form10q05558_09302010.htm

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

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

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

Large accelerated filer ¨	Accelerated filer o

Non-accelerated filer ¨ (Do not check if a smaller reporting company)	Smaller reporting company x

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

The number of shares outstanding of the issuer’s common stock, as of November 11, 2010 was 69,479,340.

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INDEX

PART I	FINANCIAL INFORMATION	PAGE NO.

Item 1.	Financial Statements (Unaudited)

	Condensed Consolidated Balance Sheets (Unaudited) as of September 30, 2010 and December 31, 2009	1

	Condensed Consolidated Statements of Operations (Unaudited) for the three and nine months ended September 30, 2010 and 2009	2

	Condensed Consolidated Statements of Cash Flows (Unaudited) for the nine months ended September 30, 2010 and 2009	3

	Notes to Condensed Consolidated Financial Statements (Unaudited)	4-14

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15-21

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	22

Item 4.	Controls and Procedures	22

PART II	OTHER INFORMATION

Item 1.	Legal Proceedings	23

Item 1A.	Risk Factors	24

Item 6.	Exhibits	24

	Signatures	25

iii

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PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

EMPIRE RESORTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except for per share data) (Unaudited)

	September 30, 2010			December 31, 2009
ASSETS
Current assets:
Cash and cash equivalents	$	35,524		$	50,080
Restricted cash		3,689			2,890
Accounts receivable, net		1,298			1,759
Prepaid expenses and other current assets		3,735			2,595
Total current assets		44,246			57,324
Property and equipment, net		28,239			28,877
Deferred financing costs, net of accumulated amortization of $2,370 in 2010 and $2,063 in 2009		1,570			1,878
Other assets		859			1,342
TOTAL ASSETS	$	74,914		$	89,421

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Senior convertible notes	$	55,000		$	65,000
Accounts payable		2,163			2,401
Accrued expenses and other current liabilities		6,038			6,472
Total current liabilities		63,201			73,873

Commitments and contingencies

Stockholders’ equity:
Preferred stock, 5,000 shares authorized; $0.01 par value -
Series A, $1,000 per share liquidation value, none issued and outstanding		---			---
Series B, $29 per share liquidation value, 44 shares issued and outstanding		---			---
Series E, $10 per share redemption value, 1,731 shares issued and outstanding		6,855			6,855
Common stock, $0.01 par value, 95,000 shares authorized, 69,479 and 69,134 shares issued and outstanding in 2010 and 2009, respectively		695			691
Additional paid-in capital		125,707			117,632
Accumulated deficit		(121,544	)		(109,630	)
Total stockholders’ equity		11,713			15,548
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	74,914		$	89,421

The accompanying notes are an integral part of these condensed consolidated financial statements.

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EMPIRE RESORTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except for per share data) (Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2010			2009			2010			2009
REVENUES:
Gaming	$	16,524		$	15,852		$	43,971		$	42,024
Racing		2,198			4,541			6,670			9,390
Food, beverage and other		1,450			1,651			4,066			3,764
Gross revenues		20,172			22,044			54,707			55,178
Less: Promotional allowances		(689	)		(1,118	)		(2,180	)		(2,760	)
Net revenues		19,483			20,926			52,527			52,418

COSTS AND EXPENSES:
Gaming		12,127			12,370			33,364			32,877
Racing		1,918			3,125			5,894			7,178
Food, beverage and other		495			530			1,412			1,331
Selling, general and administrative		3,237			3,437			8,515			9,308
Stock-based compensation		301			746			2,253			3,739
Depreciation		307			299			915			918
Total costs and expenses		18,385			20,507			52,353			55,351

INCOME (LOSS) FROM OPERATIONS		1,098			419			174			(2,933	)

Legal settlement		---			---			(7,118	)		---
Amortization of deferred financing costs		(102	)		(102	)		(307	)		(307	)
Interest expense		(1,939	)		(2,000	)		(4,541	)		(4,778	)
Interest income		5			103			16			117

NET LOSS		(938	)		(1,580	)		(11,776	)		(7,901	)
Undeclared dividends on preferred stock		(388	)		(388	)		(1,164	)		(1,164	)

NET LOSS APPLICABLE TO COMMON SHARES	$	(1,326	)	$	(1,968	)	$	(12,940	)	$	(9,065	)

Weighted average common shares outstanding, basic and diluted		69,479			37,247			69,406			35,089

Loss per common share, basic and diluted	$	(0.02	)	$	(0.05	)	$	(0.19	)	$	(0.26	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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EMPIRE RESORTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands) (Unaudited)

	Nine Months Ended September 30,
	2010			2009
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(11,776	)	$	(7,901	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		915			918
Amortization of deferred financing costs		307			307
Provision for doubtful accounts		---			286
Stock-based compensation		2,253			3,739
Interest expense - warrants		---			564
Warrants issued in legal settlement		5,618			---
Changes in operating assets and liabilities:
Restricted cash –NYS Lottery and Purse Accounts		(756	)		(2,740	)
Accounts receivable		461			(1,054	)
Prepaid expenses and other current assets		(1,140	)		232
Accounts payable		(238	)		(532	)
Accrued expenses and other current liabilities		(434	)		569
Other assets		483			374
NET CASH USED IN OPERATING ACTIVITIES		(4,307	)		(5,238	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment		(277	)		(159	)
Restricted cash - Racing capital improvement		(43	)		(33	)
NET CASH USED IN INVESTING ACTIVITIES		(320	)		(192	)

CASH FLOWS FROM FINANCING ACTIVITIES
Repayment on senior convertible notes		(10,000	)		---
Proceeds from exercise of stock options		35			137
Proceeds from issuance of common stock		---			11,000
Stock issuance costs		---			(2,165	)
Restricted cash - Revolving credit facility		---			467
Repayment on revolving credit facility		---			(3,167	)
Proceeds from exercise of option matching rights		36			---
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		(9,929	)		6,272

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(14,556	)		842
CASH AND CASH EQUIVALENTS, beginning of period		50,080			9,687
CASH AND CASH EQUIVALENTS, end of period	$	35,524		$	10,529

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest during the period	$	5,202		$	5,514

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES:
Common stock issued in settlement of preferred stock dividends	$	137		$	111
Stock issuance costs included in accrued expenses and other current liabilities		---			420

The accompanying notes are an integral part of these condensed consolidated financial statements.

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EMPIRE RESORTS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note A. Summary of Business and Basis for Presentation

Basis for Presentation

The condensed consolidated financial statements and notes as of September 30, 2010 and for the three and nine months ended September 30, 2010 and 2009 are unaudited and include the accounts of Empire Resorts, Inc. and subsidiaries (“Empire,” the “Company,” “us,” “our” or “we”).

The condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all the information and the footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements. These condensed consolidated financial statements reflect all adjustments (consisting of normal recurring accruals) which are, in our opinion, necessary for the fair presentation of the financial position, results of operations and cash flows for the interim periods. These condensed consolidated financial statements and notes should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2009. ;The results of operations for the interim period may not be indicative of results to be expected for the full year.

Going Concern

The accompanying condensed consolidated financial statements have been prepared on a basis that contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. Our ability to continue as a going concern depends on our ability to fulfill our obligations with respect to an original $65 million of 5 ½% senior convertible notes (the “Notes”) of which $55 million was outstanding at September 30, 2010. Under the terms of the Notes, we had an obligation to repurchase any of the Notes at a price equal to 100% of their principal amount on July 31, 2009; to the extent that the Holder, as defined under the indenture dated July 26, 2004 (the “Indenture”), delivered a properly executed Put Notice, as defined under the Indenture. 60;We sought a judicial determination, which we refer to as the “Action,” in the Supreme Court of New York, Sullivan County (the “Court”), against the beneficial owners of the Notes, as well as The Depository Trust Company (“DTC”) and the Bank of New York Mellon Corporation (the “Trustee,” and together with DTC, the “Defendants”) that (1) no Holder, delivered an executed Put Notice to the office of the Trustee within the lawfully mandated time for exercise of a Holder’s put rights under the Indenture prior to the close of business on July 31, 2009, and that (2) the three entities that gave the purported notice of default may not and have not accelerated the Notes or invoked certain other consequences of a default. On April 8, 2010, we received the Decision and Order (the “Decision”) from the Court granting the Defendants’ motion for summary judgment. The Decision provides that the Court has determined th at the Defendants properly exercised the option requiring us to repurchase the Notes, that we are in default under the Notes with respect to our failure to repurchase the Notes on July 31, 2009 and that we must now repurchase the Notes. On May 11, 2010, we filed a notice of appeal with the Third Judicial Department of the Appellate Division of the Supreme Court of the State of New York (the “Appellate Division”) to appeal the Decision. We are unable to predict the length of time it will take for the Appellate Division, or the State of New York Court of Appeals, to issue a final, non-appealable judgment. In the event that a final non-appealable ruling is issued declaring that the right to demand repayment of the Notes had been validly exercised, we would not have an immediate source of funds from which to pay our obligations under the Notes, and no assurance can be made that other sources of financing will be available at such time on commercially reasonable terms, if at all, to satisfy our obligations under the Notes. In connection with settlement discussions with the holders of the Notes, we redeemed $5 million principal amount of the Notes on July 30, 2010 and an additional $5 million principal amount of the Notes on August 12, 2010. On September 23, 2010, we entered into a settlement agreement with beneficial owners of approximately 93.7% of the outstanding principal amount of the Notes and the Trustee, pursuant to which the parties agreed to settle all claims relating to the Action (the “Settlement Agreement”), (see Note D). On October 22, 2010, we redeemed an additional $10 million principal amount of the Notes pursuant to the Settlement Agreement. Upon the consummation of the transactions contemplated by the Settlement Agreement, the parties thereto have agreed to mutually release all claims known, unknown or suspected at closing of the Settlement Agreement that each party may have against the others and the parties to th e Action have agreed to execute and file a Stipulation of Discontinuance, with prejudice and without costs to any party, with respect to the Action. On November 5, 2010, we received a commitment from Kien Huat Realty III Limited (“Kien Huat”), our largest stockholder, to provide, subject to the conditions contained therein to us a short-term bridge loan to a rights offering pursuant to which we would receive aggregate proceeds of $35 million from Kien Huat, which proceeds would be used, together with available funds, to repay in full our obligations under the Notes as permitted under the Settlement Agreement (See Note J). No assurance can be made, however, that the conditions to the consummation of the transaction contemplated by the Settlement Agreement or the financing arrangements proposed by Kien Huat will be satisfied or waived or that alternative financing will be secured within the time permitted under the Settlement Agreement.

Index

In addition, we have continuing net losses and negative cash flows from operating activities. These additional conditions raise substantial doubt about our ability to continue as a going concern. These condensed consolidated financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern.

Nature of Business

We currently own and operate Monticello Casino and Raceway, a video gaming machine (“VGM”) and harness horse racing facility located in Monticello, New York, 90 miles northwest of New York City. At Monticello Casino and Raceway, we operate approximately 1,090 VGMs as an agent for the New York State Lottery and conduct pari-mutuel wagering through the running of live harness horse races, the import simulcasting of harness and thoroughbred horse races from racetracks across the world and the export simulcasting of our races to offsite pari-mutuel wagering facilities.

We had an agreement (the “Concord Agreement”), subject to certain conditions, with Concord Empire Raceway Corp. (“Raceway Corp.”), a subsidiary of Concord Associates, L.P., to provide advice and general managerial oversight with respect to the operations at a harness track to be constructed at that certain parcel of land located in the Town of Thompson, New York and commonly known as the Concord Hotel and Resort. We terminated the Concord Agreement on August 5, 2010.

In the past, we have also made efforts to develop a 29.31 acre parcel of land adjacent to Monticello Casino and Raceway as the site for the development of a Class III casino and may pursue additional commercial and entertainment projects on the remaining 200 acres of land owned by the Company that encompass the site of our current gaming and racing facility. Currently, either an agreement with a Native American tribe, together with certain necessary federal and state regulatory approvals, or an amendment to the New York State Constitution would be required for us to move forward with our efforts to develop a Class III casino.

As used herein, Class III casino means a facility authorized to conduct a full range of gaming activities including slot machines, on which the outcome of play for each machine is based upon randomness, and various table games including, but not limited to, poker, blackjack and craps. VGMs are similar to slot machines, but they are electronically controlled from a central station and the procedure for determining winners is based on algorithms that distribute wins based on fixed odds, rather than mechanical or other methods designed to produce a random outcome for each play.

We operate through three principal subsidiaries, Monticello Raceway Management, Inc. (“Monticello Raceway Management”), Monticello Casino Management, LLC (“Monticello Casino Management”) and Monticello Raceway Development Company, LLC (“Monticello Raceway Development”). Currently, only Monticello Raceway Management has operations which generate revenue.

