ISLE OF CAPRI CASINOS INC (Form: 10-K, Received: 06/25/2009 06:01:07)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K


(Mark One)
ý		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended April 26, 2009
OR
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission File Number 0-20538

ISLE OF CAPRI CASINOS, INC.
(Exact name of registrant as specified in its charter)


Delaware (State or other jurisdiction of incorporation or organization)		41-1659606 (I.R.S. Employer Identification Number)
600 Emerson Road, Suite 300, St. Louis, Missouri (Address of principal executive offices)		63141 (Zip Code)

Registrant's telephone number, including area code: (314) 813-9200

Securities Registered Pursuant to Section 12(b) of the Act: None
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock, $.01 Par Value Per Share
(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 ý

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No ý

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

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

Indicate by check mark whether the registrant is a large accelerated filer, accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.


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

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

The aggregate market value of the voting and non-voting stock held by non-affiliates ¹ of the Company is $57,119,811, based on the last reported sale price of $3.57 per share on October 24, 2008 on the NASDAQ Stock Market; multiplied by 15,999,947 shares of Common Stock outstanding and held by non-affiliates of the Company on such date.

As of June 22, 2009, the Company had a total of 31,771,153 shares of Common Stock outstanding (which excludes 4,340,436 shares held by us in treasury).

Part III incorporates information by reference to the Registrant's definitive proxy statement to be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year.

(1): Affiliates for the purpose of this item refer to the directors, named executive officers and/or persons owning 10% or more of the Company's common stock, both of record and beneficially; however, this determination does not constitute an admission of affiliate status for any of the individual stockholders.

Table of Contents

ISLE OF CAPRI CASINOS, INC.

FORM 10-K

INDEX

		PAGE

PART I		2
ITEM 1.	BUSINESS	2
ITEM 1A.	RISK FACTORS	11
ITEM 1B.	UNRESOLVED STAFF COMMENTS	18
ITEM 2.	PROPERTIES	18
ITEM 3.	LEGAL PROCEEDINGS	22
ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	22
PART II		23
ITEM 5.	MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	23
ITEM 6.	SELECTED FINANCIAL DATA	26
ITEM 7.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	28
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	43
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	45
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	89
ITEM 9A.	CONTROLS AND PROCEDURES	89
ITEM 9B.	OTHER INFORMATION	89
PART III		89
ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	89
ITEM 11.	EXECUTIVE COMPENSATION	90
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	90
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, DIRECTOR INCEPENCENCE	90
ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	90
PART IV		90
ITEM 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES	90
SIGNATURES		91

Table of Contents

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report contains statements that we believe are, or may be considered to be, "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in this Annual Report regarding the prospects of our industry or our prospects, plans, financial position or business strategy, may constitute forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking words such as "may," "will," "expect," "intend," "estimate," "foresee," "project," "anticipate," "believe," "plans," "forecasts," "continue" or "could" or the negatives of these terms or variations of them or similar terms. Furthermore, such forward-looking statements may be included in various filings that we make with the SEC or press releases or oral statements made by or with the approval of one of our authorized executive officers. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot assure you that these expectations will prove to be correct. These forward-looking statements are subject to certain known and unknown risks and uncertainties, as well as assumptions that could cause actual results to differ materially from those reflected in these forward-looking statements. Factors that might cause actual results to differ include, but are not limited to, those discussed in the section entitled "Risk Factors" beginning on page 11 of this report. Readers are cautioned not to place undue reliance on any forward-looking statements contained herein, which reflect management's opinions only as of the date hereof. Except as required by law, we undertake no obligation to revise or publicly release the results of any revision to any forward-looking statements. You are advised, however, to consult any additional disclosures we make in our reports to the SEC. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained in this Annual Report.

Table of Contents

PART I

ITEM 1. BUSINESS

Overview

We are a leading developer, owner and operator of branded gaming facilities and related lodging and entertainment facilities in regional markets in the United States and internationally. We currently operate 14 casinos in the United States, located in Mississippi, Louisiana, Missouri, Iowa, Colorado and Florida. Internationally we operate 3 casinos in Dudley and Wolverhampton, England and Freeport, Grand Bahamas. We also operate a harness racing track at our casino in Florida.

Our fiscal year ends each year on the last Sunday in April.

During fiscal 2009, we made several key accomplishments that significantly impacted our operational and financial results. We:

•: streamlined operations resulting in decreased on-going property operating costs of approximately $45 million compared to FY 2008, and decreased on-going corporate and development costs by an additional $7.3 million compared to FY 2008;
•: stabilized operating results despite a $50 million net revenue decline significantly caused by economic conditions;
•: completed a $142.7 million cash tender offer for the Company's debt and settled the remaining insurance claims related to Hurricane Katrina for $95 million;
•: focused on improved results through domestic operations by exiting the Coventry, UK operation and announcing plans to exit the Grand Bahama gaming market.

During fiscal 2009 we began to implement the strategic plan designed in fiscal 2008 to improve our free cash flow. This plan includes a distinct emphasis on operational excellence, including the core aspects of our business: creating an experience that is clean, safe, friendly and fun. This approach has been shown through extensive customer research to embody the attributes of a gaming entertainment experience most important to customers in choosing which casino to visit. Additionally, we have outlined our plan for developing two distinct brands within our business, Isle and Lady Luck, and reinvesting in our core assets.

The Isle brand will be introduced at our properties which have a regional draw and tend to be in larger markets where we have expansion potential demonstrated by either the size of the market or excess land that we control. The Isle brand will offer expanded amenities, usually offering hotel rooms, expanded food and beverage offerings and conference and convention capabilities.

The Lady Luck casinos will be focused on a local customer base, typically in smaller markets with less growth potential. The goal of the Lady Luck brand will be to offer the best entertainment option for the respective market featuring casual dining, and popular local entertainment in a comfortable setting. During fiscal 2009, we neared completion of our first two Lady Luck-branded properties.

The operating focus of both brands is to deliver superior guest experiences. We are implementing several operating initiatives to improve on these attributes and made significant progress in fiscal 2009 acccording to our internal measurements. To this end we have implemented a customer courtesy program whereby we will measure our progress against three primary courtesy behaviors and incentivise our employees on improvements. In addition our maintenance, capital, and operating plans have been designed to improve on areas where customers have told us we are lacking in these key areas of clean, safe, friendly and fun. Finally we have designed our incentive plans to align employee incentives with the key initiatives and shareholders' needs.

Table of Contents

Because of the impact of the economic uncertainty in our markets, we decided in fiscal year 2009, to curtail the majority of our brand conversions and other significant capital projects.

Currently, we have prioritized approximately $60 million in capital projects that we expect to deploy over the next 24 to 36 months, primarily focused on hotel room renovations to increase our overnight business. Importantly, we emphasize that we will not begin these expenditures until we have more clarity regarding the economy and our own financial position.

