Full House Resorts
Annual Report 2013

Plain-text annual report

U.S. SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 FORM 10-KþAnnual Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended: December 31, 2013oTransition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission file number 1-32583 FULL HOUSE RESORTS, INC.(Exact Name of Registrant as specified in Its Charter) Delaware13-3391527(State or Other Jurisdiction(I.R.S. Employerof Incorporation or Organization)Identification No.) 4670 S. Fort Apache Rd., Suite 190, Las Vegas, Nevada 89147(Address and zip code of principal executive offices) (702) 221-7800(Registrant’s Telephone Number, Including Area Code) Securities registered under Section 12(b) of the Exchange Act: Common Stock, $.0001 per ShareThe NASDAQ Stock Market LLC(Title of Each Class)(Name of Each Exchange on Which Registered) Securities registered under Section 12(g) of the Exchange Act: None(Title of class) Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. o Indicate by checkmark whether the registrant: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12months (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 90days. Yes þ No o Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data Filerequired 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 suchshorter period that the registrant was required to submit and post such files). Yes þ No o Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.405 of this chapter) is not contained herein, andwill not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of thisForm 10-K or any amendment to this Form 10-K. o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or smaller reporting company. Seedefinition of “large accelerated filer,” “accelerated filer” and “small reporting company” in Rule 12b-2 of the Exchange Act.Large Accelerated Filer o Accelerated Filer o Non Accelerated Filer o Smaller reporting company þDo not check if smaller reporting company Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ The aggregate market value of registrant’s voting $.0001 par value common stock held by non-affiliates of the registrant, as of June 30, 2013, was:$47,027,115. As of March 1, 2014, there were 18,870,681 shares of Common Stock, $.0001 par value per share, outstanding. Documents Incorporated By ReferenceThe information required by Part III of this Form 10-K, to the extent not set forth herein, is incorporated by reference from the Registrant’s definitiveproxy statement relating the annual meeting of stockholders to be held in 2014, which definitive proxy statement shall be filed with the Securities andExchange Commission within 120 days after the end of the fiscal year to which this Form 10-K relates.  TABLE OF CONTENTS PART I Item 1. Business 3 Item 1A. Risk Factors 26 Item 1B. Unresolved Staff Comments 26 Item 2. Properties 26 Item 3. Legal Proceedings 27 Item 4. Mine Safety Disclosures 27 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 28 Item 6. Selected Financial Data 28 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 29 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 45 Item 8. Financial Statements and Supplementary Data 46 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 78 Item 9A. Controls and Procedures 78 Item 9B. Other Information 78 PART III Item 10. Directors, Executive Officers and Corporate Governance 79 Item 11. Executive Compensation 79 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 79 Item 13. Certain Relationships and Related Transactions, and Director Independence 79 Item 14 Principal Accounting Fees and Services 79 Item 15. Exhibits, Financial Statement Schedules 80 2 PART I Item 1. Business. Background Full House Resorts, Inc., a Delaware corporation formed in 1987, and its subsidiaries (collectively, Full House, we, our, ours, us) develops, manages,operates, and/or invests in gaming-related enterprises. We continue to actively investigate, individually and with partners, new business opportunities andour long-term strategy is to continue deriving revenues primarily from owned operations, as well as management fees. In furtherance of that strategy we madesignificant acquisitions of the Rising Star Casino Resort and Grand Lodge Casino leased operation in 2011 and the Silver Slipper Casino in 2012. With the2012 sale of the management agreement for the FireKeepers Casino in Michigan, we have transitioned the primary source of our revenues to owned entities. We currently own three casino properties, lease one casino property and we have one management contract to manage a group of related casinoproperties. These properties are located in four distinct regions of the United States - the Gulf Coast, the Midwest, Northern Nevada and the Southwest. Weown Rising Star Casino Resort located in Rising Sun, Indiana, Silver Slipper Casino located in Bay St. Louis, Mississippi and Stockman’s Casino located inFallon, Nevada. We lease the Grand Lodge Casino at the Hyatt Regency Lake Tahoe Resort, Spa and Casino located in Incline Village, Nevada on the NorthShore of Lake Tahoe. We manage the Buffalo Thunder Casino and Resort and the Cities of Gold and other gaming facilities, both located in Santa Fe, NewMexico, for the Pueblo of Pojoaque pursuant to an agreement with a three-year term expiring in September 2014. Previously we managed the FireKeepers Casino near Battle Creek, Michigan for the Nottawaseppi Huron Band of Potawatomi, through a 50% jointventure, pursuant to a seven-year management agreement through March 30, 2012, when our interest in the joint venture was sold. Properties Currently Operating Gulf Coast Casino Operations Silver Slipper Casino Silver Slipper Casino is on the far west end of the Mississippi Gulf Coast in Bay St. Louis, Mississippi. The property has approximately 37,000square feet of gaming space containing approximately 950 slot and video poker machines, 25 table games and the only live keno game on the Gulf Coast.The property includes a fine dining restaurant, buffet, quick service restaurant and two casino bars. The property draws heavily from the New Orleansmetropolitan area and other communities in southern Louisiana and southwestern Mississippi. We acquired all of the outstanding membership interests in Silver Slipper Casino Venture LLC, the owner of Silver Slipper Casino, on October 1,2012, for $69.3 million, exclusive of net working capital balances, fees and expenses. 3 On August 26, 2013, we entered into an agreement with WHD Silver Slipper Casino, LLC related to construction of a six-story, 142-room hotel atour Silver Slipper Casino property (the “Silver Slipper Casino Hotel”). We have commenced construction of the Silver Slipper Casino Hotel and expectconstruction to be completed in late 2014 or early 2015. Upon completion, the hotel will have 142-rooms in a six-story tower overlooking the waterfront. Webelieve that the Silver Slipper Casino Hotel is a much-needed amenity and will favorably impact customer loyalty by allowing guests to extend their visits atSilver Slipper Casino. Midwest Casino Operations Rising Star Casino Resort On April 1, 2011, we acquired all of the operating assets of Grand Victoria Casino & Resort, L.P. through Gaming Entertainment (Indiana) LLC, ourwholly-owned subsidiary. We renamed the property Rising Star Casino Resort in August 2011. The property has approximately 40,000 square feet of casinospace and includes approximately 1,200 slot and video poker machines, 33 table games, a 190-room hotel, five dining outlets and an 18-hole Scottish linksgolf course. In October 2011, Rising Sun/Ohio County First, Inc. (“RSOCF”) and Rising Sun Regional Foundation, Inc. teamed up to develop a new 104-roomhotel tower on land adjacent to our Rising Star Casino Resort. On June 13, 2012, the City of Rising Sun Advisory Plan Commission provided a favorablerecommendation to the City Council of Rising Sun, Indiana, regarding a revised amendment to the plan of development, which was adopted by the CityCouncil on July 5, 2012. On August 13, 2012, the Advisory Plan Commission approved the detailed plan of development. The parties entered into a realestate sale agreement dated May 2, 2012, for RSOCF to purchase approximately three acres of land on which the hotel was developed. Constructioncommenced in December 2012, and the new hotel tower at Rising Star Casino Resort opened on November 15, 2013. The opening of the new hotel tower atRising Star Casino Resort brought total room capacity to 294. We believe that the added hotel room inventory in close proximity to our casino facility willfavorably impact revenues and visitor counts. 4 On August 16, 2013, we entered into a 10-year capital lease for the new hotel tower at Rising Star Casino Resort (the “Rising Star Hotel Agreement”)which commenced on November 15, 2013 and provides us with full management control and an option to purchase the new hotel tower at Rising Star CasinoResort at the end of the term. We have recorded the capital lease obligation and hotel assets in our financial statements. On November 15, 2013, we beganoperating the new hotel tower at Rising Star Casino Resort. The Rising Star Hotel Agreement provides that we will be the lessee of the new hotel tower atRising Star Casino Resort and assume all responsibilities, revenues, expenses, profits and losses related to the hotel’s operations. The term of the Rising StarHotel Agreement is for 10 years from November 15, 2013, with the landlord having a right to sell the hotel to us at the end of the term and our correspondingobligation to purchase it on the terms set forth in the Rising Star Hotel Agreement. During the term, we will have the exclusive option to purchase the newhotel tower at Rising Star Casino Resort at a pre-set price. On January 1, 2014, we began paying a fixed monthly rent payment of approximately $77.5thousand, which will continue throughout the term of the Rising Star Hotel Agreement unless we elect to purchase the hotel before the end of the leaseperiod. In the event that we default on the lease agreement, the landlord’s recourse is limited to taking possession of the property, collection of all rent dueand payable, and the right to seek remediation for any attorneys’ fees, litigation expenses, and costs of retaking and re-leasing the property. Northern Nevada Casino Operations Grand Lodge Casino On September 1, 2011, we purchased the operating assets of Grand Lodge Casino and entered into a lease with Hyatt Equities, L.L.C. for the casinospace in the Hyatt Regency Lake Tahoe Resort, Spa and Casino in Incline Village, Nevada on the north shore of Lake Tahoe. The initial term of the leaseexpires on August 31, 2018. The lease has an option, subject to mutual agreement, to renew for an additional five-year term. The Grand Lodge Casino has18,900 square feet of casino space integrated with the Hyatt Regency Lake Tahoe Resort, Spa and Casino, featuring approximately 260 slot machines, 16table games and a poker room. Stockman’s Casino We acquired Stockman’s Casino in Fallon, Nevada on January 31, 2007. Stockman’s Casino has approximately 8,400 square feet of gaming spacewith approximately 265 slot machines, four table games and keno. The facility has a bar, a fine dining restaurant and a coffee shop. Southwest Casino Management Operations Buffalo Thunder Casino and Resort In May 2011, we entered into a three-year agreement with the Pueblo of Pojoaque, which has been approved by the National Indian GamingCommission as a management contract, to advise on the operations of Buffalo Thunder Casino and Resort in Santa Fe, New Mexico, along with the Pueblo’sCities of Gold and other gaming facilities which in aggregate have approximately 1,200 slot machines, 18 tables games (including poker) and a simulcastarea. We receive a base consulting fee of $0.1 million per month plus quarterly success fees based on achieving certain financial targets and incur onlyminimal incremental operating costs related to the contract. Our management and related agreements with Buffalo Thunder Casino and Resort becameeffective on September 23, 2011. 5 Additional projects are considered based on their forecasted profitability, development period, regulatory and political environment and the abilityto secure the funding necessary to complete the development, among other considerations. We continue to actively investigate, individually and withpartners, new business opportunities. We believe we will have sufficient cash and financing available to fund acquisitions and development opportunities inthe future. Prior Projects FireKeepers Casino Until March 30, 2012, we owned 50% of Gaming Entertainment (Michigan), LLC (“GEM”), a joint venture with RAM Entertainment, LLC,(“RAM”) a privately-held investment company. GEM had the exclusive right to provide casino management services at the FireKeepers Casino near BattleCreek, Michigan for the Nottawaseppi Huron Band of Potawatomi (the “Michigan Tribe”) for seven years commencing August 5, 2009. On December 2,2010, the FireKeepers Development Authority, a tribal entity formed by the Michigan Tribe, entered into a hotel consulting services agreement with GEM, asthe consultant, related to the FireKeepers Casino phase II development project, which included development of a hotel, multi-purpose/ballroom facility,surface parking and related ancillary support spaces and improvements. GEM was to perform hotel consulting services for a fixed fee of $12,500 per month,continuing through to the opening of the project, provided the total fee for services did not exceed, in the aggregate, $0.2 million. On May 22, 2012, wesigned an amendment to the hotel consulting services agreement extending the terms of the agreement through November 2012. On March 30, 2012, the joint venture managing the FireKeepers Casino sold the equity of the joint venture and the management agreement to theFireKeepers Development Authority for $97.5 million. In addition to the $97.5 million sale price, the FireKeepers Development Authority paid RAM and us$1.2 million each, equal to the management fee that would have been earned under the management agreement for April 2012 less a $0.2 million wind-up feeand $0.1 million holdback receivable. The $0.1 million holdback receivable was received in May 2012, less expenses related to the sale deducted by theFireKeepers Development Authority. Our gain on the sale of joint venture, related to the sale of our interest in GEM, was $41.2 million and allocated asfollows (in millions): Gross proceeds $48.8 Plus: April 2012 wind-up fee received, net of $0.03 million wind-up fee and holdback receivable 0.9 Net proceeds 49.7 Less: Our interest in joint venture (5.7)Full House gain on sale of joint venture 44.0 Less: contract right owned by subsidiary (2.8)Consolidated gain on sale of joint venture $41.2 6 Government Regulation The ownership, management, and operation of gaming facilities are subject to many federal, state, provincial, tribal and/or local laws, regulationsand ordinances, which are administered by the relevant regulatory agency or agencies in each jurisdiction. These laws, regulations and ordinances aredifferent in each jurisdiction, but primarily deal with the responsibility, financial stability and character of the owners and managers of gaming operations, aswell as persons financially interested or involved in gaming operations. We may not own, manage or operate a gaming facility unless we obtain proper licenses, permits and approvals. Applications for a license, permit orapproval may be denied for reasonable cause. Most regulatory authorities license, investigate, and determine the suitability of any person who has a materialrelationship with us. Persons having material relationships include officers, directors, employees, and certain security holders. Once obtained, licenses, permits, and approvals must be renewed from time to time and generally are not transferable. Regulatory authorities may atany time revoke, suspend, condition, limit, or restrict a license for reasonable cause. License holders may be fined and in some jurisdictions and, under certaincircumstances, gaming operation revenues can be forfeited. We may be unable to obtain any licenses, permits, or approvals, or if obtained, they may not berenewed or may be revoked in the future. In addition, a rejection or termination of a license, permit, or approval in one jurisdiction may have a negative effectin other jurisdictions. Some jurisdictions require gaming operators licensed in that state to receive their permission before conducting gaming in otherjurisdictions. The political and regulatory environment for gaming is dynamic and rapidly changing. The laws, regulations, and procedures dealing with gamingare subject to the interpretation of the regulatory authorities and may be amended. Any changes in such laws, regulations, or their interpretations could havea negative effect on our operations and future development of gaming opportunities. Certain specific provisions applicable to us are described below. Webelieve that we are in material compliance with such governmental regulations in each jurisdiction in which we conduct business. 7 Nevada Regulatory Matters In order to acquire and own Stockman’s Casino, the Grand Lodge Casino or any other gaming operation in Nevada, we are subject to the NevadaGaming Control Act and to the licensing and regulatory control of the Nevada State Gaming Control Board, the Nevada Gaming Commission, and variouslocal, city and county regulatory agencies. The laws, regulations and supervisory procedures of the Nevada gaming authorities are based upon declarations of public policy which areconcerned with, among other things: ●the character of persons having any direct or indirect involvement with gaming to prevent unsavory or unsuitable persons from having a director indirect involvement with gaming at any time or in any capacity; ●establishment and application of responsible accounting practices and procedures; ●maintenance of effective control over the financial practices and financial stability of licensees, including procedures for internal controls andthe safeguarding of assets and revenues; ●recordkeeping and reporting to the Nevada gaming authorities; ●fair operation of games; and ●the raising of revenues through taxation and licensing fees. In May 2006, we applied for registration with the Nevada Gaming Commission as a publicly traded corporation, which was granted on January 25,2007. The registration is not transferable and requires periodic payment of fees. The Nevada gaming authorities may limit, condition, suspend or revoke alicense, registration, approval or finding of suitability for any cause deemed reasonable by the licensing agency. If a Nevada gaming authority determinesthat we violated gaming laws, then the approvals and licenses we hold could be limited, conditioned, suspended or revoked, and we, and the individualsinvolved, could be subject to substantial fines for each separate violation of the gaming laws at the discretion of the Nevada Gaming Commission. Each typeof gaming device, slot game, slot game operating system, table game or associated equipment manufactured, distributed, leased, licensed or sold in Nevadamust first be approved by the Nevada State Gaming Control Board and, in some cases, the Nevada Gaming Commission. We must regularly submit detailedfinancial and operating reports to the Nevada State Gaming Control Board. Certain loans, leases, sales of securities and similar financing transactions mustalso be reported to or approved by the Nevada Gaming Commission. Certain of our officers, directors and key employees are required to be, and have been, found suitable by the Nevada Gaming Commission andemployees associated with gaming must obtain work permits which are subject to immediate suspension under certain circumstances. An application forsuitability may be denied for any cause deemed reasonable by the Nevada Gaming Commission. Changes in specified key positions must be reported to theNevada Gaming Commission. In addition to its authority to deny an application for a license, the Nevada Gaming Commission has jurisdiction to disapprovea change in position by an officer, director or key employee. The Nevada Gaming Commission has the power to require licensed gaming companies tosuspend or dismiss officers, directors or other key employees and to sever relationships with other persons who refuse to file appropriate applications or whomthe authorities find unsuitable to act in such capacities. 8 The Nevada Gaming Commission may also require anyone having a material relationship or involvement with us to be found suitable or licensed, inwhich case those persons are required to pay the costs and fees of the Nevada State Gaming Control Board in connection with the investigation. Any personwho acquires more than 5% of any class of our voting securities must report the acquisition to the Nevada Gaming Commission; any person who becomes abeneficial owner of 10% or more of our voting securities is required to apply for a finding of suitability. Under certain circumstances, an “institutionalinvestor,” as such term is defined in the regulations of the Nevada Gaming Commission, which acquires more than 10% but not more than 25% of our votingsecurities, may apply to the Nevada Gaming Commission for a waiver of such finding of suitability requirements, provided the institutional investor holdsthe voting securities for investment purposes only. The Nevada Gaming Commission has amended its regulations pertaining to institutional investors totemporarily allow an institutional investor to beneficially own more than 15%, but not more than 19%, if the ownership percentage results from a stockrepurchase program. These institutional investors may not acquire any additional shares and must reduce their holdings within one year from constructivenotice of exceeding 15%, or must file a suitability application. An institutional investor will be deemed to hold voting securities for investment purposesonly if the voting securities were acquired and are held in the ordinary course of business as an institutional investor and not for the purpose of causing,directly or indirectly, the election of a majority of our board of directors, any change in our corporate charter, bylaws, management, policies or operations, orany of our gaming affiliates, or any other action which the Nevada Gaming Commission finds to be inconsistent with holding our voting securities forinvestment purposes only. Any person who fails or refuses to apply for a finding of suitability or a license within 30 days after being ordered to do so by the Nevada GamingCommission may be found unsuitable based solely on such failure or refusal. The same restrictions apply to a record owner if the record owner, whenrequested, fails to identify the beneficial owner. Any security holder found unsuitable and who holds, directly or indirectly, any beneficial ownership of thecommon stock beyond such period of time as may be prescribed by the Nevada Gaming Commission may be guilty of a gross misdemeanor. We are subject todisciplinary action if, after we receive notice that a person is unsuitable to be a security holder or to have any other relationship with us, we: ●pay that person any dividend or interest upon our voting securities; ●allow that person to exercise, directly or indirectly, any voting right conferred through securities held by that person; or ●give remuneration in any form to that person. If a security holder is found unsuitable, then we may be found unsuitable if we fail to pursue all lawful efforts to require such unsuitable person torelinquish his or her voting securities for cash at fair market value. 9 The Nevada Gaming Commission may also, in its discretion, require any other holders of our debt or equity securities to file applications, beinvestigated and be found suitable to own the debt or equity securities. The applicant security holder is required to pay all costs of such investigation. If theNevada Gaming Commission determines that a person is unsuitable to own such security, then pursuant to the regulations of the Nevada GamingCommission, we may be sanctioned, including the loss of our approvals, if, without the prior approval of the Nevada Gaming Commission, we: ●pay to the unsuitable person any dividends, interest or any distribution whatsoever; ●recognize any voting right by such unsuitable person in connection with such securities; ●pay the unsuitable person remuneration in any form; or ●make any payment to the unsuitable person by way of principal, redemption, conversion; exchange, liquidation or similar transaction. We are required to maintain a current stock ledger in Nevada which may be examined by the Nevada Gaming Commission at any time, and to filewith the Nevada Gaming Commission, at least annually, a list of our stockholders. The Nevada Gaming Commission has the power to require our stockcertificates to bear a legend indicating that the securities are subject to the Nevada Gaming Control Act and the regulations of the Nevada GamingCommission. As a licensee or registrant, we may not make certain public offerings of our securities without the prior approval of the Nevada GamingCommission. Such approval, if given, does not constitute a recommendation or approval of the investment merits of the securities subject to the offering. Wehave received a waiver of the prior approval requirement with respect to public offerings of securities subject to certain conditions. Also, changes in controlthrough merger, consolidation, acquisition of assets, management or consulting agreements or any form of takeover cannot occur without prior investigationby the Nevada State Gaming Control Board and approval by the Nevada Gaming Commission. The Nevada legislature has declared that some repurchases of voting securities, corporate acquisitions opposed by management, and corporatedefense tactics affecting Nevada gaming licensees, and registered companies that are affiliated with those operations, may be harmful to stable andproductive corporate gaming. The Nevada Gaming Commission has established a regulatory scheme to reduce the potentially adverse effects of thesebusiness practices upon Nevada’s gaming industry and to further Nevada’s policy to: ●assure the financial stability of corporate gaming licensees and their affiliates; ●preserve the beneficial aspects of conducting business in the corporate form; and ●promote a neutral environment for the orderly governance of corporate affairs. Because we are a registered company, approvals may be required from the Nevada Gaming Commission before we can make exceptional repurchasesof voting securities above their current market price and before a corporate acquisition opposed by management can be consummated. The Nevada GamingControl Act also requires prior approval of a plan of recapitalization proposed by a registered company’s board of directors in response to a tender offer madedirectly to its stockholders for the purpose of acquiring control. 10 Any person who is licensed, required to be licensed, registered, required to be registered, or who is under common control with those persons,collectively, “licensees,” and who proposes to become involved in a gaming venture outside of Nevada, is required to deposit with the Nevada GamingControl Board, and thereafter maintain, a revolving fund in the amount of $0.03 million to pay the expenses of investigation by the Nevada Gaming ControlBoard of the licensee’s participation in foreign gaming. We currently comply with this requirement. The revolving fund is subject to increase or decrease atthe discretion of the Nevada Gaming Commission. Licensees are required to comply with the reporting requirements imposed by the Nevada Gaming ControlAct. A licensee is also subject to disciplinary action by the Nevada Gaming Commission if it: ●knowingly violates any laws of the foreign jurisdiction pertaining to the foreign gaming operation; ●fails to conduct the foreign gaming operation in accordance with the standards of honesty and integrity required of Nevada gaming operations; ●engages in any activity or enters into any association that is unsuitable because it poses an unreasonable threat to the control of gaming inNevada, reflects or tends to reflect, discredit or disrepute upon the State of Nevada or gaming in Nevada, or is contrary to the gaming policies ofNevada; ●engages in activities or enters into associations that are harmful to the State of Nevada or its ability to collect gaming taxes and fees; or ●employs, contracts with or associates with a person in the foreign operation who has been denied a license or a finding of suitability in Nevadaon the ground of unsuitability. In May 2006, we adopted a compliance plan and appointed a compliance committee which currently consists of Company directors and officers,Kenneth Adams (Chair and Independent Director), Carl Braunlich (Independent Director), Kathleen Marshall (Independent Director) and Mark J. Miller (COOand Director), in accordance with Nevada Gaming Commission requirements. Our compliance committee meets quarterly and is responsible for implementingand monitoring our compliance with Nevada regulatory matters. This committee will also review information and reports regarding the suitability ofpotential key employees or other parties who may be involved in material transactions or relationships with us. Indiana Regulatory Matters We own and operate a wholly-owned subsidiary, Gaming Entertainment (Indiana) LLC, which acquired and operates Rising Star Casino Resort inRising Sun, Indiana. The ownership and operation of casino facilities in Indiana are subject to extensive state and local regulation, including primarily thelicensing and regulatory control of the Indiana Gaming Commission. The Indiana Gaming Commission is given extensive powers and duties foradministering, regulating and enforcing riverboat gaming in Indiana. 