VGM Operations. We currently operate a 45,000 square foot VGM facility at Monticello Casino and Raceway. VGMs are electronic gaming devices that allow patrons to play electronic versions of various lottery games of chance and are similar in appearance and feel to traditional slot machines. VGM operations at Monticello Casino and Raceway began on September 30, 2004. At September 30, 2010, the number of VGMs in operation was 1,090 compared to 1,099 at September 30, 2009.

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Revenues derived from our VGM operations consist of VGM revenues and related food and beverage concession revenues. Each of the VGMs is owned by the State of New York. By statute, for a period of five years which began on April 1, 2008, 42% of gross VGM revenue is distributed to us. Following that five-year period, 40% of the first $50 million, 29% of the next $100 million and 26% thereafter of gross VGM revenue will be distributed to us. Gross VGM revenues consist of the total amount wagered at our VGMs, less prizes awarded. The statute also provides a vendor’s marketing allowance for racetracks operating video lottery programs of 10% on the first $100 million of net revenues generated and 8% thereafter. The legislation authorizing the implementation of VGMs at Montic ello Casino and Raceway expires in 2013. The VGM rate distributed to us may be modified during this five year period by an amendment to the statute. On August 3, 2010, legislation was passed to reduce operator fees by one percentage point at each level of VGM revenues, which we anticipate resulting in an annual cost to us of approximately $550,000 to $600,000. This legislation was effective August 11, 2010. Additionally, daily operational hours were expanded from 16 to 20 hours. In addition to these provisions relating to operations, the legislation was also revised to extend the sunset provision of the gaming law to the year 2050. Previously the legislation was set to expire in to 2017.

Raceway Operations. Monticello Casino and Raceway offers pari-mutuel wagering, live harness racing and simulcasting from various harness and thoroughbred racetracks across the country. Monticello Casino and Raceway derives its revenue principally from (i) fees from wagering at out-of-state locations on races simulcast from our facility using export simulcasting; (ii) revenue allocations, as prescribed by law, from betting activity at Off Track Betting facilities located in New York State; (iii) wagering on live races run at our facility; (iv) wagering at our facility on races broadcast from out-of-state racetracks using import simulcasting; and (v) admission fees, program and racing form sales, the sale of food and beverages and certain other ancillary acti vities.

Note B. Summary of Significant Accounting Policies

Accounts receivable. Accounts receivable are stated at the amount we expect to collect. When needed, an allowance for doubtful accounts is recorded based on information on the collectability of specific accounts. Accounts are considered past due or delinquent based on contractual terms, how recently payments have been received and our judgment of collectability. In the normal course of business, we settle wagers for other racetracks and are exposed to credit risk. These wagers are included in accounts receivable. Account balances are written off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. As of September 30, 2010 and Decemb er 31, 2009, we recorded an allowance for doubtful accounts of approximately $763,000.

Loss per common share. We compute basic loss per share by dividing loss applicable to common shares by the weighted-average common shares outstanding for the period. Diluted loss per share reflects the potential dilution of earnings that could occur if securities or contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the loss of the entity. Since the effect of outstanding options, warrants and option matching rights is anti-dilutive with respect to losses, they have been excluded from our computation of loss per common share. Therefore, basic and diluted losses per common share for the three months and nine months ended September 30, 2010 and 2009 were the same.

Index

The following table shows the approximate number of common stock equivalents outstanding at September 30, 2010 and 2009 that could potentially dilute basic income per share in the future, but were not included in the calculation of diluted loss per share because their inclusion would have been anti-dilutive. Warrants outstanding at September 30, 2010 includes a warrant to purchase 2 million shares of our common stock that had been issued to our former Chief Executive Officer pursuant to a legal settlement, which we cancelled on September 8, 2010 as a remedy for a breach of the legal settlement, but for which our former Chief Executive Officer has the contractual right pursuant to the legal settlement to bring an action to contest such cancellation.

	Outstanding at September 30,
	2010		2009
Options		5,593,000		7,379,000
Warrants		3,250,000		278,000
Option Matching Rights		5,565,000		---
Shares to be issued upon conversion of convertible debt		4,379,000		5,175,000
Total		18,787,000		12,832,000

Fair value. In the first quarter of 2008, we adopted the Fair Value Measurements and Disclosures standard issued by the Financial Accounting Standards Board (“FASB”) for financial assets and liabilities. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). As permitted in 2008, we chose not to elect the fair value option as prescribed by FASB for our finan cial assets and liabilities that had not been previously carried at fair value. Our financial instruments are comprised of current assets and current liabilities, which included the Notes. Current assets and current liabilities approximate fair value due to their short-term nature.

Estimates and assumptions. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from estimates.

Reclassifications. Certain prior period amounts have been reclassified to conform to the current period presentation.

Recent accounting pronouncements. We do not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, will have a material effect on our consolidated financial position, results of operations, or cash flows.

Note C. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities are comprised of the following:

	September 30, 2010		December 31, 2009
	(in thousands)
Liability for horseracing purses	$	1, 604	$	1, 984
Accrued interest, including default interest of approximately $748,000 at September 30, 2010		1,506		2,167
Accrued payroll		649		466
Accrued other		2,279		1,855
Total accrued expenses and other current liabilities	$	6,038	$	6,472

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Note D. Senior Convertible Notes

On July 26, 2004, we issued $65 million of 5 ½% Notes, with a maturity date of July 31, 2014 and each Holder, as defined under the Indenture, had the right to demand that we repurchase the Notes at par plus accrued interest on July 31, 2009. Interest is payable semi-annually on January 31 and July 31.

The Notes rank senior in right of payment to all of our existing and future subordinated indebtedness. The Notes are secured by our tangible and intangible assets and by a pledge of the equity interests of each of our subsidiaries and a mortgage on our property in Monticello, New York.

The Notes initially accrued interest at an annual rate of 5 ½%, which would be maintained with the occurrence of the “Trigger Event,” as defined under the Indenture. Since the events that constitute the “Trigger Event” had not occurred within the time period allotted under the Indenture, the Notes have accrued interest from and after July 31, 2005 at an annual rate of 8%. The holders of the Notes have the option to convert the Notes into shares of our common stock at any time prior to maturity, redemption or repurchase. The initial conversion rate is 72.727 shares per each $1,000 principal amount of the Notes. This conversion rate was equivalent to an initial conversion price of $13.75 per share. Since the Trigger Event did not occur on or prior to Jul y 31, 2005, the initial conversion rate per each $1,000 principal amount of the Notes was reset to $12.56 per share. This rate would result in the issuance of 5,175,159 shares upon conversion.

In August 2009, we commenced a declaratory judgment action against the beneficial owners of the Notes, as well as DTC and the Trustee, which we refer to together as the Defendants, in the Court, pursuant to which we sought a judicial determination that (1) no Holder, as defined under the Indenture, delivered a Put Notice to the office of the Trustee within the lawfully mandated time for exercise of a Holder’s put rights under the Indenture prior to the close of business on July 31, 2009, and that (2) Plainfield Special Solutions Master Fund Limited (“Plainfield”), Highbridge International LLC (“Highbridge”) and Whitebox Advisors LLC (“Whitebox”) may not and have not accelerated the Notes or invoked certain other consequences of a default. In October 2009, we entered into a stipulation in conne ction with the Action. Pursuant to a stipulation that we entered into in August 2009, we agreed to discontinue our claims against all beneficial owners of the Notes who executed the stipulation (the “Consenting Defendants”), who represent substantially all of the outstanding principal amount of the Notes, including Plainfield, Highbridge and Whitebox, without prejudice, and Plainfield, Highbridge and Whitebox agreed to withdraw the notices of default and acceleration of the Notes that they sent to us on August 3 and August 11, 2009. The Consenting Defendants further agreed to (i) be bound by any final non-appealable judgment with respect to the declaratory judgment sought by us against the Defendants, and (ii) not to commence any action or proceeding concerning the subject matter of the declaratory judgment until there has been a final non-appealable judgment with respect to the declaratory judgment sought by us.

On October 16, 2009, the Defendants answered the complaint, denying that we are entitled to the determination sought in the Action. On October 27, 2009, the Defendants filed a motion for summary judgment, seeking a determination that the Notes were properly put to us for repurchase on July 31, 2009. On December 3, 2009, we filed opposition papers and a cross-motion for summary judgment, requesting that the Court determine that the Holders of the Notes have failed to properly exercise any option to require that we repurchase the Notes by reason of a Holder put right exercisable prior to the close of business on July 31, 2009, and, as a consequence, that we are not in default of the Indenture.

On November 5, 2009, the Trustee filed (i) an amended answer, (ii) a counterclaim against us and (iii) a third party complaint against Alpha Monticello, Inc., Alpha Casino Management Inc., Mohawk Management, LLC, and Monticello Raceway Management, as guarantors of our obligation under the Notes. The amended answer again denied that we are entitled to the determinations which we seek in the Action. The counterclaim and third party complaint seek (a) a declaration that we are in default under the Indenture for failure to repurchase the Notes upon the purported exercise of the Holders’ put right under the Indenture and that the Trustee has properly accelerated the Notes in accordance with the terms of the Indenture, and (b) damages, including all unpaid principal and interest on the Notes, prejudgment interest and costs and expenses in bringing the Action, including attorney’s fees. On February 1, 2010, the Company and the Guarantors filed a reply to the counterclaim and answer to the third party complaint denying liability and asserting certain affirmative defenses.

Index

On April 8, 2010, we received the Decision from the Court granting the Defendants’ motion for summary judgment. The Decision provides that the Court has determined that the Defendants properly exercised the option requiring us to repurchase the Notes, that we are in default under the Notes with respect to our failure to repurchase the Notes on July 31, 2009 and that we must now repurchase the Notes. On May 11, 2010, we filed a notice of appeal with the Appellate Division to appeal the Decision. We are unable to predict the length of time it will take for the Appellate Division, or the State of New York Court of Appeals, to issue a final, non-appealable judgment. In the event that a final non-appealable ruling is issued declaring that the right to demand repayment of the Notes had been valid ly exercised, we would not have an immediate source of funds from which to pay our obligations under the Notes, and no assurance can be made that other sources of financing will be available at such time on commercially reasonable terms, if at all, to satisfy our obligations under the Notes.

A failure to have repurchased the Notes when required would result in an “Event of Default” under the Indenture. Due to the “Event of Default,” the accrued interest increases to an annual rate of 9% on the overdue principal as of August 4, 2009. The default interest payable at September 30, 2010 is approximately $748,000. This represents the default interest due from August 4, 2009, the date of the purported occurrence of the Event of Default, through September 30, 2010. We have paid all interest owed on the Notes other than the default interest through September 30, 2010.

From June 2010 through August 2010, together with our financial advisor Merrill Lynch, Pierce, Fenner, Smith Incorporated and our legal counsel, we engaged in extensive negotiations with certain holders of the Notes and such holders’ legal counsel regarding the settlement of the Action and the potential terms and conditions of an exchange or modification of the terms of the Notes. In connection with settlement discussions, we repaid $5 million of principal amount of the Notes on July 30, 2010 and an additional $5 million of principal amount of the Notes on August 12, 2010. On September 23, 2010, we entered into the Settlement Agreement with the Company’s subsidiaries named therein, the Trustee, and the beneficial owners of the Notes, representing approximately 93.7% of the outstanding principal amount of the Not es. Pursuant to the Settlement Agreement, we have agreed, subject to our right to consummate the Note Purchase described below and subject to stockholder approval, to (a) repay $22.5 million in aggregate principal amount of the Notes (the “Installment Payments”) and (b) exchange up to 100% of the aggregate principal amount of the Notes that remain outstanding after giving effect to the such repayments for consideration consisting of (x) $32.5 million in aggregate principal amount of 12% Convertible Senior Notes due 2014 (the “Restated Notes”) to be issued by us and (y) a pro rata share of one million shares of our common stock, par value $0.01 per share (“Common Stock”) (collectively, the “Debt Exchange”). The Installment Payments are payable as follows; (i) $10 million on the earlier of the date on which the Debt Exchange is consummated and October 23, 2010, which amount is to be used repay a portion of the outstanding principal of the No tes (the “First Installment”), which was paid on October 22, 2010, (ii) on the earlier of the date on which the Debt Exchange is consummated and November 22, 2010, $7.5 million, which amount is to be used repay a portion of the outstanding principal of the Notes, and all unpaid interest accrued to such date on the Notes (the “Second Installment”), and (iii) on the earlier of the date on which the Debt Exchange is consummated and December 7, 2010, the amount by which $22.5 million exceeds the sum of First Installment, the principal component of the Second Installment and the aggregate principal amount of Notes held by beneficial owners that do not elect to participate in the Debt Exchange (after giving effect to such payment), which amount is to be used to repay a portion of the remaining outstanding principal of the Notes, and all unpaid interest accrued to such date on the Notes. On or before November 22, 2010, we may, at our option in lieu of consummating the Debt Exchang e, repurchase all the Notes for an amount equal to the sum of all outstanding principal and interest owed on the Notes plus $975,000, to be paid on a pro rata basis to the beneficial holders of the Notes (the “Note Purchase”). Under the terms of the Settlement Agreement, we have agreed to redeem any Notes held by a beneficial owner thereof that does not participate in the Debt Exchange in the event that we do not consummate the Note Purchase on or before November 22, 2010 and at least 90% of the aggregate principal amount of the Notes are validly tendered and not properly withdrawn in the Debt Exchange. All accrued and unpaid interest to be paid with respect to the Notes pursuant to the terms of the Settlement Agreement includes interest due on overdue principal and interest at the default rate provided in the Notes, assuming that the principal of and interest on the Notes became due and payable in full on August 3, 2009.