Table of Contents

Casino Properties

The following is an overview of our existing casino properties as of the end of fiscal year 2009:

Property		Date Acquired or Opened

Louisiana
	Lake Charles	July 1995	1,856	71	493	2,335
Mississippi
	Lula	March 2000	1,309	17	484	1,583
	Biloxi	August 1992	1,514	40	710	1,600
	Natchez	March 2000	622	10	141	908
Missouri
	Kansas City	June 2000	1,251	20	—	1,807
	Boonville	December 2001	1,004	21	140	1,101
	Caruthersville	June 2007	608	23	—	1,000
Iowa
	Bettendorf	March 2000	1,016	31	514	2,063
	Rhythm City-Davenport	October 2000	977	16	—	968
	Marquette	March 2000	603	13	25	475
	Waterloo	July 2007	1,092	35	195	1,487
Colorado
	Black Hawk	December 1998	1,369	18	238	1,100
	Colorado Central Station—Black Hawk	April 2003	652	16	164	1,200
Florida
	Pompano Park	July 1995/April 2007	1,500	38	—	4,663
International Properties
	Our Lucaya	December 2003	253	25	—	—
	Blue Chip-Dudley (66 ² / 3 % owned)	November 2003	20	9	—	40
	Blue Chip-Wolverhampton (66 ² / 3 % owned)	April 2004	20	11	—	25

			15,666	414	3,104	22,355

Louisiana

Lake Charles

Lake Charles, which commenced operations in July 1995, is located on a 19-acre site along Interstate 10, the main thoroughfare connecting Houston, Texas to Lake Charles, Louisiana. The property consists of two dockside casinos offering 1,856 slot machines, 46 table games, 25 poker tables, a 252 room deluxe hotel, a 241 room inn hotel, a 105,000 square foot land-based pavilion and entertainment center, and 2,335 parking spaces, including approximately 1,400 spaces in an attached parking garage. The pavilion and entertainment center offer customers a wide variety of non-gaming amenities, including a 97-seat Farraddays' restaurant, a 360-seat Calypso's buffet, a 165-seat Tradewinds Marketplace, a 64-seat Lucky Wins oriental restaurant and Caribbean Cove, which features free live entertainment and can accommodate 180 customers. The pavilion also has a 14,750 square foot entertainment center comprised of a 1,100-seat special events center designed for concerts, live boxing, televised pay-per-view events, banquets and other events, meeting facilities and administrative offices.

The Lake Charles market currently consists of two dockside gaming facilities (which include our property and Pinnacle Entertainment's one-level facility), a Native American casino and a pari-mutuel facility/racino (operated by Boyd Gaming). Pinnacle Entertainment has announced plans to developing their second casino (utilizing a license acquired from Harrah's Entertainment after Hurricane Rita)

Table of Contents

which would be adjacent to their current facility. The expected completion date is unknown at this time due to delays in financing and construction. The current number of slot machines in the market exceeds 8,200 machines and table games exceed 200 tables. In calendar year 2008, the two gaming facilities (Isle and Pinnacle) and one racino (Boyd), in the aggregate, generated gaming revenues of approximately $651.2 million. Revenues for the Native American property are not published. Lake Charles is the closest gaming market to the Houston metropolitan area, which has a population of approximately 5.5 million and is located approximately 140 miles west of Lake Charles. We believe that the Isle-Lake Charles attracts customers primarily from southeast Texas, including Houston, Beaumont, Galveston, Orange and Port Arthur and from local area residents. Approximately 520,000 and 1.6 million people reside within 50 and 100 miles, respectively, of the Isle-Lake Charles.

Mississippi

Lula

Lula, which we acquired in March 2000, is strategically located off of Highway 49, the only road crossing the Mississippi River between Mississippi and Arkansas for more than 50 miles in either direction. The property consists of two dockside casinos containing 1,309 slot machines and 17 table games, two on-site hotels with a total of 484 rooms, a land-based pavilion and entertainment center, 1,583 parking spaces, and a 28-space RV Park. The pavilion and entertainment center offer a wide variety of non-gaming amenities, including a 145-seat Farraddays' restaurant, a 300-seat Calypso's buffet and a 44-seat Tradewinds Marketplace, and a gift shop. All 171 rooms of our Coral Reef Hotel underwent complete renovation during the past calendar year, re-opening in December 2008.

Our Lula property is the only gaming facility in the Coahoma County, Mississippi market and generated gaming revenues of approximately $69.9 million in calendar year 2008. Lula draws a significant amount of business from the Little Rock, Arkansas metropolitan area, which has a population of approximately 675,000 and is located approximately 120 miles west of the property. Coahoma County is also located approximately 60 miles southwest of Memphis, Tennessee, which is primarily served by 9 casinos in Tunica County, Mississippi. In November 2008, Arkansas voters approved a constitutional amendment that would allow the establishment of a statewide lottery. Although lottery sales have not yet been initiated, a Lottery Commission has been established and progress is being made toward that end. Approximately 1,007,000 people reside within the property's primary target market. Lula also competes with Native American casinos in Oklahoma and a racino in West Memphis, Arkansas.

Biloxi

Biloxi, which commenced operations in August 1992, is located on a 17-acre site at the eastern end of a cluster of facilities formerly known as "Casino Row" in Biloxi, Mississippi, and is the first property reached by visitors coming from Alabama, Florida and Georgia via Highway 90.

On August 29, 2005 the property was significantly damaged by Hurricane Katrina. The property was closed on August 28, 2005 and remained closed to the public until December 26, 2005. The Highway 90 bridge spanning Biloxi Bay, located immediately to the east of the property, was also destroyed by the hurricane. The bridge was replaced with a new, larger bridge which partially opened in November 2007 and fully opened in April 2008.

In October 2005, the Mississippi legislature amended its gaming laws to allow casinos to operate land-based facilities within 800 feet of the mean high water line. Our Biloxi property is a land-based casino offering approximately 1,514 gaming positions, a 710-room hotel including 200 whirlpool suites, a 120-seat banquet room called "Paradise Room," 138-seat fine-dining restaurant called Farraddays, a 200-seat Calypso's buffet, a Tradewinds Express, a multi-story feature bar, a full service Starbucks and 1,600 parking spaces.

Table of Contents

The Mississippi Gulf Coast market (which includes Biloxi, Gulfport and Bay St. Louis) is one of the largest gaming markets in the United States and consists of 11 dockside gaming facilities which, in the aggregate, generated gaming revenues of approximately $1.3 billion during calendar year 2008.

Natchez

Natchez, which we acquired in March 2000, is located off of Highways 84 and 61 in western Mississippi. The property consists of a dockside casino offering 622 slot machines and 10 table games, a 141-room off-site hotel located approximately one mile from the casino, a 150-seat Calypso's buffet and 908 parking spaces.

Our property is currently the only gaming facility in the Natchez market and generated total revenues of approximately $40.8 million in calendar year 2008. We believe that the Isle-Natchez attracts customers primarily from among the 117,000 people residing within 50 miles of the Isle-Natchez. The Grand Soleil Casino Company began site construction for its river boat casino and land-based hotel during early 2008. Construction has been halted and restarted several times due to legal and financial issues. Future status of the facility is unknown at this time.

Missouri

Kansas City

Our Kansas City property, which we acquired in June 2000, is the closest gaming facility to downtown Kansas City and consists of a dockside casino offering 1,251 slot machines and 20 table games, a 260-seat Calypso's buffet, a 45-seat Tradewinds Marketplace and 1,807 parking spaces.

The Kansas City market consists of four dockside gaming facilities and a tribal casino that, in the aggregate, generated gaming revenues of approximately $739.1 million in calendar year 2008. The other operators of the dockside gaming facilities in this market are Ameristar Casinos, Penn National Gaming, Harrah's Entertainment and the tribal casino, owned by the Wyandotte Tribe. We believe that our Kansas City casino attracts customers primarily from the Kansas City metropolitan area, which has approximately 1.9 million residents.

In the spring of 2007, the Kansas legislature authorized casinos in several locations throughout the State of Kansas. To date, no casino construction has commenced in the Kansas City area. The Kansas Lottery is currently reviewing applications for potential casino locations which could compete with the Kansas City market.

In the fourth quarter of fiscal year 2008, the State of Missouri, began reconstruction of the Paseo Bridge and interchanges adjacent to our property. The bridge and interchange construction is expected to continue into our fiscal year 2011. Access to our property will be hampered due to lane restrictions related to bridge construction and temporary entrance/exit ramp designs until the construction is completed.

Boonville

Our Boonville property, which opened on December 6, 2001, is located 3 miles off Interstate 70, approximately halfway between Kansas City and St. Louis. The property consists of a single level dockside casino offering 1004 slot machines, 21 table games, a 140-room hotel that opened in May 2006, a 32,400 square foot pavilion and entertainment center and 1,101 parking spaces. The pavilion and entertainment center offers customers a wide variety of non-gaming amenities, including an 83-seat Farraddays' restaurant, a 218-seat Calypso's buffet, a 24-seat Tradewinds Marketplace, an 800 seat event center, and a historic display area. We are the only gaming facility between Kansas City, Missouri, and St. Louis, Missouri and generated gaming revenues of approximately $80.3 million in calendar year

Table of Contents

2008. We believe that our Boonville casino attracts customers primarily from the mid-Missouri region including the Columbia and Jefferson City areas.

