeds tax paid; and, (c) all quarterly and annual financial statements presenting historical data that are submitted to the Board, including annual financial statements that have been audited by an independent certified public accountant.

The Louisiana Act restricts gaming space on riverboats to no more than 30,000 square feet. The Board has adopted rules governing the method for approval of the area of operations and the rules and odds of authorized games and devices permitted, and prescribing grounds and procedures for the revocation, limitation or suspension of licenses and permits. On April 19, 1996, the Louisiana legislature adopted legislation requiring statewide local elections on a parish-by-parish basis to determine whether to prohibit or continue to permit licensed riverboat gaming, licensed video poker gaming, and licensed land-based gaming in Orleans Parish. The applicable local election took place on November 5, 1996, and the voters in the parishes of Boomtown New Orleans and Boomtown Bossier City voted to continue licensed riverboat and video poker gaming. However, it is noteworthy that the current legislation does not provide for any moratorium on future local elections on gaming.

Prior to the passage of legislation in the 2001 Special Session of the Louisiana Legislature, fees to the state of Louisiana for conducting gaming activities on a riverboat included: (i) $50,000 per riverboat for the first year of operation and $100,000 per year, per riverboat thereafter, plus (ii) 18.5% of net gaming proceeds. In the 2001 Special Session of the Louisiana Legislature, a law was passed legalizing dockside gaming and increasing the fees paid to the state of Louisiana to 21.5% of net gaming proceeds effective April 1, 2001 for the nine riverboats in the southern region of the state, including the Company’s Boomtown New Orleans property. The fee increase to 21.5% of net gaming proceeds will be phased in over an approximately two year period for the riverboats operating in parishes bordering the Red River, including the Company’s Boomtown Bossier City property.

Mississippi    The ownership and operation of casino gaming facilities in Mississippi are subject to extensive state and local regulation, but primarily the licensing and regulatory control of the Mississippi Gaming Commission (the “Mississippi Commission”). The Mississippi Gaming Control Act (the “Mississippi Act”), which legalized dockside casino gaming in Mississippi, is similar to the Nevada Gaming Control Act discussed below. The Mississippi Commission has adopted regulations which are also similar in many respects to the Nevada gaming regulations.

The laws, regulations and supervisory procedures of the Mississippi Commission are based upon declarations of public policy that are concerned with, among other things: (i) the prevention of unsavory or unsuitable persons from having direct or indirect involvement with gaming at any time or in any capacity; (ii) the establishment and maintenance of responsible accounting practices and procedures; (iii) the maintenance of effective controls over the financial practices of licensees, including the establishment of minimum procedures for internal fiscal affairs and safeguarding of assets and revenues, providing for reliable record keeping and requiring the filing of periodic reports with the Mississippi Commission; (iv) the prevention of cheating and fraudulent practices; (v) providing a source of state and local revenues through taxation and licensing fees; and (vi) ensuring that gaming licensees, to the extent practicable, employ Mississippi residents. The regulations are subject to amendment and interpretation by the Mississippi Commission. We believe that our compliance with the licensing procedures and regulatory requirements of the Mississippi Commission will not affect the marketability of our securities. Changes in Mississippi laws or regulations may limit or otherwise materially affect the types of gaming that may be conducted and such changes, if enacted, could have an adverse effect on the Company and the Company’s Mississippi gaming operations.

The Mississippi Act provides for legalized dockside gaming in each of the fourteen counties that border the Gulf Coast or the Mississippi River, but only if the voters in such counties have not voted to prohibit gaming in that county.

In recent years, certain anti-gaming groups proposed for adoption through the initiative and referendum process certain amendments to the Mississippi Constitution, which would prohibit gaming in the state. The

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proposals were declared illegal by Mississippi courts on constitutional and procedural grounds. The latest ruling was appealed to the Mississippi Supreme Court, which affirmed the decision of the lower court. If another such proposal were to be offered and if a sufficient number of signatures were to be gathered to place a legal initiative on the ballot, it is possible for the voters of Mississippi to consider such a proposal in November of 2004. While we are unable to predict whether such an initiative will appear on a ballot or the likelihood of such an initiative being approved by the voters, if such initiative were passed and gaming were prohibited in Mississippi, it would have a significant adverse impact on the Company and the Company’s Mississippi gaming operation.