11 Pursuant to the Indiana Riverboat Gaming Act, as amended (the “Indiana Act”), the Indiana Gaming Commission is authorized to award up to 11gaming licenses to operate riverboat casinos in the State of Indiana, including five to counties contiguous to Lake Michigan in northern Indiana, five tocounties contiguous to the Ohio River in southern Indiana and one to a county contiguous to Patoka Lake in southern Indiana, which was subsequentlyrelocated to French Lick, Indiana. In April 2007, the Indiana General Assembly enacted legislation that authorized the two horse tracks located in Andersonand Shelbyville, Indiana to install 2,000 slot machines at each facility (“racinos”). The Indiana Gaming Commission granted each horse track a five-yeargaming license authorizing the use of such slot machines. Installation of slot machines beyond the statutorily authorized number requires further approval bythe Indiana Gaming Commission. The slot operations at the race tracks opened in the second quarter of 2008. In November 2011, the Indiana Commissionauthorized Indiana Live! Casino (now known as Indiana Grand), located in Shelbyville to install up to 2,200 slot machines at its facility. In November 2012,the Indiana Gaming Commission authorized Hoosier Park to install up to 2,200 slot machines at its facility. The Indiana Act strictly regulates the facilities, persons, associations and practices related to gaming operations pursuant to the police powers ofIndiana, including comprehensive law enforcement provisions. The Indiana Act vests the Indiana Gaming Commission with the power and duties ofadministering, regulating and enforcing the system of riverboat gaming in Indiana. The Indiana Gaming Commission’s jurisdiction extends to every person,association, corporation, partnership and trust involved in riverboat gaming operations in Indiana. The Indiana Act requires the owner of a riverboat gaming operation to hold an owner’s license issued by the Indiana Gaming Commission. To obtainan owner’s license, the Indiana Act requires extensive disclosure of records and other information concerning an applicant. Applicants for licensure mustsubmit a comprehensive application and personal disclosure forms and undergo an exhaustive background investigation prior to the issuance of a license.The applicant must also disclose the identity of every person holding an ownership interest in the applicant. Any person holding an interest of 5% or more inthe applicant must undergo a background investigation and be licensed. The Indiana Gaming Commission has the authority to request specific informationon or license anyone holding an ownership interest. Each license entitles the licensee to own and operate one riverboat and gaming equipment as part of a gaming operation. The Indiana Act allows aperson to hold up to 100% of up to two individual licenses. Each initial owner’s license runs for a period of five years. Thereafter, the license is subject torenewal on an annual basis upon a determination by the Indiana Gaming Commission that the licensee continues to be eligible for an owner’s licensepursuant to the Indiana Act and the rules and regulations adopted thereunder. Gaming Entertainment (Indiana) LLC applied for and, on March 15, 2011, wasgranted the transfer of a riverboat owner’s license. Thereafter, Gaming Entertainment (Indiana) LLC has renewed its license annually on September 15 of eachyear. The Indiana Act requires that a licensed owner undergo a complete investigation every three years. If for any reason the license is terminated, theassets of the riverboat gaming operation cannot be disposed of without the approval of the Indiana Gaming Commission. Furthermore, the Indiana Actrequires that officers, directors and employees of a gaming operation be licensed. In 2009, the Indiana General Assembly enacted legislation requiring allcasino operators to submit for approval by the Commission a written power of attorney identifying a person who would serve as a trustee to temporarilyoperate the casino in certain rare circumstances, such as the revocation or non-renewal of any owner’s license. Gaming Entertainment (Indiana) LLC mostrecently had its power of attorney approval renewed on September 12, 2013. 12 The Indiana Gaming Commission has a rule mandating that licensees maintain a cash reserve to protect patrons against defaults in gamingdebts. The cash reserve is to be equal to a licensee’s average payout for a three-day period based on the riverboat’s performance during the prior calendarquarter. The cash reserve can consist of cash on hand, cash maintained in Indiana bank accounts and cash equivalents not otherwise committed or obligated. The Indiana Act does not limit the maximum bet or loss per patron. Each licensee sets minimum and maximum wagers on its own games. Playersmust use chips or tokens as, according to the Indiana Act, wagering may not be conducted with money or other negotiable currency. No person under the ageof 21 is permitted to wager, and wagers may only be taken from persons present at a licensed riverboat. The Indiana Gaming Commission places special emphasis on the participation of minority business enterprises (“MBEs”) and women businessenterprises (“WBEs”) in the riverboat industry. Each licensee is required to submit annually to the Indiana Gaming Commission a report that includes thetotal dollar value of contracts awarded for goods and services and the percentage awarded to MBEs and WBEs, respectively. Prior to 2008, the IndianaGaming Commission required licensees to establish goals of expending 10% of the total dollars spent on the majority of goods and services with MBEs and5% with WBEs. Following a disparity study in 2007 to determine whether there existed a gap between the capacity of MBEs and WBEs and the utilizationthereof by riverboat casinos in Indiana, the Indiana Commission mandated that, effective as of January 1, 2008, annual goals for expenditures to WBEs forthe purchase of construction goods and services shall be set at 10.9%. In November 2010, relying on two years of expenditure data, that indicated astatistically significant disparity, the Indiana Gaming Commission issued Resolution 2010-217 to mandate that, effective January 1, 2011, the annual goalfor expenditures to MBEs for the purchase of construction goods and services shall be set at 23.2%. The Indiana Act requires that the Indiana GamingCommission update the disparity study every five years. Accordingly, a disparity study was conducted in 2012, reviewing Indiana riverboat and racinoexpenditures between January 1, 2009 and December 31, 2011 (the “2012 Disparity Study”). The 2012 Disparity Study showed that there were no expenditure disparities by riverboat casinos or racinos. On November 15, 2012, the IndianaGaming Commission adopted the 2012 Disparity Study. For expenditures in all areas, the Indiana Gaming Commission has taken the position that thecapacity percentages set forth in the 2012 Disparity Study for MBEs and WBEs, respectively, are goals and targets for which best faith efforts of each licenseeare expected. Failure to meet these goals will be scrutinized heavily by the Indiana Gaming Commission and the Indiana Act authorizes the Indiana GamingCommission to suspend, limit or revoke an owner’s gaming license or impose a fine for failure to comply with these guidelines. However, if a determination ismade that a licensee has failed to demonstrate compliance with these guidelines, the licensee has 90 days from the date of the determination to comply. A licensee may not lease, hypothecate, borrow money against or lend money against an owner’s riverboat gaming license. An ownership interest inan owner’s riverboat gaming license may only be transferred in accordance with the regulations promulgated under the Indiana Act. Indiana state law stipulates a graduated wagering tax with a starting tax rate of 5% of the first $25.0 million of adjusted gross receipts for casinoswith adjusted gross gaming receipts under $75.0 million during the fiscal tax year ended June 30, 2014, with a deduction for free play and a top rate of 40%for adjusted gross receipts in excess of $600.0 million. In addition to the wagering tax, an admissions tax of $3 per admission is assessed. The Indiana Actprovides for the suspension or revocation of a license if the wagering and admissions taxes are not timely submitted. 13 A licensee may enter into debt transactions that total $1.0 million or more only with the prior approval of the Indiana Gaming Commission. Suchapproval is subject to compliance with requisite procedures and a showing that each person with whom the licensee enters into a debt transaction would besuitable for licensure under the Indiana Act. Unless waived, approval of debt transactions requires consideration by the Commission at two businessmeetings. The Indiana Gaming Commission, by resolution, has authorized its executive director, subject to subsequent ratification by the Indiana GamingCommission, to approve debt transactions after a review of the transaction documents and consultation with the Indian Gaming Commission chair and theIndiana Gaming Commission’s financial consultant. The Indiana Gaming Commission may subject a licensee to fines, suspension or revocation of its license for any act that is in violation of the IndianaAct or the regulations of the Indiana Gaming Commission or for any other fraudulent act. In addition, the Indiana Gaming Commission may revoke anowner’s license if the Indiana Gaming Commission determines that the revocation of the license is in the best interests of the State of Indiana. Limitation,conditioning, or suspension of any gaming license or approval or the directive to utilize its power of attorney could (and revocation of any gaming license orapproval would) materially adversely affect us, our gaming operations and our results of operations. The Indiana Act provides that the sale of alcoholic beverages at riverboat casinos is subject to licensing, control and regulation pursuant to Title 7.1of the Indiana Code and the rules adopted by the Indiana Alcohol and Tobacco Commission. Mississippi Regulatory Matters In order to acquire and own Silver Slipper Casino or any other gaming operation in Mississippi, we are subject to the Mississippi Gaming ControlAct (“Mississippi Act”) and to the licensing and regulatory control of the Mississippi Gaming Commission, and various local, city and county regulatoryagencies. The Mississippi Act is similar to the Nevada Gaming Control Act. The Mississippi Gaming Commission has adopted regulations that are alsosimilar in many respects to the Nevada gaming regulations. The laws, regulations and supervisory procedures of the Mississippi gaming authorities are based upon declarations of public policy which areconcerned with, among other things: ●the character of persons having any direct or indirect involvement with gaming to prevent unsavory or unsuitable persons from having a director indirect involvement with gaming at any time or in any capacity; ●the establishment and application of responsible accounting practices and procedures; ●maintenance of effective control over the financial practices and financial stability of licensees, including procedures for internal controls andthe safeguarding of assets and revenues, including recordkeeping and requiring the filing of periodic reports to the Mississippi GamingCommission; ●the prevention of cheating and fraudulent practices; 14 ●providing a source of state and local revenues through taxation and licensing fees; and ●ensuring that gaming licensees, to the extent practicable, employ Mississippi residents. The Mississippi Act provides for legalized gaming in each of the 14 counties that border the Gulf Coast or the Mississippi River; however, gaming islegalized only if the voters in the county have not voted to prohibit gaming in that county. Currently, gaming is permissible in nine of the fourteen countiesand occurs in nine counties. Historically, the Mississippi Act required gaming vessels to be located on the Mississippi River or on navigable waterways ineligible counties along the Mississippi River or in waters along the Gulf Coast shore of the eligible counties. However, more recently, the Mississippi Act hasbeen amended to permit licensees in the three counties along the Gulf Coast to establish land based casino operations. Due to another change to theMississippi Act, the Mississippi Gaming Commission has also permitted licensees in approved river counties to conduct gaming operations on permanentstructures, provided that the majority of any such structure is located on the river side of the “bank full” line of the Mississippi River. We and any subsidiary we own that operates a casino in Mississippi are subject to the licensing and regulatory control of the Mississippi GamingCommission. As the sole member of Silver Slipper Casino Venture LLC, a licensee of the Mississippi Gaming Commission, we applied for registration withthe Mississippi Gaming Commission as a publicly traded corporation, which was granted on September 20, 2012. As a registered corporation, we are requiredperiodically to submit financial and operating reports, and any other information that the Mississippi Gaming Commission may require. If we fail to satisfythe registration requirements of the Mississippi Act, we and our Mississippi subsidiary, Silver Slipper Casino Venture LLC, cannot own or operate gamingfacilities in Mississippi. No person may become a stockholder of or receive any percentage of profits from a Mississippi gaming subsidiary without firstobtaining the necessary licensing and approvals from the Mississippi Gaming Commission. A Mississippi gaming subsidiary must maintain a gaming licensefrom the Mississippi Gaming Commission, subject to certain conditions, including continued compliance with all applicable state laws and regulations. There are no limitations on the number of gaming licenses that may be granted. Further, the Mississippi Act provides for 24-hour gaming operationsand does not limit the maximum bet or loss per patron or the percentage of space that may be utilized for gaming. Gaming licenses are issued for a three-yearperiod and must be renewed periodically thereafter. Silver Slipper Casino was most recently granted a renewal of its license by the Mississippi GamingCommission on June 21, 2012, effective July 20, 2012. This license expires on July 15, 2015. The Mississippi gaming authorities may limit, condition, suspend or revoke a license, registration, approval or finding of suitability for any causedeemed reasonable by the Mississippi Gaming Commission. If a Mississippi Gaming Commission determines that we violated gaming laws, then theapprovals and licenses we hold could be limited, conditioned, suspended or revoked, and we, and the individuals involved, could be subject to substantialfines for each separate violation of the gaming laws at the discretion of the Mississippi Gaming Commission. Because of such a violation, the MississippiGaming Commission may attempt to appoint a supervisor to operate the casino facilities. Limitation, conditioning, or suspension of any gaming license orapproval or the appointment of a supervisor could (and revocation of any gaming license or approval would) materially adversely affect us, our gamingoperations and our results of operations. 15 Certain of our officers, directors and key employees are required to be, and have been, found suitable by the Mississippi Gaming Commission andemployees associated with gaming must obtain work permits which are subject to immediate suspension under certain circumstances. An application forsuitability may be denied for any cause deemed reasonable by the Mississippi Gaming Commission. Changes in specified key positions must be reported tothe Mississippi Gaming Commission. In addition to its authority to deny an application for a license, the Mississippi Gaming Commission has jurisdiction todisapprove a change in position by an officer, director or key employee. The Mississippi Gaming Commission has the power to require licensed gamingcompanies to suspend or dismiss officers, directors or other key employees and to sever relationships with other persons who refuse to file appropriateapplications or whom the authorities find unsuitable to act in such capacities. Determinations of suitability or questions pertaining to licensing are notsubject to judicial review in Mississippi. We believe that we have obtained, applied for or are in the process of applying for all necessary findings ofsuitability with respect to such persons affiliated with us or Silver Slipper Casino Venture LLC, although the Mississippi Gaming Commission, in itsdiscretion, may require additional persons to file applications for findings of suitability. The Mississippi Gaming Commission may also require anyone having a material relationship or involvement with us to be found suitable orlicensed, in which case those persons are required to pay the costs and fees in connection with the investigation. At any time, the Mississippi GamingCommission has the power to investigate and require the finding of suitability of any record of our beneficial stockholders. The Mississippi Act requires thatany person who acquires more than 5% of any class of our voting securities, as reported to the Securities and Exchange Commission, must report theacquisition to the Mississippi Gaming Commission and such person may be required to be found suitable. Also, any person who becomes a beneficial ownerof 10% or more of any class of our voting securities, as reported to the Securities and Exchange Commission, is required to apply for a finding of suitabilityby the Mississippi Gaming Commission and must pay the costs and fees that the Mississippi Gaming Commission incurs in conducting its investigation. If astockholder who must be found suitable is a corporation, partnership or trust, it must submit detailed business and financial information, including a list ofbeneficial owners. The Mississippi Gaming Commission generally has exercised its discretion to require a finding of suitability of any beneficial owner of 5% of anyclass of voting securities of a registered corporation. However, under certain circumstances, an “institutional investor”, as defined in the Mississippi gamingregulations, which acquires more than 10%, but not more than 15%, of the voting securities of a registered corporation, as reported to the Securities andExchange Commission, may apply for a waiver of such finding of suitability if such investor holds the securities for investment purposes only. Aninstitutional investor will be deemed to hold voting securities for investment purposes only if the voting securities were acquired and are held in the ordinarycourse of business as an institutional investor and not for the purpose of causing, directly or indirectly, the election of a majority of our board of directors,any change in our corporate charter, bylaws, management, policies or operations, or any of our gaming affiliates, or any other action which the MississippiGaming Commission finds to be inconsistent with holding our voting securities for investment purposes only. Activities that are not deemed to beinconsistent with holding voting securities for investment purposes include (1) voting on all matters voted on by stockholders; (2) making financial andother inquiries of management of the type normally made by securities analysts for informational purposes and not to cause a change in the registeredcorporation’s management, policies or operations’ and (3) such other activities as the Mississippi Gaming Commission may determine to be consistent withsuch investment intent. 16 Any person who fails or refuses to apply for a finding of suitability or a license within 30 days after being ordered to do so by the MississippiGaming Commission may be found unsuitable based solely on such failure or refusal. The same restrictions apply to a record owner if the record owner, whenrequested, fails to identify the beneficial owner. Any security holder found unsuitable and who holds, directly or indirectly, any beneficial ownership of thecommon stock beyond such period of time as may be prescribed by the Mississippi Gaming Commission may be guilty of a misdemeanor. We are subject todisciplinary action if, after we receive notice that a person is unsuitable to be a security holder or to have any other relationship with us, we: ●pay that person any dividend or interest upon our voting securities; ●recognize the exercise, directly or indirectly of any voting right conferred through securities held by that person; ●Pay the unsuitable person any remuneration in any form for services rendered or otherwise, except in certain limited and specific circumstances;or ●Fail to pursue all lawful efforts to require the unsuitable person to divest himself of the securities including, if necessary, the immediatepurchase of the securities for cash at fair market value. The Mississippi Gaming Commission may also, in its discretion, require identities of the holders of our debt or other securities to file applications,be investigated and be found suitable to own any debt security of a registered corporation if the Mississippi Gaming Commission has reason to believe thatthe holder’s ownership of such debt securities would be inconsistent with the declared policies of the State of Mississippi. Although the Mississippi GamingCommission generally does not require the individual holders of such notes to be investigated and found suitable, it retains the right to do so for any reasondeemed necessary by the Mississippi Gaming Commission. The applicant holder of any debt securities is required to pay all costs of such investigation. If the Mississippi Gaming Commission determines that a person is unsuitable to own such debt security, we may be sanctioned, including the loss ofour approvals, if, without the prior approval of the Mississippi Gaming Commission, we: ●pay to the unsuitable person any dividends, interest or any distribution whatsoever; ●recognize any voting right by such unsuitable person in connection with such securities; ●pay the unsuitable person remuneration in any form; or ●make any payment to the unsuitable person by way of principal, redemption, conversion; exchange, liquidation or similar transaction. 17 Each Mississippi gaming subsidiary must maintain in Mississippi a current stock ledger with respect to the ownership of its equity securities. Wealso must maintain a current list of our shareholders, which must reflect the record ownership of each outstanding share of any class of our equity securities.The ledger and stockholder lists must be available for inspection by the Mississippi Gaming Commission at any time. If any securities are held in trust by anagent or by a nominee, the record holder may be required to disclose the identity of the beneficial owner to the Mississippi Gaming Commission. A failure tomake such disclosure may be grounds for finding the record holder unsuitable. We must also render maximum assistance in determining the identity of thebeneficial owner. The Mississippi Act requires that certificates representing securities of a registered corporation bear a legend indicating that the securitiesare subject to the Mississippi Act and the regulations of the Mississippi Gaming Commission. On September 20, 2012, we received a waiver of this legendrequirement from the Mississippi Gaming Commission. The Mississippi Gaming Commission has the power to impose additional restrictions on the holdersof our securities at any time. Substantially all material loans, leases, sales of securities and similar financing transactions by a registered corporation or a Mississippi gamingsubsidiary must be reported to and approved by the Mississippi Gaming Commission. A Mississippi gaming subsidiary may not make a public offering of itssecurities, but may pledge or mortgage casino facilities. A registered corporation may not make a public offering of its securities without the prior approval ofthe Mississippi Gaming Commission if any part of the proceeds of the offering is to be used to finance the construction, acquisition, or operation of gamingfacilities in Mississippi or to retire or extend obligations incurred for those purposes. Such approval, if given, does not constitute a recommendation orapproval of the investment merits of the securities subject to the offering. We have received a waiver of the prior approval requirement with respect to publicofferings and private placements of securities, subject to certain conditions. A Mississippi gaming subsidiary may not guarantee a security issued by an affiliated company pursuant to a public offering, or pledge its assets tosecure payment or performance of the obligations evidenced by a security issued by an affiliated company, without the prior approval of the MississippiGaming Commission. A pledge of the stock of a Mississippi gaming subsidiary and the foreclosure of such a pledge are ineffective without the prior approvalof the Mississippi Gaming Commission. We have obtained approvals from the Mississippi Gaming Commission for such guarantees, pledges and restrictionsin connection with offerings of securities, subject to certain restrictions. Also, changes in control through merger, consolidation, acquisition of assets, management or consulting agreements or any form of takeover cannotoccur without prior investigation and approval by the Mississippi Gaming Commission. The Mississippi legislature has declared that some repurchases of voting securities, corporate acquisitions opposed by management, and corporatedefense tactics affecting Mississippi gaming licensees and registered corporations that are affiliated with those operations, may be harmful to stable andproductive corporate gaming. The Mississippi Gaming Commission has established a regulatory scheme to reduce the potentially adverse effects of thesebusiness practices upon Mississippi’s gaming industry and to further Mississippi’s policy to: ●assure the financial stability of corporate gaming licensees and their affiliates; ●preserve the beneficial aspects of conducting business in the corporate form; and ●promote a neutral environment for the orderly governance of corporate affairs. 18 Because we are a registered corporation, approvals may be required from the Mississippi Gaming Commission before we can make exceptionalrepurchases of voting securities above their current market price and before a corporate acquisition opposed by management can be consummated.Mississippi gaming regulations also require prior approval of a plan of recapitalization proposed by a registered corporation’s board of directors in responseto a tender offer made directly to its stockholders for the purpose of acquiring control of the registered corporation. Neither we nor Silver Slipper Casino Venture LLC may engage in gaming activities in Mississippi while also conducting operations outside ofMississippi without approval of, or a waiver of such approval by, the Mississippi Gaming Commission. The Mississippi Gaming Commission may requiredeterminations that there are means for the Mississippi Gaming Commission to have access to information concerning us and our affiliates’ out-of-stategaming operations. We have approval from the Mississippi Gaming Commission for foreign gaming operations in that such approval for foreign gamingoperations is automatically granted under the Mississippi regulations in connection with foreign operations (except for internet gaming activities) conductedwithin the 50 states or any territory of the United States, or on board any cruise ship embarking from a port located therein. The Mississippi GamingCommission requires a formal foreign gaming waiver for involvement in internet gaming. License, fees and taxes are payable to the State of Mississippi, the Mississippi Gaming Commission, and the county and city in which ourMississippi subsidiary, Silver Slipper Casino Venture LLC’s gaming operations are conducted. Depending on the particular fee or tax involved, these feesand taxes are payable either monthly, quarterly or annually. Gaming fees and tax calculations are generally based upon (1) a percentage of the gross gamingrevenues received by the subsidiary operation; (2) the number of gaming devices operated by the casino; or (3) the number of table games operated by thecasino. The license fee payable to the State of Mississippi is based upon gaming receipts and the current maximum tax rate imposed is 8% of all gamingreceipts in excess of $134,000 per month. The sale of alcoholic beverages at our Mississippi gaming operation is subject to the licensing, control and regulation by the Alcoholic BeverageControl Division of the Mississippi State Tax Commission (“ABC”) as well as local ordinances. If alcohol regulations are violated, the ABC may limit,condition, suspend or revoke any license for the serving of alcoholic beverages or place such licensee on probation with or without conditions. In November 2004, Silver Slipper Casino Venture LLC entered into a thirty-year public trust tidelands lease agreement with the State of Mississippifor the marsh lands. Prior to Hurricane Katrina, all Gulf Coast casinos had this type of tidelands lease with the State of Mississippi for lease of the waterbottom under the casino when casinos were required to be over water. Subsequent to Hurricane Katrina, the law changed to allow casinos to be built on landno further than 800 feet from the approved gaming site, therefore the tidelands lease expired and the Gulf Coast casinos hold an “In Lieu” agreement with theState of Mississippi. The “In Lieu” agreements are in the form of a property tax assessment with the State of Mississippi and the properties are taxed as long asthey occupy the land and continue gaming operations. Tribal Gaming Gaming on tribal lands (lands over which tribes have jurisdiction and which meet the definition of tribal lands under the Indian Gaming RegulatoryAct of 1988, (the “Regulatory Act”)) is regulated by federal, state and tribal governments. The regulatory environment regarding tribal gaming is alwayschanging. Changes in federal, state or tribal law or regulations may limit or otherwise affect tribal gaming or may be applied retroactively and could thenhave a negative effect on our operations. 