Caruthersville

Our Caruthersville property was acquired on June 11, 2007 and is a riverboat casino located along the Mississippi River in Southeast Missouri. In June 2008, the casino was re-branded as a Lady Luck casino. The dockside casino offers 608 slot machines, 15 table games and 8 poker games. As part of the re-brand, the property renovated its 40,000 square foot pavilion, which includes a 130-seat Lone Wolf restaurant and bar and lounge and a 270-seat Otis & Henry's restaurant. Renovations to the riverboat including the casino floor have begun with completion scheduled for summer of 2009. The property also operates a 10,000 square foot exposition center with seating for up to 1,100 patrons and has 1,000 parking spaces. Our Caruthersville facility is the only casino located in Southeast Missouri and generated gaming revenues of approximately $31.9 million in calendar year 2008.

Iowa

Bettendorf

The Bettendorf property, which we acquired in March 2000, is located off of Interstate 74, an interstate highway serving the Quad Cities metropolitan area. The property consists of a dockside casino offering 1,016 slot machines and 31 table games, a 514-hotel rooms, 40,000 square feet of flexible convention/banquet space, a 102-seat Farraddays' restaurant, a 272-seat Calypso's buffet, a 26-seat Tradewinds Marketplace and 2,063 parking spaces. We have entered into agreements with the City of Bettendorf, Iowa under which we manage and provide financial and operating support for the QC Waterfront Convention Center that is adjacent to our hotel rooms. The QC Waterfront Convention Center opened in January 2009.

The Quad Cities metropolitan area, consisting of Bettendorf and Davenport, Iowa and Moline and Rock Island, Illinois, currently has three gaming operations—our two gaming facilities in Bettendorf and in Davenport, and one operator, which opened a larger land-based facility, including a hotel, in December 2008. The three operations in the Quad Cities generated, in the aggregate, gaming revenues of approximately $186.5 million in calendar year 2008. Our operations in the Quad Cities also compete with other gaming operations in Illinois and Iowa.

Davenport

Our Davenport property, which we acquired in October 2000, is located at the intersection of River Drive and Highway 61, a state highway serving the Quad Cities metropolitan area. The property consists of a dockside gaming facility offering 977 slot machines and 16 table games, a 228-seat Hit Parade buffet, a Grab-n-Go food outlet and 968 parking spaces.

Marquette

Our Marquette property, which we acquired in March 2000, is located in Marquette, Iowa, approximately 60 miles north of Dubuque, Iowa. The property consists of a dockside casino offering 603 slot machines and 13 table games, a 25-room hotel, a marina and 475 parking spaces. During fiscal 2009, we began rebranding of the property as a Lady Luck casino. Upon completion, the facility will include a newly themed 158-seat buffet restaurant, an Otis and Henry's Express food outlet and a Lone Wolf restaurant and bar. We expect the rebranding to be completed during calendar 2009.

We are the only gaming facility in the Marquette, Iowa market and generated gaming revenues of approximately $32.8 million in calendar year 2008. We believe most of our Marquette customers are

Table of Contents

from northeast Iowa and Wisconsin and we compete for those customers with other gaming facilities in Iowa and Wisconsin.

Waterloo

Our Waterloo property, which opened on June 30, 2007, is located adjacent to Highway 218 and US 20 in Waterloo, Iowa. The property consists of a single level casino offering 1,092 slot machines, 29 table games and 6 poker tables. The property also offers a wide variety of non-gaming amenities, including a 105-seat Farraddays' restaurant, a 208-seat Isle buffet, a 36-seat Tradewinds marketplace, Club Capri Lounge, Fling feature bar, 5,000 square feet of meeting space, over 1,487 parking spaces and a 195-room hotel, which includes 27 suites, as well as an indoor pool and hot tub area.

We are the only gaming facility in the Waterloo, Iowa market. We compete with other casinos in eastern Iowa. We generated gaming revenues of approximately $77.4 million in calendar year 2008.

Colorado

Black Hawk

Our Black Hawk property, which operates as an Isle branded casino, commenced operations in December 1998, is located on an approximately 10-acre site and is one of the first gaming facilities reached by customers arriving from Denver via Highway 119, the main thoroughfare connecting Denver to Black Hawk. The property includes a land-based casino with 1,369 slot machines and 18 table games, a 238-room hotel and 1,100 parking spaces in an attached parking garage. The Isle-Black Hawk also offers customers a wide variety of non-gaming amenities, including a 114-seat Farraddays' restaurant, a 271-seat Calypso's buffet and a 36-seat Tradewinds Marketplace.

The Colorado Central Station-Black Hawk

The Colorado Central Station-Black Hawk, which we acquired in April 2003, is located across the intersection of Main Street and Mill Street from the Isle-Black Hawk. The property consists of a land-based casino with 652 slot machines, 6 standard table games, a 10 table poker room, a 164-room hotel that opened in December 2005 and 1,200 parking spaces in our parking structure connecting Isle-Black Hawk and Colorado Central Station-Black Hawk. The property also offers guests dining in its 94 seat Station Café that was opened in early 2007 as well as a 6 seat Quizno's sandwich franchise that is located in the lower level of the facility. All three sites are connected via sky bridges.

When casinos having multiple gaming licenses in the same building are combined, the Black Hawk/Central City market consists of 22 gaming facilities (nine of which have more than 600 slot machines), which in aggregate, generated gaming revenues of approximately $575.8 million in calendar year 2008. Black Hawk is the closest gaming market to the Denver, Colorado metropolitan area, which has a population of approximately 2.7 million and is located approximately 40 miles east of Black Hawk. We believe that the Black Hawk and Colorado Central Station-Black Hawk attract customers primarily from Denver, Boulder, Fort Collins and Golden, Colorado.

Changes to Colorado Gaming Laws —During fiscal year 2009, the voters of Colorado approved changes to gaming law, effective during July, 2009, which extend the hours of operations, expand the types of allowable table games and increase the betting limits from $5 to $100 per bet.

Florida

Pompano

In 1995, we acquired Pompano Park, a harness racing track located in Pompano Beach, Florida. Pompano Park is located off of Interstate 95 and the Florida Turnpike on a 223-acre owned site, near

Table of Contents

Fort Lauderdale, midway between Miami and West Palm Beach. Pompano Park is the only racetrack licensed to conduct harness racing in Florida.

On April 14, 2007, following changes to Florida law, we opened a gaming facility including 1,500 slot machines, two restaurants and a feature bar at Pompano Park adjacent to the existing grandstand at a cost of approximately $190 million. Two additional restaurants and a new poker room with 38 tables on the second floor of the facility opened in May 2007. One of the restaurants was closed in October 2008 allowing for a greater profit margin of the remaining second floor restaurant. The Isle-Pompano draws most of its customers from the approximately 2.6 million people residing within a 25-mile radius of the facility and competes with two other racinos and two tribal gaming facilities in the market.

During May 2009, the Florida legislature passed legislation which, if enacted, would lower our state gaming tax rate from 50% to 35%. This legislation is contingent upon a number of factors, including but not limited to, negotiation of a gaming compact between the State of Florida and the Seminoles, approval of the compact by the Bureau of Indian Affairs and the Florida legislature. No assurance can be given that the current legislation will become effective.

Grand Bahama Island

Our Lucaya

Our Lucaya is a 19,000 square-foot casino located at the Our Lucaya Resort in Freeport, Grand Bahama and offers 253 slot machines, 25 table games and a 110-seat restaurant. In May 2009, we entered into an agreement to continue operating the Isle of Capri Casino in Freeport, Grand Bahama during a transition period, following which we intend to exit the operation. Under the agreement, we will also continue to assist the Government of the Bahamas and the owner of the Our Lucaya Resort, Hutchison Lucaya Ltd, in their efforts to identify and select a new operator for the casino. The term of the transition period ends on August 31, 2009, although under certain circumstances, it may be extended for up to two additional months in order to allow sufficient time for a new operator to receive necessary approvals.