As of January 1, 2003, dockside gaming was permissible in nine of the fourteen eligible counties in the state and gaming operations had commenced in seven counties. Under Mississippi law, gaming vessels must be located on the Mississippi River or on navigable waters in eligible counties along the Mississippi River or in the waters lying south of the counties along the Mississippi Gulf Coast.

The Mississippi Act permits unlimited stakes gaming on permanently moored vessels on a 24-hour basis and does not restrict the percentage of space which may be utilized for gaming. The Mississippi Act permits substantially all traditional casino games and gaming devices.

The Company and any subsidiary of the Company that operates a casino in Mississippi, (a “Mississippi Gaming Subsidiary”), are subject to the licensing and regulatory control of the Mississippi Commission. The Company is currently registered under the Mississippi Act as a publicly traded corporation (a “Registered Corporation”) and has been found suitable as the parent company of Casino Magic Biloxi. As a Registered Corporation, the Company is required periodically to submit detailed financial and operating reports to the Mississippi Commission and furnish any other information which the Mississippi Commission may require. If the Company is unable to continue to satisfy the registration requirements of the Mississippi Act, the Company and any Mississippi Gaming Subsidiary cannot own or operate gaming facilities in Mississippi. No person may become a stockholder of or receive any percentage of profits from an Intermediary Company or a Mississippi Gaming Subsidiary of a Registered Corporation without first obtaining licenses and approvals from the Mississippi Commission. The Company has obtained such approvals from the Mississippi Commission.

The Mississippi Gaming Subsidiary must maintain a gaming license from the Mississippi Commission to operate a casino in Mississippi. Such licenses are issued by the Mississippi Commission subject to certain conditions, including, but not limited to, the continued compliance with all applicable state laws and regulations. There are no limitations on the number of gaming licenses that may be issued in Mississippi. Gaming licenses require the payment of periodic fees and taxes, are not transferable, are issued for a three-year period (and may be continued for two additional three-year periods) and must be renewed periodically thereafter. Casino Magic Biloxi was granted a renewal of its gaming license by the Mississippi Commission on December 21, 2000.

Certain officers and employees of the Company and the officers, directors and certain key employees of Casino Magic Biloxi must be found suitable or approved by the Mississippi Commission. The Company believes that it has obtained or applied for all necessary findings of suitability with respect to such persons associated with the Company or Casino Magic Biloxi, although the Mississippi Commission in its discretion may require additional persons to file applications for findings of suitability. In addition, any person having a material relationship or involvement with the Company or Casino Magic Biloxi, may be required to be found suitable, in which case those persons must pay the costs and fees associated with such investigation. The Mississippi Commission may deny an application for a finding of suitability for any cause that it deems reasonable. Changes in certain licensed positions must be reported to the Mississippi Commission. In addition to its authority to deny an application for a finding of suitability, the Mississippi Commission has jurisdiction to disapprove a change in a person’s corporate position or title and such changes must be reported to the Mississippi Commission. The Mississippi Commission has the power to require the Company and Casino Magic Biloxi to suspend or dismiss officers, directors and other key employees or sever relationships with other persons who refuse to file appropriate applications or who the authorities find unsuitable to act in such capacities. Determination of suitability or questions pertaining to licensing are not subject to judicial review in Mississippi.

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At any time, the Mississippi Commission has the power to investigate and require the finding of suitability of any of record or beneficial stockholder of the Company. The Mississippi Act requires any person who acquires more than 5% of any class of voting securities of a Registered Corporation, as reported to the Securities and Exchange Commission (“SEC”), to report the acquisition to the Mississippi Commission, and such person may be required to be found suitable. Also, any person who becomes a beneficial owner of more than 10% of any class of voting securities of a Registered Corporation, as reported to the SEC, must apply for a finding of suitability by the Mississippi Commission. The Mississippi Commission generally has exercised its discretion to require a finding of suitability of any beneficial owner of more than five percent of any class of voting securities of a Registered Corporation. If a stockholder who must be found suitable is a corporation, partnership or trust, it must submit detailed business and financial information, including a list of beneficial owners. Any record or beneficial stockholder required to apply for a finding of suitability must pay all investigative fees and costs of the Mississippi Commission in connection with such investigation.