19 The terms and conditions of management agreements or other agreements and the operation of casinos on tribal lands are subject to the RegulatoryAct, which is implemented by the National Indian Gaming Commission (“NIGC”). The contracts also are subject to the provisions of statutes relating tocontracts with tribes, which are supervised by the United States Department of the Interior. The Regulatory Act is interpreted by the Department of theInterior and the NIGC and may be clarified or amended by the judiciary or legislature. Under the Regulatory Act, the NIGC has the power to: ●inspect and examine certain tribal gaming facilities; ●perform background checks on persons associated with tribal gaming; ●inspect, copy and audit all records of tribal gaming facilities; ●hold hearings, issue subpoenas, take depositions, and adopt regulations; and ●penalize violators of the Regulatory Act. Penalties for violations of the Regulatory Act include fines, and possible temporary or permanent closing of gaming facilities. The Department ofJustice may also impose federal criminal sanctions for illegal gaming on tribal lands and for theft from tribal gaming facilities. The Regulatory Act also requires that the NIGC review tribal gaming ordinances. Such ordinances are approved only if they meet certainrequirements relating to: ●ownership; ●security; ●personnel background; ●recordkeeping and auditing of the tribe’s gaming enterprises; ●use of the revenues from gaming; and ●protection of the environment and the public health and safety. The Regulatory Act also regulates tribal gaming and management agreements. The NIGC must approve management agreements and collateralagreements, including agreements like promissory notes, loan agreements and security agreements. A management agreement can be approved only afterdetermining that the contract provides for: ●adequate accounting procedures and verifiable financial reports, copies of which must be furnished to the tribe; 20 ●tribal access to the daily operations of the gaming enterprise, including the right to verify gross revenues and income; ●minimum guaranteed payments to the tribe, which must have priority over the retirement of development and construction costs; ●a ceiling on the repayment of such development and construction costs; and ●a contract term not exceeding five years and a management fee not exceeding 30% of net revenues as defined by the agency and adetermination by the chairman of the NIGC that the fee is reasonable considering the circumstances; provided that the NIGC may approve up toa seven-year term and a management fee not to exceed 40% of net revenues if the NIGC is satisfied that the capital investment required or theincome projections for the particular gaming activity justify the larger profit allocation and longer term. Under the Regulatory Act, we must provide the NIGC with background information, including financial statements and gaming experience, on: ●each person with management responsibility for a management agreement; ●each of our directors; and ●the ten persons who have the greatest direct or indirect financial interest in a management agreement to which we are a party, or ●in the case of a publicly traded company, the holders of 5% or more of the ownership interest in the company. The NIGC will not approve a management company and may void an existing management agreement if a director, key employee or an interestedperson of the management company: ●is an elected member of the tribal government that owns the facility being managed; ●has been or is convicted of a felony or misdemeanor gaming offense; ●has knowingly and willfully provided materially false information to the NIGC or a tribe; ●has refused to respond to questions from the NIGC; ●is a person whose prior history, reputation and associations pose a threat to the public interest or to effective gaming regulation and control, orcreate or enhance the chance of unsuitable, unfair or illegal activities in gaming or the business and financial arrangements incidental thereto;or ●has tried to influence any decision or process of tribal government relating to gaming. 21 Contracts may also be voided if: ●the management company has materially breached the terms of the management agreement, or the tribe’s gaming ordinance; or ●a trustee, exercising the skill and diligence to which a trustee is commonly held, would not approve such management agreement. The Regulatory Act divides games that may be played on tribal land into three categories. Class I Gaming includes traditional tribal games andprivate social games and is not regulated under the Regulatory Act. Class II Gaming includes bingo, pull tabs, lotto, punch boards, tip jars, instant bingo, andother games similar to bingo, if those games are played at a location where bingo is played. Class III Gaming includes all other commercial forms of gaming,such as video casino games (e.g., video slots, video blackjack), so-called “table games” (e.g., blackjack, craps, roulette), and other commercial gaming (e.g.,sports betting and pari-mutuel wagering). Class II Gaming is allowed on tribal land if performed according to a tribal ordinance which has been approved by the NIGC and if the state in whichthe tribal land is located allows such gaming for any purpose. Class II Gaming also must comply with several other requirements, including a requirementthat key management officials and employees be licensed by the tribe. Class III Gaming is permitted on tribal land if the same conditions that apply to Class II Gaming are met and if the gaming is performed according tothe terms of a written gaming compact between the tribe and the host state. The Regulatory Act requires states to negotiate in good faith with tribes that seekto enter into tribal-state compacts. Should the state not negotiate in good faith, regulations of the Department of Interior allow the Secretary of the Interior toimpose the terms of a gaming compact on the state. The negotiation and adoption of tribal-state compacts is vulnerable to legal and political changes that may affect our future revenues and securitiesprices. Accordingly, we cannot predict: ●which additional states, if any, will approve casino gaming on tribal land; ●the timing of any such approval; ●the types of gaming permitted by each tribal-state compact; ●any limits on the number of gaming machines allowed per facility; or ●whether states will attempt to renegotiate or take other steps that may affect existing compacts. Under the Regulatory Act, tribal governments have primary regulatory authority over gaming on tribal land within the tribe’s jurisdiction unless atribal-state compact has delegated this authority. Therefore, persons engaged in gaming activities, including us, are subject to the provisions of tribalordinances and regulations on gaming. 22 Tribal-state compacts have been litigated in several states, including Michigan. In addition, many bills have been introduced in Congress thatwould amend the Regulatory Act, including bills introduced in 2005 that seek to limit “off reservation” gaming by tribes. Although this legislative attemptwas rejected, the Department of the Interior under the Bush administration in January 2008 issued a “guidance memorandum” immediately followed by aseries of decisions which gave effect to the defeated legislation, placing limitations on the distance a tribal casino could be from the tribe’s reservation.Although under the Obama administration, the strictures of the “guidance memorandum” have been reduced, there continues to be a policy of restricting theability of tribes from operating gaming facilities that are remote from the tribe’s reservation or core geographic area of operation. If the Regulatory Act wereamended or this department policy remain in effect, then the governmental structure and requirements by which tribes may conduct gaming could besignificantly changed, which could have an impact on our future operations and development of tribal gaming opportunities. Furthermore, in 2009, theUnited States Supreme Court issued a decision which interpreted the Indian Reorganization Act, enacted in 1934, and found that the Secretary of the Interiorwas only authorized to take land into trust for tribes recognized as of the date of that Act. Thus, a tribe receiving federal recognition after 1934 was notallowed to have land taken into trust for its benefit. Pueblo of Pojoaque Gaming Commission On September 23, 2011, a management contract between us and Buffalo Thunder, Inc. and Pojoaque Gaming, Inc. became effective. Those entitiesare the operating arms of the Pueblo of Pojoaque in Santa Fe, New Mexico (“the Pueblo”). The management contract and two ancillary employmentagreements had been approved by the NIGC pursuant to the Regulatory Act. Gaming on the Pueblo is subject to regulation and control by the NIGC asdetailed above and the Pueblo of Pojoaque Gaming Commission (“Pueblo Gaming Commission”). The Pueblo Gaming Commission is authorized under thePueblo Gaming Ordinance to regulate gaming. Regulations of the Gaming Commission require the licensing of managers, employees and gaming vendors.The Pueblo Gaming Commission has the authority to require any persons or entities with an interest in the gaming operations or seeking to conduct businesswith the gaming operations to submit applications for licensing or approval, submit to background and financial investigations and criminal checks todetermine that such persons or entities have the requisite honesty, integrity and experience to not adversely affect gaming operations or pose a threat to theintegrity of the gaming operations or the Pueblo. The Pueblo Gaming Commission is empowered to conduct investigations, issue Notices of Violation, conduct hearings and impose penaltiesincluding fines, suspension, termination or revocation of gaming licenses or deny the issuance of gaming licenses for violations of the gaming ordinance orthe Pueblo Gaming Commission’s regulations. The Pueblo Gaming Commission maintains a presence at the gaming facilities to ensure the fairness of the games, protection of the public andPueblo and security of the Pueblo’s assets. The two Company executives who are responsible for the management of the gaming operations have been granted gaming licenses by the PuebloGaming Commission. Costs and Effects of Compliance with Environmental Laws Indiana riverboat casinos are subject to regulation by the Indiana Department of Environmental Management (IDEM). That department hasregulations similar to the federal Department of Environmental Protection and maintains enforcement programs in the areas of air pollution, water andwastewater pollution and hazardous waste handling. As a riverboat and land-based golf club, we are subject to the regulation of the IDEM in our operations.The IDEM has reporting requirements and can impose fines and other penalties for violations of its regulations. While there can be criminal sanctions forserious and intentional violations of the regulations, the general penalty is a fine of up to $0.03 million for each day of a violation and injunctions againstcontinued violations and corrective orders. Rising Star Casino Resort has not been the subject of any fine or other enforcement proceeding by the IDEM. 23 In order to have land taken into trust or otherwise be approved for use by a tribe for gaming purposes by the federal Bureau of Indian Affairs (BIA), asa federal agency, the BIA is required to comply with the National Environmental Policy Act (NEPA). Likewise, in order for the NIGC to approve amanagement agreement for us to manage a tribal gaming casino as required by the Indian Gaming Regulatory Act, the NIGC, as a federal agency, is requiredto comply with NEPA. For these purposes, NEPA requires a federal agency to consider the effect on the physical and natural environment of a developmentproject as part of its approval process. Compliance with NEPA begins with conducting an environmental assessment, which considers the factors identifiedin NEPA, as implemented by the Council on Environmental Quality, and determines whether the development will cause a significant impact on theenvironment. If not, the federal agency may issue a finding of no significant impact. If the federal agency determines the development project may cause asignificant impact on the environment, then it will conduct a further study resulting in an environmental impact statement, which considers all impacts on theenvironment and what can be done to mitigate those impacts. Because this constitutes action by a federal agency, any of these determinations can be thesubject of litigation. Competition The gaming industry is highly competitive. Gaming activities include traditional land-based casinos, riverboat and dockside gaming, casino gamingon tribal land, state-sponsored lotteries, video poker in restaurants, bars and hotels, internet gaming, pari-mutuel betting on horse racing, dog racing and jaialai, sports bookmaking, card rooms, and casinos at racetracks. Silver Slipper Casino, Rising Star Casino Resort, Grand Lodge Casino, Stockman’s Casinoand the Indian-owned and other casinos that we may be developing and plan to manage or own compete with all these forms of gaming, and will competewith any new forms of gaming that may be legalized in additional jurisdictions, as well as with other types of entertainment. Some of our competitors havemore personnel and greater financial or other resources than we do. Silver Slipper Casino is one of eleven casinos located on the Gulf Coast. Its closest competitor is the Hollywood Casino, approximately a fifteenminute drive to the northwest in Bay St. Louis, which is larger with 56,300 square feet of casino space, approximately 1,200 slot machines, 20 table games,poker room, 290 hotel rooms and four dining options. Further to the east is the Island View Casino, approximately thirty minutes away in Gulfport, with83,000 square feet of casino space, approximately 2,000 slot machines, over 40 table games, approximately 560 hotel rooms and four dining options. InAugust 2013, Island View Casino Resort officials announced plans for a $50.0 million expansion to include an approximately 400 room beachfront hotel,restaurants and meeting and convention space. Construction will begin this fall and is expected to be completed by the summer of 2015. There are eightcasinos in the Biloxi area, approximately an hour away on I-10 East. The largest Biloxi casinos include the Beau Rivage Casino & Hotel and IP Casino,Resort & Spa. The IP Casino, Resort & Spa includes approximately 70,000 square feet of gaming space, 1,800 slot machines, 60 table games and a pokerroom. The Beau Rivage Casino & Hotel includes approximately 79,000 square feet of casino space, 2,000 slot machines, 80 table games and a pokerroom. Approximately a one and a half hour drive on I-10 West from Silver Slipper Casino are three casinos located in and near New Orleans, which includethe Harrah’s New Orleans Casino, Boomtown Casino New Orleans and the Treasure Chest Casino. The largest of these casinos is the Harrah’s New OrleansCasino, the only land casino in downtown New Orleans which features approximately 125,000 square feet of gaming space, 1,800 gaming machines, 150table and poker games and ten restaurants. Each of these facilities is within the general market of Silver Slipper Casino and is expected to continue providingcompetition to our Silver Slipper Casino operation. 24 Rising Star Casino Resort is one of three riverboat casinos located on the Ohio River in southeastern Indiana. Its closest competitor is the HollywoodCasino, approximately a twenty minute drive, which is larger with 142,500 square feet of casino space, over 2,900 slot machines, 80 table games, poker roomand five dining options. To the south of the Rising Star Casino Resort is the Belterra Casino, approximately thirty minutes away, with approximately 50,000square feet of casino space, 1,400 slot machines and 53 table games. Ohio has recently authorized legalized gambling and the new Scioto Downs Racino andHollywood Casino opened in Columbus, Ohio in June and October 2012, respectively. The Scioto Downs Racino includes over 2,100 slots and live horseracing. The Ohio Hollywood Casino includes over 3,000 slots, approximately 70 table games and a poker room. The Horseshoe Casino Cincinnati opened onMarch 4, 2013 and features approximately 96,000 square feet of casino space, 1,800 slot machines, 120 table games and a poker room. Miami Valley openedin December 2013. There are also two proposed racinos within the general market of Rising Star Casino Resort which are expected to open in 2014 andprovide increased competition to our Rising Star Casino Resort operation. While Kentucky has limited legal gaming, the cities of Lexington and Louisvilleare within the market of Rising Star Casino Resort and there is a possibility that Kentucky will expand legalized gaming in the near future. Grand Lodge Casino is one of four casinos located within a five mile radius of each other in the north Lake Tahoe area. The closest and largestcompetitor is the Tahoe Biltmore Lodge & Casino which is approximately 4.5 miles away and has more than 200 slot machines, approximately eight tablegames and a sports book. In South Lake Tahoe, approximately a 45 minute drive from Incline Village, there are four gaming properties, which do not directlycompete with the North Lake Tahoe area. There are also numerous Native American casinos serving the Northern California market. Stockman’s Casino is located on the west side of Fallon, Nevada on Highway 50, approximately 60 miles east of Reno, Nevada, and is the largest ofseveral casinos in the Churchill County area. The county’s population is roughly 25,000 with a nearby naval air base which has a significant economicimpact on our business. Of the approximately nine casinos currently operating in the Fallon, Nevada market, our major competitors are three other casinosthat are smaller than Stockman’s Casino both in size and the number of gaming machines. While we are not aware of any significant planned expansion togaming capacity in the Churchill County area, additional competition may adversely affect our financial condition or results of operations. The Buffalo Thunder Casino and Resort and the Cities of Gold and other gaming facilities are two of four casinos located in the Santa Fe, NewMexico area. The closest competitor is the Camel Rock Casino in Santa Fe, New Mexico, approximately a ten minute drive, which is smaller withapproximately 500 slot machines, two table games and two dining options. To the southwest, approximately an hour away, is the San Felipe CasinoHollywood, located in Algodones, New Mexico. The San Felipe Casino Hollywood includes approximately 600 slot machines and an RV park. The SanFelipe Travel Center, which is adjacent to the San Felipe Casino Hollywood, includes a 24-hour convenience store, restaurant and service station. There arethree casinos located in Albuquerque, New Mexico, approximately a 1.5 hour drive away. The largest of these casinos is the Isleta Resort & Casino with300,000 square feet of casino space, over 1,600 slot machines, approximately 30 table games, poker room, bingo and five dining options. Each of thesefacilities is within the general market of Buffalo Thunder Casino and Resort and the Cities of Gold and other gaming facilities and is expected to providecompetition. 25 Employees As of March 1, 2014, we had 16 full-time corporate employees, four of whom are executive officers and an additional three are senior management.The Silver Slipper Casino had approximately 400 full-time and 80 part-time employees, Rising Star Casino Resort had approximately 500 full-time and 150part-time employees, Grand Lodge Casino had approximately 105 full-time and 30 part-time employees and Stockman’s Casino had approximately 95 full-time and 20 part-time employees. The Buffalo Thunder management contract oversees approximately 460 full-time and 15 part-time employees, none ofwhich are our direct employees. We believe that our relationship with our employees is good. None of our employees are currently represented by a laborunion, although such representation could occur in the future. Item 1A. Risk Factors. As a smaller reporting company, we are not required to provide the information required by this item. Item 1B. Unresolved Staff Comments. Not applicable. Item 2. Properties. The following describes our principal real estate properties. All properties listed below and substantially all other assets secure our indebtedness inconnection with our First Lien Credit Agreement with Capital One Bank, N.A. (“First Lien Credit Agreement”) and our Second Lien Credit Agreement withABC Funding, LLC (“Second Lien Credit Agreement”), as discussed in Note 8 to the consolidated financial statements set forth in Item 8. FinancialStatements and Supplementary Data. Silver Slipper Casino We own Silver Slipper Casino located in Bay St. Louis, Mississippi. The Silver Slipper Casino property consists of 38 acres of land we leasepursuant to a Lease with Option to Purchase, as amended, which expires on April 30, 2058. The leased land includes approximately 31 acres of protectedmarsh land as well as a seven-acre casino parcel. Silver Slipper Casino includes approximately 37,000 square feet of gaming space and an adjacent surfacelot. We also lease approximately five acres of land occupied by Silver Slipper Casino gaming office and warehouse space, as well as a small parcel of landwith a building. In addition, we have commenced construction of a 142-room hotel adjacent to Silver Slipper Casino. Construction of the hotel is expectedto be completed in late 2014 or early 2015. 26 Rising Star Casino Resort We own Rising Star Casino Resort located in Rising Sun, Indiana on the Ohio River. The property consists of a dockside barge structure withapproximately 40,000 square feet of gaming space, a land-based pavilion, a 190-room hotel, surface parking and an 18-hole golf course on 380 acres. Inaddition, a third party constructed a new 104-room hotel on property adjacent to Rising Star Casino Resort, bringing total room capacity to 294. We operatethis new hotel pursuant to a 10-year capital lease that includes an option to purchase the new hotel at any time during the term of the lease. Stockman’s Casino We own Stockman’s Casino located in Fallon, Nevada. Stockman’s Casino is located on approximately five acres and includes 8,400 square feet ofgaming space, a fine dining restaurant, coffee shop and adjacent surface parking. Grand Lodge Casino Pursuant to a lease expiring on August 31, 2018, we lease the Grand Lodge Casino at the Hyatt Regency Lake Tahoe Resort, Spa and Casino inIncline Village, Nevada on the north shore of Lake Tahoe. We pay a fixed monthly rent of $0.1 million over the initial term of the lease. The lease has anoption, subject to mutual agreement, to renew the lease for an additional five-year term. The Grand Lodge Casino has 18,900 square feet of gaming area andthe casino is integrated into the Hyatt Regency Lake Tahoe Resort, Spa and Casino. Corporate Offices We lease corporate office space in Las Vegas, Nevada pursuant to the amended lease agreement dated December 1, 2012. We occupy approximately2,569 square feet of office space in the same location we have occupied since 2002. The lease agreement expires on May 31, 2018. Item 3. Legal Proceedings. We are subject to various legal and administrative proceedings relating to personal injuries, employment matters, commercial transactions and othermatters arising in the normal course of business. We do not believe that the final outcome of these matters will have a material adverse effect on ourconsolidated financial position or results of operations. We maintain what we believe is adequate insurance coverage to further mitigate the risks of suchproceedings. Item 4. Mine Safety Disclosures. Not applicable. 27 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Our common stock traded on the NYSE Amex under the symbol “FLL” until February 12, 2013. On February 13, 2013, our common stockcommenced trading on the NASDAQ Capital Market under the symbol “FLL”. Set forth below are the high and low sales prices of our common stock asreported on the NYSE Amex until February 12, 2013 and the NASDAQ Capital Market for the periods thereafter. High Low Year Ended December 31, 2013 First Quarter $3.58 $2.75 Second Quarter 3.32 2.58 Third Quarter 3.05 2.61 Fourth Quarter 3.03 2.70 Year Ended December 31, 2012 First Quarter $3.59 $2.45 Second Quarter 3.15 2.76 Third Quarter 4.00 2.60 Fourth Quarter 3.82 2.73 On March 3, 2014, the last sale price of our common stock as reported by the NASDAQ Capital Market was $2.47. As of March 3, 2014, we had 107 registered holders of record of our common stock. We believe that there are over 1,300 beneficial owners. Dividend Policy We have not paid any dividends on our common stock to date. The payment of dividends in the future will be contingent upon the terms of ourindebtedness, and our revenues and earnings, if any, capital requirements, growth opportunities and general financial condition. It is the present intention ofour Board of Directors to retain all earnings, if any, for use in our business operations, debt reduction and growth initiatives and, accordingly, our Board ofDirectors does not anticipate paying any dividends in the foreseeable future. Item 6. Selected Financial Data. As a smaller reporting company, we are not required to provide the information required by this item. 28 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Forward Looking Statements This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934,as amended, relating to our financial condition, profitability, liquidity, resources, business outlook, market forces, corporate strategies, contractualcommitments, legal matters, capital requirements and other matters. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. We note that many factors could cause our actual results and experience to change significantly from the anticipated results orexpectations expressed in our forward-looking statements. When words and expressions such as: “believes,” “expects,” “anticipates,” “estimates,” “plans,”“intends,” “objectives,” “goals,” “aims,” “projects,” “forecasts,” “possible,” “seeks,” “may,” “could,” “should,” “might,” “likely,” “enable,” or similar wordsor expressions are used in this Form 10-K, as well as statements containing phrases such as “in our view,” “there can be no assurance,” “although no assurancecan be given,” or “there is no way to anticipate with certainty,” forward-looking statements are being made. Various risks and uncertainties may affect the operation, performance, development and results of our business and could cause future outcomes tochange significantly from those set forth in our forward-looking statements, including the following factors: ●our growth strategies; ●our potential acquisitions and investments; ●successful integration of acquisitions; ●risks related to development and construction activities; ●anticipated trends in the gaming industries; ●patron demographics; ●general market and economic conditions, including but not limited to, the effects of local and national economic, housing and energyconditions on the economy in general and on the gaming and lodging industries in particular; ●access to capital and credit, including our ability to finance future business requirements; ●our dependence on key personnel; ●the availability of adequate levels of insurance; ●changes in federal, state, and local laws and regulations, including environmental and gaming licenses or legislation and regulations; ●ability to obtain and maintain gaming and other governmental licenses; ●regulatory approvals; ●impact of weather; ●competitive environment, including increased competition in our target market areas; ●increases in the effective rate of taxation at any of our properties or at the corporate level; and ●risks, uncertainties and other factors described from time to time in this and our other SEC filings and reports. We undertake no obligation to publicly update or revise any forward-looking statements as a result of future developments, events or conditions.New risks emerge from time to time and it is not possible for us to predict all such risk factors, nor can we assess the impact of all such risk factors on ourbusiness or the extent to which any factor, or combination of factors, may cause actual results to differ significantly from those forecast in any forward-looking statements. 