In consideration of the foregoing, the Trustee and we have agreed under the terms of the Settlement Agreement to promptly take the necessary steps to withdraw the motions pending in that certain judicial proceeding commenced by us in August 2009 in the Court to the Action. Upon the consummation of the Debt Exchange or the Note Purchase, the parties to the Settlement Agreement have agreed to mutually release all claims known, unknown or suspected at closing of the Settlement Agreement that each party may have against the others and the parties to the Action have agreed to execute and file a Stipulation of Discontinuance, with prejudice and without costs to any party, with respect to the Action.

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The Restated Notes, if issued, will bear interest on the principal amount thereof at the rate of 12% per annum, 8% of which will be payable in cash and 4% of which will be payable in cash or, at our option (except as provided in the Restated Indenture under which the Restated Notes are to be issued), in kind. The Restated Notes would be our senior secured obligations, the payment of which will be secured by liens on our tangible and intangible assets and by a pledge of the equity interests of each of our subsidiaries and a mortgage on our property in Monticello, New York. Prior to maturity, redemption or repurchase, the Restated Notes will be convertible, at the option of the holder, into shares of Common Stock based upon a conversion rate of 1,132 shares per $1,000 in principal amount (which represents a convers ion price of approximately $0.8837 per share), subject to certain anti-dilution adjustment from time to time as provided in the Restated Indenture (the “Conversion Price”). The Restated Indenture under which the Restated Notes are to be issued will contain certain additional rights and obligations of us, including, without limitation, the following: (a) we will be required to pay to the holders of the Restated Notes an amount equal to the present value of foregone interest payments through July 31, 2012 in the event that the Restated Notes are converted prior to such date; (b) we may, at our option, redeem some or all of the Restated Notes for cash at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages (as defined in the Restated Indenture), provided that we may only exercise such redemption right before July 31, 2012 if the average of the last reported bid prices of Common Stock for the twenty consecutive trading da ys ending on the trading day prior to the date on which we mail the notice of redemption exceeds 200% of the Conversion Price in effect on such date; (c) each holder of the Restated Notes will have the right to require that we purchase such holder’s Restated Notes (or portions thereof) on July 31, 2012, subject to certain conditions and in accordance with the procedures set forth in the Restated Indenture; and (d) we will be required to comply with certain restrictive covenants on the conduct of our business.

The consummation of the Debt Exchange is subject to certain customary conditions, including: (a) the approval by our stockholders of the Debt Exchange and a corresponding increase in our authorized capital stock, (b) the receipt of regulatory approvals, which do not impose unreasonable restrictions upon the holders of the Restated Notes, (c) the absence of any material adverse changes to our business, results of operations or prospects and (d) the valid tender on or prior to the closing of at least 90% of the then outstanding aggregate principal amount of the Notes.

In the event that the Settlement Agreement is terminated in accordance with its terms or we have neither consummated the Note Purchase nor the Debt Exchange on or before November 22, 2010 (or, with respect to the Debt Exchange, January 21, 2011 in the event that we have complied with certain conditions related to the filing of a proxy statement and the holding of stockholder meeting) (the “Final Date”), we will be required to, among other things, immediately pay in cash, to the beneficial holders of the Notes that are parties to the Settlement Agreement, an amount equal to the greater of (A) 3% of the outstanding principal amount of the Notes on the Final Date, (B) $975,000, and (C) in certain circumstances, an amount representing the conversion value of the Restated Notes on the Final Date, were they issued on such date, plus, in each case, certain fees and expenses incurred in connection with the preparation, execution, negotiation and delivery of the Settlement Agreement and related documents. In addition, in the event that either the Settlement Agreement is terminated in accordance with its terms or neither the Note Purchase nor the Debt Exchange has been consummated on or before Final Date, the Trustee will be entitled to entry without further notice of a judgment against us and the guarantors of the Notes, jointly and severally, in an amount based upon the aggregate principal amount of the Notes then outstanding.

We recognized interest expense associated with the Notes of approximately $1.9 million and $1.3 million in the three months ended September 30, 2010 and 2009, respectively, and approximately $4.5 million and $3.9 million in the nine months ended September 30, 2010 and 2009, respectively. Included in the interest expense associated with the Notes for the three and nine months ended September 30, 2010, was default interest expense of approximately $748,000.

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Note E. Stockholders’ Equity

Stock-based compensation expense is approximately $301,000 and $746,000 for the three months ended September 30, 2010 and 2009, respectively, and approximately $2.3 million and $3.7 million for the nine months ended September 30, 2010 and 2009, respectively. As of September 30, 2010, there was approximately $363,000 of total unrecognized compensation cost related to non-vested share-based compensation awards granted under our plans. That cost is expected to be recognized over the remaining vesting period of two years. This expected cost does not include the impact of any future stock-based compensation awards.

On May 11, 2010, as part of a legal settlement with Joseph Bernstein, our former CEO, we issued warrants to purchase an aggregate of 3.25 million shares of our common stock at $2.00 per share, as follows: (i) 250,000 shares with an expiration date of May 10, 2015; (ii) 1 million shares with an expiration date of May 10, 2015; and (iii) 2 million shares with an expiration date of May 10, 2020, which may be exercised on a cashless basis and cannot be exercised until the warrants to purchase 1.25 million shares described in clauses (i) and (ii) above have been exercised in full. The warrants were recorded as legal settlement expense and valued at approximately $5.6 million. On September 8, 2010, we served a notice to Joseph Bernstein of his breach of the legal settlement and informed Mr. Bernstein that we elected certain remedies under the legal settlement including the cancellation of the warrant to purchase 2 million shares with an expiration date of May 10, 2020. Pursuant to the legal settlement, if Mr. Bernstein initiates an action within a specified time period to seek a declaration from a court of competent jurisdiction that he has not materially breached the legal settlement, the cancellation of the warrant will be stayed pending resolution of litigation; provided, however, that the warrant shall remain unexercisable pending resolution of such action.

Options that were granted to three officers and an employee, who have resigned during the second quarter of 2009, would have otherwise expired in thirty to ninety days subsequent to the termination date, based on the equity incentive plan under which the options were issued, but were extended to dates mutually agreed upon in the respective termination agreements, as permitted under the plan. The modification resulted in stock-based compensation expense of approximately $843,000 in the three and nine months ended September 30, 2009.

Options that were granted to four directors, who have resigned in March 2009, would have expired on the date of termination or in thirty days based on the equity incentive plan under which the options were issued, but were extended to the original expiration dates set forth for the respective options. The modification resulted in stock-based compensation expense of approximately $0 and $123,000 in the three and nine months ended September 30, 2009.

As a condition to the closing of the loan agreement with The Park Avenue Bank on July 27, 2009, we issued warrants to purchase an aggregate of 277,778 shares of our common stock, at an exercise price of $0.01 per share, to The Park Avenue Bank and a designee of a participant in the loan. The warrants expire on July 26, 2014. The warrants were valued at approximately $564,000, using the Black-Scholes valuation model.

On August 19, 2009, we entered into an investment agreement with Kien Huat pursuant to which (i) we issued to Kien Huat 6,804,188 shares of our Common Stock or approximately 19.9% of the outstanding shares of Common Stock on a pre-transaction basis, for aggregate consideration of $11 million (the “First Tranche”), and (ii) subject to and following stockholder approval of the transaction, as required under applicable NASDAQ Marketplace Rules, and the satisfaction of other customary closing conditions, we were to issue to the Investor an additional 27,701,852 shares of Common Stock for additional consideration of $44 million (the “Second Tranche”). During the period between the closing of the First Tranche and the closing of the Second Tranche, we were subject to certain customary covenants related to the operation of our business. As a result of the closing of the Second Tranche, Kien Huat owns 34,506,040 shares of the Common Stock, representing approximately one share less than 50.0% of our voting power following the closing.

On September 30, 2009, we entered into an amendment to the investment agreement Kien Huat. Under the investment agreement, if any option or warrant outstanding as of the closing of the First Tranche or the Second Tranche (or, in limited circumstances, if issued after the closing of the Second Tranche) is exercised after the closing of the First Tranche, Kien Huat has the right (following notice of such exercise) to purchase an equal number of additional shares of Common Stock as are issued upon such exercise at the exercise price for the applicable option or warrant, which is subject to stockholder approval. The investment agreement amendment clarifies that Kien Huat’s Option Matching Right was intended to extend to options and warrants exercised between the closing of the First Tranche and the closing of t he Second Tranche.

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On February 23, 2010, we authorized issuance of 74,705 shares of our common stock as payment of dividends due for the year ended December 31, 2009 on our Series B preferred stock. The approximate value of these shares when issued was $137,000.

On March 9, 2009, we authorized issuance of 124,610 shares of our common stock as payment of dividends due for the year ended December 31, 2008 on our Series B preferred stock. The approximate value of these shares when issued was $111,000.

Note F. Promotional Allowances

We are participating in a pilot tax-free bonus VGM program, as authorized by the New York State Lottery (“NYSL”). Under normal circumstances, bonus VGM play provided to a guest is subject to the NYSL tax. The pilot program authorizes us to provide up to 10% of our VGM win as non-taxable bonus VGM play to our guests. This non-taxable bonus VGM play cannot be converted into cash and must be played at a VGM. Such bonus VGM play is not included in gaming revenues or in promotional allowances since there is no direct cost to us for providing this incentive. The amount of non-taxable bonus VGM play played by our guests was approximately $1.6 million and $724,000 for the three months ended September 30, 2010 and 2009 respectively, and approximately $4.3 million and $724,000 for the nine months ended September 30, 2010 and 2009 re spectively.

At our discretion, we may exceed the 10% limit authorized for non-taxable bonus VGM play. If the 10% threshold is exceeded, the bonus VGM play is taxable, and is included in gaming revenues and promotional allowances. The cost for providing taxable bonus VGM play played by our guests was approximately $66,000 and $229,000 for the three months ended September 30, 2010 and 2009 respectively, and approximately $167,000 and $608,000 for the nine months ended September 30, 2010 and 2009 respectively, and are classified as gaming costs and expenses on the statement of operations.

The retail value of food, beverage, other services, taxable bonus VGM play and other prizes provided to our guests are included in revenues and promotional allowances for the three and nine months ended September 30, 2010 and 2009 are as follows.

	Three months ended				Nine months ended
	September 30, 2010		September 30, 2009		September 30, 2010		September 30, 2009
	(in thousands)				(in thousands)
Food and beverage	$	413	$	398	$	1,292	$	724
Taxable bonus VGM play		112		394		284		1,049
Players club awards		161		278		588		845
Bus group sales incentives		3		48		16		142
Total promotional allowances	$	689	$	1,118	$	2,180	$	2,760

Note G. Concentration

We have no accounts receivable concentration as of September 30, 2010. Two debtors, New York Off-Track Betting Corporation and New Jersey Sports and Exposition Authority, represented approximately 12% and 11%, respectively, of our total outstanding accounts receivable as of December 31, 2009.

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Note H. Related Party Transactions

Concord Associates, L.P.

Pursuant to the Concord Agreement, until the earlier to occur of the commencement of operations at the gaming facilities to be developed by Concord Associates, L.P., an affiliate of a significant stockholder and a member of our board of directors (the “Board”), at the site of the former Hotel and Resort or July 31, 2011, we were to continue to pay to the Monticello Harness Horsemen’s Association, Inc. 8.75% of the net win from VGM activities at Monticello Casino and Raceway, and Concord Associates, L.P. was to pay any of the difference, if any, between $5 million per year and 8.75% of the net win from VGM activities (“VGM Shortfall”) during such period. As of September 30, 2010, we believe Concord Associates, L.P. owed us approximately $310,000 for the VGM Shortfall. On August 5, 201 0 we terminated the Concord Agreement. Concord Associates, L.P. has contested its responsibility to make such VGM Shortfall payments to us. We have agreed with Concord Associates L.P. to submit the matter to arbitration.