The Mississippi Commission has adopted a regulation which provides that under certain circumstances, an “institutional investor,” as defined in the regulation, which acquires more than 10%, but not more than 15%, of a Registered Corporation’s voting securities may apply to the Mississippi Commission for a waiver of such finding of suitability if such institutional investor holds the voting securities for investment purposes only. An institutional investor shall not be deemed to hold voting securities for investment purposes only unless the voting securities were acquired and are held in the ordinary course of business as an institutional investor and not for the purpose of causing, directly or indirectly, the election of a majority of the members of the board of directors of the Registered Corporation, any change in the Registered Corporation’s corporate charter, bylaws, management, policies or operations of the Registered Corporation or any of its gaming affiliates, or any other action which the Mississippi Commission finds to be inconsistent with holding the Registered Corporation’s voting securities for investment purposes only. Activities which are not deemed to be inconsistent with holding voting securities for investment purposes include: (i) voting on all matters voted on by the stockholders; (ii) making financial and other inquiries of management of the type normally made by securities analysts for informational purposes and not to cause a change in its management, policies or operations; and (iii) such other activities as the Mississippi Commission may determine to be consistent with such investment intent.

Any person who fails or refuses to apply for a finding of suitability or a license within thirty (30) days after being ordered to do so by the Mississippi Commission may be found unsuitable. The same restrictions apply to a record owner, if the record owner, after request, fails to identify the beneficial owner. Any person found unsuitable and who holds, directly or indirectly, any beneficial ownership of the securities beyond such time as the Mississippi Commission prescribes, may be guilty of a misdemeanor. The Company may be subject to disciplinary action if, after receiving notice that a person is unsuitable to be a stockholder or to have any other relationship with the Company, Casino Magic Corp. or Casino Magic Biloxi, the company involved: (i) pays the unsuitable person any dividend or other distribution upon such person’s voting securities; (ii) recognizes the exercise, directly or indirectly, of any voting rights conferred by securities held by the unsuitable person; (iii) pays the unsuitable person any remuneration in any form for services rendered or otherwise, except in certain limited and specific circumstances; or (iv) fails to pursue all lawful efforts to require the unsuitable person to divest himself of the securities, including, if necessary, the immediate purchase of the securities for cash at a fair market value.

The Company may be required to disclose to the Mississippi Commission, upon request, the identities of the holders of any of the Company’s debt or other securities. In addition, under the Mississippi Act, the Mississippi Commission may in its discretion require the holder of any debt security of a Registered Corporation to file an application, be investigated and be found suitable to own the debt security. Although the Mississippi Commission generally does not require the individual holders of obligations, such as the Company’s 9.5% Notes and 9.25% Notes, to be investigated and found suitable, the Mississippi Commission retains the discretion to do so for any reason, including, but not limited to, a default, or where the holder of the debt instrument exercises a material influence over the gaming operations of the entity in question. Any holder of debt securities required to apply for a finding of suitability must pay all investigative fees and costs of the Mississippi Commission in connection with such an investigation.

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If the Mississippi Commission determines that a person is unsuitable to own a debt security, then the Registered Corporation may be sanctioned, including the loss of its approvals, if without the prior approval of the Mississippi Commission, it: (i) pays to the unsuitable person any dividend, interest, or any distribution whatsoever; (ii) recognizes any voting right by the unsuitable person in connection with those securities; (iii) pays the unsuitable person remuneration in any form; or (iv) makes any payment to the unsuitable person by way of principal, redemption, conversion, exchange, liquidation or similar transaction.

Each Mississippi Gaming Subsidiary must maintain in Mississippi a current ledger with respect to ownership of its equity securities, and the Company must maintain in Mississippi a current list of stockholders of the Company which must reflect the record ownership of each outstanding share of any class of equity securities issued by the Company. The ledger and stockholder lists must be available for inspection by the Mississippi Commission at any time. If any securities are held in trust by an agent or by a nominee, the record holder may be required to disclose the identity of the beneficial owner to the Mississippi Commission. A failure to make such disclosure may be grounds for finding the record holder unsuitable. The Company must also render maximum assistance in determining the identity of the beneficial owner.