29 Overview We are a leading multi-jurisdictional developer, owner and operator of gaming-related enterprises in regional markets. We have successfullytransitioned from a gaming management company to a company with operations that consist primarily of owned casino properties. The repositioning of ourbusiness plan is highlighted by the acquisition of Rising Star Casino Resort and the lease of Grand Lodge Casino in 2011 and the acquisition of SilverSlipper Casino and the sale of the management agreement for the FireKeepers Casino in 2012. We actively explore, individually and with partners, newgaming-related opportunities with a focus on acquiring and developing casino properties. We currently own three casino properties, lease one casino property and we have one management contract to manage a group of related casinoproperties. These properties are located in four distinct regions of the United States – the Gulf Coast, the Midwest, Northern Nevada and the Southwest. On March 30, 2012, we entered into a Membership Interest Purchase Agreement with Silver Slipper Casino Venture LLC to acquire all of theoutstanding membership interest of the entity operating Silver Slipper Casino in Bay St. Louis, Mississippi. The purchase was closed on October 1, 2012, fora price of approximately $69.3 million exclusive of cash and working capital in the amount of $6.4 million and $2.9 million, respectively. We entered intothe First Lien Credit Agreement on June 29, 2012 and the Second Lien Credit Agreement on October 1, 2012, as discussed in Note 8 to our consolidatedfinancial statements set forth in Item 8. Financial Statements and Supplementary Data, and we used the debt to fund the Silver Slipper Casino purchase price. On April 1, 2011, we acquired all of the operating assets of Grand Victoria Casino & Resort, L.P. through Gaming Entertainment (Indiana) LLC, ourwholly-owned subsidiary. In August 2011, the property was renamed Rising Star Casino Resort. In May 2011, we entered into a three-year agreement with thePueblo of Pojoaque, which has been approved by the National Indian Gaming Commission as a management contract, to advise on the operations of BuffaloThunder Casino and Resort in Santa Fe, New Mexico, along with the Pueblo’s Cities of Gold and other gaming facilities which in aggregate haveapproximately 1,200 slot machines, 18 tables games (including poker) and a simulcast area. Our management and related agreements with Buffalo ThunderCasino and Resort became effective on September 23, 2011. As of September 1, 2011, we own the operating assets of Grand Lodge Casino, and have a leaseterminating August 31, 2018 with Hyatt Equities, L.L.C. for the casino space in the Hyatt Regency Lake Tahoe Resort, Spa and Casino in Incline Village,Nevada on the north shore of Lake Tahoe. Until March 30, 2012, we owned 50% of GEM, a joint venture with RAM, a privately-held investment company, where we were the primarybeneficiary and, therefore, we included GEM in our consolidated financial statements. On February 17, 2012, we and RAM signed a letter of intent with theFireKeepers Development Authority to propose terms of a potential sale of GEM and its management rights and responsibilities under the currentmanagement agreement and allow the FireKeepers casino to become self-managed by the FireKeepers Development Authority, in return for $97.5 million.The sale closed on March 30, 2012 and effectively terminated the existing management agreement, which was scheduled to run through August 2016. Wealso received a $1.2 million wind-up fee equivalent to what our management fee would have been for the month of April 2012. We conduct gaming operations in four gaming jurisdictions and are subject to regulatory oversight in each of those jurisdictions. Accordingly, weare required to submit regular reports to the gaming authorities in each jurisdiction regarding our operations and from time to time make applicationsregarding our operations, including financial arrangements entered into by us, and obtaining gaming licenses or findings of suitability of key personnelworking at our properties. Such reporting and applications may affect our abilities to obtain financings or loans for our existing operations or expansionopportunities. We believe that we and our operations are in material compliance with all such gaming regulations. 30 Critical Accounting Estimates and Policies Use of Estimates We prepare our consolidated financial statements in conformity with accounting principles generally accepted in the United States. Certain of ouraccounting policies require that we apply significant judgment in defining the appropriate assumptions for calculating financial estimates. The significantaccounting estimates inherent in the preparation of our financial statements primarily include our valuation of goodwill and purchase price allocations madein connection with our acquisitions, the estimated useful lives assigned to our depreciable and amortizable assets, asset impairment, bad debt expense, ouropinion of collectability of receivables and fair value estimates related to valuation of receivables. Other accounting estimates include management’s propercalculation of payroll liabilities such as paid time off, medical benefits, bonus accruals and other liabilities including slot club points and tax liabilities. Various assumptions, principally affecting the timing and other factors, underlie the determination of some of these significant estimates. Theprocess of determining significant estimates is fact-and project-specific and takes into account factors such as historical experience and current and expectedlegal, regulatory and economic conditions. We regularly evaluate these estimates and assumptions, particularly in areas, if any, where changes in suchestimates and assumptions could have a material impact on our results of operations, financial position and, generally to a lesser extent, cash flows. Whererecoverability of these assets or planned investments are contingent upon the successful development and management of a project, we evaluate thelikelihood that the project will be completed, the prospective market dynamics and how the proposed facilities should compete in that setting in order toforecast future cash flows necessary to recover the recorded value of the assets or planned investment. We review our conclusions as warranted by changingconditions. By their nature, these judgments are subject to an inherent degree of uncertainty. Our judgments are based on our historical experience, terms ofexisting contracts, observance of trends in the gaming industry and information available from other outside sources. There can be no assurance that actualresults will not differ from our estimates. Our significant accounting policies and basis of presentation are discussed below, as well as where appropriate in this discussion and analysis and inthe notes to our consolidated financial statements. Although our financial statements necessarily make use of certain accounting estimates made bymanagement, except as discussed in the following paragraphs, we believe that no matters that are the subject of such estimates are so highly uncertain orsusceptible to change as to present a significant risk of a material impact on our financial condition or operating performance. 31 Property and Equipment We define a fixed asset as a unit of property that: (a) has an economic useful life that extends beyond 12 months; and (b) was acquired or producedfor a cost greater than $2,500 for a single asset, or greater than $5,000 for a group of assets acquired or produced for a specific capital project. See Note 6 andNote 7 to the consolidated financial statements set forth in Item 8. Financial Statements and Supplementary Data. Fixed assets are capitalized and depreciatedfor book and tax purposes. Fixed assets acquired or produced for a cost less than $2,500, our minimum threshold amount for capitalization, are reflected as anexpense in our financial statements. 32 Fixed assets are recorded at historical cost as of the date acquired and depreciated beginning on the date the fixed asset is placed in service. A fixedasset costing less than the threshold stated above is recorded as an expense for financial statement and tax purposes. A fixed asset with an economic usefullife that is less than 12 months is expensed for financial statement and tax purposes, regardless of the acquisition or production cost. We evaluate ourproperty and equipment and other long-lived assets for impairment in accordance with the accounting guidance in the Impairment or Disposal of Long-LivedAssets Subsections of FASB ASC Topic 360-10. The interest cost associated with major development and construction projects is capitalized and included in the cost of the project. Interest expenseis capitalized at the applicable weighted-average borrowing rates of interest. Interest capitalization ceases once a project is substantially complete or nolonger undergoing construction activities to prepare it for its intended use. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets or the term of the capitalizedlease, whichever is appropriate under the circumstances. Our capital lease asset and liabilities are initially measured at the beginning of the lease term at thepresent value of the minimum lease payments. Assets under a capital lease which meet the transfer-of-ownership or bargain-purchase option criteria of FASBASC Topic 840, “Leases”, are amortized over the estimated useful lives of the assets. Our depreciation expense is highly dependent on the assumptions wemake about our assets’ estimated useful lives. We determine the estimated useful lives based on our experience with similar assets and our estimate of theusage of the asset. Whenever events or circumstances occur which change the estimated useful life of an asset, we account for the change prospectively. Goodwill Goodwill represents the excess of the purchase price over fair value of net assets acquired in connection with Silver Slipper Casino, Rising StarCasino Resort and Stockman’s Casino. In accordance with the authoritative guidance for goodwill and other intangible assets, we test our goodwill andindefinite-lived intangible assets for impairment annually or if a triggering event occurs. We evaluate goodwill utilizing the market approach and incomeapproach applying the discounted cash flows in accordance with the provisions of FASB ASC Topic 350, “Intangibles-Goodwill and Other” on an annualbasis. 33 Intangible Assets Our indefinite-lived intangible assets include trademarks and certain license rights. Gaming licenses represent the value of the license to conductgaming in certain jurisdictions, which are subject to highly extensive regulatory oversight and, in some cases, a limitation on the number of licensesavailable for issuance. The value of the Rising Star Casino Resort gaming license was estimated using a derivation of the income approach to valuation. Theother gaming license values are based on actual costs. Trademarks are based on the legal fees and recording fees related to the trademark of the “Rising StarCasino Resort” name, and variations of such name. Indefinite-lived intangible assets are not amortized unless it is determined that their useful life is nolonger indefinite. We periodically review our indefinite-lived assets to determine whether events and circumstances continue to support an indefinite usefullife. If it is determined that an indefinite-lived intangible asset has a finite useful life, then the asset is tested for impairment and is subsequently accounted foras a finite-lived intangible asset. Our finite-lived intangible assets include customer relationship player loyalty programs, land leases, water rights and bank loan fee intangibles.Finite-lived intangible assets are amortized over their estimated useful lives, and we periodically evaluate the remaining useful lives of these intangibleassets to determine whether events and circumstances warrant a revision to the remaining period of amortization. We review our finite-lived intangible assetsfor impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. The player loyalty programs represent the value of repeat business associated with Silver Slipper Casino’s and Rising Star Casino Resort’s loyaltyprograms. The values of the loyalty programs were determined using a derivation of the income approach to valuation. The valuation analyses for the activerated players were based on projected revenues and attrition rates. Silver Slipper Casino and Rising Star Casino Resort maintain historical information for theproportion of revenues attributable to the rated players for gross gaming revenue. The value of the player loyalty programs are amortized over a life of threeyears. Loan fees incurred and paid as a result of debt instruments were accumulated and amortized over the term of the related debt, based on an effectiveinterest method. Revenue Recognition and Promotional Allowances Slot coin-in is the gross amount wagered for the period cited. The win or hold percentage is the net amount of gaming wins and losses, withliabilities recognized for accruals related to the anticipated payout of progressive jackpots, funds deposited by customers before gaming play occurs(commonly called “casino front money”) and for chips and tokens in the customers’ possession (outstanding chip and token liability). Changes in our slotwin percentages can have a significant impact to earnings. 34 For table games, customers usually purchase gaming chips at the gaming tables. The cash and markers (extensions of credit granted to certain creditworthy customers) are deposited in the gaming table’s drop box. Table game win is the amount of drop that is retained and recorded as casino gamingrevenue, with liabilities recognized for funds deposited by customers before gaming play occurs and for unredeemed gaming chips. As we are focused onregional gaming markets, our table win percentages are fairly stable as the majority of these markets do not regularly experience high-end play, which canlead to volatility in win percentages. Therefore, changes in table game win percentages do not typically have a material impact to our earnings. Key performance indicators related to gaming revenue are slot coin-in and table game drop (volume indicators) and “win” or “hold” percentage. Ourtypical property slot win percentage is in the range of 4% to 9% of slot coin-in, and our typical table game win percentage is in the range of 5% to 25% oftable game drop. Hotel, food and beverage, entertainment and other operating revenues are recognized as services are performed, net of revenue-based taxes. Advanceticket sales are recorded as deferred revenue until services are provided to the customer. Revenues are recognized net of certain sales incentives, andaccordingly, cash incentives to customers for gambling activity, including the cash value of points redeemed by Players Club members, totaling $6.0 millionand $6.7 million have been recognized as a direct reduction of casino revenue in 2013 and 2012, respectively. Sales and similar revenue-linked taxescollected from customers are excluded from revenue and recorded as a liability payable to the appropriate taxing authority and included in accrued expenses.Revenue also does not include the retail value of accommodations, food and beverage, and other services gratuitously furnished to customers totaling $19.8million in 2013 and $15.4 million in 2012. The estimated cost of providing room, food and beverage and other incentives is included primarily in casinoexpenses. We recognize the impact on gaming revenues on an annual basis to reflect an estimate of the change in the value of outstanding chips and tokensthat are not expected to be redeemed. This estimate is determined by measuring the difference between the total value of chips and tokens placed in serviceless the value of chips and tokens in the inventory of chips and tokens under our control. This measurement was not consistently performed in past years, butwill be performed on an annual basis in the future utilizing methodology in which a consistent formula is applied to estimate the percentage value of thechips and tokens not in custody that are not expected to be redeemed. In addition to the formula, certain judgments are made with regard to variousdenominations and souvenir chips and tokens. 35 Customer Loyalty Programs We currently offer incentives to our customers through customer loyalty programs at each of our properties – the Silver Slipper Casino Players Club,the Rising Star Rewards Club™, the Grand Lodge Players Advantage Club® and the Stockman’s Winner’s Club. Under these programs, customers earnpoints based on their level of play that may be redeemed for various benefits, such as free play, cash back, complimentary dining, or hotel stays, amongothers, depending on each property’s specific offers. The reward credit balance under the plans will be forfeited if the customer does not earn any rewardcredits over a specified time period, or after a specified time period of inactivity, up to a 13-month time period, depending on the specific property’s customerloyalty program. We accrue a liability for the estimated cost of providing these benefits as the benefits are earned. Estimates and assumptions are made regarding costof providing the benefits, breakage rates, and the mix of goods and services customers will choose. We use historical data to assist in the determination ofestimated accruals. Changes in estimates or customer redemption habits could produce significantly different results. At December 31, 2013 and December31, 2012, we had accrued $1.2 million and $1.3 million, respectively, for the estimated cost of providing these benefits. Such amounts are included in“Accrued player club points and progressive jackpots” in our Consolidated Balance Sheets. Loyalty programs are just a part of the total marketing program. The amount of marketing reinvestment (complimentaries to players, promotionalawards, entertainment, etc.) is based on the specific property and competitive assumptions. We track the percentage of promotional and marketing costscompared to gaming revenue for an efficient use and return on our marketing investment. Each of our properties has been faced with a highly competitivepromotional environment due to the high amounts of incentives offered by the competition. The Rising Star Casino Resort has been significantly impactedby the substantial promotions offered at the new Ohio casinos. Share-based Compensation Share-based compensation expense from stock awards is included in general and administrative expense. See Note 12 to the consolidated financialstatements set forth in Item 8. Financial Statements and Supplementary Data. Vesting is contingent upon certain conditions, including continuous service ofthe individual recipients. Unvested stock grants made in connection with our incentive compensation plan are viewed as a series of individual awards and therelated share-based compensation expense is amortized into compensation expense on a straight-line basis as services are provided over the vesting period,and reported as a reduction of stockholders’ equity. We grant shares of restricted stock, rather than options, to key members of management and the board ofdirectors. 36 Recently Issued Accounting Pronouncements We have reviewed authoritative standards issued after December 31, 2013. As a result, we determined that the new standards are not likely to haveany significant impact on our future financial statements. Results of Operations A significant portion of our operating income in 2012 and prior years was generated from our management agreements, including agreements withthe FireKeepers Casino in Michigan and the Buffalo Thunder Casino and Resort in New Mexico. The FireKeepers management agreement ended March 30,2012, with the sale of our interest in GEM. The Buffalo Thunder Casino and Resort management agreement is in effect through September 2014. There canbe no assurance that the Buffalo Thunder management agreement will be extended. Consistent with our long-term strategy, we have acquired gamingproperties and have transitioned from primarily a management company to primarily an owner/operator of regional casino operations. With the acquisition ofRising Star Casino Resort in 2011 and Silver Slipper Casino in 2012, and the leasing of Grand Lodge Casino in 2011, our results of continuing operationshave been significantly impacted and our revenues are currently primarily derived from owned operations. For purposes of our discussion, references to (i) Midwest segment refers to Rising Star Casino Resort, (ii) Gulf Coast segment refers to Silver SlipperCasino and (iii) Northern Nevada segment refers to Grand Lodge Casino and Stockman’s Casino. 37 We believe the impact of the lost revenues from the sale of our interest in GEM and the FireKeepers management agreement was diminished with theacquisition of the Silver Slipper Casino, as well as the Rising Star Casino Resort and Grand Lodge Casino operations. Indiana gaming tax legislation was recently passed, which allows a portion of the free play to be tax-free, resulting in a savings of $1.0 million forthe year ended December 31, 2013, for the Rising Star Casino Resort. In addition, as part of the legislation, if Rising Star Casino Resort’s gross gamingrevenues are less than $75.0 million during the State of Indiana’s fiscal year ended June 30, 2014, we may be entitled to additional tax relief currentlyestimated at $2.5 million per year, beginning on July 1, 2014. Year Ended December 31, 2013 Compared to Year Ended December 31, 2012 Revenues For the year ended December 31, 2013, total revenues increased $16.0 million, or 12% as compared to 2012, principally related to $51.6 million inrevenue in our Gulf Coast segment, representing a full year of operations at Silver Slipper Casino, which we purchased on October 1, 2012, offset by a $17.1million, or 20%, decrease in our Midwest segment revenues as a result of increased competition and a $5.6 million, or 77%, decrease in ourdevelopment/management segment revenues as a result of the sale of our interest in GEM and the FireKeepers management agreement on March 30, 2012. The $17.1 million decrease in our Midwest segment revenues was the result of lower casino revenues at the Rising Star Casino Resort, primarily as aresult of increased competition due to the opening of an Ohio racino in December 2013, a new casino in Cincinnati, Ohio, in March 2013, and two casinos inColumbus, Ohio in 2012, coupled with an overall soft market growth. The $16.0 million increase in total revenues for the year ended December 31, 2013 consisted of the following changes by revenue type: an $18.9million, or 17%, increase in casino revenues, a $1.7 million, or 28%, increase in food and beverage revenues, a $0.1 million, or 18%, increase in hotelrevenues, and a $0.7 million, or 32%, increase in other revenues, offset by a $5.5 million, or 77%, decrease in management fees, as discussed above. Theincreases in casino and food and beverage revenues were due to the revenue at the Silver Slipper Casino, representing a full year of operations, offset by a$16.5 million, or 21%, decrease in casino revenues and $0.7 million, or 18%, decrease in food and beverage revenues at the Rising Star Casino Resort, due toincreased competition as discussed above. The Rising Star Casino Resort’s hotel revenue for the year ended December 31, 2013 was $0.6 million, an increaseof $0.1 million, or 18%, over the prior year due to the addition of the 104 new rooms in November. The Rising Star Casino Resort had an occupancy rate of90%, an average daily rate (“ADR”) of $63 and hotel revenue per available room (“RevPAR”) of $57, for the year ended December 31, 2013, as compared toan occupancy rate of 97%, an ADR of $63 and RevPAR of $61, for the year ended December 31, 2012. The Rising Star Casino Resort’s hotel revenueconsisted of approximately 89% of complimentary room sales for the year ended December 31, 2013, as compared to approximately 90% of complimentaryroom sales for the year ended December 31, 2012. 38 Operating Costs and Expenses For the year ended December 31, 2013, total operating costs and expenses increased $17.5 million, or 15%, as compared to 2012, as a result of thepurchase of the Silver Slipper Casino operations with $47.7 million in operating costs for the full year. Casino expenses increased by 7.6% to approximately$67.8 million in 2013 and food and beverage expenses increased by 31.4% to approximately $7.8 million in 2013, principally due to a full year ofoperations at Silver Slipper Casino in 2013. Hotel expenses increased $0.1 million, or 20%, primarily due to the addition of the new 104-room hotel tower atthe Rising Star Casino Resort in November 2013. The increase in Silver Slipper Casino operating costs was offset by a $13.8 million, or 17%, decrease in ourMidwest segment costs and a $2.2 million, or 97%, decrease in our development/management segment operating costs. Operating costs also decreased $1.5million, or 22%, in our corporate segment primarily due to a $1.2 million, or 18%, decrease in selling, general and administrative expenses as explainedbelow. The $2.2 million decrease in our development/management segment operating costs was predominantly attributable to the sale of our interest in GEMand the FireKeepers management agreement on March 30, 2012. The $13.8 million decrease in our Midwest segment operating expenses was the result of cost containment measures and a decrease in businessvolume. The decrease in Midwest segment operating costs were spread between expense categories with $10.2 million, or 21%, in lower casino expenses,$2.0 million, or 10%, in lower selling, general and administrative expenses (as explained below), $1.1 million, or 27%, in lower depreciation expense and$0.4 million, or 12%, in lower food and beverage expenses. Rising Star Casino Resort’s casino expenses decreased $10.2 million over the prior year, largelydue to a $7.3 million, or 30%, decrease in gaming taxes, a $1.5 million, or 13%, decrease in complimentary expense and a $0.7 million, or 8%, decrease incasino payroll and related expenses. Gaming taxes were lower for the year ended December 31, 2013 due to lower taxable gaming revenues and also werepartially attributable to new Indiana gaming tax legislation, which allows a portion of the free play to be tax-free resulting in a savings of $1.0 million for theyear ended December 31, 2013. Rising Star Casino Resort’s depreciation expenses decreased $1.1 million over the prior year period, as a result of someshorter-lived fixed assets that became fully depreciated. Rising Star Casino Resort’s food and beverage expenses decreased $0.4 million over the prior yearperiod due to the decline in business which lowered food and beverage cost of sales. Project Development and Acquisition Costs For the year ended December 31, 2013, project development costs decreased $1.8 million, or 96%, as compared to 2012, mainly as a result of theSilver Slipper Casino acquisition costs incurred in the prior year. Project development and acquisition costs are allocated to our development/managementsegment. Selling, General and Administrative Expense For the year ended December 31, 2013, selling, general and administrative expenses increased $10.0 million, or 27%, as compared to 2012. Selling,general and administrative expenses were $18.2 million for the year ended December 31, 2013 at the Silver Slipper Casino, which was acquired on October 1,2012, which were partially offset by a $2.0 million, or 10%, decrease in our Midwest segment expenses and also a $1.2 million, or 18%, decrease in ourcorporate segment expenses due to lower compensation and other employee related expenses. The $2.0 million decrease in our Midwest segment’s selling, general and administrative expenses was due to Rising Star Casino Resort’s cost controlinitiatives which resulted in $1.2 million, or 13%, lower payroll and other employee related expenses, $0.3 million, or 93%, lower maintenance expensesrelated to dredging and a $0.5 million, or 29%, decline in advertising expenses. Operating Gains (Losses) For the year ended December 31, 2013, we incurred an impairment loss of $4.0 million related to Stockman’s Casino goodwill as discussed in Note 5to the consolidated financial statements set forth in Item 8. Financial Statements and Supplementary Data. This contrasts with a $41.2 million gain on sale ofthe joint venture, related to the sale of our interest in GEM in the prior year period. 39 Other (Expense) Income For the year ended December 31, 2013, we incurred a $4.5 million increase in interest expense related to our First Lien Credit Agreement and SecondLien Credit Agreement, whose proceeds were used to purchase Silver Slipper Casino. We capitalized $0.03 million in interest related to the construction of ahotel at Silver Slipper Casino, as discussed in Note 11 to the consolidated financial statements set forth in Item 8. Financial Statements and SupplementaryData. In the year ended December 31, 2012, we incurred a $1.7 million loss on extinguishment of debt related to the write-off of the loan costs related to ourprior credit agreement with Wells Fargo Bank, National Association (the “Wells Fargo Credit Agreement”). These other (expense) income items are allocatedto our corporate operations segment. Income Taxes The estimated effective tax rate for the year ended December 31, 2013 is approximately 8% compared to 35% for the same period in 2012. The lower taxrate in 2013 is primarily a function of pre-tax book loss of $4.3 million for the year ended December 2013 compared to pre-tax book income of $45.2 millionfor the year ended December 31, 2012. The lower tax rate in 2013 was primarily due to the pre-tax book loss of $4.3 million and the impact of permanentitems, including the non-deductibility of gaming taxes in calculating state tax and the deductibility of executive compensation related to the vesting ofrestricted stock during the year. State tax expense is typically higher than the statutory rate as a result of the non-deductibility of gaming taxes in certainstates. The tax deduction for restricted stock, which vested in June 2013, was lower than the cumulative expense recognized on the income statement over thethree year vesting period. There is no valuation allowance on the deferred tax asset of $1.3 million as of December 31, 2013, as we believe the deferred taxassets are fully realizable. Subsequent to year end, we filed our tax return for 2013, and we received in early March 2014 a refund of 2.0 million for a netoperating loss carryback. Noncontrolling Interest For the year ended December 31, 2012, we recorded net income attributable to non-controlling interest in consolidated joint venture of $2.2 millionas a result of our interest in GEM, which was sold on March 30, 2012. Liquidity and Capital Resources Economic Conditions and Related Risks and Uncertainties The United States has experienced, since 2007, a widespread and severe economic slowdown accompanied by, among other things, weakness inconsumer spending including gaming activity and reduced credit and capital financing availability, all of which have far-reaching effects on economicconditions in the country for an indeterminate period. Our operations are currently concentrated in the Gulf Coast, the Midwest, Northern Nevada and theSouthwest. Accordingly, future operations could be affected by adverse economic conditions and increased competition particularly in those areas and theirkey feeder markets in neighboring states. The effects and duration of these conditions and related risks and uncertainties on our future operations and cashflows, including our access to capital or credit financing, cannot be estimated at this time, but may be significant. Silver Slipper Casino, Rising Star Casino Resort, Grand Lodge Casino, and Stockman’s Casino operations, along with the Buffalo Thunder Casinoand Resort management agreement, are currently our primary sources of income and operating cash flow. There can be no assurance that the Pueblo ofPojoaque management agreement ending in September 2014, or the Grand Lodge Casino lease ending in August 2018 will be extended beyond their currentterms. The Buffalo Thunder management agreement generated $1.7 million in management income in 2013. 