United Kingdom

Blue Chip Casino Operations —We currently operate the Blue Chip casino operations under a plan of administration which is similar to bankruptcy in the U.S. While we continue to operate these casinos, we are actively seeking purchasers for all Blue Chip assets under our current plan of administration and currently expect to complete the sale of all Blue Chip assets during fiscal year 2010.

Blue Chip-Dudley

Our pub-style casino in Dudley, England is one of 17 gaming facilities in the West Midlands market. Dudley is close to the Birmingham metropolitan area, which has a population of approximately 5.3 million. The casino consists of 20 slot machines, 9 table games, and 30 electronic touch bet table terminals. We own two-thirds of the Blue Chip-Dudley.

Blue Chip-Wolverhampton

Our pub-style casino in Wolverhampton, England is also in the West Midlands market. Wolverhampton is close to the Birmingham metropolitan area. The casino consists of 20 slot machines, 11 table games, and 34 electronic touch bet table terminals. We own two-thirds of the Blue Chip-Wolverhampton.

Coventry —We operated a casino in the Coventry Convention Center from July 2007 through April of 2009, when we terminated our lease and sold the assets of our operations.

Table of Contents

Marketing

Our marketing programs are designed to promote our overall business strategy of providing customers with a safe, clean, friendly and fun gaming experience at each of our properties. We have developed an extensive proprietary database of customers that allows us to create effective targeted marketing and promotional programs that are designed to reward customer loyalty, attract new customers to our properties and maintain high recognition of our brands.

Specifically, as we implement our strategic plan, our marketing programs and initiatives are generally focused on the following areas:

•: Customer Research: Overall, our operating and marketing strategies have been developed and are being implemented to meet the needs and desires of our casino customers in each of our locations. In order to assess these needs and desires, we engage in significant customer research in each of our markets. Upon receipt of these surveys, we assess the attitudes of our customers and the customers of our competitive properties towards the most important attributes of their experience in a regional and/or local gaming facility. We use the extensive information gathered from these research initiatives to make marketing, operating and development decisions that, we believe, will optimize the position of our properties relative to our competition.
•: Branding Initiatives: As previously discussed, we have designed a strategic plan that will consolidate our property portfolio from four brands into two brands. We believe that this approach will allow us to most effectively align and promote our properties based upon customer needs and desires, will further allow us to more efficiently market our properties on a consolidated basis, and will streamline the costs associated with marketing our portfolio.
•: Database Marketing: We are streamlining our database marketing initiatives across the Company in order to focus our marketing efforts on profitable customers who have a proven willingness to regularly visit our properties. Specifically, our focus is on eliminating from our database customers who have historically been included in significant marketing efforts but have proven costly either as a result of excessive marketing expenditures on the part of the Company, or because these customers have become relatively dormant in terms of customer activity yet have remained active in our database.
•: Segmentation: We have compiled an extensive database of customer information over time. Among our most important marketing initiatives, we are currently introducing database segmentation to our properties in order to adjust investment rates to a level at which we expect to meet a reasonable level of customer profit contribution.
•: Retail Development: We believe that we must more effectively attract new, non-database customers to our properties in order to increase profitability and free cash flow. These customers are generally less expensive to attract and retain and, therefore, currently represent a significant opportunity for our operations.

Employees

As of April 26, 2009, we employed approximately 8,400 people. We have a collective bargaining agreement with UNITE HERE covering approximately 430 employees at our Pompano property which expires in May 2012. We believe that our relationship with our employees is satisfactory.

Governmental Regulations

The gaming and racing industries are highly regulated, and we must maintain our licenses and pay gaming taxes to continue our operations. Each of our facilities is subject to extensive regulation under the laws, rules and regulations of the jurisdiction where it is located. These laws, rules and regulations

Table of Contents

generally relate to the responsibility, financial stability and character of the owners, managers and persons with financial interests in the gaming operations. Violations of laws in one jurisdiction could result in disciplinary action in other jurisdictions. A more detailed description of the regulations to which we are subject is contained in Exhibit 99.1 to this Annual Report.

Our businesses are subject to various federal, state and local laws and regulations in addition to gaming regulations. These laws and regulations include, but are not limited to, restrictions and conditions concerning alcoholic beverages, food service, smoking, environmental matters, employees and employment practices, currency transactions, taxation, zoning and building codes, and marketing and advertising. Such laws and regulations could change or could be interpreted differently in the future, or new laws and regulations could be enacted. Material changes, new laws or regulations, or material differences interpretations by courts or governmental authorities could adversely affect our operating results.

Available Information

For more information about us, visit our web site at www.isleofcapricasinos.com. Our electronic filings with the U.S. Securities and Exchange Commission (including all annual reports on Form 10-K, quarter reports on Form 10-Q, and current reports on Form 8-K, and any amendments to these reports), including the exhibits, are available free of charge through our web site as soon as reasonably practicable after we electronically file them with or furnish them to the U.S. Securities and Exchange Commission.

ITEM 1A. RISK FACTORS

We face significant competition from other gaming operations, including Native American gaming facilities that could have a material adverse effect on our future operations.

The gaming industry is intensely competitive, and we face a high degree of competition in the markets in which we operate. We have numerous competitors, including land-based casinos, dockside casinos, riverboat casinos, casinos located on Native American-owned lands and at racing and pari-mutuel operations and video lottery and video poker machines not located in casinos. Some of our competitors may have better name recognition, marketing and financial resources than we do; competitors with more financial resources may therefore be able to improve the quality of, or expand, their gaming facilities in a way that we may be unable to match.

Legalized gaming is currently permitted in various forms throughout the United States. Certain states have recently legalized, and other states are currently considering legalizing gaming. Our existing gaming facilities compete directly with other gaming properties in Louisiana, Mississippi, Missouri, Iowa, Florida and Colorado. Our existing casinos attract a significant number of their customers from Houston, Texas; Mobile, Alabama; Kansas City, Kansas; Southern Florida; Little Rock, Arkansas and Denver, Colorado. Legalization of gaming in jurisdictions closer to these geographic markets than the jurisdictions in which our facilities are located would have a material adverse effect on our operating results. Other jurisdictions, including states in close proximity to jurisdictions where we currently have operations, have considered and may consider legalizing casino gaming and other forms of competition. In addition, there is no limit on the number of gaming licenses that may be granted in several of the markets in which we operate. As a result, new gaming licenses could be awarded to facilities in these markets, which could allow new gaming operators to enter our markets that could have an adverse effect on our operating results.

We also compete with other forms of legalized gaming and entertainment such as online computer gambling, bingo, pull tab games, card parlors, sports books, "cruise-to-nowhere" operations, pari-mutuel or telephonic betting on horse racing and dog racing, state-sponsored lotteries, jai-alai, and, in the

Table of Contents

future, may compete with gaming at other venues. In addition, we compete more generally with other forms of entertainment for the discretionary spending of our customers.

Our continued success depends upon drawing customers from each of these geographic markets. We expect competition to increase as new gaming operators enter our markets, existing competitors expand their operations, gaming activities expand in existing jurisdictions and gaming is legalized in new jurisdictions. We cannot predict with any certainty the effects of existing and future competition on our operating results.

We are subject to extensive regulation from gaming and other regulatory authorities that could adversely affect us.