The Mississippi Act requires that the certificates representing securities of a Registered Corporation bear a legend indicating that such securities are subject to the Mississippi Act and the regulations of the Mississippi Commission. The Company has received from the Mississippi Commission a waiver from this legend requirement. The Mississippi Commission has the power to impose additional restrictions on the holders of the Company’s securities at any time.

Substantially all material loans, leases, sales of securities and similar financing transactions by a Registered Corporation or a Mississippi Gaming Subsidiary must be reported to or approved by the Mississippi Commission. A pledge of the stock of a Mississippi Gaming Subsidiary and the foreclosure of such a pledge are ineffective without the prior approval of the Mississippi Commission. Moreover, restrictions on the transfer of an equity security issued by a Mississippi Gaming Subsidiary and agreements not to encumber such securities are ineffective without the prior approval of the Mississippi Commission.

A Registered Corporation may not make a public offering of its securities without the prior approval of the Mississippi Commission if any part of the proceeds of the offering is to be used to finance the construction, acquisition or operation of gaming facilities in Mississippi or to retire or extend obligations incurred for those purposes. Under the regulations of the Mississippi Commission, a Mississippi Gaming Subsidiary may not guarantee a security issued by an affiliated company pursuant to a public offering, or pledge its assets to secure payment or performance of the obligations evidenced by the security issued by the affiliated company, without the prior approval of the Mississippi Commission. Such approval, if given, does not constitute a recommendation or approval of the investment merits of the securities subject to the offering.

On December 18, 2002, the Mississippi Commission granted the Company prior approval to make public offerings and private placements of securities for a period of two years, subject to certain conditions (the “Mississippi Shelf Approval”). The Mississippi Shelf Approval also includes approval for Casino Magic Biloxi to guarantee any security issued by, and for Casino Magic Biloxi to hypothecate its assets to secure the payment or performance of, any obligations evidenced by a security issued by the Company in a public offering or private placement under the Mississippi Shelf Approval. The Mississippi Shelf Approval also includes approval to place restrictions upon the transfer of and enter into agreements not to encumber the equity securities of Casino Magic Biloxi. The Mississippi Shelf Approval, however, may be rescinded for good cause without prior notice upon the issuance of an interlocutory stop order by the Mississippi Commission. The Mississippi Shelf Approval does not constitute a finding, recommendation or approval of the Mississippi Commission as to the accuracy or the adequacy of any prospectus or the investment merits of any securities offered thereby. Any representation to the contrary is unlawful.

Changes in control of the Company through merger, consolidation, acquisition of assets, management or consulting agreements or any form of takeover, cannot occur without the prior approval of the Mississippi

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Commission. Entities seeking to acquire control of a Registered Corporation must satisfy the Mississippi Commission in a variety of stringent standards prior to assuming control of the Registered Corporation. The Mississippi Commission may also require controlling stockholders, officers, directors and other persons having a material relationship or involvement with the entity proposing to acquire control, to be investigated and licensed as part of the approval process relating to the transaction.

The Mississippi legislature has declared that some corporate acquisitions opposed by management, repurchases of voting securities and other corporate defense tactics that affect corporate gaming licensees in Mississippi and Registered Corporations may be injurious to stable and productive corporate gaming. The Mississippi Commission has established a regulatory scheme to ameliorate the potentially adverse effects of these business practices upon Mississippi’s gaming industry and to further Mississippi’s policy to: (i) assure the financial stability of corporate gaming operators and their affiliates; (ii) preserve the beneficial aspects of conducting business in the corporate form; and (iii) promote a neutral environment for the orderly governance of corporate affairs.

Approvals are, in certain circumstances, required from the Mississippi Commission before Registered Corporation may make exceptional repurchases of voting securities (such as repurchases which treat holders differently) in excess of the current market price and before a corporate acquisition opposed by management may be consummated. Mississippi’s gaming regulations also require prior approval by the Mississippi Commission of a plan of recapitalization proposed by the Registered Corporation’s board of directors in response to a tender offer made directly to the Registered Corporation’s stockholders for the purpose of acquiring control of the Registered Corporation.