Kien Huat

Pursuant to the investment agreement with Kien Huat, a significant stockholder, the parties agreed to negotiate in good faith and cooperate to mutually agree upon the terms and conditions of a loan agreement, pursuant to which it was anticipated that Kien Huat would make a loan available to us of up to the lesser of $10 million or the maximum amount we were then permitted to borrow (taking into account other our indebtedness at such time) under the terms of our existing indebtedness. Pursuant to correspondence received from Kien Huat’s counsel on August 9, 2010 and August 10, 2010, we have been advised that Kien Huat does not believe there is any current obligation for it to provide such loan availability. We have determined that Kien Huat does not have an obligation under the investment agreement to make a loan available to us. In addition, on November 5, 2010, Kien Huat delivered a commitment letter to the Company agreeing, subject to the conditions contained therein, to provide to the Company a short-term bridge loan to a rights offering pursuant to which the Company would receive aggregate proceeds of $35 million from Kien Huat. See Note J, “Subsequent Events.”

Note I. Commitments and Contingencies

Legal Proceedings

Empire Resorts, Inc. v. The Bank of New York Mellon Corporation and The Depository Trust Company

On August 5, 2009, we filed a declaratory judgment action against the beneficial owners of the Notes, as well as DTC and the Trustee, which we refer to together as the Defendants. In the complaint, we sought a judicial determination that (1) no Holder, as defined under the Indenture, delivered a Put Notice to the office of the Trustee within the lawfully mandated time for exercise of a Holder’s put rights under the Indenture prior to the close of business on July 31, 2009, and that (2) the three entities that gave the purported notice of default may not and have not accelerated the Notes or invoked certain other consequences of a default. On April 8, 2010, we received the Decision from the Court granting the Defendants’ motion for summary judgment. The Decision provides that the Court has d etermined that the Defendants properly exercised the option requiring us to repurchase the Notes, that we are in default under the Notes with respect to our failure to repurchase the Notes on July 31, 2009 and that we must now repurchase the Notes. On May 11, 2010, we filed a notice of appeal with the Appellate Division to appeal the Decision. We are unable to predict the length of time it will take for the Appellate Division, or the State of New York Court of Appeals, to issue a final, non-appealable judgment. In the event that a final non-appealable ruling is issued declaring that the right to demand repayment of the Notes had been validly exercised, we would not have an immediate source of funds from which to pay our obligations under the Notes, and no assurance can be made that other sources of financing will be available at such time on commercially reasonable terms, if at all, to satisfy our obligations under the Notes. In connection with settlement discussio ns with the holders of the Notes, we redeemed $5 million principal amount of the Notes on July 30, 2010 and an additional $5 million principal amount of the Notes on August 12, 2010. On September 23, 2010, we entered into the Settlement Agreement with beneficial owners of approximately 93.7% of the outstanding principal amount of the Notes and the Trustee, pursuant to which the parties agreed to settle all claims relating to the Action. On October 22, 2010, we redeemed an additional $10 million principal amount of the Notes pursuant to the Settlement Agreement. Upon the consummation of the transactions contemplated by the Settlement Agreement, the parties thereto have agreed to mutually release all claims known, unknown or suspected at closing of the Settlement Agreement that each party may have against the others and the parties to the Action have agreed to execute and file a Stipulation of Discontinuance, with prejudice and without costs to any party, with respect to the Ac tion. No assurance can be made, however, that the conditions to the consummation of the transaction contemplated by the Settlement Agreement will be satisfied or waived or that alternative financing will be secured within the time permitted under the Settlement Agreement.

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Bryanston Group v. Empire Resorts, Inc.

A complaint has been filed in the Supreme Court of The State of New York, New York County (the “Supreme Court”) on or about July 12, 2010 against us. The lawsuit arises out of a recapitalization agreement entered into on December 10, 2002 pursuant to which we issued Series E preferred stock to Bryanston Group, Inc. and Stanley Tollman. The complaint is brought by Bryanston Group, Inc. and Stanley Tollman alleging that we breached the terms of the recapitalization agreement by (i) failing to use the funds from the 2009 investment by Kien Huat to redeem the Series E preferred shares and pay dividends on the shares; and (ii) paying in excess of $1 million per year in operating expenses (including paying the settlement to our former chief executive officer, Joseph Bernstein) while not redeeming the Series E preferred shares an d paying dividends on the shares. The plaintiffs had unsuccessfully sought a preliminary injunction, asking the Supreme Court to have us put into escrow funds sufficient to pay the purchase price for the redemption the Series E shares and the dividends. The Company has since filed a motion to dismiss the complaint. While we cannot predict the outcome of this litigation, we believe the lawsuit is without merit and we will aggressively defend our interests.

Other Proceedings

We are a party from time to time to various other legal actions that arise in the normal course of business. In the opinion of management, the resolution of these other matters will not have a material and adverse effect on our consolidated financial position, results of operations or cash flows.

Note J. Subsequent Events

Kien Huat Financing Commitment

On November 5, 2010, Kien Huat delivered to us a commitment letter (the “Commitment Letter”) to provide, subject to the terms thereof, a short-term bridge loan to us in the aggregate principal amount of $35 million (the “Bridge Loan”). If consummated, the proceeds of the Bridge Loan, together with available funds, are to be used to repay in full our obligations under our Notes in accordance with the terms of the Settlement Agreement. Following the extension of the Bridge Loan and the repayment of the Notes, we intend to conduct a rights offering upon terms to be determined by the Board. In the proposed rights offering, if conducted, all holders of our common stock will be granted the right to purchase additional shares of the our common stock at a price of $0.8837 per share. 0; In the Commitment Letter, Kien Huat also agreed to purchase all shares issuable pursuant to the basic rights that would be allocated to Kien Huat with respect to its currently owned shares of the Company’s common stock. If conducted, the proceeds of the rights offering will be used, to the extent available, to repay amounts outstanding under the Bridge Loan. If, upon the completion of the rights offering, the proceeds thereof are insufficient to repay in full all amounts outstanding under the Bridge Loan, including principal and accrued interest thereon, Kien Huat has agreed to convert the full amount remaining unpaid into a convertible term loan with a term of two years at an interest rate of 5% per annum convertible at a price equal to the exercise price of the rights issued in the rights offering. Kien Huat’s commitments to participate in the rights offering and to provide the term loan are subject to the terms and conditions of the Commitment Letter, i ncluding the negotiation and execution of definitive documentation of the transactions contemplated thereby.

Option Grants

On November 9, 2010, the Compensation Committee of the Board approved the grant of the following options to the Company’s directors and certain executive officers in consideration of their continued service to the Company: (i) an option granted to each of the Company’s six non-employee directors to purchase 40,000 shares of the Company’s common stock at an exercise price of $0.93 per share, which vest in equal portions annually over a three year period from the grant date or upon the grantee’s involuntary dismissal from the Board, if earlier; (ii) an option granted to Joseph D’Amato, the Company’s Chief Executive Officer and Chief Financial Officer to purchase 480,000 shares of the Company’s common stock at an exercise price of $0.93 per share, which vest in equal portions annually over a thre e year period from the grant date; (iii) an option granted to Emanuel R. Pearlman, the Chairman of the Board, to purchase 1,400,000 shares of the Company’s common stock at an exercise price of $0.93 per share, which vest in equal portions annually over a three year period from the grant date; and (iv) an option granted to Nanette L. Horner, the Company’s VP of Legal Affairs, to purchase 80,000 shares of the Company’s common stock at an exercise price of $0.93 per share, which vest in equal portions annually over a three year period from the grant date.

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

The Management’s Discussion and Analysis of the Financial Condition and Results of Operations should be read together with the Management’s Discussion and Analysis of Financial Condition and Results of Operations and the Condensed Consolidated Financial Statements and related notes thereto in our Annual Report on Form 10-K for the fiscal year ended December 31, 2009.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains statements which constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements generally relate to our strategies, plans and objectives for future operations and are based upon management’s current plans and beliefs or estimates of future results or trends. Forward-looking statements also involve risks and uncertainties, including, but not restricted to, the risks and uncertainties described in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2009, which could cause actual results to differ materially from those contained in any forward-looking statement. Many o f these factors are beyond our ability to control or predict.

You should not place undue reliance on any forward-looking statements, which are based on current expectations. Further, forward-looking statements speak only as of the date they are made, and we will not update these forward-looking statements, even if our situation changes in the future. We caution the reader that a number of important factors discussed herein, and in other reports filed with the Securities and Exchange Commission, could affect our actual results and cause actual results to differ materially from those discussed in forward-looking statements.

Liquidity and Going Concern

The accompanying condensed consolidated financial statements have been prepared on a basis that contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. Our ability to continue as a going concern depends on our ability to fulfill our obligations with respect to an original $65 million of 5 ½% senior convertible notes (the “Notes”) of which $55 million was outstanding at September 30, 2010. Under the terms of the Notes, we had an obligation to repurchase any of the Notes at a price equal to 100% of their principal amount on July 31, 2009; to the extent that the Holder, as defined under the indenture dated July 26, 2004 (the “Indenture”), delivered a properly executed Put Notice, as defined under the Indenture. 60;We sought a judicial determination, which we refer to as the “Action,” in the Supreme Court of New York, Sullivan County (the “Court”), against the beneficial owners of the Notes, as well as The Depository Trust Company (“DTC”) and the Bank of New York Mellon Corporation (the “Trustee,” and together with DTC, the “Defendants”) that (1) no Holder, delivered an executed Put Notice to the office of the Trustee within the lawfully mandated time for exercise of a Holder’s put rights under the Indenture prior to the close of business on July 31, 2009, and that (2) the three entities that gave the purported notice of default may not and have not accelerated the Notes or invoked certain other consequences of a default. On April 8, 2010, we received the Decision and Order (the “Decision”) from the Court granting the Defendants’ motion for summary judgment. The Decision provides that the Court has determined th at the Defendants properly exercised the option requiring us to repurchase the Notes, that we are in default under the Notes with respect to our failure to repurchase the Notes on July 31, 2009 and that we must now repurchase the Notes. On May 11, 2010, we filed a notice of appeal with the Third Judicial Department of the Appellate Division of the Supreme Court of the State of New York (the “Appellate Division”) to appeal the Decision. We are unable to predict the length of time it will take for the Appellate Division, or the State of New York Court of Appeals, to issue a final, non-appealable judgment. In the event that a final non-appealable ruling is issued declaring that the right to demand repayment of the Notes had been validly exercised, we would not have an immediate source of funds from which to pay our obligations under the Notes, and no assurance can be made that other sources of financing will be available at such time on commercially reasonable terms, if at all, to satisfy our obligations under the Notes. On September 23, 2010, we entered into a settlement agreement with beneficial owners of approximately 93.7% of the outstanding principal amount of the Notes and the Trustee, pursuant to which the parties agreed to settle all claims relating to the Action (the “Settlement Agreement”). In connection with settlement discussions with the holders of the Notes, we redeemed $5 million principal amount of the Notes on July 30, 2010 and an additional $5 million principal amount of the Notes on August 12, 2010. On October 22, 2010 we redeemed an additional $10 million principal amount of the Notes pursuant to the Settlement Agreement. Upon the consummation of the transactions contemplated by the Settlement Agreement, the parties thereto have agreed to mutually release all claims known, unknown or suspected at closing of the Settlement Agreement that each party may have against the others and the parties to the Action have agreed to execute and file a Stipulation of Discontinuance, with prejudice and without costs to any party, with respect to the Action. On November 5, 2010, we received a commitment from Kien Huat Realty III Limited (“Kien Huat”), our largest stockholder, to provide, subject to the conditions contained therein to us a short-term bridge loan to a rights offering pursuant to which we would receive aggregate proceeds of $35 million from Kien Huat, which proceeds would be used, together with available funds, to repay in full our obligations under the Notes as permitted under the Settlement Agreement. No assurance can be made, however, that the conditions to the consummation of the transaction contemplated by the Settlement Agreement or the financing arrangements proposed by Kien Huat will be satisfied or waived or that alternative financing will be secured within the time permitted under the Settlement Agreement. In addition, we have continuing net losses and negative cash flows from op erating activities. These additional conditions raise substantial doubt about our ability to continue as a going concern. These condensed consolidated financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern.

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Overview

Empire Resorts, Inc. (“Empire,” the “Company,” “us,” “our” or “we”) was organized as a Delaware corporation on March 19, 1993, and since that time has served as a holding company for various subsidiaries engaged in the hospitality and gaming industries.

Through our wholly-owned subsidiary, Monticello Raceway Management, Inc. (“Monticello Raceway Management”), we currently own and operate Monticello Casino and Raceway, a video gaming machine (“VGM”) and harness horseracing facility located in Monticello, New York, 90 miles northwest of New York City. At Monticello Casino and Raceway, we currently operate 1,090 VGMs as an agent for the New York State Lottery and conduct pari-mutuel wagering through the running of live harness horse races, the import simulcasting of harness and thoroughbred horse races from racetracks across the country and the export simulcasting of our races to offsite pari-mutuel wagering facilities.

On August 3, 2010, legislation was passed to reduce operator fees by one percentage point at each level of VGM revenues, which we anticipate resulting in an annual cost to us of approximately $550,000 to $600,000. This legislation was effective August 11, 2010. Additionally, daily operational hours were expanded from 16 to 20 hours. In addition to these provisions relating to operations, the legislation was also revised to extend the sunset provision of the gaming law to the year 2050. Previously the legislation was set to expire in to 2017.