40 On a consolidated basis, cash provided by operations during the year ended December 31, 2013 was $12.3 million. Cash of $6.5 million was used ininvesting activities, largely due to the purchase of $6.2 million in property and equipment at our various properties, including $2.2 million in constructioncosts for the Silver Slipper Casino Hotel. Cash of $11.5 million was used in financing activities to repay $11.3 million in debt and pay $0.2 million in loanfees connected with the Silver Slipper Casino Hotel financing. As of December 31, 2013, we had approximately $14.9 million in cash and equivalents. During the year ended December 31, 2012, we prepaid, atour discretion, the principal payment of $1.3 million due April 1, 2013 on the First Lien Credit Agreement, in order to reduce interest costs. As a practice, weconsistently prepaid our quarterly payments before their due dates in 2013, and during the year ended December 31, 2013, we prepaid, at our discretion, thesum of $8.8 million in quarterly principal payments, which were due through July 1, 2015. The next scheduled principal payment is due October 1, 2015. Projects Our future cash requirements include funding needs of approximately $5.2 million towards future construction costs for the Silver Slipper Casino Hotel.Construction and financing costs of $2.5 million were funded from available cash during the year ended December 31, 2013, for the Silver Slipper CasinoHotel. On August 26, 2013, we entered into an agreement with WHD Silver Slipper Casino, LLC related to construction of the Silver Slipper Casino Hotel.We have commenced construction of the Silver Slipper Casino Hotel, which is expected to be completed in late 2014 or early 2015 and is budgeted to costapproximately $17.7 million. The progress on the Silver Slipper Casino Hotel has been slower than expected as we encountered soil conditions which mayextend the opening of the hotel to early 2015. In connection with the financing of the Silver Slipper Casino Hotel, on August 26, 2013, we entered into aFirst Amendment to the First Lien Credit Agreement (“First Lien Amendment”) and an Amendment No. 1 to the Second Lien Credit Agreement (“Second LienAmendment”) which amended certain provisions of our First and Second Lien Credit Agreements, respectively. The First Lien Amendment modificationsincluded a $10.0 million increase to the term loan portion of the First Lien Credit Agreement to $56.3 million, a 1% lower interest rate and an extendedmaturity date to June 29, 2016. We intend to finance $10.0 million of the construction cost of the Silver Slipper Casino Hotel with the proceeds of theincrease in the term loan under our First Lien Credit Agreement as described in Note 8 to the consolidated financial statements set forth in Item 8. FinancialStatements and Supplementary Data, which remains undrawn and available within the limits and terms of the First Lien Credit Agreement, with the remaining$7.7 million of the construction cost funded or to be funded from available cash as discussed previously. 41 We believe the Silver Slipper Casino Hotel is a much-needed amenity which will allow guests to extend their visits and enjoy more of what SilverSlipper Casino has to offer and favorably impact customer loyalty and revenues. In October 2011, Rising Sun/Ohio County First, Inc., an Indiana non-profit corporation, and Rising Sun Regional Foundation, Inc. teamed up todevelop a new 104-room hotel on land adjacent to our Rising Star Casino Resort. Construction commenced in December 2012, and the new hotel tower atRising Star Casino Resort opened November 15, 2013. We believe that the added hotel room inventory in proximity to our casino facility will favorablyimpact revenues and visitor counts. On August 16, 2013, we entered into a 10-year capital lease for the new hotel tower at Rising Star Casino Resort (the “Rising Star Hotel Agreement”)which commenced on November 15, 2013 and provides us with full management control and an option to purchase the new hotel tower at Rising Star CasinoResort at the end of the lease term. We have recorded the capital lease obligation and hotel assets in our financial statements. On November 15, 2013, webegan operating the new hotel tower at Rising Star Casino Resort. The Rising Star Hotel Agreement provides that we, as the lessee, assume allresponsibilities, revenues, expenses, profits and losses related to the hotel’s operations. The term of the Rising Star Hotel Agreement is for 10 years fromNovember 15, 2013, with the landlord having a right to sell the hotel to us at the end of the term and our corresponding obligation to purchase it on the termsset forth in the Rising Star Hotel Agreement. During the term, we will have the exclusive option to purchase the new hotel tower at Rising Star Casino Resortat a pre-set price. On January 1, 2014, we began paying a fixed monthly rent payment of approximately $77.5 thousand, which will continue throughout theterm of the Rising Star Hotel Agreement unless we elect to purchase the hotel before the end of the lease period. In the event that we default on the leaseagreement, the landlord’s recourse is limited to taking possession of the property, collection of all rent due and payable, and the right to seek remediation forany attorneys’ fees, litigation expenses, and costs of retaking and re-leasing the property. Subject to the effects of the economic uncertainties discussed above, we believe that adequate financial resources will be available to execute ourcurrent growth plan from a combination of operating cash flows and external debt and equity financing. However, there can be no assurances of our ability tocontinue expanding. Other Projects We evaluate projects on a number of factors, including forecasted profitability, development period, regulatory and political environment and theability to secure the funding necessary to complete the development or acquisition, among other considerations. No assurance can be given that anyadditional projects will be pursued or completed or that any completed projects will be successful. 42 We believe that there are significant opportunities to grow our operations in existing and new regional casino markets throughout the UnitedStates. Our expansion efforts have principally focused on opportunities in the Southern United States. We believe that our expertise as a multi-jurisdictionalcasino operator and our experience with the development of the FireKeepers Casino position us well to expand our operations with new project openings. We, together with Keeneland Association, Inc., are currently pursuing potential gaming opportunities in Kentucky, including the installation ofinstant racing machines at racetrack properties. The installation of instant racing machines at racetrack properties in Kentucky has been challenged byopponents of the instant racing machines who filed an action alleging that the machines are unlawful gambling. The Kentucky Court of Appeals had vacatedthe lower court’s decision that had upheld regulations adopted by the Kentucky Horse Racing Commission authorizing the use of instant racing machines byrace tracks in Kentucky, and the Kentucky Horse Racing Commission and others, including Keeneland Association, Inc., appealed the vacation of the lowercourt’s decision to the Kentucky Supreme Court. On February 20, 2014, the Kentucky Supreme Court held, among other matters, that the Kentucky HorseRacing Commission acted in its regulatory authority when it licensed the operation of pari-mutuel wagering on instant racing, also known as historical horseracing, but remanded the matter to the Circuit Court, to determine if instant racing constitutes a pari-mutuel form of wagering authorized by Kentucky law. On February 26, 2014, we entered into an exclusivity agreement with Keeneland Association, Inc. to own, manage, and operate instant racing and, ifauthorized, traditional casino gaming at race tracks in Kentucky, subject to completion of definitive documents for each opportunity. In addition, we andKeeneland Association, Inc. have a letter of intent that provides for an exclusive option to purchase the Thunder Ridge Raceway in Prestonsburg, Kentucky.The purchase will be subject to the completion of definitive documentation and to the approval of the Kentucky Horse Racing Commission, including theapproval to transfer the racing license to a to-be-constructed quarter horse racetrack near Corbin, Kentucky to be owned 75% by us and 25% by KeenelandAssociation, Inc. Banking Relationships On October 29, 2010, we, as borrower, entered into the Wells Fargo Credit Agreement with the financial institutions listed therein and Wells FargoBank, National Association. On December 17, 2010, we entered into a Commitment Increase of the Wells Fargo Credit Agreement and a related AssignmentAgreement increasing the loan commitment from $36.0 million to $38.0 million, consisting of a $33.0 million term loan and a revolving line of credit of $5.0million. The initial funding date of the Wells Fargo Credit Agreement occurred on March 31, 2011, when we borrowed $33.0 million on the term loan whichwas used to fund our acquisition of Rising Star Casino Resort. The purchase occurred on April 1, 2011. The Wells Fargo Credit Agreement was secured bysubstantially all of our assets. Using proceeds from the sale of our interest in GEM and the FireKeepers management agreement, we paid off the remaining$25.3 million debt related to the Wells Fargo Credit Agreement and extinguished the facility on March 30, 2012, which consisted of $24.8 million of ourexisting long term debt and $0.5 million due on the interest rate swap agreement related to the Wells Fargo Credit Agreement. On June 29, 2012, we entered into the First Lien Credit Agreement with Capital One, which provided for a term loan in an amount up to $50.0million and a revolving loan in an amount up to $5.0 million. On October 1, 2012, we entered into the Second Lien Credit Agreement with ABC Funding,LLC as administrative agent which provided for a term loan in an amount up to $20.0 million. On October 1, 2012, we closed on the acquisition of all of theequity membership interests in Silver Slipper Casino Venture LLC dba Silver Slipper Casino located in Bay St. Louis, Mississippi. The purchase price ofapproximately $69.3 million, exclusive of cash and working capital in the amount $6.4 million and $2.9 million, respectively, was funded by our First LienCredit Agreement with Capital One Bank, N.A. and our Second Lien Credit Agreement with ABC Funding, LLC. The $5.0 million revolving loan under theFirst Lien Credit Agreement remains undrawn and available, subject to the terms and restrictions of the First Lien Credit Agreement. The First Lien CreditAgreement and Second Lien Credit Agreement are secured by substantially all of our assets and therefore, our wholly-owned subsidiaries guarantee ourobligations under the agreements. The Second Lien Credit Agreement is subject to the lien of the First Lien Credit agreement. We have elected to pay interest on the First Lien Credit Agreement based on the greater of the elected LIBOR rate, or 1.0%, plus a margin rate as setforth in the agreement. The LIBOR rate is a rate per annum equal to the quotient of (a) the greater of (1) 1.00% and (2) the rate per annum referenced to as theBBA (British Bankers Association) LIBOR divided by (b) one minus the reserve requirement set forth in the First Lien Credit Agreement for such loan ineffect from time to time. LIBOR rate elections can be made based on a 30 day, 60 day, 90 day or 180 day LIBOR, and margins are adjusted quarterly. As ofDecember 31, 2013, the interest rate was 4.75% on the balance outstanding on the First Lien Credit Agreement, based on the 1.0% minimum, plus a 3.75%margin. We pay interest on the Second Lien Credit Agreement at the fixed rate of 13.25% per annum. 43 The First Lien Credit Agreement and Second Lien Credit Agreement contain customary negative covenants, including, but not limited to,restrictions on our and our subsidiaries’ ability to: incur indebtedness; grant liens; pay dividends and make other restricted payments; make investments;make fundamental changes; dispose of assets; and change the nature of our business. The First Lien Credit Agreement and Second Lien Credit Agreementrequire that we maintain specified financial covenants, including a total leverage ratio, a first lien leverage ratio, and a fixed charge coverage ratio, all ofwhich measure Adjusted EBITDA (as defined in the agreements) against outstanding debt and fixed charges (as defined in the agreements). A capitalexpenditure ratio must also be maintained as set forth in the agreements. The First Lien Credit Agreement and Second Lien Credit Agreement define AdjustedEBITDA as net income (loss) plus (i) interest expense, net, (ii) provision for taxes (iii) depreciation and amortization and further adjusted to eliminate theimpact of certain items that are not indicative of ongoing operating performance such as: (iv) acquisition costs, (v) non-cash stock compensation, (vi) loss onderivatives and debt, (vii) gain on sale of joint venture, (viii) impairment loss, and (ix) certain severance costs. The First Lien Amendment revised the ratio requirements under the First Lien Credit Agreement. Also, the Second Lien Amendment revised the totalleverage ratio requirements under the Second Lien Credit Agreement to exclude the capital lease related to the new tower at the Rising Star Casino Resort.The First Lien Credit Agreement and the Second Lien Credit Agreement maximum total leverage ratio and maximum first lien leverage ratio vary accordingto the applicable time period and the fixed charge coverage ratio remains constant, as indicated in the tables below: First Lien Credit AgreementApplicable Period MaximumTotal LeverageRatio MaximumFirst Lien LeverageRatio MinimumFixed Charge CoverageRatioInitial funding date through and including December 31,2014 4.00x 2.75x 1.10xJanuary 1, 2015 through and including December 31, 2015 3.75x 2.50x 1.10xJanuary 1, 2016 and thereafter 3.50x 2.25x 1.10x Second Lien Credit AgreementApplicable Period MaximumTotal LeverageRatio MaximumFirst Lien LeverageRatio MinimumFixed Charge CoverageRatioInitial funding date through and including September 30,2013 4.00x 3.00x 1.00xOctober 1, 2013 through and including September 30, 2014 3.75x 2.75x 1.00xOctober 1, 2014 and thereafter 3.50x 2.50x 1.00x We measure compliance with our covenants on a quarterly basis and we were in compliance as of December 31, 2013; however, there can be noassurances that we will remain in compliance with all covenants in the future. The First Lien Credit Agreement and Second Lien Credit Agreement alsoinclude customary events of default, including, among other things: non-payment; breach of covenant; breach of representation or warranty; cross-defaultunder certain other indebtedness or guarantees; commencement of insolvency proceedings; inability to pay debts; entry of certain material judgments againstus or our subsidiaries; occurrence of certain ERISA events; re-purchase of our own stock and certain changes of control. A breach of a covenant or otherevents of default could cause the loans to be immediately due and payable, terminate commitments for additional loan funds, or the lenders could exerciseany other remedy available under the First Lien Credit Agreement or Second Lien Credit Agreement or by law. If a breach of covenants or other event ofdefault were to occur, we would seek modifications to covenants or a temporary waiver or waivers from the First Lien Credit Agreement and Second LienCredit Agreement lenders. No assurance can be given that we would be successful in obtaining such modifications. During the year ended December 31, 2012, we prepaid, at our discretion, the principal payment of $1.3 million due April 1, 2013 on the First LienCredit Agreement, in order to reduce interest costs. As a practice, we consistently prepaid our quarterly payments before their due dates in 2013, and duringthe year ended December 31, 2013, we prepaid, at our discretion, the sum of $8.8 million in quarterly principal payments, which were due through July 1,2015. The next scheduled principal payment is due October 1, 2015. We are required to make prepayments under the First Lien Credit Agreement, under certain conditions defined in the agreement, in addition to thescheduled principal installments for any fiscal year ending December 31, 2012 and thereafter. Prepayment penalties will be assessed in the event thatprepayments are made on the Second Lien Credit Agreement prior to the discharge of the First Lien Credit Agreement. 44 On August 26, 2013, we entered into the First Lien Amendment and the Second Lien Amendment which amended certain provisions of the First LienCredit Agreement and Second Lien Credit Agreement. The First Lien Amendment modifications included a $10.0 million increase to the term loan portion ofthe First Lien Credit Agreement to $56.3 million, a 1% lower interest rate and an extended maturity date to June 29, 2016. Also, certain financial ratiocovenants were revised under the First Lien Credit Agreement and Second Lien Credit Agreement to accommodate the additional extension of credit underthe First Lien Credit Agreement and our capital lease agreement related to the new hotel tower at Rising Star Casino Resort, as discussed in Note 7 to theconsolidated financial statements set forth in Item 8. Financial Statements and Supplementary Data. The $10.0 million increase to the term loan under ourFirst Lien Credit Agreement remains undrawn and available, subject to the terms and restrictions of the First Lien Credit Agreement, and will be used to funda portion of the approximately $17.7 million construction of the Silver Slipper Casino Hotel. We have commenced construction of the Silver Slipper CasinoHotel, which is expected to be completed in late 2014 or early 2015. The remaining $7.7 million of the construction cost has been, and will be, funded fromavailable cash. As of December 31, 2013, we had funded cash of $2.5 million in construction and financing costs for the Silver Slipper Casino Hotel and weanticipate funding an additional $5.2 million in cash in 2014. Off-balance Sheet Arrangements We have no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, changesin financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors. Item 7A. Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, we are not required to provide the information required by this item. 45 Item 8. Financial Statements and Supplementary Data. PageReport of Independent Registered Public Accounting Firm 47Consolidated Statements of Operations 48Consolidated Balance Sheets 49Consolidated Statements of Stockholders’ Equity 50Consolidated Statements of Cash Flows 51Notes to Consolidated Financial Statements 52 46 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of DirectorsFull House Resorts, Inc.Las Vegas, NV We have audited the accompanying consolidated balance sheets of Full House Resorts, Inc. and Subsidiaries (collectively, the “Company”) as of December31, 2013 and 2012, and the related consolidated statements of operations, stockholders’ equity and cash flows for the years then ended. These financialstatements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that weplan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is notrequired to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internalcontrol over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing anopinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our auditsprovide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as ofDecember 31, 2013 and 2012, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generallyaccepted in the United States. /s/ Piercy Bowler Taylor & Kern Piercy Bowler Taylor & KernCertified Public AccountantsLas Vegas, Nevada March 10, 2014 47 FULL HOUSE RESORTS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per share data) December 31,2013 December 31,2012 Revenues Casino $131,581 $112,649 Food and beverage 7,967 6,223 Hotel 582 493 Management fees 1,678 7,180 Other operations 2,919 2,215 144,727 128,760 Operating costs and expenses Casino 67,779 62,976 Food and beverage 7,847 5,973 Hotel 656 547 Other operations 5,056 5,067 Project development and acquisition costs 67 1,861 Selling, general and administrative 46,974 37,003 Depreciation and amortization 9,388 6,884 137,767 120,311 Operating gains (losses) Gain on sale of joint venture -- 41,189 Impairment loss (4,000) -- (4,000) 41,189 Operating income 2,960 49,638 Other (expense) income Interest expense (7,268) (2,731)Gain on derivative instrument -- 8 Other expense, net (15) (6)Loss on extinguishment of debt -- (1,719) Other expense, net (7,283) (4,448)(Loss) income before income taxes (4,323) 45,190 Income tax (benefit) expense (361) 15,175 Net (loss) income (3,962) 30,015 Income attributable to noncontrolling interest in consolidated joint venture -- (2,181)Net (loss) income attributable to the Company $(3,962) $27,834 Net (loss) income attributable to the Company per common share $(0.21) $1.49 Weighted-average number of common shares outstanding 18,740,162 18,677,544 See notes to consolidated financial statements. 48 FULL HOUSE RESORTS, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(In thousands, except shares) December 31,2013 December 31,2012 ASSETS Current assets Cash and equivalents $14,936 $20,603 Accounts receivable, net of allowance for doubtful accounts of $471 and $959 1,869 2,657 Prepaid expenses 6,288 5,744 Deferred tax asset -- 2,110 Other 726 1,225 23,819 32,339 Property, equipment and capital lease assets, net of accumulated depreciation 91,168 83,673 Other long-term assets Goodwill 18,127 22,127 Intangible assets, net of accumulated amortization of $4,055 and $1,506 15,533 18,106 Long term deposits 761 301 Loan fees, net of accumulated amortization of $2,327 and $496 3,558 5,159 Deferred tax asset 1,321 1,020 39,300 46,713 $154,287 $162,725 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable $2,661 $2,532 Income taxes payable -- 7 Accrued player club points and progressive jackpots 1,999 2,378 Accrued payroll and related 3,276 4,107 Other accrued expenses 3,139 3,808 Deferred tax liability 66 -- Current portion of capital lease obligation 736 -- Current portion of long-term debt -- 2,500 11,877 15,332 Long-term debt, net of current portion 57,500 66,250 Deferred tax liability 113 10 Capital lease obligation, net of current portion 6,983 -- 76,473 81,592 Stockholders’ equity Common stock, $.0001 par value, 100,000,000 shares authorized; 20,107,276 and 20,036,276 shares issued 2 2 Additional paid-in capital 45,350 44,707 Treasury stock, 1,356,595 common shares (1,654) (1,654)Retained earnings 34,116 38,078 77,814 81,133 $154,287 $162,725 See notes to consolidated financial statements. 49 FULL HOUSE RESORTS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY(In thousands) Additional Total Common stock paid-in Treasury stock Retained Stockholders’ December 31, 2013 Shares Dollars capital Shares Dollars Earnings Equity Beginning balances 20,036 $2 $44,707 1,357 $(1,654) $38,078 $81,133 Issuance of share basedcompensation 65 -- -- -- -- -- -- Previously deferred share-based compensationrecognized -- -- 623 -- -- -- 623 Issuances of common stock 6 -- 20 -- -- -- 20 Net (loss) -- -- -- -- -- (3,962) (3,962) Ending balances 20,107 $2 $45,350 1,357 $(1,654) $34,116 $77,814 Additional Total Common stock paid-in Treasury stock Retained Noncontrolling Stockholders’ December 31, 2012 Shares Dollars capital Shares Dollars Earnings interest Equity Beginning balances 20,030 $2 $43,448 1,357 $(1,654) $8,508 $5,141 $55,445 Previously deferred share-based compensationrecognized -- -- 1,242 -- -- -- -- 1,242 Issuances of commonstock 6 -- 17 -- -- -- -- 17 Distributions to non-controlling interest inconsolidated jointventure -- -- -- -- -- -- (3,586) (3,586) Sale of interest in jointventure -- -- -- -- -- 1,736 (3,736) (2,000) Net income -- -- -- -- -- 27,834 2,181 30,015 Ending balances 20,036 $2 $44,707 1,357 $(1,654) $38,078 $-- $81,133 See notes to consolidated financial statements 50 FULL HOUSE RESORTS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands) 2013 2012 Cash flows from operating activities: Net (loss) income attributable to the Company $(3,962) $27,834 Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Non-controlling interest in consolidated joint venture -- 2,181 Gain on sale of joint venture -- (41,189) Stockman’s goodwill impairment adjustment 4,000 -- Depreciation 6,839 5,270 Amortization of gaming and other rights -- 593 Amortization of loan fees 1,831 2,395 Amortization of player loyalty program, land lease and water rights 2,550 1,021 Other 24 90 Deferred and share-based compensation 643 1,259 Increases and decreases in operating assets and liabilities: Accounts receivable, net 788 2,840 Prepaid expenses (544) (1,460) Deferred tax 1,977 (1,724) Other assets 499 (442) Accounts payable and accrued expenses (2,359) (567) Income taxes payable (7) (2,402) Net cash provided by (used in) operating activities 12,279 (4,301)Cash flows from investing activities: Proceeds from sale of joint venture, less holdback -- 49,658 Purchase of property and equipment (6,162) (2,986) Deposits and other related costs (333) (1,286) Other 29 (115) Net cash (used in) provided by investing activities (6,466) 45,271 Cash flows from financing activities: Repayment of long-term debt and interest rate swap (11,250) (28,187) Distributions to non-controlling interest in consolidated joint venture -- (3,323) Loan fees (230) (3,564) Net cash used in financing activities (11,480) (35,074)Net (decrease) increase in cash and equivalents (5,667) 5,896 Cash and equivalents, beginning of year 20,603 14,707 Cash and equivalents, end of year $14,936 $20,603 2013 2012 SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for interest $5,516 $1,877 Cash received from income tax refund, net of cash paid of $0.3 million for income taxes in 2013 and cash paid forincome taxes in 2012 $(2,409) $21,876 Borrowings paid directly to sellers and vendors at closing $-- $70,000 Property acquisition financed with a capital lease $7,719 $-- See notes to consolidated financial statements. 51 FULL HOUSE RESORTS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. ORGANIZATION, NATURE AND HISTORY OF OPERATIONS Full House Resorts, Inc., a Delaware corporation formed in 1987, and its subsidiaries (collectively, Full House, we, our, ours, us) develops, manages, operates,and/or invests in gaming-related enterprises. We continue to actively investigate, individually and with partners, new business opportunities and our long-term strategy is to continue deriving revenues primarily from owned operations, as well as management fees. In furtherance of that strategy we madesignificant acquisitions of the Rising Star Casino Resort and Grand Lodge Casino leased operation in 2011 and the Silver Slipper Casino in 2012. With the2012 sale of the management agreement for the FireKeepers Casino in Michigan, we have transitioned the primary source of our revenues to owned entities. We currently own three casino properties, lease one casino property and we have one management contract to manage a group of related casino properties.These properties are located in four distinct regions of the United States – the Gulf Coast, the Midwest, Northern Nevada and the Southwest. We own RisingStar Casino Resort located in Rising Sun, Indiana, Silver Slipper Casino located in Bay St. Louis, Mississippi and Stockman’s Casino located in Fallon,Nevada. We lease one property, the Grand Lodge Casino at the Hyatt Regency Lake Tahoe Resort, Spa and Casino located in Incline Village, Nevada on theNorth Shore of Lake Tahoe. We manage the Buffalo Thunder Casino and Resort and the Cities of Gold and other gaming facilities, both located in Santa Fe,New Mexico, for the Pueblo of Pojoaque pursuant to an agreement with a three-year term expiring September 2014. Previously we managed the FireKeepers Casino near Battle Creek, Michigan for the Nottawaseppi Huron Band of Potawatomi, through a 50% joint venture,pursuant to a seven-year management agreement through March 30, 2012, when our interest in the joint venture was sold. Properties Currently Operating Gulf Coast Casino Operations Silver Slipper Casino The Silver Slipper Casino is on the far west end of the Mississippi Gulf Coast in Bay St. Louis, Mississippi. The property has approximately 37,000 squarefeet of gaming space containing approximately 950 slot and video poker machines, 25 table games and the only live keno game on the Gulf Coast. Theproperty includes a fine dining restaurant, buffet, quick service restaurant and two casino bars. The property draws heavily from the New Orleans metropolitanarea and other communities in southern Louisiana and southwestern Mississippi. We acquired all of the outstanding membership interests in Silver Slipper Casino Venture LLC, the owner of Silver Slipper Casino, on October 1, 2012, for$69.3 million, exclusive of net working capital balances, fees and expenses. 