Neither the Company nor any Mississippi Gaming Subsidiary may engage in gaming activities in Mississippi while also conducting gaming operations outside of Mississippi without approval of the Mississippi Commission. The Mississippi Commission may require determinations that, among other things, there are means for the Mississippi Commission to have access to information concerning the out-of-state gaming operations of the Company and its affiliates. The Company has previously obtained a waiver of foreign gaming approval from the Mississippi Commission for operations in other states in which the Company conducts gaming operations and will be required to obtain the approval or a waiver of such approval from the Mississippi Commission prior to engaging in any additional future gaming operations outside of Mississippi.

If the Mississippi Commission decides that the Company or Casino Magic Biloxi violated a gaming law or regulation, the Mississippi Commission could limit, condition, suspend or revoke the Company’s approvals and the license of Casino Magic Biloxi, subject to compliance with certain statutory and regulatory procedures. In addition, the Company, Casino Magic Corp., Casino Magic Biloxi and the persons involved could be subject to substantial fines for each separate violation. Because of such a violation, the Mississippi Commission could attempt to appoint a supervisor to operate the Company’s Mississippi casino facilities. Limitation, conditioning or suspension of any gaming license or approval or the appointment of a supervisor could (and revocation of any gaming license or approval would) materially adversely affect the Company, the Company’s gaming operations and the Company’s results of operations.

License fees and taxes, computed in various ways depending on the type of gaming or activity involved, are payable to the State of Mississippi and to the counties and cities in which a Mississippi Gaming Subsidiary’s respective operations are conducted. Depending upon the particular fee or tax involved, these fees and taxes are payable either monthly, quarterly or annually and are based upon (i) a percentage of the gross gaming revenues received by the casino operation, (ii) the number of gaming devices operated by the casino, or (iii) the number of table games operated by the casino. The license fee payable to the State of Mississippi is based upon “gaming receipts” (generally defined as gross receipts less payouts to customers as winnings) and the current maximum tax rate imposed is 8% of gaming receipts in excess of $134,000 per month. The gross revenue fees imposed by the local governments equal approximately 4% of the gaming receipts.

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The Mississippi Commission’s regulations require as a condition of licensure or license renewal that an existing licensed gaming establishment’s plan include a 500-car parking facility in close proximity to the casino complex and infrastructure facilities which amount to at least 25% of the casino cost. The Company believes that Casino Magic Biloxi is in compliance with this requirement. The Mississippi Commission later adopted amendments to the regulation that increase the infrastructure development requirement from 25% to 100% for new casinos (or upon acquisition of a closed casino), but grandfathered existing licensees.

In recent years, certain anti-gaming groups proposed for adoption through the initiative and referendum process certain amendments to the Mississippi Constitution which would prohibit gaming in the state. The proposals were declared illegal by the Mississippi courts on constitutional and procedural grounds. The latest ruling was appealed to the Mississippi Supreme Court, which affirmed the decision of the lower court. If another such proposal were to be offered and if a sufficient number of signatures were to be gathered to place a legal initiative on the ballot, it is possible for the voters of Mississippi to consider such a proposal in November 2003. While the Company is unable to predict whether such an initiative will appear on a ballot or the likelihood of such an initiative being approved by the voters, if such a referendum were passed and gaming were prohibited in Mississippi, it would have a significant adverse effect on the Company and its Mississippi gaming operations.

The sale of food or alcoholic beverages at Casino Magic Biloxi is subject to licensing, control and regulation by the applicable state and local authorities. The agencies involved have full power to limit, condition, suspend or revoke any such license, and any such disciplinary action against Casino Magic Biloxi could (and revocation would) have a materially adverse effect upon the Company’s operations. Certain of the Company’s and Casino Magic Biloxi’s officers and managers must be investigated by the Alcoholic Beverage Control Division of the State Tax Commission (the “ABC”) in connection with Casino Magic Biloxi’s liquor permits. Changes in licensed positions must be approved by the ABC.