We are concentrating on improving our cash flow, and our current operations at Monticello Raceway Management and on restructuring our balance sheet with the infusion of new capital from our Investor, Kien Huat Realty III Limited, a corporation organized under the laws of the Isle of Man (“Kien Huat”). We had an agreement (the “Concord Agreement”), subject to certain conditions, with Concord Empire Raceway Corp. (“Raceway Corp.”), a subsidiary of Concord Associates, L.P., to provide advice and general managerial oversight with respect to the operations at a harness track to be constructed at that certain parcel of land located in the Town of Thompson, New York and commonly known as the Concord Hotel and Resort. We terminated the Concord Agreement on August 5, 2010.

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We have been working since 1996 to develop a Class III casino on a 29.31 acre site owned by us adjacent to our Monticello, New York facility. As used herein, Class III gaming means a full casino including slot machines, on which the outcome of play is based upon randomness, and various table games including, but not limited to, poker, blackjack and craps. Initially, this effort was pursued through agreements with various Native American tribes. Our most recent efforts were pursuant to agreements with the St. Regis Mohawk Tribe, which expired pursuant to their terms on December 31, 2007. We were advised, however, that on January 4, 2008, the St. Regis Mohawk Tribe received a letter from the Bureau of Indian Affairs (“BIA”) denying the St. Regis Mohawk Tribe’s request to take 29.31 acres into trust for the purpose of building a Class III gaming facility to be located at Monticello Casino and Raceway. The basis for the denial, a newly promulgated “commutability rule,” is reported to be under review by the U.S. Department of the Interior. On July 8, 2010, the St. Regis Mohawk Tribe issued a press release announcing that it is ending its exclusive negotiations with us and is pursing alternative sites and options for off-reservation gaming in the Catskills region of the State of New York.

Effective August 5, 2009 and continuing through January 29, 2011, a subsidized VGM free play pilot program was implemented at Monticello Casino and Raceway. Monticello Casino and Raceway intends to use this free play to build its player loyalty, increase its database of active and profitable players and to reactivate dormant players. Monticello Casino and Raceway is authorized to provide promotional free play up to 10% of the prior month’s video gaming revenue (net win). Parameters for determining free play success will be mutually agreed on by the New York State Lottery (“NYSL”) and Monticello Casino and Raceway, by evaluating prior revenue trends compared to current trends, or other measurements as agreed upon between New York State Lottery and Monticello Casino and Raceway.< /div>

Competition

We face significant competition for our VGM operation from a VGM facility at Yonkers Raceway, and to a lesser extent, two casinos that have opened in Pennsylvania and one, operated by the Mohegan Tribal Gaming Authority, is within 70 miles of our Monticello property. The Yonkers facility, which is much closer to New York City, has a harness horseracing facility, approximately 5,500 VGMs, food and beverage outlets and other amenities. In August 2009, the New York State Lottery approved a pilot test period for us and one other New York State racino authorizing for a pilot tax-free bonus VGM program for our guests. The pilot program was to last six months and the NYSL was to evaluate the success of the pilot program by February 4, 2010. The pilot tax-free bonus VGM program provided us the opportunity to reward our guests based on their level of VGM play and to offer promotions that can compete with the offerings of our competitors located in Pennsylvania. The pilot tax-free bonus VGM program has been extended through January 29, 2011.

In January 2010, the Pennsylvania legislature authorized and its Governor approved table games in its existing slot-machine facilities. The legislation authorizes all table games, including blackjack, craps, roulette, baccarat, and poker at thoroughbred and harness racetracks with slot-machine facilities and stand-alone slot-machine facilities. In addition, the legislation authorizes the granting of credit to guests of the Pennsylvania casinos. Table games became operational in Pennsylvania’s casinos in July 2010. Presently approximately 533 table games and approximately 121 poker tables are offered at the Pennsylvania casinos. Both Pennsylvania casinos that we compete against have installed and offer table games. This legislation amended and augmented the legislation passed in July 2004 in which Pennsylvania legalized the opera tion of up to 61,000 slot machines at 14 locations throughout the state) to permit table games at the slot-machine facilities. As of September 2010, there were nine casinos in operation within Pennsylvania, with six located at racing tracks. One such race track facility is the Mohegan Sun at Pocono Downs, which has approximately 2,300 slot machines, and began the operation of 65 table games and 16 poker tables in July 2010. The Mohegan Sun at Pocono Downs opened in January 2007 in Wilkes-Barre, Pennsylvania, approximately 70 miles southwest of Monticello. In addition, in October 2007, the Mount Airy Casino Resort opened with approximately 2,500 slot machines, a hotel, spa, and a golf course; and in July 2010 it began the operation of 56 table games and 12 poker tables. The Mount Airy Casino Resort is located in Mount Pocono, Pennsylvania, approximately 60 miles southwest of Monticello.

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Results of Operations

Three Months Ended September 30, 2010 Compared to Three Months Ended September 30, 2009.

Revenues. Net revenues decreased approximately $1.4 million (7%) for the three months ended September 30, 2010 compared to the three months ended September 30, 2009. Revenue from racing operations decreased by approximately $2.3 million (52%), food, beverage and other revenue decreased by approximately $201,000 (12%) and revenue from VGM operations increased by approximately $672,000 (4%). Promotional allowances decreased by approximately $429,000 (38%), as described below.

Our number of daily visits increased approximately 3% and the average daily win per unit increased from an adjusted $159.07 for the three months ended September 30, 2009 to $166.59 for the three months ended September 30, 2010 (5%). The adjusted average daily win per unit for the three months ended September 30, 2009 reflects the reduction in the number of machines in service from 1,253 to 1,090. Our VGM hold percentage was 8.0% and 7.6% for the three months ended September 30, 2010 and 2009, respectively.

Racing revenue decreased primarily due to a reduction in payments received from Off-Track Betting Corporations (“OTBs”) of approximately $2.4 million and lower stall rental income of $90,000; offset by an increase in simulcasting commissions of approximately $168,000. The reduction in commissions received from OTBs is primarily the result of receipt of approximately $2.1 million of previously contested amounts from OTBs during the third quarter of 2009.

Food, beverage and other revenue decreased primarily as a result of $110,000 of other revenue received in 2009 and a decrease in cash paying food and beverage guests.

Promotional allowances consist of the retail value of complimentary food, beverages and other items provided to our guests. In addition, promotional allowances include taxable bonus VGM play offered to our guests based on their relative gaming worth and prizes included in certain promotional marketing programs. Promotional allowances decreased by approximately $429,000 (38%), primarily due to decreases in taxable bonus VGM play offered to our guests of approximately $282,000, players club awards of approximately $117,000 and bus group sales incentives of approximately $45,000; offset by an increase in food promotions of approximately $15,000. Taxable bonus VGM play is included in revenues and promotional allowances to reflect the cost of the NYSL commissions paid on such bonus VGM play, and included in gaming cos ts and expenses. Taxable bonus VGM play was $112,000 and $394,000 in the three-month periods ended September 30, 2010 and 2009, respectively. Excluding the taxable bonus VGM play from both the three-month period ended September 30, 2010 and 2009, cash-basis VGM revenue increased approximately $954,000 (6%). The cost of providing such bonus VGM play was $66,000 and $229,000 in the three-month period ended September 30, 2010 and 2009, respectively.

We are participating in a pilot tax-free bonus VGM program, as authorized by the NYSL. Under this program, bonus VGM play provided to a guest is not subject to the NYSL tax. The pilot program authorizes us to provide up to 10% of our VGM win as non-taxable bonus VGM play to our guests. This non-taxable bonus VGM play cannot be converted into cash and must be played at a VGM. Such bonus VGM play is not included in gaming revenues or in promotional allowances since there is no cost to us for providing this incentive. The amount of non-taxable bonus VGM play played by our guests was approximately $1.6 million and $724,000 for the three months ended September 30, 2010 and 2009 respectively. At our discretion, we may exceed the 10% limit authorized for non-taxable bonus VGM play. If the 10% threshold is exceeded, the bonus VGM p lay is taxable, and is included in gaming revenues and promotional allowances.

Gaming costs. Gaming (VGM) costs decreased by approximately $244,000 (2%) to approximately $12.1 million for the three months ended September 30, 2010. Gaming costs decreased by approximately $701,000 primarily due to the settlement payment of $650,000 in regards to the Sportsystems Gaming Management at Monticello LLC contract in 2009, offset by an increase in Lottery and other commissions of approximately $457,000 due to higher VGM revenue, a one percent tax increase and amounts owed on free play that exceeds the 10% limit available under the pilot tax-free bonus VGM program.

Index

Racing costs. Racing costs decreased by approximately $1.2 million (39%) to approximately $1.9 million for the three months ended September 30, 2010. This decrease is a result of the horsemen’s share declining by approximately $1.2 million caused by lower racing revenues.

Food, beverage and other costs. Food, beverage and other costs decreased approximately $35,000 (7%) to approximately $495,000 primarily as a result of decreased food revenue. Food and beverage costs were 34% and 32% of food and beverage revenues for the three months ended September 30, 2010 and 2009, respectively.

Selling, general and administrative expenses. Selling, general and administrative expenses decreased approximately $201,000 (6%) for the three months ended September 30, 2010 as compared to the three months ended September 30, 2009. This decrease was a result of cost savings of approximately $977,000, mostly due to costs associated with the assignment of our revolving line of credit of approximately $449,000 in 2009, but with no such costs in 2010 and a decrease in director and professional fees of approximately $374,000 in 2010. These decreases were offset by an increase in direct marketing expenses of approximately $496,000, primarily consisting of television advertising and promotional prize expenses, and an increase in attorney fees of approximately $35 0,000 primarily due to the settlement with our Note holders.

Stock-based compensation expense. The decrease in stock-based compensation of approximately $445,000 (60%) was primarily a result of fewer options granted to directors during the three months ended September 30, 2010.

Interest expense. Interest expense decreased approximately $61,000 (3%) as a result of us paying down the principal on the Notes by $10 million in July and August 2010, $564,000 interest expense related to The Park Avenue Bank warrants in 2009 and by us paying off our revolving line of credit in December 2009, offset by the accrual of default interest on the Notes of approximately $748,000 in September 2010.

Nine Months Ended September 30, 2010 Compared to Nine Months Ended September 30, 2009.

Revenues. Net revenues increased approximately $108,000 (0%) for the nine months ended September 30, 2010 compared to the nine months ended September 30, 2009. Revenue from VGM operations increased by approximately $1.9 million (5%), food, beverage and other revenue increased by approximately $302,000 (8%), and revenue from racing operations decreased by approximately $2.7 million (29%). Promotional allowances decreased by approximately $580,000 (21%), as described below.

Our number of daily visits increased approximately 10%; and the average daily win per unit increased from an adjusted $141.50 for the nine months ended September 30, 2009 to $148.31 for the nine months ended September 30, 2010 (5%). The adjusted average daily win per unit for the nine months ended September 30, 2009 reflects the reduction in the number of machines in service from 1,476 to 1,090. Our VGM hold percentage was 8.0% and 7.8% for the nine months ended September 30, 2010 and 2009, respectively.

Racing revenue decreased primarily due to a reduction in payments received from OTBs of approximately $2.8 million; offset by an increase in simulcasts commissions of approximately $63,000. The reduction in commissions received from OTBs is primarily the result of the receipt of approximately $2.8 million of previously contested amounts from OTBs during the nine months ended September 30, 2009.

Food, beverage and other revenue increased primarily as a result of promotional allowances related to food.

Promotional allowances consist of the retail value of complimentary food, beverages and other items provided to our guests. In addition, promotional allowances include taxable bonus VGM play offered to our guests based on their relative gaming worth and prizes included in certain promotional marketing programs. Promotional allowances decreased by approximately $580,000 (21%), primarily due to decreases in taxable bonus VGM play of approximately $765,000, players club awards of approximately $257,000 and bus group sales incentives of approximately $126,000; offset by an increase in food promotions of approximately $568,000. Taxable bonus VGM play is included in revenues and promotional allowances to reflect the cost of the NYSL commissions paid on such bonus VGM play, and included in gaming costs and expenses. Taxable bonus VGM play was $284,000 and $1,049,000 in the nine-month period ended September 30, 2010 and 2009, respectively. Excluding the taxable bonus VGM play from both the nine-month periods ended September 30, 2010 and 2009, cash-basis VGM revenue increased approximately $2.7 million (7%). The cost of providing such bonus VGM play was approximately $167,000 and $608,000 in the nine-month period ended September 30, 2010 and 2009, respectively.