52 On August 26, 2013, we entered into an agreement with WHD Silver Slipper Casino, LLC related to construction of a six-story, 142-room hotel at our SilverSlipper Casino property (the “Silver Slipper Casino Hotel”). We have commenced construction of the Silver Slipper Casino Hotel and expect construction tobe completed late in 2014 or early 2015. Upon completion, the hotel will have 142-rooms in a six-story tower overlooking the waterfront. We believe thatthe Silver Slipper Casino Hotel is a much-needed amenity and will favorably impact customer loyalty by allowing guests to extend their visits at SilverSlipper Casino. Midwest Casino Operations Rising Star Casino Resort On April 1, 2011, we acquired all of the operating assets of Grand Victoria Casino & Resort, L.P. through Gaming Entertainment (Indiana) LLC, our wholly-owned subsidiary. We renamed the property Rising Star Casino Resort in August 2011. The property has approximately 40,000 square feet of casino spaceand includes approximately 1,200 slot and video poker machines, 33 table games, a 190-room hotel, five dining outlets and an 18-hole Scottish links golfcourse. In October 2011, Rising Sun/Ohio County First, Inc. (“RSOCF”) and Rising Sun Regional Foundation, Inc. teamed up to develop a new 104-room hoteltower on land adjacent to our Rising Star Casino Resort. On June 13, 2012, the City of Rising Sun Advisory Plan Commission provided a favorablerecommendation to the City Council of Rising Sun, Indiana, regarding a revised amendment to the plan of development, which was adopted by the CityCouncil on July 5, 2012. On August 13, 2012, the Advisory Plan Commission approved the detailed plan of development. The parties entered into a realestate sale agreement dated May 2, 2012, for RSOCF to purchase approximately three acres of land on which the hotel was developed. Constructioncommenced in December 2012, and the new hotel tower at Rising Star Casino Resort opened on November 15, 2013. The opening of the new hotel tower atRising Star Casino Resort brought total room capacity to 294. We believe that the added hotel room inventory in close proximity to our casino facility willfavorably impact revenues and visitor counts. 53 On August 16, 2013, we entered into a 10-year capital lease for the new hotel tower at Rising Star Casino Resort (the “Rising Star Hotel Agreement”) whichcommenced on November 15, 2013 and provides us with full management control and an option to purchase the new hotel tower at Rising Star Casino Resortat the end of the lease term. We have recorded the capital lease obligation and hotel assets in our financial statements. On November 15, 2013, we beganoperating the new hotel tower at Rising Star Casino Resort. The Rising Star Hotel Agreement provides that we, as the lessee, assume all responsibilities,revenues, expenses, profits and losses related to the hotel’s operations. The term of the Rising Star Hotel Agreement is for 10 years from November 15, 2013,with the landlord having a right to sell the hotel to us at the end of the term and our corresponding obligation to purchase it on the terms set forth in theRising Star Hotel Agreement. During the term, we will have the exclusive option to purchase the new hotel tower at Rising Star Casino Resort at a pre-setprice. On January 1, 2014, we began paying a fixed monthly rent payment of approximately $77.5 thousand, which will continue throughout the term of theRising Star Hotel Agreement unless we elect to purchase the hotel before the end of the lease period. In the event that we default on the lease agreement, thelandlord’s recourse is limited to taking possession of the property, collection of all rent due and payable, and the right to seek remediation for any attorneys’fees, litigation expenses, and costs of retaking and re-leasing the property. Northern Nevada Casino Operations Grand Lodge Casino On September 1, 2011, we purchased the operating assets of Grand Lodge Casino and entered into a lease with Hyatt Equities, L.L.C. for the casino space inthe Hyatt Regency Lake Tahoe Resort, Spa and Casino in Incline Village, Nevada on the north shore of Lake Tahoe. The initial term of the lease expires onAugust 31, 2018. The lease has an option, subject to mutual agreement, to renew for an additional five-year term. The Grand Lodge Casino has 18,900 squarefeet of casino space integrated with the Hyatt Regency Lake Tahoe Resort, Spa and Casino, featuring approximately 260 slot machines, 16 table games and apoker room. Stockman’s Casino We acquired Stockman’s Casino in Fallon, Nevada on January 31, 2007. Stockman’s Casino has approximately 8,400 square feet of gaming space withapproximately 265 slot machines, four table games and keno. The facility has a bar, a fine dining restaurant and a coffee shop. Southwest Casino Management Operations Buffalo Thunder Casino and Resort In May 2011, we entered into a three-year agreement with the Pueblo of Pojoaque, which has been approved by the National Indian Gaming Commission as amanagement contract, to advise on the operations of Buffalo Thunder Casino and Resort in Santa Fe, New Mexico, along with the Pueblo’s Cities of Goldand other gaming facilities which in aggregate have approximately 1,200 slot machines, 18 table games (including poker) and a simulcast area. We receive abase consulting fee of $0.1 million per month plus quarterly success fees based on achieving certain financial targets and incur only minimal incrementaloperating costs related to the contract. Our management and related agreements with Buffalo Thunder Casino and Resort became effective on September 23,2011. 54 Additional projects are considered based on their forecasted profitability, development period, regulatory and political environment and the ability to securethe funding necessary to complete the development, among other considerations. We continue to actively investigate, individually and with partners, newbusiness opportunities. We believe we will have sufficient cash and financing available to fund acquisitions and development opportunities in the future. Prior Projects FireKeepers Casino Until March 30, 2012, we owned 50% of Gaming Entertainment (Michigan), LLC (“GEM”), a joint venture with RAM Entertainment, LLC, (“RAM”) aprivately-held investment company. GEM had the exclusive right to provide casino management services at the FireKeepers Casino near Battle Creek,Michigan for the Nottawaseppi Huron Band of Potawatomi (the “Michigan Tribe”) for seven years commencing August 5, 2009. We were the primarybeneficiary and, therefore, included GEM in our consolidated financial statements. On December 2, 2010, the FireKeepers Development Authority (“FDA”), atribal entity formed by the Michigan Tribe, entered into a hotel consulting services agreement with GEM, as the consultant, related to the FireKeepers Casinophase II development project, which included development of a hotel, multi-purpose/ballroom facility, surface parking and related ancillary support spacesand improvements. GEM was to perform hotel consulting services for a fixed fee of $12,500 per month, continuing through to the opening of the project,provided the total fee for services did not exceed, in the aggregate, $0.2 million. On May 22, 2012, we signed an amendment to the hotel consulting servicesagreement extending the terms of the agreement through November 2012. On March 30, 2012, the joint venture managing the FireKeepers Casino sold the equity of the joint venture and the management agreement to the FDA for$97.5 million. In addition to the $97.5 million sale price, the FDA paid RAM and us $1.2 million each, equal to the management fee that would have beenearned under the management agreement for April 2012 less a $0.2 million wind-up fee and $0.1 million holdback receivable. The $0.1 million holdbackreceivable was received in May 2012, less expenses related to the sale deducted by the FDA. Our gain on the sale of joint venture, related to the sale of ourinterest in GEM, was $41.2 million and allocated as follows (in millions): Gross proceeds $48.8 Plus: April 2012 wind-up fee received, net of $0.03 million wind-up fee and holdback receivable 0.9 Net proceeds 49.7 Less: Our interest in joint venture (5.7)Full House gain on sale of joint venture 44.0 Less: contract right owned by subsidiary (2.8)Consolidated gain on sale of joint venture $41.2 55 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Accounting. The consolidated financial statements include our accounts and the accounts of our wholly-owned subsidiaries,including the Silver Slipper Casino, Rising Star Casino Resort, Grand Lodge Casino and Stockman’s Casino. GEM, a 50%-owned investee that was jointlyowned by RAM, until March 30, 2012, was consolidated pursuant to the relevant portions of Financial Accounting Standards Board (“FASB”) AccountingStandards Codification™ (“ASC”) Topic 810, “Consolidation.” All material intercompany accounts and transactions have been eliminated. We have elected to not adopt the option available under ASC Topic 825, “Financial Instruments”, to measure any of our eligible financial instruments orother items. Accordingly, except where carried at estimated fair value under other generally accepted accounting principles and disclosed herein, we continueto measure all of our assets and liabilities on the historical cost basis of accounting. Use of Estimates. We prepare our consolidated financial statements in conformity with accounting principles generally accepted in the United States. Certainof our accounting policies require that we apply significant judgment in defining the appropriate assumptions for calculating financial estimates. Thesignificant accounting estimates inherent in the preparation of our financial statements primarily include our valuation of goodwill and purchase priceallocations made in connection with our acquisitions, the estimated useful lives assigned to our depreciable and amortizable assets, asset impairment, baddebt expense, our opinion of collectability of receivables and fair value estimates related to valuation of receivables. Other accounting estimates includemanagement’s proper calculation of payroll liabilities such as paid time off, medical benefits, bonus accruals and other liabilities including slot club pointsand tax liabilities. Various assumptions, principally affecting the timing and other factors, underlie the determination of some of these significant estimates. The process ofdetermining significant estimates is fact-and project-specific and takes into account factors such as historical experience and current and expected legal,regulatory and economic conditions. We regularly evaluate these estimates and assumptions, particularly in areas, if any, where changes in such estimatesand assumptions could have a material impact on our results of operations, financial position and, generally to a lesser extent, cash flows. Whererecoverability of these assets or planned investments are contingent upon the successful development and management of a project, we evaluate thelikelihood that the project will be completed, the prospective market dynamics and how the proposed facilities should compete in that setting in order toforecast future cash flows necessary to recover the recorded value of the assets or planned investment. We review our conclusions as warranted by changingconditions. By their nature, these judgments are subject to an inherent degree of uncertainty. Our judgments are based on our historical experience, terms of existingcontracts, observance of trends in the gaming industry and information available from other outside sources. There can be no assurance that actual results willnot differ from our estimates. 56 Cash Equivalents. Cash in excess of daily requirements may be invested in highly liquid short-term investments with initial maturities of three months orless when purchased, which are reported as cash equivalents in the consolidated financial statements. Fair Value of Financial Instruments. The carrying value of our cash and equivalents, accounts receivable and accounts payable approximate fair valuebecause of the short maturity of those instruments. The estimated fair values of our debt approximates their recorded values as of the balance sheet datespresented, based on level 2 inputs consisting of interest rates offered to us for loans of the same or similar remaining maturities and bearing similar risks. Concentrations and Economic Risks and Uncertainties. The United States, since 2007, has experienced a widespread economic slowdown accompanied by,among other things, weakness in consumer spending including gaming activity and reduced credit and capital financing availability, all of which have far-reaching effects on economic conditions in the country for an indeterminate period. Our operations are currently concentrated in the Gulf Coast, the Midwest,Northern Nevada and the Southwest. Accordingly, future operations could be affected by adverse economic conditions and increased competitionparticularly in those areas and their key feeder markets in neighboring states. The effects and duration of these conditions and related risks and uncertaintieson our future operations and cash flows, including our access to capital or credit financing, cannot be estimated at this time, but may be significant. Receivables. Accounts receivable are uncollateralized and carried, net of an appropriate allowance, at their estimated collectible value based on customers’past credit history and current financial condition and on current general economic conditions. Since credit is extended on a short-term basis, accountsreceivables do not normally bear interest. The allowances for doubtful accounts are estimated by management for accounts that are partially or entirelyuncollectible. We record uncollectible allowances over 90 days old as a charge to selling, general and administrative expenses. The majority of our casinoaccounts receivable consists primarily of returned checks and markers. We review the receivables and related aging to determine a factor for estimating theallowance for our receivables. Property and Equipment. We define a fixed asset as a unit of property that: (a) has an economic useful life that extends beyond 12 months; and (b) wasacquired or produced for a cost greater than $2,500 for a single asset, or greater than $5,000 for a group of assets acquired or produced for a specific capitalproject. Fixed assets are capitalized and depreciated for book and tax purposes. Fixed assets acquired or produced for a cost less than $2,500, our minimumthreshold amount for capitalization, are reflected as an expense in our financial statements. Fixed assets are recorded at historical cost as of the date acquired (Note 6), and depreciated beginning on the date the fixed asset is placed in service. A fixedasset costing less than the threshold stated above is recorded as an expense for financial statement and tax purposes. A fixed asset with an economic usefullife that is less than 12 months is expensed for financial statement and tax purposes, regardless of the acquisition or production cost. We evaluate ourproperty and equipment and other long-lived assets for impairment in accordance with the accounting guidance in the Impairment or Disposal of Long-LivedAssets Subsections of FASB ASC Topic 360-10. 57 The interest cost associated with major development and construction projects is capitalized and included in the cost of the project. Interest expense iscapitalized at the applicable weighted-average borrowing rates of interest. Interest capitalization ceases once a project is substantially complete or no longerundergoing construction activities to prepare it for its intended use. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets or the term of the capitalized lease,whichever is appropriate under the circumstances. Our capital lease asset and liabilities are initially measured at the beginning of the lease term at the presentvalue of the minimum lease payments. Assets under a capital lease which meet the transfer-of-ownership or bargain-purchase option criteria of FASB ASCTopic 840, “Leases”, are amortized over the estimated useful lives of the assets. Our depreciation expense is highly dependent on the assumptions we makeabout our assets’ estimated useful lives. We determine the estimated useful lives based on our experience with similar assets and our estimate of the usage ofthe asset. Whenever events or circumstances occur which change the estimated useful life of an asset, we account for the change prospectively. Goodwill. Goodwill represents the excess of the purchase price over fair value of net assets acquired in connection with the Silver Slipper Casino, Rising StarCasino Resort and Stockman’s Casino. In accordance with the authoritative guidance for goodwill and other intangible assets, we test our goodwill andindefinite-lived intangible assets for impairment annually or if a triggering event occurs. We evaluate goodwill utilizing the market approach and incomeapproach applying the discounted cash flows in accordance with the provisions of FASB ASC Topic 350, “Intangibles-Goodwill and Other” on an annualbasis. Intangible Assets. Our indefinite-lived intangible assets include trademarks and certain license rights. Gaming licenses represent the value of the license toconduct gaming in certain jurisdictions, which are subject to highly extensive regulatory oversight and, in some cases, a limitation on the number of licensesavailable for issuance. The fair value of the Rising Star Casino Resort gaming license was estimated using a derivation of the income approach to valuation.The other gaming license values are based on actual costs. Indefinite-lived intangible assets are not amortized unless it is determined that their useful life isno longer indefinite. We periodically review our indefinite-lived assets to determine whether events and circumstances continue to support an indefiniteuseful life. If it is determined that an indefinite-lived intangible asset has a finite useful life, then the asset is tested for impairment and is subsequentlyaccounted for as a finite-lived intangible asset. 58 Our finite-lived intangible assets include customer relationship player loyalty programs, land leases, water rights and bank loan fee intangibles. Finite-livedintangible assets are amortized over their estimated useful lives, and we periodically evaluate the remaining useful lives of these intangible assets todetermine whether events and circumstances warrant a revision to the remaining period of amortization. We review our finite-lived intangible assets forimpairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. The player loyalty programs represent the value of repeat business associated with Silver Slipper Casino’s and Rising Star Casino Resort’s loyaltyprograms. The value of the loyalty programs were determined using a multi-period excess earning method of the income approach, which examines theeconomic returns contributed by the identified tangible and intangible assets of a company, and then isolates the excess return, which is attributable to theasset being valued, based on cash flows attributable to the player loyalty program. The valuation analyses for the active rated players were based onprojected revenues and attrition rates. Costs incurred in obtaining long-term financing are included in loan fees, net of amortization over the life of therelated debt. Revenue Recognition and Promotional Allowances. Slot coin-in is the gross amount wagered for the period cited. The win or hold percentage is the netamount of gaming wins and losses, with liabilities recognized for accruals related to the anticipated payout of progressive jackpots, funds deposited bycustomers before gaming play occurs (commonly called “casino front money”) and for chips and tokens in the customers’ possession (outstanding chip andtoken liability). Changes in our slot win percentages can have a significant impact to earnings. For table games, customers usually purchase gaming chips at the gaming tables. The cash and markers (extensions of credit granted to certain credit worthycustomers) are deposited in the gaming table’s drop box. Table game win is the amount of drop that is retained and recorded as casino gaming revenue, withliabilities recognized for funds deposited by customers before gaming play occurs and for unredeemed gaming chips. As we are focused on regional gamingmarkets, our table win percentages are fairly stable as the majority of these markets do not regularly experience high-end play, which can lead to volatility inwin percentages. Therefore, changes in table game win percentages do not typically have a material impact to our earnings. Key performance indicators related to gaming revenue are slot coin-in and table game drop (volume indicators) and “win” or “hold” percentage. Our typicalproperty slot win percentage is in the range of 4% to 9% of slot coin-in, and our typical table game win percentage is in the range of 5% to 25% of table gamedrop. 59 Hotel, food and beverage, entertainment and other operating revenues are recognized as services are performed, net of revenue-based taxes. Advance ticketsales are recorded as deferred revenue until services are provided to the customer. Revenues are recognized net of certain sales incentives, and accordingly,cash incentives to customers for gambling activity, including the cash value of points redeemed by Players Club members, totaling $6.0 million and $6.7million have been recognized as a direct reduction of casino revenue in 2013 and 2012, respectively. Sales and similar revenue-linked taxes collected fromcustomers are excluded from revenue and recorded as a liability payable to the appropriate taxing authority and included in accrued expenses. Revenue alsodoes not include the retail value of accommodations, food and beverage, and other services gratuitously furnished to customers totaling $19.8 million in2013 and $15.4 million in 2012. The estimated cost of providing room, food and beverage and other incentives is included primarily in casino expenses, asnoted in the table below (in thousands): 2013 2012 Rooms $3,577 $3,588 Food and beverage 13,549 9,249 Other incentives 888 1,120 $18,014 $13,957 We recognize the impact on gaming revenues on an annual basis to reflect an estimate of the change in the value of outstanding chips and tokens that are notexpected to be redeemed. This estimate is determined by measuring the difference between the total value of chips and tokens placed in service less the valueof chips and tokens in the inventory of chips and tokens under our control. This measurement was not consistently performed in past years, but will beperformed on an annual basis in the future utilizing methodology in which a consistent formula is applied to estimate the percentage value of the chips andtokens not in custody that are not expected to be redeemed. In addition to the formula, certain judgments are made with regard to various denominations andsouvenir chips and tokens. Derivative Instruments and Hedging Activities. Derivative Instruments – Interest Rate Swap Agreement. We adopted the accounting guidance for derivative instruments and hedging activities (ASCTopic 815, “Derivatives and Hedging”), as amended, to account for our interest rate swap, prior to the pay-off of the interest rate swap on March 30, 2012.The accounting guidance required us to recognize our derivative instruments as either assets or liabilities in our consolidated balance sheet at fair value. Theaccounting for changes in fair value (i.e. gains or losses) of a derivative instrument agreement depended on whether it had been designated and qualified aspart of a hedging relationship and further, on the type of hedging relationship. The derivative instrument was not designated as a hedge for accountingpurposes. The change in fair value was recorded in the consolidated statement of operations in the period of change. Additionally, the difference betweenamounts received and paid under such agreements, as well as any costs or fees, were recorded as a reduction of, or an addition to, interest expense as incurredover the life of the agreement. Fluctuations in interest rates caused the fair value of our derivative instrument to change each reporting period. EffectiveMarch 20, 2012 the interest rate swap was terminated, and $0.5 million was paid, which reflected the fair value of the interest rate swap on that date, and weceased to recognize the interest rate swap as a liability on the balance sheet in long-term debt. Derivative Instruments – Interest Rate Cap Agreement. Currently, we are subject to interest rate risk under our Capital One First Lien Credit Agreement. InNovember 2012 in accordance with the terms of the First Lien Credit Agreement, we entered into a prepaid interest rate cap agreement with Capital One for anotional amount of $15.0 million at a LIBOR cap rate of 1.5%. The agreement was effective November 2, 2012 and will terminate on October 1, 2014. 60 Customer Loyalty Programs. We currently offer incentives to our customers through customer loyalty programs at each of our properties – the SilverSlipper Casino Players Club, the Rising Star Rewards Club™, the Grand Lodge Players Advantage Club® and the Stockman’s Winner’s Club. Under theseprograms, customers earn points based on their level of play that may be redeemed for various benefits, such as free play, cash back, complimentary dining, orhotel stays, among others, depending on each property’s specific offers. The reward credit balance under the plans will be forfeited if the customer does notearn any reward credits over a specified time period, or after a specified time period of inactivity, up to a 13-month time period, depending on the specificproperty’s customer loyalty program. We accrue a liability for the estimated cost of providing these benefits as the benefits are earned. Estimates and assumptions are made regarding cost ofproviding the benefits, breakage rates, and the mix of goods and services customers will choose. We use historical data to assist in the determination ofestimated accruals. Changes in estimates or customer redemption habits could produce significantly different results. At December 31, 2013 and December31, 2012, we had accrued $1.2 million and $1.3 million, respectively, for the estimated cost of providing these benefits. Such amounts are included in“Accrued player club points and progressive jackpots” in our consolidated balance sheets. Loyalty programs are just a part of the total marketing program. The amount of marketing reinvestment (complimentaries to players, promotional awards,entertainment, etc.) is based on the specific property and competitive assumptions. We track the percentage of promotional and marketing costs compared togaming revenue for an efficient use and return on our marketing investment. Each of our properties has been faced with a highly competitive promotionalenvironment due to the high amounts of incentives offered by the competition. The Rising Star Casino Resort has been significantly impacted by thesubstantial promotions offered at the new Ohio casinos. Share-based Compensation. Share-based compensation expense from stock awards (Note 12) is included in general and administrative expense. Vesting iscontingent upon certain conditions, including continuous service of the individual recipients. Unvested stock grants made in connection with our incentivecompensation plan are viewed as a series of individual awards and the related share-based compensation expense is amortized into compensation expense ona straight-line basis as services are provided over the vesting period, and reported as a reduction of stockholders’ equity. We grant shares of restricted stock,rather than options, to key members of management and the board of directors. Legal Defense Costs. We do not accrue for estimated future legal and related defense costs, if any, to be incurred in connection with outstanding orthreatened litigation and other disputed matters but rather, record such as period costs when the related services are rendered. Income Taxes. Income tax-related interest and penalties, if any, are treated as part of income tax expense. Income per Common Share. Basic income or earnings per share (“EPS”) is computed based upon the weighted-average number of common sharesoutstanding during the year. Diluted EPS is computed based upon the weighted average number of common and common equivalent shares if their effectupon exercise would have been dilutive using the treasury stock method. As of December 31, 2013 and 2012, there were no common equivalent shares thatwould have been dilutive and, therefore, the calculations for basic and diluted EPS are equal. Reclassifications. Certain minor reclassifications in prior year balances have been made to conform to the current presentation, which had no effect onpreviously reported net income. 