Nevada    The ownership and operation of casino gaming facilities in Nevada are subject to: (i) the Nevada Gaming Control Act and the regulations promulgated there under (collectively, “Nevada Act”); and (ii) various local regulations. The Company’s gaming operations are subject to the licensing and regulatory control of the Nevada Gaming Commission (“Nevada Commission”), the Nevada State Gaming Control Board (“Nevada Board”) and the City of Reno. The Nevada Commission, the Nevada Board and the City of Reno are collectively referred to as the “Nevada Gaming Authorities.”

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

The subsidiary of the Company (the “Gaming Subsidiary”) which operates Boomtown Reno and two other gaming operations with slot machines only, is required to be licensed by the Nevada Gaming Authorities. The gaming licenses require the periodic payment of fees and taxes and are not transferable. The Company is currently registered by the Nevada Commission as a publicly traded corporation (a “Registered Corporation”) and has been found suitable as the parent company of the Gaming Subsidiary, which is a gaming licensee under the terms of the Nevada Act. As a Registered Corporation, the Company is required periodically to submit detailed financial and operating reports to the Nevada Commission and furnish any other information which the Nevada Commission may require. No person may become a stockholder of, or holder of an interest of, or receive any percentage of profits from a gaming licensee without first obtaining licenses and approvals from the Nevada

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Gaming Authorities. The Company and the Gaming Subsidiary have obtained from the Nevada Gaming Authorities the various registrations, findings of suitability, approvals, permits and licenses required in order to engage in gaming activities in Nevada.

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

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

The Company and the Gaming Subsidiary are required to submit detailed financial and operating reports to the Nevada Commission. Substantially all material loans, leases, sales of securities and similar financing transactions by the Company and the Gaming Subsidiary must be reported to or approved by the Nevada Commission.

If it were determined that the Nevada Act was violated by the Gaming Subsidiary, the gaming licenses it holds could be limited, conditioned, suspended or revoked, subject to compliance with certain statutory and regulatory procedures. In addition, the Company, the Gaming Subsidiary and the persons involved could be subject to substantial fines for each separate violation of the Nevada Act at the discretion of the Nevada Commission. Further, a supervisor could be appointed by the Nevada Commission to operate Boomtown Reno and, under certain circumstances, earnings generated during the supervisor’s appointment (except for reasonable rental value of the casino) could be forfeited to the State of Nevada. Limitation, conditioning or suspension of the gaming licenses of the Gaming Subsidiary or the appointment of a supervisor could (and revocation of any gaming license would) negatively affect the Company’s gaming operations.

Any beneficial holder of the Company’s voting securities, regardless of the number of shares owned, may be required to file an application, be investigated, and be found suitable as a beneficial holder of the Company’s voting securities if the Nevada Commission has reason to believe that such ownership would otherwise be inconsistent with the declared policies of the State of Nevada. The applicant must pay all costs of investigation incurred by the Nevada Gaming Authorities in conducting any such investigation.

The Nevada Act requires any person who acquires beneficial ownership of more than 5% of a Registered Corporation’s voting securities to report the acquisition to the Nevada Commission. The Nevada Act requires that beneficial owners of more than 10% of a Registered Corporation’s voting securities apply to the Nevada Commission for a finding of suitability within thirty days after the Chairman of the Nevada Board mails the written notice requiring such filing. Under certain circumstances, an “institutional investor,” as defined in the Nevada Act, which acquires more than 10%, but not more than 15%, of a Registered Corporation’s voting

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securities may apply to the Nevada Commission for a waiver of such finding of suitability if such institutional investor holds the voting securities for investment purposes only. An institutional investor shall not be deemed to hold voting securities for investment purposes unless the voting securities were acquired and are held in the ordinary course of business as an institutional investor and not for the purpose of causing, directly or indirectly, the election of a majority of the members of the board of directors of the Registered Corporation, any change in the Registered Corporation’s corporate charter, restated bylaws, management, policies or operations of the Registered Corporation, or any of its gaming affiliates, or any other action which the Nevada Commission finds to be inconsistent with holding the Registered Corporation’s voting securities for investment purposes only. Activities which are not deemed to be inconsistent with holding voting securities for investment purposes only include: (i) voting on all matters voted on by stockholders; (ii) making financial and other inquiries of management of the type normally made by securities analysts for informational purposes and not to cause a change in its management, policies or operations; and (iii) such other activities as the Nevada Commission may determine to be consistent with such investment intent. If the beneficial holder of voting securities who must be found suitable is a corporation, partnership or trust, it must submit detailed business and financial information, including a list of beneficial owners. The applicant is required to pay all costs of investigation.