Index

We are participating in a pilot tax-free bonus VGM program, as authorized by the NYSL. Under this program, bonus VGM play provided to a guest is not subject to the NYSL tax. The pilot program authorizes us to provide up to 10% of our VGM win as non-taxable bonus VGM play to our guests. This non-taxable bonus VGM play cannot be converted into cash and must be played at a VGM. Such bonus VGM play is not included in gaming revenues or in promotional allowances since there is no cost to us for providing this incentive. The amount of non-taxable bonus VGM play played by our guests was approximately $4.3 million and approximately $724,000 for the nine months ended September 30, 2010 and 2009 respectively. At our discretion, we may exceed the 10% limit authorized for non-taxable bonus VGM play. If the 10% threshold is exceeded, the bonus VGM play is taxable, and is included in gaming revenues and promotional allowances.

Gaming costs. Gaming (VGM) costs increased by approximately $487,000 (1%) to approximately $33.4 million for the nine months ended September 30, 2010. Lottery and other commissions increased approximately $1.4 million due to increased VGM revenue, the one percent tax increase and amounts owed on free play that exceeds the 10% limit available under the pilot tax-free bonus VGM program. This increase was offset by decreases in consulting fees of approximately $758,000, which was primarily due to the settlement payment of $650,000 in regards to the Sportsystems Gaming Management at Monticello LLC contract in 2009 and other cost savings of approximately $180,000.

Racing costs. Racing costs decreased by approximately $1.3 million (18%) to approximately $5.9 million for the nine months ended September 30, 2010. This decrease is a result of the horsemen’s share declining by approximately $1.4 million caused by lower racing revenues; offset by increases in legal expenses and various other costs of approximately $111,000.

Food, beverage and other costs. Food, beverage and other costs increased approximately $81,000 (6%) to approximately $1.4 million primarily as a result of increased food revenue. Food and beverage costs were 35% of food and beverage revenues for the nine months ended September 30, 2010 and 2009.

Selling, general and administrative expenses. Selling, general and administrative expenses decreased approximately $793,000 (9%) for the nine months ended September 30, 2010 as compared to the nine months ended September 30, 2009. This decrease was a result of payroll savings of approximately $733,000 and other cost savings of approximately $1.3 million, mostly due to reduced director fees of approximately $554,000 in 2010 and costs associated with the assignment of our revolving line of credit of approximately $449,000 in 2009, but with no such costs in 2010. These decreases were offset by increases in direct marketing expenses of approximately $1.3 million, primarily consisting of television advertising and promotional prize expenses.

Stock-based compensation expense. The decrease in stock-based compensation of approximately $1.5 million (40%) was primarily a result of the modification of options that were granted to three officers and an employee, who have resigned during the second quarter of 2009, which resulted in stock-based compensation expense of approximately $843,000 during the nine months ended September 30, 2009 and of the modification of options that were granted to four directors, who have resigned in March 2009, which resulted in stock-based compensation expense of approximately $123,000 during the nine months ended September 30, 2009.

Legal Settlement. On May 13, 2010, Mr. Bernstein, our former CEO, the Company and the third party defendants entered into a settlement agreement providing for the dismissal of all claims with prejudice. The legal settlement of approximately $7.1 million consisted of a payment of $1.5 million in cash and the issuance of warrants to purchase 3.2 million shares of our common stock valued at $5.6 million to our former CEO.

Interest expense. Interest expense decreased approximately $237,000 (5%) as a result of us paying down the principal on the Notes by $10 million in July and August 2010, $564,000 interest expense related to The Park Avenue Bank warrants in 2009 and by us paying off our revolving line of credit in December 2009, offset by the accrual of default interest on the Notes of approximately $748,000 in September 2010.

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Liquidity and Capital Resources

Net cash used in operating activities during the nine months ended September 30, 2010 and 2009 was approximately $4.3 million and $5.2 million, respectively. The decrease of approximately $931,000 was primarily a result of the increase in the net loss adjusted for non-cash items.

Net cash used in investing activities during the nine months ended September 30, 2010 and 2009 was approximately $320,000 and $192,000 respectively. The increase of approximately $128,000 was primarily a result of the purchasing of equipment.

Net cash used in financing activities was approximately $9.9 million for the nine months ended September 30, 2010 compared to net cash provided by financing activities of $6.3 million for the nine months ended September 30, 2009. This decrease is primarily a result of a $10 million repayment on the principal of our Notes during the nine months ended September 30, 2010, compared to the nine months ended September 30, 2009, when we benefited from proceeds from the issuance of common stock of $11 million and stock options of approximately $137,000 and the redemption of the restricted cash account under our revolving credit facility of approximately $467,000, offset by stock issuance costs of approximately $2.2 million and repayments of $3.2 million to our revolving credit facility.

Concord Associates, L.P.

Pursuant to the Concord Agreement, until the earlier to occur of the commencement of operations at the gaming facilities to be developed by Concord Associates, L.P., an affiliate of a significant stockholder and a member of our board of directors, at the site of the former Hotel and Resort or July 31, 2011, we were to continue to pay to the Monticello Harness Horsemen’s Association, Inc. 8.75% of the net win from VGM activities at Monticello Casino and Raceway, and Concord Associates, L.P. was to pay any of the difference, if any, between $5 million per year and 8.75% of the net win from VGM activities (“VGM Shortfall”) during such period. As of September 30, 2010, we believe Concord Associates, L.P. owed us approximately $310,000 for the VGM Shortfall. On August 5, 2010 we terminated the Concor d Agreement. Concord Associates, L.P. has contested its responsibility to make such VGM Shortfall payments to us. We have agreed with Concord Associates L.P. to submit the matter to arbitration.

Kien Huat

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices. We do not have any financial instruments held for trading or other speculative purposes and do not invest in derivative financial instruments, interest rate swaps or other investments that alter interest rate exposure. We invest our excess cash primarily in short term U.S. Treasury Funds. Due to the short-term nature of these investments, an increase by 1% in market interest rates would not have a significant impact on the total value of our portfolio as of September 30, 2010. Accordingly, while changes in interest rates could decrease interest income, we do not believe that an interest rate change would not have a significant impact on our operatio ns.

We do not have exposure to foreign currency exchange rate fluctuations, as we do not transact business in international markets and are not a party to any material non-U.S. dollar-denominated contracts.

We do not use derivative financial instruments nor do we enter into any futures or forward commodity contracts since we do not have significant market risk exposure with respect to commodity prices.

ITEM 4. CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its j udgment in evaluating the cost-benefit relationship of possible controls and procedures. Management believes, however, that a controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

We carried out an evaluation as of September 30, 2010 under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as required by Rule 13a-15 of the Securities Exchange Act of 1934, as amended. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to timely alert them to any material information (including our consolidated subsidiaries) that must be included in our periodic Securities and Exchange Commission filings.

Changes in Our Financial Reporting Internal Controls.

There has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Securities Exchange Act of 1934, as amended) during the fiscal quarter ended September 30, 2010 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Empire Resorts, Inc. v. The Bank of New York Mellon Corporation and The Depository Trust Company

Bryanston Group v. Empire Resorts, Inc.

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ITEM 1A. RISK FACTORS

If the transactions contemplated by the Settlement Agreement are not satisfied or waived or alternative financing permitted thereunder is not obtained, we may not have an immediate source of repayment for our obligations under the Notes.

Our ability to continue as a going concern is dependent upon the consummation of the Debt Exchange or our ability to arrange alternative financing to consummate the Note Purchase, as defined in the Settlement Agreement or otherwise fulfill our obligations under the Settlement Agreement. The consummation of the transactions contemplated by the Settlement Agreement is subject to the satisfaction or waiver of certain conditions, including the approval of the transactions contemplated thereby by the Company’s stockholders. No assurance can be made that the conditions to the Settlement Agreement will be satisfied or waived within the time permitted thereunder or that financing necessary to fulfill such obligations will be available on commercially reasonable terms, if it all, in the event that we do not consumma te the Debt Exchange, as defined in the Settlement Agreement. Moreover, future efforts to arrange alternative financing to fulfill our obligations under the Settlement Agreement if we do not consummate the Debt Exchange may involve the issuance of additional shares of our capital stock, which may dilute stockholder investment.

ITEM 6. EXHIBITS

10.1	Employment Agreement, dated as of July 1, 2010, by and between the Company and Nanette L. Horner.

31.1	Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1	Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		Empire Resorts, Inc.

Dated: November 12, 2010		/s/ Joseph A. D’Amato
		Joseph A. D’Amato
		Chief Executive Officer and Chief Financial Officer

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EXHIBIT INDEX

10.1	Employment Agreement, dated as of July 1, 2010, by and between the Company and Nanette L. Horner.

31.1	Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1	Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

EX-10.1 2 ex101to10q05558_09302010.htm ex101to10q05558_09302010.htm

Exhibit 10.1

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (the “Agreement”) is entered into as of July 1, 2010 (the “Commencement Date”), by and between Empire Resorts, Inc., a Delaware corporation (the “Company”), and Nanette L. Horner (the “Executive,” and the Company and the Executive collectively referred to herein as “the Parties”).

W I T N E S S E T H:

WHEREAS, the Company desires to employ the Executive as Vice President Legal Affairs and to enter into an agreement embodying the terms of such employment (this “Agreement”), and the Executive desires to enter into employment with the Company, subject to the terms and conditions of this Agreement;

NOW, THEREFORE, in consideration of the premises and the mutual covenants and promises of the Parties contained herein, the Parties, intending to be legally bound, hereby agree as follows:

1. Term. The term of employment under this Agreement shall be for the period beginning on the Commencement Date and ending on the second anniversary of the Commencement Date (the “Term”), or such earlier date upon which the Executive’s employment is terminated by either Party in accordance with the provisions of this Agreement.

2. Employment.

(a) Position. As of the Commencement Date, the Executive shall be employed as Vice President Legal Affairs. The Executive shall perform all of the duties normally accorded to such position, as reasonably directed by the Company’s Chief Executive Officer. The Executive shall report to the Company’s Chief Executive Officer.

(b) Obligations. The Executive agrees to perform her duties faithfully and devote all of her full business time and attention to the business and affairs of the Company. Anything herein to the contrary notwithstanding, nothing shall preclude the Executive from: (i) serving on the boards of directors of trade associations and/or charitable organizations; (ii) engaging in charitable activities and community affairs; and (iii) managing her pers onal investments and affairs, provided that the activities described in the preceding clauses (i) through (iii) do not materially interfere with the proper performance of her duties and responsibilities hereunder and do not prevent her from devoting her full business time and attention to the affairs of the Company.

3. Base Salary. The Company agrees to pay or cause to be paid to the Executive during the Term a base salary at the rate of One Hundred Seventy-Five Thousand Dollars ($175,000) per year (the “Base Salary”). Such Base Salary shall be payable, less applicable withholdings and deductions, in accordance with the Company’s reasonable and customary payroll practices applicable to its executive officers.

4. Bonus. The Executive shall be entitled to participate in any annual bonus plan maintained by the Company for its senior executives on such terms and conditions as may be determined from time to time by the Compensation Committee of the Board. The payment of any such bonus shall be in the absolute discretion of the Company.

5. Additional Incentive.

(a) The Compensation Committee of the Board has granted to Executive an option to purchase 20,000 shares of the Company’s common stock (the “Options”) pursuant to the Company’s 2005 Equity Incentive Plan (the “Plan”). The per share exercise price applicable to the Options will be equal to 100% of the Fair Market Value (as defined in the Plan) of a share of the Company’s common stock on the Commencement Date. The Options vest as follows: 10,000 Options on the first (1st) anniversary of the Commencement Date, and 10,000 Options on the second (2nd) anniversary of the Commencement Date, subject to earlier vesting as provided herein and in the Plan. The Options shall expire on the fifth anniversary of the Commencement Date. Upon the occurrence of a Change in Control (as defined below), the Options shall be deemed fully vested and exercisable. In the event of any conflict between the terms and provisions of this Section 5 and the Plan, the Plan shall govern.

(b) For the purposes of this Agreement, “Change in Control” shall have the same meaning as in the Plan.

(c) Employee Benefits. The Executive shall be entitled to participate in all employee benefit plans, practices and programs maintained by the Company and made available to senior level executive officers generally and as may be in effect from time to time, including any medical and health plans and any equity-based incentive programs that may be put into place. The Executive’s participation in such plans, practices and programs shall be on the same basis and terms as are applicable to senior level executive officers of the Company generally. Such level of benefits shall be at a level commensurate with her position.

6. Other Benefits.

(a) Vacation. During each calendar year of the Term, the Executive shall earn twenty (20) days of paid vacation in accordance with the Company’s vacation policy for senior level executive officers.

(b) Perquisites. The Executive shall be entitled to perquisites on the same basis as provided to other executive officers at the Company.

(c) Relocation. The Executive shall be entitled to receive reimbursement of up to $5,000 for relocation expenses (which qualify as “moving expenses” under Section 217 of the Internal Revenue Code) subject to receipt by the Company of appropriate documentation of such expenses in connection with relocation to Monticello, New York; provided that in the event the Executive terminates her employment without Good Reason (as defined herein) within 12 months of moving, sh e shall be required to reimburse the Company for such relocation payments.