Licensing requirements. As owners and operators of gaming and pari-mutuel wagering facilities, we are subject to extensive state and local regulation. State and local authorities require us and our subsidiaries to demonstrate suitability to obtain and retain various licenses and require that we have registrations, permits and approvals to conduct gaming operations. The regulatory authorities in the jurisdictions in which we operate have very broad discretion with regard to their regulation of gaming operators, and may for a broad variety of reasons and in accordance with applicable laws, rules and regulations, limit, condition, suspend, fail to renew or revoke a license to conduct gaming operations or prevent us from owning the securities of any of our gaming subsidiaries, or prevent other persons from owning an interest in us or doing business with us. We may also be deemed responsible for the acts and conduct of our employees. Substantial fines or forfeiture of assets for violations of gaming laws or regulations may be levied against us, our subsidiaries and the persons involved, and some regulatory authorities have the ability to require us to suspend our operations. The suspension or revocation of any of our licenses or our operations or the levy on us or our subsidiaries of a substantial fine would have a material adverse effect on our business.

To date, we have demonstrated suitability to obtain and have obtained all governmental licenses, registrations, permits and approvals necessary for us to operate our existing gaming facilities. We cannot assure you that we will be able to retain these licenses, registrations, permits and approvals or that we will be able to obtain any new ones in order to expand our business, or that our attempts to do so will be timely. Like all gaming operators in the jurisdictions in which we operate, we must periodically apply to renew our gaming licenses and have the suitability of certain of our directors, officers and employees approved. We cannot assure you that we will be able to obtain such renewals or approvals.

In addition, regulatory authorities in certain jurisdictions must approve, in advance, any restrictions on transfers of, agreements not to encumber or pledges of equity securities issued by a corporation that is registered as an intermediary company with such state, or that holds a gaming license. If these restrictions are not approved in advance, they will be invalid.

Compliance with other laws. We are also subject to a variety of other federal, state and local environmental laws, regulations and ordinances that apply to non-gaming businesses. We are also subject to a variety of other local rules and regulations, including zoning, environmental, construction and land-use laws and regulations governing the serving of alcoholic beverages. Under various federal, state and local laws and regulations, an owner or operator of real property may be held liable for the costs of removal or remediation of certain hazardous or toxic substances or wastes located on its property, regardless of whether or not the present owner or operator knows of, or is responsible for, the presence of such substances or wastes. We have not identified any issues associated with our properties that could reasonably be expected to have an adverse effect on us or the results of our operations. However, several of our properties are located in industrial areas or were used for industrial purposes for many years. As a consequence, it is possible that historical or neighboring activities have affected one or more of our properties and that, as a result, environmental issues could

Table of Contents

arise in the future, the precise nature of which we cannot now predict. The coverage and attendant compliance costs associated with these laws, regulations and ordinances may result in future additional costs.

Regulations adopted by the Financial Crimes Enforcement Network of the U.S. Treasury Department require us to report currency transactions in excess of $10,000 occurring within a gaming day, including identification of the patron by name and social security number. U.S. Treasury Department regulations also require us to report certain suspicious activity, including any transaction that exceeds $5,000 if we know, suspect or have reason to believe that the transaction involves funds from illegal activity or is designed to evade federal regulations or reporting requirements. Substantial penalties can be imposed against us if we fail to comply with these regulations.

Several of our riverboats must comply with U.S. Coast Guard requirements as to boat design, on-board facilities, equipment, personnel and safety and must hold U.S. Coast Guard Certificates of Documentation and Inspection. The U.S. Coast Guard requirements also set limits on the operation of the riverboats and mandate licensing of certain personnel involved with the operation of the riverboats. Loss of a riverboat's Certificate of Documentation and Inspection could preclude its use as a riverboat casino. Each of our riverboats is inspected annually and, every five years, is subject to dry-docking for inspection of its hull, which could result in a temporary loss of service.

We are required to have third parties periodically inspect and certify all of our casino barges for stability and single compartment flooding integrity. Our casino barges and other facilities must also meet local fire safety standards. We would incur additional costs if any of our gaming facilities were not in compliance with one or more of these regulations.

Potential changes in legislation and regulation of our operations. From time to time, legislators and special interest groups have proposed legislation that would expand, restrict or prevent gaming operations in the jurisdictions in which we operate. In addition, from time to time, certain anti-gaming groups have challenged constitutional amendments or legislation that would limit our ability to continue to operate in those jurisdictions in which these constitutional amendments or legislation have been adopted.

Taxation and fees. State and local authorities raise a significant amount of revenue through taxes and fees on gaming activities. We believe that the prospect of significant revenue is one of the primary reasons that jurisdictions permit legalized gaming. As a result, gaming companies are typically subject to significant taxes and fees in addition to normal federal, state, local and provincial income taxes, and such taxes and fees are subject to increase at any time. We pay substantial taxes and fees with respect to our operations. From time to time, federal, state, local and provincial legislators and officials have proposed changes in tax laws, or in the administration of such laws, affecting the gaming industry. Any material increase, or the adoption of additional taxes or fees, could have a material adverse effect on our future financial results.

Our business may be adversely affected by legislation prohibiting tobacco smoking.

Legislation in various forms to ban indoor tobacco smoking has recently been enacted or introduced in many states and local jurisdictions, including several of the jurisdictions in which we operate. On January 1, 2008, a statewide smoking ban that includes casino floors went into effect in Colorado. This smoking ban in Colorado has had some negative impact on business volume at our Black Hawk properties, the long-term impact of which we cannot yet predict.

If additional restrictions on smoking are enacted in jurisdictions in which we operate, we could experience a significant decrease in gaming revenue and particularly, if such restrictions are not applicable to all competitive facilities in that gaming market, our business could be materially adversely affected.

Table of Contents

Our substantial indebtedness could adversely affect our financial health and restrict our operations.

We have a significant amount of indebtedness. As of April 26, 2009, we had approximately $1.3 billion of total debt outstanding.

Our significant indebtedness could have important consequences to our financial health, such as:

•

limiting our ability to use operating cash flow or obtain additional financing to fund working capital, capital expenditures, expansion and other important areas of our business because we must dedicate a significant portion of our cash flow to make principal and interest payments on our indebtedness;

•

causing an event of default if we fail to satisfy the financial and restrictive covenants contained in the indenture and agreements governing our 7% senior subordinated notes due 2014, our senior secured credit facility and our other indebtedness, which could result in all of our debt becoming immediately due and payable, could permit our secured lenders to foreclose on the assets securing our secured debt and have other adverse consequences, any of which, if not cured or waived, could have a material adverse effect on us;

•

placing us at a competitive disadvantage to our competitors who are not as highly leveraged;

•

increasing our vulnerability to and limiting our ability to react to changing market conditions, changes in our industry and economic downturns or downturns in our business; and

•

our agreements governing our indebtedness, among other things, require us to maintain certain specified financial ratios and to meet certain financial tests. Our debt agreements also limit our ability to:

i.: borrow money;
ii.: make capital expenditures;
iii.: use assets as security in other transactions;
iv.: make restricted payments or restricted investments;
v.: incur contingent obligations; and
vi.: sell assets and enter into leases and transactions with affiliates.

A substantial portion of our outstanding debt bears interest at variable rates, although we have entered into interest rate protection agreements expiring in through fiscal year 2014 with counterparty banks with respect to a majority of our term loans under our senior debt agreement. If short-term interest rates rise, our interest cost will increase on the unhedged portion of our variable rate indebtedness, which will adversely affect our results of operations and available cash.

Any of the factors listed above could have a material adverse effect on our business, financial condition and results of operations. In addition, although based on our current level of operations, we believe that our operating cash flow, available cash and available borrowings under our senior secured credit facility will be sufficient to meet our anticipated future liquidity needs, we cannot assure you that our business will continue to generate sufficient cash flow, or that future available draws under our senior secured credit facility will be sufficient, to enable us to meet our liquidity needs, including those needed to service our indebtedness.

Table of Contents

Despite our significant indebtedness, we may still be able to incur significantly more debt. This could intensify the risks described above.

The terms of the indenture and agreements governing the senior subordinated 7% notes, our senior secured credit facility and our other indebtedness limit, but do not prohibit, us or our subsidiaries from incurring significant additional indebtedness in the future.