61 Recently Issued Accounting Pronouncements We have reviewed authoritative standards issued after December 31, 2013. As a result, we determined that the new standards are not likely to have anysignificant impact on our future financial statements. 3. VARIABLE INTEREST ENTITIES GEM. Prior to the sale of our interest on March 30, 2012, we directed the day-to-day operational activities of GEM which significantly impacted GEM’seconomic performance, and therefore, we were the primary beneficiary pursuant to the relevant portions of FASB ASC Topic 810 “Consolidation” [ASC 810-10-25 Recognition of Variable Interest Entities, paragraphs 38-39]. As such, the joint venture was a variable interest entity that was consolidated in ourfinancial statements. An unaudited summary of GEM’s operations follows (In thousands): GEM CONDENSED STATEMENT OF INCOME INFORMATION Twelve Months Ended: December 31,2013 December 31,2012 Revenues $-- $5,340 Net income -- 4,362 4. CONTRACT RIGHTS On March 30, 2012, our remaining contract rights were sold with our interest in GEM to the FDA. 62 5. GOODWILL & OTHER INTANGIBLES Goodwill: Due to various factors, including weak economic conditions, lower than anticipated discretionary consumer spending, and increased competition in ourIndiana market, we realized lower than expected operating results during the third quarter of 2013 at some of our properties. We performed interimimpairment assessments of goodwill for these properties as of September 30, 2013. We evaluated goodwill for all of the relevant properties and recognized a$4.0 million impairment of Stockman’s Casino goodwill. Our review of Rising Star Casino Resort as of September 30, 2013, resulted in approximately a2.6% excess of estimated fair value using the discounted cash flows approach. We also evaluated goodwill for the Silver Slipper Casino utilizing the marketapproach, resulting in approximately a 20.1% excess of estimated fair value over carrying value considering an earnings multiple of 7.0. These calculations,which are subject to change as a result of future economic uncertainty, contemplate changes for both current year and future year estimates in earnings andthe impact of these changes to the fair value of Silver Slipper Casino, Rising Star Casino Resort and Stockman’s Casino, although there is always someuncertainty in key assumptions including projected future earnings growth. If our estimates of projected cash flows related to our assets are not achieved, wemay be subject to future impairment charges, which could have a material adverse impact on our consolidated financial statements. Year ended December 31, 2013(in thousands) Balance atbeginning ofthe year Changes duringthe year Balance atend of theyear Stockman’s Goodwill $5,809 $(4,000) $1,809 Rising Star Goodwill 1,647 -- 1,647 Silver Slipper Goodwill 14,671 -- 14,671 Goodwill, net of accumulated impairment losses $22,127 $(4,000) $18,127 Year ended December 31, 2012(in thousands) Balance atbeginning ofthe year Changes duringthe year Balance atend of theyear Stockman’s Goodwill $5,809 $-- $5,809 Rising Star Goodwill 1,647 -- 1,647 Silver Slipper Goodwill -- 14,671 14,671 Goodwill, net of accumulated impairment losses $7,456 $14,671 $22,127 63 Other Intangible Assets: Other intangible assets, net consist of the following (in thousands): December 31, 2013 EstimatedLife(years) GrossCarryingValue AccumulatedAmortization CumulativeExpense /(Disposals) IntangibleAsset, Net Amortizing Intangible assets: Player Loyalty Program - Rising Star 3 $1,700 $(1,558) $- $142 Player Loyalty Program - Silver Slipper 3 5,900 (2,458) - 3,442 Land Lease and Water Rights - Silver Slipper 46 1,420 (39) 1,381 Capital One Bank Loan Fees 3 4,671 (2,019) 216 2,868 ABC Funding, LLC Loan Fees 4 984 (308) 14 690 Non-amortizing intangible assets: Gaming License-Indiana Indefinite 9,900 -- - 9,900 Gaming License-Mississippi Indefinite 115 -- (10) 105 Gaming Licensing - Nevada Indefinite 542 -- (19) 523 Trademarks Indefinite 36 -- 4 40 Indefinite -- - - $25,268 $(6,382) $205 $19,091 Other Intangible assets subtotal $19,613 $(4,055) $(25) $15,533 Loan Fees subtotal 5,655 (2,327) 230 3,558 $25,268 $(6,382) $205 $19,091 December 31, 2012 EstimatedLife(years) GrossCarryingValue AccumulatedAmortization CumulativeExpense /(Disposals) IntangibleAsset, Net Amortizing Intangible assets: Player Loyalty Program - Rising Star 3 $1,700 $(992) $-- $708 Player Loyalty Program - Silver Slipper 3 5,900 (492) -- 5,408 Land Lease and Water Rights - Silver Slipper 46 1,420 (23) -- 1,397 Wells Fargo Bank Loan Fees 5 2,614 (924) (1,690) - Capital One Bank Loan Fees 3 4,671 (434) -- 4,237 ABC Funding, LLC Loan Fees 4 984 (62) -- 922 Non-amortizing intangible assets: Gaming License-Indiana Indefinite 9,900 -- -- 9,900 Gaming License-Mississippi Indefinite 115 -- -- 115 Gaming License-Nevada Indefinite 542 -- -- 542 Trademarks Indefinite 36 -- -- 36 $27,882 $(2,927) $(1,690) $23,265 Other Intangible assets subtotal $19,613 $(1,507) $-- $18,106 Loan Fees subtotal 8,269 (1,420) (1,690) 5,159 $27,882 $(2,927) $(1,690) $23,265 64 Player Loyalty Program The player loyalty programs represent the value of repeat business associated with Silver Slipper Casino’s and Rising Star Casino Resort’s loyaltyprograms. The value of $5.9 million and $1.7 million of the Silver Slipper Casino’s and Rising Star Casino Resort’s player loyalty programs, respectively,were determined using a multi-period excess earning method of the income approach, which examines the economic returns contributed by the identifiedtangible and intangible assets of a company, and then isolates the excess return, which is attributable to the asset being valued, based on cash flowsattributable to the player loyalty program. The valuation analyses for the active rated players were based on projected revenues and attrition rates. SilverSlipper Casino and Rising Star Casino Resort maintain historical information for the proportion of revenues attributable to the rated players for gross gamingrevenue. The value of the player loyalty programs are amortized over a life of three years. Land Lease and Water Rights In November 2004, Silver Slipper Casino entered into a lease agreement with Cure Land Company, LLC for approximately 38 acres of land (“Land Lease”),which includes approximately 31 acres of protected marsh land as well as a seven-acre casino parcel, on which the Silver Slipper Casino was subsequentlybuilt. The lease was amended and extended on February 26, 2013, as discussed in Note 11. The $1.0 million Land Lease represents the excess fair value of theland over the estimated net present value of the Land Lease payments. The $0.4 million of water rights represented the fair value of the water rights basedupon the market rates in Hancock County, Mississippi. The value of the Land Lease and water rights are amortized over the life of the Land Lease, or 46years. Loan Fees On October 1, 2012, we funded the purchase of the Silver Slipper Casino with the full amount of the $50.0 million First Lien Credit Agreement with CapitalOne and the full amount of the Second Lien Credit Agreement with ABC Funding, LLC, as discussed in Note 8. We incurred $4.7 million in loan fees relatedto obtaining the First Lien Credit Agreement and $1.0 million in loan fees related to obtaining the Second Lien Credit Agreement. On August 26, 2013, weentered into a first amendment to the First Lien Credit Agreement (the “First Lien Amendment”) and an amendment to the Second Lien Credit Agreement (the“Second Lien Amendment”) and incurred $0.2 million in additional loan fees, as discussed in Note 8. All of the loan fees are amortized over the terms of theagreements. The First Lien Amendment modifications included an extended maturity date to June 29, 2016, therefore the amortization period for these loanfees was extended. 65 The amortization of loan fees was $1.8 million and $0.7 million for the year ended December 31, 2013 and December 31, 2012, respectively. Gaming Licenses Gaming licenses represent the value of the license to conduct gaming in certain jurisdictions, which are subject to highly extensive regulatory oversight and,in some cases, a limitation on the number of licenses available for issuance. The value of the $9.9 million Rising Star Casino Resort gaming license wasestimated using a multi-period excess earning method of the income approach, which examines the economic returns contributed by the identified tangibleand intangible assets of a company, and then isolates the excess return, which is attributable to the asset being valued, based on cash flows attributable to thegaming license. The other gaming license values are based on actual costs. Gaming licenses are not amortized as they have indefinite useful lives and areevaluated for potential impairment on an annual basis unless events or changes in circumstances indicate the carrying amount of the gaming licenses may notbe recoverable. We reviewed existing gaming licenses as of December 31, 2013 and recognized an expense of $0.1 million related to gaming licensing costspertaining to a former director and a secretary/general counsel, who are no longer affiliated with us. We incurred $0.1 million in costs related to obtaining a Mississippi gaming license during 2012, for the purchase of all of the outstanding membershipinterest of Silver Slipper Casino Venture, LLC which owns and operates the Silver Slipper Casino. Trademark Trademarks are based on the legal fees and recording fees related to the trademark of the “Rising Star Casino Resort” name, and variations of suchname. Trademarks are not subject to amortization, as they have an indefinite useful life and are evaluated for potential impairment on an annual basis unlessevents or changes in circumstances indicate the carrying amount of the trademark may not be recoverable. Current and Future Amortization We amortize our definite-lived intangible assets, including our player loyalty programs, loan fees, land leases and water rights over their estimated usefullives. The aggregate amortization expense was $4.4 million and $1.7 million for the year ended December 31, 2013 and December 31, 2012, respectively. Total amortization expense for intangible assets for the years ending December 31, 2014, 2015, 2016, 2017, 2018 and thereafter is anticipated to beapproximately $2.4 million, $1.8 million, $3.1 million, $0.03 million, $0.03 million, and $1.2 million, respectively. 66 6. PROPERTY AND EQUIPMENT At December 31, 2013 and 2012, property and equipment consists of the following (in thousands): 2013 2012 Land and improvements $11,670 $9,907 Buildings and improvements 72,570 70,401 Furniture and equipment 26,943 19,338 Construction in progress 3,081 311 114,264 99,957 Less accumulated depreciation (23,096) (16,284) $91,168 $83,673 The construction in progress was primarily related to construction costs for the Silver Slipper Casino Hotel (Note 11) and the renovation of the Silver Slippergarage and also included capitalized interest of $0.03 million related to these projects. Leased property and equipment of $7.6 million, as of December 31, 2013, related to the Rising Star Casino Resort capital lease (Note 7) is also included inthe schedule above. At December 31, 2013 and 2012, leased property and equipment consisted of the following (in thousands): 2013 2012 Leased land and improvements $215 $-- Leased buildings and improvements 5,787 -- Leased furniture and equipment 1,717 -- 7,719 -- Less accumulated amortization (83) -- $7,636 $-- Amortization related to the Rising Star Casino Resort capital lease is combined with depreciation expense. 7. CAPITAL LEASE OBLIGATION Rising Star Casino Resort Capital Lease. On August 16, 2013, we entered into a 10-year capital lease for the new hotel tower at Rising Star Casino Resort(the “Rising Star Hotel Agreement”) with Rising Sun/Ohio County First, Inc., an Indiana non-profit corporation (the “Landlord”). The Landlord’s 104-roomtower, adjacent to the Rising Star Casino Resort, opened November 15, 2013. The Rising Star Hotel Agreement provides us with full management control andwe, as the lessee, assume all responsibilities, revenues, expenses, profits and losses related to the hotel’s operations. The term of the Rising Star HotelAgreement is for 10 years from November 15, 2013, with the Landlord having a right to sell the hotel tower to us at the end of the term and our correspondingobligation to purchase it on the terms set forth in the Rising Star Hotel Agreement. During the term, we will have the exclusive option to purchase the newhotel tower at Rising Star Casino Resort at a pre-set price. On January 1, 2014, we began paying a fixed monthly rent payment of approximately $77.5thousand, which will continue throughout the term of the Rising Star Hotel Agreement unless we elect to purchase the hotel before the end of the leaseperiod. In the event that we default on the lease agreement, the Landlord’s recourse is limited to taking possession of the property, collection of all rent dueand payable, and the right to seek remediation for any attorneys’ fees, litigation expenses, and costs of retaking and re-leasing the property. 67 Future minimum lease payments and the present value of such payments related to the capital lease are as follows, as of December 31, 2013 (in thousands): 2014 $930 2015 930 2016 930 2017 930 2018 930 Thereafter 4,499 Total minimum lease payments 9,149 Less: amount representing interest (1,430)Present value of minimum lease payments $7,719 The current portion of our capital lease obligation is $0.7 million, which represents the minimum lease payments, less interest, to be paid over the nextyear. The capital lease obligation, net of current portion is $7.0 million. 8. LONG-TERM DEBT At December 31, 2013 and 2012, long-term debt consists of the following (in thousands): 2013 2012 Long-term debt, net of current portion: Term loan agreement, $50.0 million on June 29, 2012, funded on October 1, 2012, maturing June 29, 2016, withvariable interest as described in the fourth succeeding paragraph. (the average interest rate was 4.75% and 5.4% duringthe quarter and year ended December 31, 2013, respectively) $ 37,500 $ 48,750 Term loan agreement, $20.0 million on October 1, 2012, maturing October 1, 2016, interest rate is fixed at 13.25% perannum. 20,000 20,000 Less current portion -- ( 2,500) $57,500 $66,250 First and Second Lien Credit Agreements. On June 29, 2012, we entered into the First Lien Credit Agreement with Capital One, which provides for a termloan in an amount up to $50.0 million and a revolving loan in an amount up to $5.0 million. On October 1, 2012, we entered into a Second Lien CreditAgreement with ABC Funding, LLC as administrative agent which provided for a term loan in an amount up to $20.0 million. We funded the purchase ofSilver Slipper Casino with the full amount of the $50.0 million term loan under the First Lien Credit Agreement and the full amount of the Second LienCredit Agreement. The $5.0 million revolving loan under the First Lien Credit Agreement remains undrawn and available, subject to the terms andrestrictions of the First Lien Credit Agreement. 68 On August 26, 2013, we entered into the First Lien Amendment and the Second Lien Amendment which amended certain provisions of the First Lien CreditAgreement and Second Lien Credit Agreement. The First Lien Amendment modifications included a $10.0 million increase to the term loan portion of theFirst Lien Credit Agreement to $56.3 million, a 1% lower interest rate and an extended maturity date to June 29, 2016. Also, certain financial ratio covenantswere revised under the First Lien Credit Agreement and Second Lien Credit Agreement to accommodate the additional extension of credit under the FirstLien Credit Agreement and our capital lease agreement related to the hotel adjacent to the Rising Star Casino Resort as discussed in Note 7. The $10.0million term loan under the First Lien Credit Agreement remains undrawn and available within the limits and terms of the First Lien Credit Agreement, andwill be used to fund a portion of the $17.7 million construction of the six-story, 142-room Silver Slipper Casino Hotel being built between the south side ofthe casino and the waterfront, with rooms facing views of the bay. The remaining $7.7 million of the construction cost has been, and will be, funded fromavailable cash. As of December 31, 2013, we had funded cash of $2.5 million in construction and financing costs for the Silver Slipper Casino Hotel, and weanticipate funding an additional $5.2 million in cash in 2014. Construction of the hotel is expected to be completed in late 2014 or early 2015. The First Lien Credit Agreement and Second Lien Credit Agreement are secured by substantially all of our assets and therefore, our wholly-ownedsubsidiaries guarantee our obligation under the agreements. The Second Lien Credit Agreement is subject to the lien of the First Lien Credit Agreement. We have elected to pay interest on the First Lien Credit Agreement based on the greater of the elected LIBOR rate, or 1.0%, plus a margin rate as set forth inthe agreement. The LIBOR rate is a rate per annum equal to the quotient of (a) the greater of (1) 1.00% and (2) the rate per annum referenced to as the BBA(British Bankers Association) LIBOR divided by (b) one minus the reserve requirement set forth in the First Lien Credit Agreement for such loan in effectfrom time to time. LIBOR rate elections can be made based on a 30 day, 60 day, 90 day or 180 day LIBOR, and margins are adjusted quarterly. As ofDecember 31, 2013, the interest rate was 4.75% on the balance outstanding on the First Lien Credit Agreement, based on the 1.0% minimum, plus a 3.75%margin. We pay interest on the Second Lien Credit Agreement at the fixed rate of 13.25% per annum. The First Lien Credit Agreement and Second Lien Credit Agreement contain customary negative covenants for transactions of this type, including, but notlimited to, restrictions on our and our subsidiaries’ ability to: incur indebtedness; grant liens; pay dividends and make other restricted payments; makeinvestments; make fundamental changes; dispose of assets; and change the nature of our business. The First Lien Credit Agreement and Second Lien CreditAgreement require that we maintain specified financial covenants, including a total leverage ratio, a first lien leverage ratio, and a fixed charge coverage ratioall of which measure Adjusted EBITDA (as defined in the agreements) against outstanding debt and fixed charges (as defined in the agreements). A capitalexpenditure ratio must also be maintained as set forth in the agreements. The First Lien Credit Agreement and Second Lien Credit Agreement define AdjustedEBITDA as net income (loss) plus (i) interest expense, net, (ii) provision for taxes (iii) depreciation and amortization and further adjusted to eliminate theimpact of certain items that are not indicative of ongoing operating performance such as: (iv) acquisition costs, (v) non-cash stock compensation, (vi) loss onderivatives and debt, (vii) gain on sale of joint venture, (viii) impairment loss, and (ix) certain severance costs. The First Lien Amendment revised the ratio requirements under the First Lien Credit Agreement. Also, the Second Lien Amendment revised the total leverageratio requirements under the Second Lien Credit Agreement to exclude the capital lease related to the new tower at the Rising Star Casino Resort. The FirstLien Credit Agreement and the Second Lien Credit Agreement maximum total leverage ratio and maximum first lien leverage ratio vary according to theapplicable time period and the fixed charge coverage ratio remains constant, as indicated in the tables below: First Lien Credit AgreementApplicable Period MaximumTotal Leverage Ratio MaximumFirst Lien Leverage Ratio MinimumFixed Charge CoverageRatioInitial funding date through and including December 31,2014 4.00x 2.75x 1.10xJanuary 1, 2015 through and including December 31, 2015 3.75x 2.50x 1.10xJanuary 1, 2016 and thereafter 3.50x 2.25x 1.10x Second Lien Credit AgreementApplicable Period MaximumTotal Leverage Ratio MaximumFirst Lien LeverageRatio MinimumFixed Charge CoverageRatioInitial funding date through and including September 30,2013 4.00x 3.00x 1.00xOctober 1, 2013 through and including September 30, 2014 3.75x 2.75x 1.00xOctober 1, 2014 and thereafter 3.50x 2.50x 1.00x We measure compliance with our covenants on a quarterly basis and we were in compliance at December 31, 2013, however, there can be no assurances thatwe will remain in compliance with all covenants in the future. The First Lien Credit Agreement and Second Lien Credit Agreement also include customaryevents of default, including, among other things: non-payment; breach of covenant; breach of representation or warranty; cross-default under certain otherindebtedness or guarantees; commencement of insolvency proceedings; inability to pay debts; entry of certain material judgments against us or oursubsidiaries; occurrence of certain ERISA events; re-purchase of our own stock and certain changes of control. A breach of a covenant or other events ofdefault could cause the loans to be immediately due and payable, terminate commitments for additional loan funds, or the lenders could exercise any otherremedy available under the First Lien Credit Agreement or Second Lien Credit Agreement or by law. If a breach of covenants or other event of default were tooccur, we would seek modifications to covenants or a temporary waiver or waivers from the First Lien Credit Agreement and Second Lien Credit Agreementlenders. No assurance can be given that we would be successful in obtaining such modifications. 69 During the year ended December 31, 2012, we prepaid, at our discretion, the principal payment of $1.3 million due April 1, 2013 on the First Lien CreditAgreement, in order to reduce interest costs. As a practice, we consistently prepaid our quarterly payments before their due dates in 2013, and during the yearended December 31, 2013, we prepaid, at our discretion, the sum of $8.8 million in quarterly principal payments, which were due through July 1, 2015. Thenext scheduled principal payment is due October 1, 2015. We are required to make prepayments under the First Lien Credit Agreement, under certain conditions defined in the agreement, in addition to the scheduledprincipal installments for any fiscal year ending December 31, 2012 and thereafter. We are required to pay the entire outstanding principal on the First LienCredit Agreement and Second Lien Credit Agreement, together with all accrued and unpaid interest thereon, on the respective maturity dates. Prepaymentpenalties will be assessed in the event that prepayments are made on the Second Lien Credit Agreement prior to the discharge of the First Lien CreditAgreement. Scheduled maturities of long-term debt as of the most recent balance sheet presented are as follows, for the annual periods ended December 31 (in thousands): 2014 $-- 2015 1,250 2016 56,250 2017 -- $57,500 9. DERIVATIVE INSTRUMENTS Derivative Instruments – Interest Rate Swap Agreement We adopted the accounting guidance for derivative instruments and hedging activities (ASC Topic 815, “Derivatives and Hedging”), as amended, to accountfor our interest rate swap, prior to the payoff of the interest rate swap on March 30, 2012. The accounting guidance required us to recognize our derivativeinstruments as either assets or liabilities in our consolidated balance sheet at fair value. The accounting for changes in fair value (i.e. gains or losses) of aderivative instrument agreement depended on whether it had been designated and qualified as part of a hedging relationship and further, on the type ofhedging relationship. The derivative instrument was not designated as a hedge for accounting purposes. The change in fair value was recorded in theconsolidated statement of operations in the period of change. Additionally, the difference between amounts received and paid under such agreements, aswell as any costs or fees, were recorded as a reduction of, or an addition to, interest expense as incurred over the life of the agreement. Fluctuations in interestrates caused the fair value of our derivative instrument to change each reporting period. Effective March 30, 2012 the interest rate swap was terminated, and$0.5 million was paid, which reflected the fair value of the interest rate swap on that date, and we ceased to recognize the interest rate swap as a liability onthe balance sheet in long-term debt. Prior to the pay-off of the interest rate swap, the interest rate swap was adjusted to fair value and the adjustment of theinterest rate swap was recognized as income during the first quarter of 2012. During the three months ended March 31, 2012, the weighted average cashinterest rate paid on the debt was 8.16%, including interest rate swap interest and loan interest.70 Derivative Instruments – Interest Rate Cap AgreementCurrently, we are subject to interest rate risk under our Capital One First Lien Credit Agreement. In November 2012 in accordance with the terms of the FirstLien Credit Agreement, we entered into a prepaid interest rate cap agreement with Capital One for a notional amount of $15.0 million at a LIBOR cap rate of1.5%. The agreement was effective November 2, 2012 and terminates on October 1, 2014. Any future settlements resulting from the interest rate cap will berecognized in interest expense during the period in which the change occurs. 10. INCOME TAXES The income tax provision consists of the following (in thousands): 2013 2012 Current:Federal $(2,627) $15,390 State 289 1,509 (2,338) 16,899 Deferred:Federal 1,572 (1,712) State 405 (12) 1,977 (1,724) $(361) $15,175 A reconciliation of the income tax provision relative to continuing operations with amounts determined by applying the statutory U.S. Federal income taxrate of 35% to consolidated income before income taxes is as follows (in thousands): 2013 2012 Tax provision at U.S. statutory rate $(1,513) $15,053 State taxes, net of federal benefit 473 1,067 Permanent differences 573 (586)Credits (73) (46)Adjustments to beginning deferred balances 221 (196)Other (42) (117) $(361) $15,175 71 At December 31, 2013 and 2012, our deferred tax assets (liabilities) consist of the following (in thousands): 2013 2012 Deferred tax assets: Deferred compensation $537 $1,713 Depreciation of fixed assets -- 595 Intangible assets and amortization 1,835 591 Accrued expenses 427 933 Chip and token liability 19 93 Allowance for doubtful accounts 188 150 Other 224 531 3,230 4,606 Deferred tax liabilities: Depreciation of fixed assets (627) -- Prepaid expenses (1,461) (1,310) Interest in partnerships -- (176) (2,088) (1,486) $1,142 $3,120 Management has made an annual analysis of its state and federal tax returns that remain subject to examination by major authorities (presently consisting oftax years 2010 through 2012) and concluded that we have no recordable liability as of December 31, 2013 or 2012, for unrecognized tax benefits as a resultof uncertain tax positions taken. 11. COMMITMENTS AND CONTINGENCIES Operating leases On December 1, 2012, we amended and extended our corporate office lease through May 2018. Effective December 2010, Stockman’s Casino entered into alease agreement as lessee for its primary outdoor casino sign until November 2015. On June 28, 2011, the Grand Lodge Casino entered into a CasinoOperations Lease (“Grand Lodge Lease”) with Hyatt Equities, L.L.C. for approximately 20,900 square feet of building space occupied by the Grand LodgeCasino gaming operations, as well as associated gaming office space. On April 8, 2013, the Grand Lodge Casino entered into a first amendment to the GrandLodge Lease (the “Amendment”) with Hyatt Equities, L.L.C. amending the terms of the lease. The Amendment extended the initial term of the Grand LodgeLease until August 31, 2018 and makes certain other conforming changes. Except as set forth in the Amendment, all other terms of the Grand Lodge Leaseremain in full force and effect. Silver Slipper Casino entered into the Land Lease in November 2004, as amended in March 2009, September 2012 and February 2013, which includesapproximately 31 acres of protected marsh land as well as a seven-acre casino parcel, on which the Silver Slipper Casino was subsequently built. InDecember 2010, Silver Slipper Casino entered into a lease agreement with Cure Land Company, LLC for approximately five acres of land occupied by theSilver Slipper Casino gaming office and warehouse space through November 30, 2020. On January 31, 2012 Silver Slipper Casino entered into a leaseagreement with Chelsea Company, LLC for a small parcel of land with a building which may be occupied by a proposed Silver Slipper Casino welcomecenter in the future, through December 31, 2019. On January 11, 2013 Silver Slipper Casino terminated a previous restaurant lease agreement withDiamondhead Country Club & Property Owners Association (“DCCPOA”) and entered into a contract to purchase services to be provided by DCCPOArelated to its golf and country club through December 31, 2019. 