Any person who fails or refuses to apply for a finding of suitability or a license within thirty days after being ordered to do so by the Nevada Commission or the Chairman of the Nevada Board, may be found unsuitable. The same restrictions apply to a record owner if the record owner, after request, fails to identify the beneficial owner. Any stockholder found unsuitable and who holds, directly or indirectly, any beneficial ownership of the common stock beyond such period of time as may be prescribed by the Nevada Commission may be guilty of a criminal offense. The Company is subject to disciplinary action if, after it receives notice that a person is unsuitable to be a stockholder or to have any other relationship with the Company or the Gaming Subsidiary, the Company: (i) pays that person any dividend or interest upon voting securities of the Company, (ii) allows that person to exercise, directly or indirectly, any voting right conferred through securities held by that person, (iii) pays remuneration in any form to that person for services rendered or otherwise, or (iv) fails to pursue all lawful efforts to require such unsuitable person to relinquish his voting securities including, if necessary, the immediate purchase of said voting securities for cash at fair market value.

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

The Company is required to maintain a current stock ledger in Nevada which may be examined by the Nevada Gaming Authorities at any time. If any securities are held in trust by an agent or by a nominee, the record holder may be required to disclose the identity of the beneficial owner to the Nevada Gaming Authorities. A failure to make such disclosure may be grounds for finding the record holder unsuitable. The Company is also required to render maximum assistance in determining the identity of the beneficial owner. The Nevada Commission has the power to require that the Company’s stock certificates bear a legend indicating that the securities are subject to the Nevada Act. However, to date the Nevada Commission has not imposed such a requirement on the Company.

The Company is not permitted to make a public offering of its securities without the prior approval of the Nevada Commission if the securities or the proceeds therefrom are intended to be used to construct, acquire or finance gaming facilities in Nevada, or to retire or extend obligations incurred for such purposes. On

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February 20, 2003, the Nevada Commission granted the Company prior approval to make public offerings for a period of two years, subject to certain conditions (the “Nevada Shelf Approval”). The Nevada Shelf Approval also applies to any affiliated company wholly owned by the Company (an “Affiliate”), which is a publicly traded corporation or would thereby become a publicly traded corporation pursuant to a public offering. The Nevada Shelf Approval, however, may be rescinded for good cause without prior notice upon the issuance of an interlocutory stop order by the Chairman of the Nevada Board. The Nevada Shelf Approval does not constitute a finding, recommendation or approval of the Nevada Gaming Authorities as to the accuracy or the adequacy of the prospectus or the investment merits of the securities offered thereby. Any representation to the contrary is unlawful.

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

The Nevada legislature has declared that some corporate acquisitions opposed by management, repurchases of voting securities and corporate defense tactics affecting Nevada corporate gaming licensees, and Registered Corporations that are affiliated with those operations, may be injurious to stable and productive corporate gaming. The Nevada Commission has established a regulatory scheme to ameliorate the potentially adverse effects of these business practices upon Nevada’s gaming industry and to further Nevada’s policy to: (i) assure the financial stability of corporate gaming licensees and their affiliates; (ii) preserve the beneficial aspects of conducting business in the corporate form; and (iii) promote a neutral environment for the orderly governance of corporate affairs. Approvals are, in certain circumstances, required from the Nevada Commission before the Registered Corporation can make exceptional repurchases of voting securities above the current market price thereof and before a corporate acquisition opposed by management can be consummated. The Nevada Act also requires prior approval of a plan of recapitalization proposed by the Registered Corporation’s Board of Directors in response to a tender offer made directly to the Registered Corporation’s stockholders for the purposes of acquiring control of the Registered Corporation.