As of April 26 2009, we had the capacity to incur additional indebtedness, including the ability to incur additional indebtedness under all of our lines of credit, of approximately $348 million. Refer to Footnote 8, Long-Term Debt in the Notes to our Consolidated Financial Statements, for additional discussion on our Senior Secured Credit Facility. Approximately $14.9 million of these lines of credit were used to support letters of credit. Our capacity to issue additional indebtedness is subject to the limitations imposed by the covenants in our senior secured credit facility and the indenture governing our senior subordinated 7% notes. The indenture governing our senior subordinated 7% notes and our senior secured credit facility contain financial and other restrictive covenants, but will not fully prohibit us from incurring additional debt. If new debt is added to our current level of indebtedness, the related risks that we now face could intensify.

We may not be able to successfully expand to new locations or recover our investment in new properties which would adversely affect our operations and available resources.

We regularly evaluate opportunities for growth through development of gaming operations in existing or new markets, through acquiring other gaming entertainment facilities or through redeveloping our existing facilities. The expansion of our operations, whether through acquisitions, development or internal growth, could divert management's attention and could also cause us to incur substantial costs, including legal, professional and consulting fees. To the extent that we elect to pursue any new gaming acquisition or development opportunity, our ability to benefit from our investment will depend on many factors, including:

•: our ability to successfully identify attractive acquisition and development opportunities;
•: our ability to successfully operate any developed or acquired properties;
•: our ability to attract and retain competent management and employees for the new locations;
•: our ability to secure required federal, state and local licenses, permits and approvals, which in some jurisdictions are limited in number and subject to intense competition; and
•: the availability of adequate financing on acceptable terms.

Many of these factors are beyond our control. There have been significant disruptions in the global capital markets that have adversely impacted the ability of borrowers to access capital. Many analysts are predicting that these disruptions may continue for the foreseeable future. Accordingly, it is likely that we are dependent on free cash flow from operations and remaining borrowing capacity under our senior secured credit facility to implement our near-term expansion plans and fund our planned capital expenditures. As a result of these and other considerations, we cannot be sure that we will be able to recover our investments in any new gaming development opportunities or acquired facilities, or successfully expand to additional locations.

We may experience construction delays during our expansion or development projects which could adversely affect our operations.

From time to time we may commence construction projects at our properties. We also evaluate other expansion opportunities as they become available and we may in the future engage in additional construction projects. The anticipated costs and construction periods are based upon budgets, conceptual design documents and construction schedule estimates prepared by us in consultation with

Table of Contents

our architects and contractors. Construction projects entail significant risks, which can substantially increase costs or delay completion of a project. Such risks include shortages of materials or skilled labor, unforeseen engineering, environmental or geological problems, work stoppages, weather interference and unanticipated cost increases. Most of these factors are beyond our control. In addition, difficulties or delays in obtaining any of the requisite licenses, permits or authorizations from regulatory authorities can increase the cost or delay the completion of an expansion or development. Significant budget overruns or delays with respect to expansion and development projects could adversely affect our results of operations.

If our key personnel leave us, our business could be adversely affected.

Our continued success will depend, among other things, on the efforts and skills of a few key executive officers and the experience of our property managers. We do not maintain "key man" life insurance for any of our employees. Our ability to retain key personnel is affected by the competitiveness of our compensation packages and the other terms and conditions of employment, our continued ability to compete effectively against other gaming companies and our growth prospects. The loss of the services of any of these key individuals could have a material adverse effect on our business, financial condition and results of operations.

Members of the Goldstein family control a large percentage of our common stock and their decisions may differ from those that may be made by other shareholders.

Bernard Goldstein, our current Chairman and former Chief Executive Officer, his sons, including Robert Goldstein, our Vice Chairman and Jeffrey Goldstein, one of our directors; and various family trusts associated with members of the Goldstein Family, collectively own and control approximately 50% of our common stock, as of April 26, 2009. Although the members of the Goldstein family are free to vote their shares differently than one another, the Goldstein family will be able to exert a significant amount of control over the election of our board of directors and the vote on substantially all other matters, including significant corporate transactions, such as the approval of a merger or other transactions involving a sale of us. The interests of the Goldstein family may differ from those of our other shareholders.

We have a history of fluctuations in our operating income (losses) from continuing operations, and we may incur additional operating losses from continuing operations in the future. Our operating results could fluctuate significantly on a periodic basis.

We earned income from continuing operations of $59.4 million in fiscal year 2009 and sustained a net (loss) from continuing operations of ($38.1) million in fiscal year 2008. Companies with fluctuations in income (loss) from continuing operations often find it more challenging to raise capital to finance improvements in their businesses and to undertake other activities that return value to their shareholders. In addition, companies with operating results that fluctuate significantly on a quarterly or annual basis experience increased volatility in their stock prices in addition to difficulties in raising capital. We cannot assure you that we will not have fluctuations in our income (losses) from continuing operations in the future, and should that occur, that we would not suffer adverse consequences to our business as a result, which could decrease the value of our common stock.

Inclement weather and other conditions could seriously disrupt our business and have a material, adverse effect on our financial condition and results of operations.

The operations of our facilities are subject to disruptions or reduced patronage as a result of severe weather conditions, natural disasters and other casualties. Because many of our gaming operations are located on or adjacent to bodies of water, these facilities are subject to risks in addition to those associated with other casinos, including loss of service due to casualty, forces of nature,

Table of Contents

mechanical failure, extended or extraordinary maintenance, flood, hurricane or other severe weather conditions. In addition, severe weather such as high winds and blizzards occasionally limits access to our land-based facilities in Colorado. While our business interruption insurance has historically provided sufficient coverage for our losses, we cannot be sure that the proceeds from any future claim will be sufficient to compensate us if one or more of our casinos experience a closure.

Reductions in discretionary consumer spending as a result of downturns in the economy could have a material, adverse effect on our business.

Our business has been and may continue to be adversely affected by the economic recession currently being experienced in the United States, as we are highly dependent on discretionary spending by our patrons. Changes in discretionary consumer spending or consumer preferences brought about by factors such as increased unemployment, significant increases in energy prices such as occurred in the first half of 2008, perceived or actual deterioration in general economic conditions, the current housing market crisis, the current credit crisis, bank failures and the potential for additional bank failures, perceived or actual decline in disposable consumer income and wealth, the current global economic recession and changes in consumer confidence in the economy may continue to reduce customer demand for the leisure activities we offer and may adversely affect our revenues and operating cash flow. We are not able to predict the length or severity of the current economic condition.

The market price of our common stock may fluctuate significantly.

The market price of our common stock has historically been volatile and may continue to fluctuate substantially due to a number of factors, including actual or anticipated changes in our results of operations, the announcement of significant transactions or other agreements by our competitors, conditions or trends in the our industry or other entertainment industries with which we compete, general economic conditions including those affecting our customers' discretionary spending, changes in the cost of air travel or the cost of gasoline, changes in the gaming markets in which we operate and changes in the trading value of our common stock. The stock market in general, as well as stocks in the gaming sector have been subject to significant volatility and extreme price fluctuations that have sometimes been unrelated or disproportionate to individual companies' operating performances. Broad market or industry factors may harm the market price of our common stock, regardless of our operating performance.

Work stoppages, organizing drives and other labor problems could negatively impact our future profits.

Some of our employees are currently represented by a labor union or have begun organizing a drive for labor union representation. A lengthy strike or other work stoppages at any of our casino properties or construction projects could have an adverse effect on our business and results of operations. Labor unions are making a concerted effort to recruit more employees in the gaming industry. In addition, organized labor may benefit from new legislation or legal interpretations by the current presidential administration. We cannot provide any assurance that we will not experience additional or more successful union activity in the future.