7. Expenses. The Executive shall be entitled to receive prompt reimbursement on not less than a monthly basis for all expenses reasonably incurred by her in connection with the performance of her duties hereunder or for promoting, pursuing or otherwise furthering the business or interests of the Company (including but not limited to travel costs, dining and entertainment), in each case in accordance with policies established by the Board from time to time and upon receipt of appropriate documentation of such expenses (which policies comply with the Section 409A Rules (defined below in Section 11).

8. Termination.

(a) Death. The Executive’s employment hereunder shall terminate automatically upon the Executive’s death.

(b) Disability. If during the Term of this Agreement, Executive becomes physically or mentally unable to perform her duties for the Company hereunder and such incapacity has continued for a total of ninety (90) consecutive days or any one hundred twenty (120) days in a period of three hundred sixty-five (365) consecutive days (“Disability”), then the Company shall have the right to terminate Executive’s employment with the Company upon written notice to Executive.

(c) Cause. The Company shall be entitled to terminate the Executive’s employment for “Cause.” For purposes of this Agreement, “Cause” shall mean that the Executive: (i) pleads “guilty” or “no contest” to or is convicted of an act which is defined as a felony under federal or state law or as a crime under federal or state law which involves Executive’s fraud or dishonesty; (ii) in carrying out her duties, engages in conduct that cons titutes willful neglect or willful misconduct; provided such plea, conviction, neglect or misconduct results in material economic harm to the Company; (iii) fails to obtain or maintain required licenses in the jurisdiction where the Company currently operates or has plans to operate; (iv) willfully and intentionally fails to reasonably perform the material responsibilities of the Executive’s position, (v) engages in any conduct that is reasonably likely to cause harm to the reputation of the Company; or (vi) materially breaches any term of this Agreement. In the event any of the occurrences in (i) through (vi) above have occurred, the Executive shall be given written notice by the Company of its intention to so terminate her employment, such notice; (i) to state in detail the particular act or acts or failure or failures to act that constitute the grounds on which the proposed termination for Cause is based and (ii) to be given within sixty (60) days after the Board knew of such acts or failures to act . In the event such notice is timely given by the Company, the Executive shall have thirty (30) days after the date that the notice is given in which to cure such conduct, to the extent such cure is possible. For the avoidance of doubt, any of the occurrences constituting Cause set forth in clause (i) above cannot be cured. No act or failure to act on Executive’s part will be considered “willful” unless done, or omitted to be done by Executive not in good faith and without reasonable belief that her action or omission was in the best interests of the Company.

(d) Good Reason. The Executive may terminate her employment hereunder for “Good Reason,” which is defined to include the following events arising without the consent of the Executive: (A) a material diminution in the Executive’s Base Salary; (B) a material diminution in the Executive’s authority, duties or responsibilities under this Agreement; or (C) any other action or inaction that constitutes a material breach of the terms of this Agreement, as permitted under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”). In the event any of the occurrences in (A) through (C) above have occurred, the Company shall be given written notice by the Executive of her intention to so terminate her employment, such notice; (i) to state in detail the particular act or acts or failure or failures to act that constitute the grounds on which the proposed termination for Good Reason is based and (ii) to be given within thirty (30) days after the Executive knew of such acts or failures to act. In the event such notice is timely given by the Executive, the Company shall have thirty (30) days after the date that the notice is given in which to cure such conduct, to the extent such cure is possible. The Executive shall have sixty (60) days from the date Executive notified the Company of such acts or failures to act that constitute the gro unds on which the proposed termination for Good Reason is based to terminate her employment for Good Reason.

(e) Without Cause. The Company may terminate the Executive’s employment hereunder without Cause at any time and for any reason (or for no reason) by giving the Executive a Notice of Termination (as defined below).

(f) Voluntary. Notwithstanding anything contained elsewhere in this Agreement to the contrary, the Executive may terminate her employment hereunder at any time and for any reason whatsoever or for no reason at all in the Executive’s sole discretion by giving the Company a Notice of Termination. Such termination shall not be deemed a breach of this Agreement.

(g) Notice of Termination. For purposes of this Agreement, a “Notice of Termination” shall mean a notice which indicates the specific termination provision of this Agreement relied upon and which sets forth in reasonable detail, if applicable, the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated. For purposes of this Agreement, no purported termination of employment which requires a Notice of Termination shall be effective without such Notice of Termination. Th e Termination Date (as defined below) specified in such Notice of Termination shall be no less than thirty (30) days from the date the Notice of Termination is given.

(h) Termination Date. “Termination Date” shall mean the date of the termination of the Executive’s employment with the Company and specifically (i) in the case of the Executive’s death, her date of death; (ii) in the case of a termination of the Executive’s employment for Cause, the relevant date specified in Section 8(c) of this Agreement; (iii) in the case of a termination of the Executive’s employment for Good Reason, the relevant date specified in Section 8(d) of this Agreement; (iv) in the case of the expiration of th e Term of this Agreement in accordance with Section 1, the date of such expiration; and (v) in all other cases, the date specified in the Notice of Termination.

9. Compensation Upon Termination of Employment.

(a) For Cause; Without Good Reason. If during the Term of this Agreement, the Executive’s employment under this Agreement is terminated by the Company for Cause or by the Executive without Good Reason (and other than by reason of the Executive’s death or Disability), the Company’s sole obligation hereunder shall be to pay the Executive the following amounts earned hereunder but not paid as of the Termination Date:

(i) the Executive’s Base Salary through the Termination Date;

(ii) reimbursement of any and all reasonable expenses incurred in connection with the Executive’s duties and responsibilities under this Agreement; and

(iii) other or additional benefits and entitlements in accordance with applicable plans, programs and arrangements of the Company (subsections (i) through (iii)collectively, the “Accrued Compensation”).

(b) Without Cause or for Good Reason. If the Executive’s employment hereunder is terminated by the Executive for Good Reason or by the Company without Cause, the Company’s sole obligation hereunder shall be to pay the Executive the following amounts:

(i) the Accrued Compensation;

(ii) a pro-rata portion (based on the days worked by the Executive during the applicable year) of any bonus awarded pursuant to any annual bonus plan maintained by the Company for its senior executives to which the Executive would have been entitled had she not been terminated, which shall be paid at such time as other participants in the bonus plan are paid their respective bonuses in respect of that fiscal year, but no later than March 15 of the calendar year following the Termination Date;

(iii) The Executive’s Base Salary for the following period (the “Salary Continuation Period”): (A) in the event that Executive’s employment hereunder is terminated prior to the occurrence of a Change in Control, the lesser of (x) eighteen (18) months following such termination or (y) the remaining duration of the Term; or (B) in the event that Executive’s employment hereunder is terminated on or following the occurrence of a Change in Control, the greater of (x) twenty-four (24) months following such termination or (y) the remaining duration of the Term; in each instance such amount payable in equal installments in accordance with the Company’s p ayroll practices applicable to its executive officers which payments shall commence on the first payroll date following the 75th day after the Termination Date, conditioned upon satisfaction of the condition set forth in Section 9(g) herein. The first payment pursuant to this Section 9(b)(iii) shall include those payments that would have previously been paid if the payments described in this Section had begun on the first payroll date following the Termination Date. This timing of the commencement of payments pursuant to this Section 9(b)(iii) is subject to Section 11 below; and

(iv) that portion of the Options that is unvested on the Termination Date shall be deemed vested on the Termination Date and such Options shall remain outstanding through the remainder of the original 5 year term.

(c) Disability. If the Executive’s employment hereunder is terminated by the Company by reason of the Executive’s Disability, the Company’s sole obligation hereunder shall be to pay the Executive the following amounts:

(i) the Accrued Compensation; and

(ii) any accrued benefits under the Company’s regular and any supplemental long-term disability plan or plans; and

(iii) that portion of the Options that is unvested on the Termination Date shall be deemed vested on the Termination Date and such Options shall remain outstanding through the remainder of the original 5 year term.

(d) Death. If the Executive’s employment hereunder is terminated due to her death, the Company’s sole obligation hereunder shall be to pay the Accrued Compensation to the person or persons designated in writing by the Executive to receive such payment, or if no such designation was made, the Executive’s estate. In addition, that portion of the Options that is unvested on the Termination Date shall be deemed vested on the Termination Date and such Options shall remain outstanding through the remainder of the original 5 year term.

(e) Continuation of Employee Benefits. Notwithstanding anything to the contrary, in addition to any amounts payable above, the Company shall, during the Salary Continuation Period, provide to the Executive and her beneficiaries continued participation in all medical, dental, vision, prescription drug, hospitalization by fully subsidizing the cost of all COBRA premiums, and life insurance coverages (to the extent such coverage may be continued under all policies), and in all other employee welfare and pension benefit plans, progr ams and arrangements in which the Executive was participating immediately prior to the Termination Date (exclusive of participation in any Section 401(k) Plan for severance benefits). The Executive may continue COBRA coverage at the Executive’s cost for the remaining COBRA period after the Salary Continuation Period. Notwithstanding the foregoing, the Company’s obligation to provide welfare benefits under this Section shall be reduced to the extent that equivalent coverages and benefits are made available under the plans, programs or arrangements of a subsequent employer.

(f) No Mitigation; No Offset. In the event of any termination of her employment hereunder, the Executive shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise and no such payment shall be offset or reduced by the amount of any compensation provided to the Executive in any subsequent employment, except as provided in Section 9(e) of this Agreement.

(g) Release. In exchange for the payment by the Company of the amounts contemplated by Section 9(b)(ii) and (iii) of this Agreement and before such amounts shall be deemed payable to the Executive hereunder, the Executive and the Company each agree to execute and deliver a release with respect to claims for such payment in such form as is reasonably requested by the Company.

(h) Timing of Payments. Other than the benefits provided for in Section 9(e) above, unless otherwise specifically indicated herein, the payments provided for in this Section 9 shall be made to the Executive within sixty (60) days of the termination of the Executive’s employment with the Company.

(i) Limitation on Benefits. Notwithstanding anything to the contrary contained in this Agreement, to the extent that any of the payments and benefits provided for under this Agreement or any other agreement or arrangement between the Company and the Executive (collectively, the “Payments”) (i) constitute a “parachute payment” within the meaning of Section 280G of the Code and (ii) but for this Section 9(i), would be subject to the excise tax imposed by Section 49 99 of the Code, then the Payments shall be payable either (i) in full or (ii) as to such lesser amount which would result in no portion of such Payments being subject to excise tax under Section 4999 of the Code; whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the excise tax imposed by Section 4999, results in the Executive’s receipt on an after-tax basis, of the greatest amount of benefits under this Agreement, notwithstanding that all or some portion of such benefits may be taxable under Section 4999 of the Code. Unless the Executive and the Company otherwise agree in writing, any determination required under this Section shall be made in writing by the Company’s independent public accountants (the “Accountants”), whose determination shall be conclusive and binding upon the Exe cutive and the Company for all purposes. For purposes of making the calculations required by this Section, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely in reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. The Company and the Executive shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section. If the limitation set forth in this Section 9(i) is applied to reduce an amount payable to the Executive, and the Internal Revenue Service successfully asserts that, despite the reduction, the Executive has nonetheless received payments which are in excess of the maximum amount that could have been paid to the Executive without being subjected to any excise tax, then, unle ss it would be unlawful for the Company to make such a loan or similar extension of credit to the Executive, the Executive may repay such excess amount to the Company as though such amount constitutes a loan to the Executive made at the date of payment of such excess amount, bearing interest at 120% of the applicable federal rate (as determined under section 1274(d) of the Code in respect of such loan).

(j) Valuation of Non-Competition Obligations. The Company shall make reasonable efforts to cooperate with the Executive with regard to the value for tax purposes of the Executive’s non-competition obligations under this Agreement.

10. Employee Covenants.

(a) Unauthorized Disclosure. The Executive shall not, during the Term of this Agreement and thereafter, make any Unauthorized Disclosure (as defined below). For purposes of this Agreement, “Unauthorized Disclosure” shall mean disclosure by the Executive without the prior written consent of the Board to any person, other than an employee of the Company or a person to whom disclosure is reasonably necessary or appropriate in connection with the performance by the Executive of her dutie s hereunder, of any confidential information relating to the business or prospects of the Company, including, but not limited to, any information with respect to any of the Company’s customers, products, methods of distribution, strategies, business and marketing plans and business policies and practices, including information disclosed to the Company by others under agreements to hold such information confidential (the “Confidential Information”). Notwithstanding the foregoing, the Executive may disclose Confidential Information (i) to the extent such disclosure is or may be required by law, but only after providing (A) notice to the Company of any third party’s request for such information, which notice shall include the Executive’s intent with respect to such request, and (B) to the extent possible under the circumstances, sufficient opportunity for the Company to challenge or limit the scope of the disclosure, or (ii) in confidence to an attorney, accountant or other advisor for the purpose of securing professional advice concerning the Executive’s personal matters, provided that such attorney or other advisor agrees to observe these confidentiality provisions. Confidential Information shall not include the use or disclosure by the Executive of any information known generally to the public or known within the Company’s trade or industry (other than as a result of disclosure by the Executive in violation of this Section 10(a)). This confidentiality covenant has no temporal, geographical or territorial restriction.