72 Land Lease buyout. The Land Lease includes an exclusive option to purchase the leased land (“Purchase Option”), as well as an exclusive option topurchase a four acre portion of the leased land (“4 Acre Parcel Purchase Option”), which may be exercised at any time in conjunction with a hoteldevelopment during the term of the Land Lease for $2.0 million. On February 26, 2013, Silver Slipper Casino entered into a third amendment to the LandLease which amended the term and Purchase Option provisions. The term of the Land Lease was extended to April 30, 2058, and the Purchase Option wasextended through October 1, 2027, and may only be exercised after February 26, 2019. If there is no change in ownership, the purchase price will be $15.5million, less $2.0 million if the 4 Acre Parcel Purchase Option has been previously exercised, plus a retained interest in Silver Slipper Casino operations of3% of net income. In the event that we sell or transfer substantially all of the assets of our ownership in Silver Slipper Casino, then the purchase price willincrease to $17.0 million. The total rent expense for all operating leases for the years ended December 31, 2013 and December 31, 2012 was $2.9 million and $1.9 million, respectively. Future minimum lease payments are as follows (in thousands): 2014 $2,766 2015 2,750 2016 2,706 2017 2,703 2018 2,099 Thereafter 36,755 $49,779 Other Commitments Employment agreements. We are obligated under employment agreements with certain key employees that provide the employee with a base salary, bonus,restricted stock grants and other customary benefits and severance in the event the employee is terminated without cause or due to a “change of control,” asdefined in the agreements. The severance amounts vary with the term of the agreement and can be up to two years’ base salary and an average bonuscalculated as earned in the previous three years or as a percentage of base salary. If such termination occurs within two years of a change of control, as definedin the agreements, or by us without cause, the employee will receive a lump sum payment equal to no less than six months to one year’s annual base salary, alump sum cash payment equal to the average bonus earned in the previous one to three years or calculated as a percentage of base salary, and the accelerationand vesting of all unvested shares and stock-based grants awarded upon the date of change of control in some instances, along with insurance costs, 401(k)matching contributions and certain other benefits total ranging from $1.8 million to $2.2 million, in the aggregate. In the event the employee’s employment terminates due to illness, incapacity or death, the severance amounts vary with the term of the agreement and can beup to two years’ base salary, an amount equal to the prior year bonus on a pro-rata basis to date of termination, reimbursement of expenses incurred prior todate of termination and applicable insurance and other group benefit proceeds, with an expected cost ranging from $0.4 million to $0.7 million peremployee. 73 Defined Contribution Pension Plan. We sponsor a defined contribution pension plan for all eligible employees providing for voluntary contributions byeligible employees and matching contributions made by us. Matching contributions made by us were $0.6 million for both 2013 and 2012, excludingnominal administrative expenses assumed. Silver Slipper Casino Hotel construction. On August 26, 2013, the Silver Slipper Casino entered into an agreement with WHD Silver Slipper, LLC related toconstruction of the six-story, 142-room Silver Slipper Casino Hotel being built between the south side of the casino and the waterfront, with rooms facingviews of the bay. We expect costs related to the construction of the Silver Slipper Casino Hotel to be approximately $17.7 million. We intend to finance$10.0 million of the construction cost with the proceeds of the term loan under the First Lien Credit Agreement as described in Note 8, with the remaining$7.7 million of the construction and related costs funded from available cash. As of December 31, 2013, we had funded cash of $2.5 million in constructionand financing costs for the Silver Slipper Casino Hotel, and we anticipate funding an additional $5.2 million in cash in 2014. Construction of the SilverSlipper Casino Hotel is expected to be completed in late 2014 or early 2015. Other items. We received correspondence from the Internal Revenue Service (IRS) regarding a late filing of an information return, which may result in apenalty. We have requested a waiver of penalties and believe our request is sustainable on its merits. Legal matters. We are party to a number of pending legal proceedings which occurred in the normal course of business. Management does not expect thatthe outcome of such proceedings, either individually or in the aggregate, will have a material effect on our financial position, cash flows or results ofoperations. 12. SHARE-BASED COMPENSATION PLANS On June 1, 2011, our compensation committee approved the issuance of 660,000 shares of restricted stock, then valued at the closing price of our stock($3.88), with no discount. The majority of the shares (600,000) vested on June 1, 2013. The remaining shares have a three year vesting schedule asfollows: 20,001 vested on June 1, 2012, 20,001 vested on June 1, 2013 and 19,998 will vest on June 1, 2014. On January 15, 2013, our compensationcommittee approved the issuance of 50,000 additional shares of restricted stock, then valued at the closing price of our stock ($3.22), with no discount. Theseshares will vest over three years, 16,667 on January 15, 2014, 16,667 on January 15, 2015 and 16,666 on January 15, 2016. On June 5, 2013, ourcompensation committee approved the issuance of 15,000 additional shares of restricted stock, then valued at the closing price of our stock ($2.86), with nodiscount. These shares will vest over three years, 5,000 on June 1, 2014, 5,000 on June 1, 2015 and 5,000 on June 1, 2016. On January 1, 2014, ourcompensation committee approved the issuance of 120,000 additional shares of restricted stock, then valued at the December 31, 2013 closing price and theJanuary 2, 2014 opening price of our stock for an average of ($2.78), with no discount. These shares will vest over two years, 60,000 on January 1, 2015 and60,000 on January 1, 2016. Vesting is contingent upon certain conditions, including continuous service of the individual recipients. Unvested stock grants made in connection with ourincentive compensation plan are viewed as a series of individual awards and the related share-based compensation expense is amortized into compensationexpense on a straight-line basis as services are provided over the vesting period, and reported as a reduction of stockholders’ equity. We grant shares ofrestricted stock, rather than options, to key members of management and the board of directors. 74 We recognized stock compensation expense of $0.6 million and $1.2 million for the twelve months ended December 31, 2013 and December 31, 2012,respectively. Share based compensation expense related to the amortization of the restricted stock issued is included in selling, general and administrativeexpense. At December 31, 2013 and 2012, we had deferred share-based compensation of $0.2 million and $0.6 million, respectively. The following table summarizes our restricted stock activity relative to share-based compensation for 2013 and 2012: 2013 2012 Shares Weightedaveragegrant datevalue (pershare) Shares Weightedaveragegrant datevalue (pershare) Unvested at beginning of year 639,999 $3.88 660,000 $3.88 Issued 65,000 3.14 -- -- Vested (620,001) 3.88 (20,001) 3.88 Forfeited -- -- -- -- Unvested at end of year 84,998 $3.31 639,999 $3.88 In the second quarter of 2013 and 2012, we issued 6,000 shares of unrestricted stock in conjunction with director compensation, which was valued at $0.02million in each year based on the closing price of our stock of $3.19 and $2.95, respectively, with no discount. Since the shares were fully vested at the dateof grant, we recognized share-based compensation expense of $0.02 million in each year related to these grants. As of March 1, 2014, there are 17,000 sharesof common stock available for future issuance under the plan. 13. SEGMENT REPORTING The following tables reflect selected information for our reporting segments for the twelve months ended December 31, 2013 and December 31, 2012,respectively. The casino operation segments include the Silver Slipper Casino’s operation in Bay St. Louis, Mississippi, Rising Star Casino Resort’soperation in Rising Sun, Indiana, the Grand Lodge Casino’s operation in Lake Tahoe, Nevada and Stockman’s Casino operation in Fallon, Nevada. We haveincluded regional information for segment reporting and aggregated casino operations in the same region. The development/management segment includescosts associated with casino development and management projects, including the management agreement with the Pueblo of Pojoaque to advise on theoperations of the Buffalo Thunder in Santa Fe, New Mexico, and until March 30, 2012, GEM. The Corporate segment includes our general and administrativeexpenses. 75 Selected statement of operations data for 2013 and 2012, respectively, is as follows (in thousands): 2013 Casino Operations Nevada Midwest Gulf Coast Development/Management Corporate Consolidated Revenues $22,273 $69,147 $51,629 $1,678 $-- $144,727 Selling, general and administrativeexpense 6,027 17,404 18,217 -- 5,326 46,974 Depreciation and amortization 748 3,032 5,595 -- 13 9,388 Impairment loss (4,000) -- -- -- -- (4,000)Operating income (loss) 334 2,393 3,960 1,612 (5,339) 2,960 Net (loss) income attributable to Company 213 979 2,508 (348) (7,314) (3,962) 2012 Casino Operations Nevada Midwest Gulf Coast Development/Management Corporate Consolidated Revenues $22,313 $86,291 $12,861 $7,295 $-- $128,760 Selling, general and administrativeexpense 6,292 19,398 4,670 136 6,507 37,003 Depreciation and amortization 909 4,163 1,211 592 9 6,884 Operating gain -- -- -- 41,189 -- 41,189 Operating income (loss) 3,851 5,746 663 46,196 (6,818) 49,638 Net income (loss) attributable to Company 2,539 2,158 456 30,108 (7,427) 27,834 Selected balance sheet data as of December 31, 2013 and 2012 is as follows (in thousands): 2013 Casino Operations Nevada Midwest Gulf Coast Development/Management Corporate Consolidated Total assets $13,838 $55,523 $71,662 $59 $13,205 $154,287 Property and equipment, net 7,352 36,427 47,338 -- 51 91,168 Goodwill 1,809 1,647 14,671 -- -- 18,127 Liabilities 2,056 12,718 3,559 -- 58,140 76,473 2012 Casino Operations Nevada Midwest Gulf Coast Development/Management Corporate Consolidated Total assets $16,964 $51,054 $72,911 $96 $21,700 $162,725 Property and equipment, net 6,988 29,632 47,024 -- 29 83,673 Goodwill 5,809 1,647 14,671 -- -- 22,127 Liabilities 2,281 5,817 3,020 -- 70,474 81,592 76 14. SUBSEQUENT EVENTS On January 1, 2014, our compensation committee approved the issuance of 120,000 additional shares of restricted stock, then valued at the December 31,2013 closing price and the January 2, 2014 opening price of our stock for an average of ($2.78), with no discount. These shares will vest over two years,60,000 on January 1, 2015 and 60,000 on January 1, 2016. On February 26, 2014, we entered into an exclusivity agreement with Keeneland Association, Inc. to own, manage, and operate instant racing and, ifauthorized, traditional casino gaming at race tracks in Kentucky, subject to completion of definitive documents for each opportunity. In addition, we andKeeneland Association, Inc. have a letter of intent that provides for an exclusive option to purchase the Thunder Ridge Raceway in Prestonsburg, Kentucky.The purchase will be subject to the completion of definitive documentation and to the approval of the Kentucky Horse Racing Commission, including theapproval to transfer the racing license to a to-be-constructed quarter horse racetrack near Corbin, Kentucky to be owned 75% by us and 25% by KeenelandAssociation, Inc. 77 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None. Item 9A. Controls and Procedures. Evaluation of Disclosure Controls and Procedures — As of December 31, 2013, we completed an evaluation, under the supervision and with theparticipation of our management, including our Chief Executive Officer and Chief Financial Officer of the effectiveness of the design and operation of ourdisclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rule 13a-15(e) and 15d-15(e)). Based upon that evaluation, the ChiefExecutive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective at a reasonable assurance level in timelyalerting them to material information relating to us which is required to be included in our periodic Securities and Exchange Commission filings. Evaluation of Internal Control Over Financial Reporting — Our management is responsible for establishing and maintaining adequate internalcontrol over financial reporting. Our internal control system was designed to provide reasonable assurance to our management and board of directorsregarding the preparation and fair presentation of published financial statements. Management assessed the effectiveness of our internal control over financial reporting (as defined in the Securities Exchange Act of 1934 Rule 13a-15(f) and 15d-15(f)) as of December 31, 2013. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of theTreadway Commission (COSO) in Internal Control-Integrated Framework. Based on our assessment we believe that, as of December 31, 2013, our internalcontrol over financial reporting is effective based on those criteria. There have been no changes during the quarter ended December 31, 2013 that have materially affected, or are reasonably likely to materially affect,our internal control over financial reporting. Item 9B. Other Information. None. 78 PART III Item 10. Directors, Executive Officers and Corporate Governance. The information required by this Item will be set forth under the captions “Proposal No. 1. Election of Directors” and “Section 16(a) BeneficialOwnership Reporting Compliance” in the definitive Proxy Statement for our 2014 Annual Meeting of Stockholders (our “Proxy Statement”) to be filed withthe Securities and Exchange Commission on or before April 30, 2014 and is incorporated herein by this reference. Item 11. Executive Compensation. The information required by this Item will be set forth under the caption “Executive Compensation” in our Proxy Statement and is incorporatedherein by this reference. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The information required by this Item will be set forth under the captions “Proposal No. 1. Election of Directors - Security Ownership of CertainBeneficial Owners and Management” and “Executive Compensation - Equity Compensation Plan Information” in our Proxy Statement and is incorporatedherein by this reference. Item 13. Certain Relationships and Related Transactions, and Director Independence. The information required by this Item will be set forth under the caption “Certain Transactions” in our Proxy Statement and is incorporated hereinby this reference. Item 14. Principal Accounting Fees and Services. The information required by this Item will be set forth under the caption “Independent Registered Public Accounting Firm” in our Proxy Statementand is incorporated herein by this reference. 79 Item 15. Exhibits, Financial Statement Schedules. (a) Financial statements of the Company (including related notes to consolidated financial statements) filed as part of this report are listed below: •Report of Independent Registered Public Accounting Firm; •Consolidated Balance Sheets as of December 31, 2013 and 2012; •Consolidated Statements of Operations for the years ended December 31, 2013 and 2012; •Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2013 and 2012; •Consolidated Statements of Cash Flows for the years ended December 31, 2013 and 2012; •Notes to Consolidated Financial Statements. (b) Exhibits ExhibitNumber Description 2.1 Asset Purchase Agreement by and between Grand Victoria Casino & Resort, L.P. and Full House Resorts, Inc., dated as of September 10, 2010.(Incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commissionon September 13, 2010) 2.2 Equity Purchase Agreement dated March 30, 2012 by and among Full House Resorts, Inc.; Firekeepers Development Authority, anunincorporated instrumentality and political subdivision of the Nottawaseppi Huron Band of Potawatomi Indians; RAM Entertainment, LLCand Robert A. Mathewson. (Incorporated by reference to Exhibit 2.1 to the Registrant’s Quarterly Report on Form 10-Q filed on May 8, 2012) 2.3 Membership Interest Purchase Agreement by and between the Sellers named therein, Full House Resorts, Inc. and Silver Slipper Casino VentureLLC, dated as of March 30, 2012. (Incorporated by reference to Exhibit 2.01 to the Registrant’s Current Report on Form 8-K as filed with theSecurities and Exchange Commission on April 5, 2012) 3.1 Amended and Restated Certificate of Incorporation as amended to date. (Incorporated by reference to Exhibit 3.1 to the Registrant’s QuarterlyReport on Form 10-Q filed on May 9, 2011) 3.2 Amended and Restated Bylaws of Full House Resorts Inc. (Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form8-K as filed with the Securities and Exchange Commission on June 4, 2008) 10.1+ Amended and Restated 2006 Incentive Compensation Plan (Effective as of April 26, 2011). (Incorporated by reference to Exhibit A to theRegistrant’s Definitive Proxy Statement as filed with the Securities and Exchange Commission on March 16, 2011) 10.2+ Form of Restricted Stock Agreement. (Incorporated by reference to Exhibit 10.75 to the Registrant’s Quarterly Report on Form 10-QSB as filedwith the Securities and Exchange Commission on August 14, 2006) 10.3+ Employment Agreement, dated July 17, 2007, between Full House Resorts, Inc. and Andre Hilliou. (Incorporated by reference to Exhibit 10.1 tothe Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on July 20, 2007) 80 10.4+ Employment Agreement, dated July 17, 2007, between Full House Resorts, Inc. and Mark J. Miller. (Incorporated by reference to Exhibit 10.2to the Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on July 20, 2007) 10.5+ Letter Agreement dated November 12, 2012, between Full House Resorts, Inc. and T. Wesley Elam. (Incorporated by reference to Exhibit 10.1to the Registrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on November 15, 2012) 10.6+ Employment Agreement, dated December 7, 2012, between Full House Resorts, Inc. and Deborah J. Pierce. (Incorporated by reference toExhibit 10.6 to the Registrant’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 6, 2013) 10.7 Casino Operations Lease dated June 28, 2011 by and between Hyatt Equities, L.L.C. and Gaming Entertainment (Nevada) LLC. (Incorporatedby reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-k filed with the Securities and Exchange Commission on June 30,2011) 10.8 Asset Purchase and Transition Agreement dated June 28, 2011 by and between HCC Corporation, doing business as Grand Lodge Casino, andGaming Entertainment (Nevada) LLC. (Incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with theSecurities and Exchange Commission on June 30, 2011) 10.9 First Lien Credit Agreement dated as of June 29, 2012, by and among Full House Resorts, Inc. as borrower, the Lenders named therein andCapital One, National Association as Administrative Agent. (Incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report onForm 10-Q as filed with the Securities and Exchange Commission on August 8, 2012) 10.10 Second Lien Credit Agreement dated as of October 1, 2012, by and among Full House Resorts, Inc. as borrower, the Lenders named therein andABC Funding, LLC as Administrative Agent. (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K/A asfiled with the Securities and Exchange Commission on October 5, 2012) 10.11 Lease Agreement with Option to Purchase dated as of November 17, 2004, by and between Cure Land Company, LLC, as landlord, and SilverSlipper Casino Venture LLC, as tenant. (Incorporated by reference to Exhibit 10.11 to the Registrant’s Annual Report on Form 10-K as filedwith the Securities and Exchange Commission on March 6, 2013) 10.12 First Amendment to Lease Agreement with Option to Purchase dated as of March 13, 2009, by and between Cure Land Company, LLC, aslandlord, and Silver Slipper Casino Venture LLC, as tenant. (Incorporated by reference to Exhibit 10.12 to the Registrant’s Annual Report onForm 10-K as filed with the Securities and Exchange Commission on March 6, 2013) 10.13 Second Amendment to Lease Agreement with Option to Purchase dated as of September 26, 2012, by and between Cure Land Company, LLC,as landlord, and Silver Slipper Casino Venture LLC, as tenant. (Incorporated by reference to Exhibit 10.13 to the Registrant’s Annual Reporton Form 10-K as filed with the Securities and Exchange Commission on March 6, 2013) 10.14 Third Amendment to Lease Agreement with Option to Purchase dated as of February 26, 2013, by and between Cure Land Company, LLC, aslandlord, and Silver Slipper Casino Venture LLC, as tenant. (Incorporated by reference to Exhibit 10.14 to the Registrant’s Annual Report onForm 10-K as filed with the Securities and Exchange Commission on March 6, 2013) 81 10.15 First Amendment to Casino Operations Lease dated April 8, 2013 by and between Hyatt Equities, L.L.C. and Gaming Entertainment (Nevada)LLC. (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K as filed with the SEC on April 11, 2013) 10.16 Hotel Lease / Purchase Agreement dated August 15, 2013 by and between Rising Sun/Ohio County First, Inc. and Gaming Entertainment(Indiana) LLC. (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K/A as filed with the Securities andExchange Commission on August 22, 2013) 10.17 First Amendment to First Lien Credit Agreement dated as of August 26, 2013 by and among Full House Resorts, Inc., as borrower, the Lendersnamed therein and Capital One, National Association, as administrative agent for the Lenders, as L/C Issuer and as Swing Line Lender.(Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K as filed with the Securities and ExchangeCommission on August 30, 2013) 10.18 Amendment No. 1 to Second Lien Credit Agreement dated as of August 26, 2013 by and among Full House Resorts, Inc., as borrower, theLenders named therein and ABC Funding, LLC, as administrative agent for the Lenders. (Incorporated by reference to Exhibit 10.2 to theRegistrant’s Current Report on Form 8-K as filed with the Securities and Exchange Commission on August 30, 2013) 10.19 Standard Form of Agreement Between Owner and Design-Builder dated August 26, 2013 between Silver Slipper Casino Venture, LLC andWHD Silver Slipper, LLC. (Incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K as filed with the Securitiesand Exchange Commission on August 30, 2013) 21.1 List of Subsidiaries of Full House Resorts, Inc. (Incorporated by reference to Exhibit 21.1 to the Registrant’s Annual Report on Form 10-K asfiled with the Securities and Exchange Commission on March 6, 2013) 23.1 Consent of Piercy Bowler Taylor & Kern, independent registered public accounting firm 31.1* Certification of principal executive officer pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Actof 2002 31.2* Certification of principal financial officer pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of2002 * 32.1* Certification of principal executive officer pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Actof 2002 * 32.2* Certification of principal financial officer pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of2002 * 101.INS* XBRL Instance 101.SCH* XBRL Taxonomy Extension Schema 101.CAL* XBRL Taxonomy Extension Calculation 101.DEF* XBRL Taxonomy Extension Definition 82 101.LAB* XBRL Taxonomy Extension Labels 101.PRE* XBRL Taxonomy Extension Presentation *Filed herewith. +Executive compensation plan or arrangement. XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933,as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is otherwise not subject to liability underthese sections.83 SIGNATURES In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has caused this Report to be signed on its behalf by theundersigned thereunto duly authorized. FULL HOUSE RESORTS, INC. Date: March 10, 2014By:/s/ ANDRE M. HILLIOU Andre M. Hilliou, Chief Executive Officer In accordance with the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and inthe capacities and on the dates indicated. Name and Capacity Date /s/ ANDRE M. HILLIOU March 10, 2014Andre M. Hilliou, Chief Executive Officer and Chairman of the Board (Principal Executive Officer) /s/ DEBORAH J. PIERCE March 10, 2014Deborah J. Pierce, Chief Financial Officer (Principal Financial Officer) /s/ KENNETH R. ADAMS March 10, 2014Ken Adams, Director /s/ CARL G. BRAUNLICH March 10, 2014Carl G. Braunlich, Director /s/ KATHLEEN MARSHALL March 10, 2014Kathleen Marshall, Director /s/ MARK J. MILLER March 10, 2014Mark J. Miller, Director and Chief Operating Officer 84EXHIBIT 23 CONSENT OF PIERCY BOWLER TAYLOR & KERN CERTIFIED PUBLIC ACCOUNTANTS Board of DirectorsFull House Resorts, Inc.Las Vegas, Nevada We consent to the incorporation by reference in the registration statement of Full House Resorts, Inc. on Form S-8 (File No. 333-29299) of our report datedMarch 10, 2014, included in this Annual Report on Form 10-K, on the consolidated financial statements of Full House Resorts, Inc. and Subsidiaries as of andfor the years ended December 31, 2013 and 2012. /s/ Piercy Bowler Taylor & Kern Piercy Bowler Taylor & Kern,Certified Public AccountantsLas Vegas, Nevada March 10, 2014 85 Exhibit 31.1CERTIFICATION I, Andre M. Hilliou, certify that: 1.I have reviewed this annual report on Form 10-K of Full House 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 thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respectsthe financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; 4.The small business issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)) for the small business issuer and have: a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is madeknown to us by others within those entities, particularly during the period in which this report is being prepared; b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; c)Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusionsabout the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on suchevaluation; and d)Disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the smallbusiness issuer’s most recent quarter (the small business issuer’s fourth quarter in the case of an annual report) that has materially affected,or is reasonably likely to materially effect the small business issuer’s internal control over financial reporting; and 5.The small business issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financialreporting, to the small business issuer’s auditors and the audit committee of the small business issuer’s board of directors (or persons performingthe equivalent function): a)All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which arereasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and b)Any fraud, whether or not material, that involves management of other employees who have a significant role in the small business issuer’sinternal controls over financial reporting. Dated: March 10, 2014By:/s/ ANDRE M. HILLIOU Andre M. Hilliou Chief Executive Officer 86Exhibit 31.2CERTIFICATION I, Deborah J. Pierce, certify that: 1.I have reviewed this annual report on Form 10-K of Full House 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 thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respectsthe financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; 4.The small business issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)) for the small business issuer and have: a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is madeknown to us by others within those entities, particularly during the period in which this report is being prepared; b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; c)Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusionsabout the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on suchevaluation; and d)Disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the smallbusiness issuer’s most recent quarter (the small business issuer’s fourth quarter in the case of an annual report) that has materially affected,or is reasonably likely to materially effect the small business issuer’s internal control over financial reporting; and 5.The small business issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financialreporting, to the small business issuer’s auditors and the audit committee of the small business issuer’s board of directors (or persons performingthe equivalent function): a)All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which arereasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and b)Any fraud, whether or not material, that involves management of other employees who have a significant role in the small business issuer’sinternal controls over financial reporting. Dated: March 10, 2014By:/s/ DEBORAH J. PIERCE Deborah J. Pierce Chief Financial Officer 87Exhibit 32.1 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICERPURSUANT TO 18 U.S.C. SECTION 1350 In connection with the Annual Report on Form 10-K of Full House Resorts, Inc. for the year ended December 31, 2013 as filed with the Securities andExchange Commission (the “Report’), I, Andre M. Hilliou, Chief Executive Officer of Full House Resorts, Inc., hereby certify pursuant to 18 U.S.C. Section1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Full HouseResorts, Inc. Dated: March 10, 2014By:/s/ ANDRE M. HILLIOU Andre M. Hilliou Chief Executive Officer 88Exhibit 32.2 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICERPURSUANT TO 18 U.S.C. SECTION 1350 In connection with the Annual Report on Form 10-K of Full House Resorts, Inc. for the year ended December 31, 2013 as filed with the Securities andExchange Commission (the “Report”) I, Deborah J. Pierce, Chief Financial Officer of Full House Resorts, Inc., hereby certify pursuant to 18 U.S.C. Section1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Full HouseResorts, Inc. Dated: March 10, 2014By:/s/ DEBORAH J. PIERCE Deborah J. Pierce Chief Financial Officer 89

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