* * * * * * *

In addition to the foregoing, you should consider each of the factors set forth in this Annual Report in evaluating our business and our prospects. The factors described in our Part 1, Item 1A are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently consider immaterial may also impair our business operations. This Annual Report is qualified in its entirety by these risk factors. If any of the foregoing risks actually occur, our business, financial

Table of Contents

condition and results of operation could be materially harmed. In that case, the trading price of our securities, including our common stock, could decline significantly.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

Lake Charles

We own approximately 2.7 acres and lease approximately 16.2 acres of land in Calcasieu Parish, Louisiana for use in connection with the Isle-Lake Charles. This lease automatically renewed in March 2005 for five years and we have the option to renew it for fifteen (15) additional terms of five years each, subject to increases based on the Consumer Price Index ("CPI") with a minimum of 10% and construction of hotel facilities on the property. We own two hotels in Lake Charles with a total of 493 rooms. Annual rent payments under the Lake Charles lease are approximately $2.1 million.

Lula

We lease approximately 50 acres of land in Coahoma County, Mississippi in connection with the operations of the Isle-Lula. Unless terminated by us at an earlier date, the lease expires in 2033. Rent under the lease is currently 5.5% of gross gaming revenue as reported to the Mississippi Gaming Commission, plus $100,000 annually. We also own approximately 100 acres in Coahoma County, which may be utilized for future development.

Biloxi

We lease the real estate upon which some of our land-based facilities, including the casino, are located from the City of Biloxi and the Mississippi Secretary of State at current annual rent of $561,800 per year, plus 3% of our Biloxi property's gross gaming revenues, net of state and local gaming taxes and fees, in excess of $25.0 million. The lease renews for a five year term on July 1, 2009, with renewal options for four additional terms of five years each and a sixth option renewal term, concluding on January 31, 2034, subject to rent increases based on the CPI, limited to 6% for each renewal period. We also lease our Biloxi berth from the Biloxi Port Commission at an annual rent of the greater of $510,000 or 1% of the gross gaming revenue net of state and local gaming taxes. The lease terminates on July 1, 2014 and we have the option to renew it for six additional terms of five years each subject to increases based on the CPI, limited to 6% for each renewal period.

In April 1994, in connection with the construction of a hotel, we entered into a lease for additional land adjoining our Biloxi property. This lease with the City of Biloxi and the Mississippi Secretary of State is for an initial term of 25 years, with options to renew for six additional terms of ten years each and a final option period concluding December 31, 2085. Current annual rent is $605,000 plus 4% of gross non-gaming revenues, as defined in the lease, and renewals are subject to rent increases based on the CPI. The annual rent is adjusted after each five-year period based on increases in the CPI, limited to a 10% increase in any five-year period.

In August 2002, we entered into a lease for two additional parcels of land adjoining our property and the hotel. On the parcel adjoining the Biloxi property, we constructed a multi-level parking garage that has approximately 1,000 parking spaces. There is additional ground level parking on a parcel of land in front of the garage, also subject to this lease, with approximately 600 parking spaces. We have constructed a 400-room addition to the existing hotel on the parcel leased next to the existing hotel. In addition, we may construct a hotel above the parking garage. This lease with the City of Biloxi and the Mississippi Secretary of State is for an initial term of forty years, with one option to renew for an

Table of Contents

additional twenty-five years and additional options thereafter, with the consent of the Mississippi Secretary of State, consistent with the term of the lease described in the preceding paragraph. When combined with the base and percentage rents described for the leases in the preceding two paragraphs, annual rent under those two leases and this lease was $3.8 million for lease year ending July 31, 2008, and estimated to be $4.1 million for the lease year ending July 31, 2009. The minimum rent for the lease year beginning August 1, 2008 will be $4.1 million in accordance with the terms of the lease agreement. Such amounts are subject to decreases due to market adjustments and increases based on the CPI. Also, we are responsible for annual rent equal to 4% of gross retail revenue and gross cash revenue (as defined in the lease), but without double counting. If the rent minimum described in the preceding sentences is not otherwise satisfied from other rents, then this percentage rent is not in addition to the minimum rent, but rather is to be applied to that minimum.

In connection with and pursuant to a settlement between the City of Biloxi and the State of Mississippi concerning the control and management of the area where we are located, we also have agreed to pay the City of Biloxi's lease obligations to the State of Mississippi for an agreed upon period of time. This amount is $580,000 per year, payable on June 30, subject to increases based on the CPI and decreases if there are other tenants of the subject property. This obligation ends after June 2018 but may be renewed for thirty years.

We have also entered into a joint venture arrangement to sublease a surface parking lot next to our Biloxi property. Our portion of the annual rent under this lease is approximately $227,000. The current term is for five years expiring December 31, 2010, with a renewal option for an additional five-year term (under which our annual rent would increase based on the CPI), extending the lease through December 31, 2015, if exercised.

Natchez

Through numerous lease agreements, we lease approximately 24 acres of land in Natchez, Mississippi that are used in connection with the operations of our Natchez property. Unless terminated by us at an earlier date, the leases have varying expiration dates through 2037. Annual rent under the leases total approximately $1.2 million. We also lease approximately 7.5 acres of land that is utilized for parking at the facility. We own approximately 6 additional acres of property in Natchez, Mississippi, as well as the property upon which our hotel is located.

Kansas City

We lease approximately 28 acres from the Kansas City Port Authority in connection with the operation of our Kansas City property. The term of the original lease was ten years and expired in October 2006 and was renewed for an additional five years. The lease includes seven additional five-year renewal options. The minimum lease payments are indexed to correspond to any rise or fall in the CPI, initially after the ten-year term of the lease or October 18, 2006 and thereafter, at each five year renewal date. Rent under the lease currently is the greater of $2.6 million (minimum rent) per year, or 3.25% of gross revenues, less complimentaries.

Boonville

We lease our 27 acre casino site in Boonville pursuant to a lease agreement with the City of Boonville. Under the terms of agreement, we lease the site for a period of ninety-nine years. In lieu of rent, we are assessed additional amounts by the City of Boonville based on a 3.5% tax on gaming revenue, up to $1.0 million, which we recognize as additional gaming taxes.

Table of Contents

Caruthersville

We own approximately 37 acres, including our riverboat casino and 1,000 parking spaces in Caruthersville, Missouri.

Bettendorf

We own approximately 24.6 acres of land in Bettendorf, Iowa used in connection with the operations of our Bettendorf property. We also operate under a long-term lease with the City of Bettendorf, the QC Waterfront Convention Center that is adjacent to our new hotel tower. Future minimum payments associated with the convention center are approximately $1.1 million per year. We also lease approximately eight acres of land on a month-to-month basis from an entity owned by family members of our chairman, Bernard Goldstein, including Robert S. Goldstein, our vice chairman and director and Jeffrey D. Goldstein, a director of our company, which we utilize for parking and warehouse space. The initial term of the lease expires sixty days after written notice is given to either party and rent under the lease is currently $23,360 per month.

Davenport

Pursuant to various lease agreements, we lease approximately twelve acres of land in Davenport, Iowa used in connection with the operations of Rhythm City-Davenport. The aggregate annual rent on these leases is approximately $0.3 million and they have varying expiration dates through 2022.

Marquette

We lease the dock site in Marquette, Iowa that is used in connection with our Marquette operations. The lease expires in 2019, and annual rent under the lease is approximately $180,000, plus $1.00 per passenger, plus 2.5% of gaming revenues (less state wagering taxes) in excess of $20.0 million but less than $40.0 million; 5% of gaming revenues (less state wagering taxes) in excess of $40.0 million but less than $60.0 million; and 7.5% of gaming revenues (less state wagering taxes) in excess of $60.0 million. We also lease approximately two acres of land used for the employee parking lot that is a month-to-month rental of $417 and an easement related to an overhead pedestrian bridge and driveway that is an annual payment of approximately $6,300. We also own approximately 25 acres of land for the pavilion, hotel, satellite offices, warehouse, lots by the marina and other property.

Waterloo

The casino occupies approximately 54 acres of owned land. We also entered into a one-year lease agreement for 17,517 square feet of warehouse space. Rent under this lease is currently $4,306 per month.