(b) Non-Competition. During the Non-Competition Period (as defined below), the Executive shall not, directly or indirectly, without the prior written consent of the Company, own, manage, operate, join, control, be employed by, consult with or participate in the ownership, management, operation or control of, or be connected with (as a stockholder, partner, or otherwise) any business competing with, or substantially similar to, the businesses of Company and its present and future subsidiaries, joint ventures, partners or othe r affiliates (except that affiliates that are in a business unrelated to the Company’s business shall not be included)(the “Empire Companies”), as such businesses exist within 60 miles of the location in which any such entity conducts, or is actively investigating the possibility of conducting, its businesses as of the beginning of the Non-Competition Period. Notwithstanding the foregoing, the provisions of this Section 10(b) shall not be deemed to prohibit the Executive’s ownership of up to 2% of the total shares of all classes of stock outstanding of any publicly held company.

(c) Non-Solicitation. During the period from the termination of the Executive’s employment with the Company through the one year anniversary of the date of termination, the Executive shall not, directly or indirectly, alone or in conjunction with another person, (i) hire, solicit, retain, compensate or otherwise induce or attempt to induce any individual who is an employee of any of the Empire Companies, to leave the employ of the Empire Companies or in any way interfere with the relationship between any of the Empire Companies and any employee thereof, (ii) hire, engage, send any work to, place orders with, or in any manner be associated with any supplier, contractor, subcontractor or other business relation of any of the Empire Companies if such action by the Executive would have a material adverse effect on the business, assets or financial condition of any of the Empire Companies, or materially interfere with the relationship between any such person or entity and any of the Empire Companies, or (iii) solicit or accept business from any customer of any of the Empire Companies. In connection with the foregoing provisions of this Section 10, the Executive represents that her experience, capabilities and circumstances are such that such provisions will not prevent her from earning a livelihood. The Executive further agrees that the limitations set forth in this Section 10 (including, without limitation, time and territorial limitations) are reasonable and pr operly required for the adequate protection of the current and future businesses of the Empire Companies.

(d) Non-Competition Period. For purposes of this Agreement, the “Non-Competition. Period” means the period from the termination of the Executive’s employment with the Company through (i) in the case of a termination without Cause by the Company, the end of the Salary Continuation Period, (ii) in the case of a voluntary termination by the Executive without Good Reason, one (1) year following the date of such termination (for the avoidance of doubt, if Exe cutive terminates her employment for Good Reason there shall be no Non-Competition Period) and (iii) in the case of a termination by the Company with Cause, for one (1) year following such termination.

(e) Remedies. The Executive agrees that any breach of the terms of this Section 10 would result in irreparable injury and damage to the Company for which the Company would have no adequate remedy at law. The Executive therefore also agrees that in the event of said breach or any threat of such a breach, the Company shall be entitled to seek an immediate injunction and restraining order to prevent such breach or continued breach by the Executive, in addition to any other remedies to which the Company may be entitled at law or in equity. The Executive and the Company further agree that the provisions of the covenants not to compete and solicit in this Section 10 are reasonable and that the Company would not have entered into this Agreement but for the inclusion of such covenants herein. Should a court determine, however, that any provision of the covenants is unreasonable, either in period of time, geographical area, or otherwise, the Parties agree that such covenants should be interpreted and enforced to the maximum extent which such court deems reasonable and such determination shall have no effect upon, and shall not impair the enforceability of, any other provision of this Agreement.

11. Section 409A. It is the intention of the Parties that this Agreement be exempt from or comply strictly with the provisions of Section 409A of the Code, and Treasury Regulations and other Internal Revenue Service guidance promulgated thereunder (the “Section 409A Rules”). Consistent with that intention, all references hereunder to termination of the Executive’s employment with the Company shall mean separation from the service of the servi ce recipient under the 409A Rules. Further, to the extent the Executive is a specified employee under the 409A Rules, any payments of deferred compensation within the meaning of the 409A Rules (otherwise payable within the first six (6) months of termination) will be deferred and accumulated for a period of six (6) months and one (1) day and will be paid in a lump sum on such date, unless the Executive dies within such period, in which event payment will be made within sixty (60) days of her death. Thereafter, the normal schedule for the remaining payments will commence. In addition, Executive’s entitlement to the payments of the severance benefits described in Section 9(b)(iii) shall be treated as the entitlement to a series of separate payments for purposes of the Section 409A Rules. Accordingly, this Agreement, including, but not limited to, any provisions relating to severance payments, may be amended from time to t ime as may be necessary or appropriate to comply with the Section 409A Rules.

12. Withholding of Taxes. The Company may take such actions as are reasonably appropriate or consistent with applicable law and the Plan in connection with any compensation paid pursuant to this Agreement with respect to the withholding of any taxes (including income or employment taxes) or any other tax matters, including, but not limited to, requiring the Executive to furnish to the Company any applicable withholding taxes prior to the issuance of stock purs uant to an option grant or the vesting of restricted stock.

13. Indemnification; Insurance; Limitation of Liability.

(a) The Company agrees that if the Executive is made a party, or is threatened to be made a party, to any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”), by reason of the fact that she is or was a director, officer or employ ee of the Company or is or was serving at the request of the Company as a director, officer, member, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, the Executive shall be indemnified and held harmless by the Company to the fullest extent legally permitted or authorized by the Company’s certificate of incorporation, by-laws or resolutions of the Board against all cost, expense, liability and loss (including, without limitation, attorneys’ fees, judgments, fines, ERISA excise taxes or other liabilities or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by the Executive in connection therewith, and such indemnification shall continue as to the Executive even if she has ceased to be a director, member, employee or agent of the Company or other entity and shall inure to the benefit of the Executive’s heirs, executors and administrators. The Company s hall advance to the Executive all costs and expenses incurred by her in connection with a Proceeding within a reasonable time after submission of reasonable documentation of such costs and expenses. Such request shall include an undertaking by the Executive to repay the amount of such advance if it shall ultimately be determined that she is not entitled by law to be indemnified against such costs and expenses; provided that the amount of such obligation to repay shall be limited to the after-tax amount of any such advance except to the extent the Executive is able to offset such taxes incurred on the advance by the tax benefit, if any, attributable to a deduction realized by her for the repayment.

(b) Neither the failure of the Company (including its Board, independent legal counsel or stockholders) to have made a determination prior to the commencement of any Proceeding concerning payment of amounts claimed by the Executive under Section 13(a) above that indemnification of the Executive is proper because she has met the applicable standard of conduct, nor a determination by the Company (including its Board, independent legal counsel or stockholders) that the Executive has not met such applicable standard of conduct, shall create a presumption in any judicial proceeding that the Executive has not met the applicable standard of conduct.

(c) The Company agrees to continue and maintain director’s and officer’s liability insurance policy covering the Executive, until such time as actions against the Executive are no longer permitted by law, with terms and conditions no less favorable than the most favorable coverage then applying to any other senior level executive officer or director of the Company.

14. Representations. The Executive represents and warrants that she has the free and unfettered right to enter into this Agreement and to perform her obligations under it and that she knows of no agreement between her and any other person, firm or organization, or any law or regulation, that would be violated by the performance of her obligations under this Agreement. The Company represents and warrants that it is duly formed or organized, validly existing and in good standing under the laws of the State of Delaware and is registered or qualified to conduct business in all other jurisdictions in which the failure to be so registered o r qualified would adversely affect the ability of the Company to perform its obligations under this Agreement. The Company has taken all company action required to execute, deliver and perform this Agreement and to make all of the provisions of this Agreement the valid and enforceable obligations they purport to be and has caused this Agreement to be executed by a duly authorized officer of the Company. All consents and approvals by any third party required to be obtained by the Company in order for it to be authorized to enter into and consummate this Agreement have been obtained and no further third party approvals or consents are required to consummate this Agreement. Execution and delivery of this Agreement and all related documents, and performance of the obligations hereunder by the Company do not conflict with any provision of any law or regulation to which the Company or any of its affiliates are subject, conflict with or result in a breach of or constitute a default under any of the terms, conditions or provisions of any agreement or instrument to which the Company or any of its affiliates are a party or by which the Company is bound or any order or decree applicable to the Company, or result in the creation or imposition of any lien on any assets or property of the Company, and/or which would materially and adversely affect the ability of the Company to perform its obligations under this Agreement. The Company has obtained all consents, approvals, authorizations or orders of any court or governmental agency or body, if any, required for the execution, delivery and performance by the Company of this Agreement.

15. Successors and Assigns.

(a) This Agreement shall be binding upon and shall inure to the benefit of the Company, its successors and assigns and the Company shall require any successor or assign to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession or assignment had taken place. The term “the Company” as used herein shall include any such successors and assigns. The term “successors” and “assigns” as used herein shall mean a corporation or other entity acquiring or otherwise succeeding to, directly or indirectly, all or substantially all the assets and business of the Company (including this Agreement) whether by operation of law or oth erwise.

(b) Neither this Agreement nor any right or interest hereunder shall be assignable or transferable by the Executive, her beneficiaries or legal representatives, except by will or by the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive’s legal personal representative.

16. Notice. For the purposes of this Agreement, notices and all other communications provided for in this Agreement (including the Notice of Termination) shall be in writing and shall be deemed to have been duly given when personally delivered or sent by registered or certified mail, return receipt requested, postage prepaid, or upon receipt if overnight delivery service or facsimile is used, and addressed as follows:

To the Executive:

Nanette L. Homer,

at the address in the payroll records of the Company

With a copy to:

[__________________]

To the Company:

Joseph A. D’Amato CEO

Empire Resorts, Inc.

c/o Monticello Casino and Raceway, Route 17B

P.O. Box 5013

Monticello, New York 12701

with a copy to:

Robert H. Friedman

Olshan Grundman Frome Rosenzweig & Wolosky LLP

Park Avenue Tower

65 East 55th Street

New York, New York 10022

17. Survivorship. Except as otherwise set forth in this Agreement, the respective rights and obligations of the Executive and the Company hereunder shall survive any termination of the Executive’s employment.

18. Waiver. The waiver by either Party of a breach of any provision of this Agreement shall not be construed as a waiver of any subsequent breach. The failure of a Party to insist upon strict adherence to any provision of this Agreement on one or more occasions shall not be considered a waiver or deprive that Party of the right thereafter to insist upon strict adherence to that provision or any other provision of this Agreement. Any waiver must be in writing and signed by the Executive and the Company.

19. Governing Law. Subject to Section 12, this Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of New York without giving effect to the conflict of law principles thereof. Any action, suit or other legal proceeding that is commenced to resolve any matter arising under or relating to any provision of this Agreement shall be submitted to the exclusive jurisdiction of any state or federal court in New York County.

20. Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof.

21. Entire Agreement. This Agreement constitutes the entire agreement between the Parties and supersedes all prior agreements, understandings and arrangements, oral or written; between the Parties with respect to the subject matter hereof. This Agreement may be executed in one or more counterparts.

[Signature Page to Follow]

[Signature Page to Horner-Employment Agreement]

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer and the Executive has executed this Agreement as of the day and year first above written.

EMPIRE RESORTS, INC.

By:	/s/ Joseph A. D’Amato
	Name:	Joseph A. D’Amato
	Title:	Chief Executive Officer

	EXECUTIVE:

	/s/ NANETTE L. HORNER
	NANETTE L. HORNER

EX-31.1 3 ex311to10q05558_09302010.htm ex311to10q05558_09302010.htm

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO

RULE 13A-14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934

I, Joseph A. D’Amato, Chief Executive Officer and Chief Financial Officer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Empire Resorts, Inc.;

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

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

4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

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

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

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

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

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

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

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

Dated: November 12, 2010		/s/ Joseph A. D’Amato
		Joseph A. D’Amato
		Chief Executive Officer and Chief Financial Officer

EX-32.1 4 ex321to10q05558_09302010.htm ex321to10q05558_09302010.htm

Exhibit 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. SECTION 1350)

In connection with the Quarterly Report of Empire Resorts, Inc. (the “Company”) on Form 10-Q for the quarterly period ended September 30, 2010 as filed with the Securities and Exchange Commission on the date hereof (the “Quarterly Report”), I, Joseph A. D’Amato, Chief Executive Officer and Chief Financial Officer, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), that:

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

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

Date: November 12, 2010


By:	/s/ Joseph A. D’Amato
	Joseph A. D’Amato
	Chief Executive Officer and Chief Financial Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Empire Resorts, Inc. and will be retained by Empire Resorts, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

-----END PRIVACY-ENHANCED MESSAGE-----

Delaware	13-3714474
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

c/o Monticello Casino and Raceway Route 17B, P.O. Box 5013 Monticello, New York	12701
(Address of principal executive offices)	(Zip Code)