License fees and taxes, computed in various ways depending on the type of gaming or activity involved, are payable to the State of Nevada and to the City of Reno, in which the Gaming Subsidiary’s operations are conducted. Depending upon the particular fee or tax involved, these fees and taxes are payable either monthly, quarterly or annually and are based upon either: (i) a percentage of the gross revenues received; (ii) the number of gaming devices operated; or (iii) the number of table games operated. A casino entertainment tax is also paid by casino operations where entertainment is furnished in a cabaret, nightclub, cocktail lounge or casino showroom in connection with the serving or selling of food or refreshments, or the selling of any merchandise.

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

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in the foreign operation who has been denied a license or finding of suitability in Nevada on the ground of unsuitability.

California    Operation of California card club casinos such as the Hollywood Park-Casino and the Crystal Park Casino is governed by the Gambling Control Act (the “GCA”) and is subject to the oversight of the California Attorney General and the California Gambling Control Commission. Under the GCA, a California card club casino may only offer certain forms of card games, including Poker, Pai Gow, and California Blackjack. A card club casino may not offer many of the card games and other games of chance permitted in Nevada and other jurisdictions where the Company conducts business. Although the California Attorney General takes the position that, under the GCA, only individuals, partnerships or privately-held companies (as opposed to publicly-traded companies such as the Company) are eligible to operate card club casinos, the enactment of California Senate Bill 100 (“SB-100”) in 1995, and the subsequent enactment of Senate Bill-8 permit a publicly-owned racing association to own and operate a card club casino if it also owns and operates a race track on the same premises.

In September 1995, the Attorney General granted the Company a provisional registration under SB-100 to operate the Hollywood Park-Casino, which provisional registration was renewed effective January 1, 1999. Pursuant to the GCA, on September 10, 1999, in connection with the sale of the Hollywood Park Race Track, the Company was no longer eligible to operate the Hollywood Park-Casino and therefore entered into a sublease arrangement of the Hollywood Park-Casino with the same third party operator which leases the Crystal Park Casino. In the event the GCA were to be amended to permit publicly-traded companies such as the Company to operate card clubs, the Company, and its officers, directors and certain stockholders, would likely have to file the necessary licensing applications with the Attorney General, if it wished to operate the Hollywood Park-Casino or the Crystal Park Casino.

Pursuant to the GCA, the operator of a card club casino, and its officers, directors and certain stockholders are required to be registered by the Attorney General and licensed by the municipality in which it is located. A permanent registration will not be granted until the California Department of Justice completes its review of the Company’s applications and the applications of the Company’s corporate officers and directors. The Attorney General has broad discretion to deny a gaming registration and may impose reasonably necessary conditions upon the granting of a gaming registration. Grounds for denial include felony convictions, criminal acts, convictions involving dishonesty, illegal gambling activities, and false statements on a gaming application. Such grounds also generally include having a financial interest in a business or organization that engages in gaming activities that are illegal under California law. In addition, the Attorney General possesses broad authority to suspend or revoke a gaming registration on any of the foregoing grounds, as well as for violation of any federal, state or local gambling law, failure to take reasonable steps to prevent dishonest acts or illegal activities on the premises of the card club casino, failure to cooperate with the Attorney General in its oversight of the card club casino and failure to comply with any condition of the registration. The City of Inglewood and the City of Compton have granted the operator of the Hollywood Park-Casino and the Crystal Park Casino all municipal gaming licenses necessary for operation of such facilities, and the operator has received permanent registrations for both locations from the California Department of Justice.

Argentina    The Provincial Government of Neuquen, Argentina enacted a casino privatization program to issue twelve-year exclusive concession agreements to operate existing casinos. The Company’s two casinos are the only casinos in the province of Neuquen, in west central Argentina, and are located in Neuquen City and San Martin de los Andes. The casinos had previously been operated by the provincial government. The Ministry of Finance of Argentina has adopted a modified regulatory system for casinos, based somewhat on the regulatory system utilized by the State of Nevada, and such regulatory system is being administered by the Provincial Government of Neuquen. The Company cannot predict what effect the enactment of other laws, regulations or pronouncements relating to casino operations may have on the operations of Casino Magic Argentina.

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