Black Hawk

We own approximately 10.1 acres of land in Black Hawk, Colorado for use in connection with our Black Hawk operations. The property leases an additional parcel of land adjoining the Isle of Capri Black Hawk where the Colorado Central Station Hotel and parking are located. This lease is for an initial term of nine years with options to renew for eighteen additional terms of five years each with the final option period concluding June 1, 2094. Annual rent is currently $1.8 million indexed to correspond to any rise or fall in the CPI at one-year intervals, not to exceed a 3% increase or decrease from the previous year's rate.

Table of Contents

The Colorado Central Station-Black Hawk

We own or lease approximately 7.1 acres of land in Black Hawk, Colorado for use in connection with the Colorado Central Station-Black Hawk. The property leases an additional parcel of land near the Colorado Central Station-Black Hawk for parking described above. This lease is for an initial term of ten years with options to renew for nine additional terms of ten years each with the final option period concluding August 2094. Currently the annual rent is $576,000 and renewals are subject to 20% rent increases over the rate of the previous term.

Pompano

We own approximately 223 acres at Pompano.

Our Lucaya

We lease the casino at Our-Lucaya under the terms of a two-year lease which commenced June 1, 2007. In May 2009, we entered into an agreement to continue operating the Isle of Capri Casino in Freeport, Grand Bahama during a transition period, following which we intend to exit the operation. Under the agreement, we will also continue to assist the Government of the Bahamas and the owner of the Our Lucaya Resort, Hutchison Lucaya Ltd, in their efforts to identify and select a new operator for the casino. The term of the transition period ends on August 31, 2009, although under certain circumstances, it may be extended for up to two additional months in order to allow sufficient time for a new operator to receive necessary approvals.

Blue Chip-Dudley

Through our two-thirds ownership interest in Blue Chip, plc, we own the approximately 12,000 square-foot building used for the Blue Chip-Dudley casino operation. We also own an 8,000 square-foot parking area for the casino.

Blue Chip-Wolverhampton

Through our two-thirds ownership interest in Blue Chip, plc, we own the approximately 12,000 square-foot building used for the Blue Chip-Wolverhampton casino operation. We also own a 2,000 square foot parking area for the casino.

Other

We own all of the riverboats and barges utilized at our facilities. We also own or lease all of our gaming and non-gaming equipment.

We lease our principal corporate office in Creve Coeur, Missouri, and our regional offices in Biloxi, Mississippi, and Boca Raton, Florida.

We own additional property and have various property leases and options to either lease or purchase property that are not directly related to our existing operations and that may be utilized in the future in connection with expansion projects at our existing facilities or development of new projects.

Table of Contents

ITEM 3. LEGAL PROCEEDINGS

Lady Luck Gaming Corporation (now our wholly owned subsidiary) and several joint venture partners have been defendants in the Greek Civil Courts and the Greek Administrative Courts in similar lawsuits brought by the country of Greece. The actions allege that the defendants failed to make specified payments in connection with the gaming license bid process for Patras, Greece. Although it is difficult to determine the damages being sought from the lawsuits, the action may seek damages up to that aggregate amount plus interest from the date of the action.

In the Civil Court lawsuit, the Civil Court of First Instance ruled in our favor and dismissed the lawsuit in 2001. Greece appealed to the Civil Appeal Court and, in 2003, the Court rejected the appeal. Greece then appealed to the Civil Supreme Court and, in 2007, the Supreme Court ruled that the matter was not properly before the Civil Courts and should be before the Administrative Court.

In the Administrative Court lawsuit, the Administrative Court of First Instance rejected the lawsuit stating that it was not competent to hear the matter. Greece then appealed to the Administrative Appeal Court, which court rejected the appeal in 2003. Greece then appealed to the Supreme Administrative Court, which remanded the matter back to the Administrative Appeal Court for a hearing on the merits. The re-hearing took place in 2006, and in 2008 the Administrative Appeal Court rejected Greece's appeal on procedural grounds. On December 22, 2008 and January 23, 2009, Greece appealed the ruling to the Supreme Administrative Court. A hearing has not yet been scheduled.

The outcome of this matter is still in doubt and cannot be predicted with any degree of certainty. We intend to continue a vigorous and appropriate defense to the claims asserted in this matter. Through April 26, 2009, we have accrued an estimated liability including interest of $9.8 million.

We are subject to certain federal, state and local environmental protection, health and safety laws, regulations and ordinances that apply to businesses generally, and are subject to cleanup requirements at certain of our facilities as a result thereof. We have not made, and do not anticipate making, material expenditures, nor do we anticipate incurring delays with respect to environmental remediation or protection. However, in part because our present and future development sites have, in some cases, been used as manufacturing facilities or other facilities that generate materials that are required to be remediated under environmental laws and regulations, there can be no guarantee that additional pre-existing conditions will not be discovered and that we will not experience material liabilities or delays.

We are subject to various contingencies and litigation matters and have a number of unresolved claims. Although the ultimate liability of these contingencies, this litigation and these claims cannot be determined at this time, we believe that they will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to a vote of our security holders during the fourth quarter of the fiscal year 2009.

Table of Contents

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

(a)

i.: Market Information . Our common stock is traded on the NASDAQ Global Select Market under the symbol "ISLE". The following table presents the high and low closing sales prices for our common stock as reported by the NASDAQ Global Select Market for the fiscal periods indicated.

	High		Low

First Quarter (through June 22, 2009)	$	13.61	$	8.65
Fiscal Year Ending April 26, 2009
Fourth Quarter	$	9.27	$	2.63
Third Quarter		5.29		2.37
Second Quarter		9.08		3.57
First Quarter		7.45		4.20
Fiscal Year Ending April 27, 2008
Fourth Quarter	$	11.57	$	6.62
Third Quarter		20.62		10.00
Second Quarter		21.44		18.17
First Quarter		25.56		21.51

ii.: Holders of Common Stock . As of June 23, 2009, there were approximately 1,400 holders of record of our common stock.
iii.: Dividends . We have never declared or paid any dividends with respect to our common stock and the current policy of our board of directors is to retain earnings to provide for the growth of our company. In addition, our senior secured credit facility and the indenture governing our senior subordinated 7% notes limit our ability to pay dividends. See "Item 8—Financial Statements and Supplementary Data-Isle of Capri Casinos, Inc.—Notes to Consolidated Financial Statements—Note 8." Consequently, no cash dividends are expected to be paid on our common stock in the foreseeable future. Further, there can be no assurance that our current and proposed operations would generate the funds needed to declare a cash dividend or that we would have legally available funds to pay dividends. In addition, we may fund part of our operations in the future from indebtedness, the terms of which may further prohibit or restrict the payment of cash dividends. If a holder of common stock is disqualified by the regulatory authorities from owning such shares, such holder will not be permitted to receive any dividends with respect to such stock. See "Item 1—Business-Governmental Regulations."

Table of Contents

iv.: Equity Compensation Plans . The following table provides information about securities authorized for issuance under our 1993 and 2000 Employee Stock Option Plans, and our Deferred Bonus Plan, for the fiscal year 2009.

					(c)

	(a)				Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
	Number of securities to be issued upon exercise of outstanding options, warrants and rights		(b)
Plan category			Weighted-average exercise price of outstanding options, warrants and rights
Equity compensation plans approved by security holders		1,520,040	$	12.30		1,780,930
Equity compensation plans not approved by security holders		—		—		—
Total		1,520,040	$	12.30		1,780,930

(b): Issuance of Unregistered Securities

None.

(c): Purchases of our Common Stock

The following table provides information related to our purchases of Isle of Capri Casinos, Inc. common stock:

Period			Average Price Paid per Share

January 26, 2009 to February 22, 2009		—	$	—	—	1,104,208
February 23, 2009 to March 29, 2009		—		—	—	1,104,208
March 30, 2009 to April 26, 2009		—		—	—	1,104,208

	Total	—		—	—	1,104,208

(1) We have repurchased shares of our common stock under stock repurchase programs. These programs authorize us to repurchase of up to 6,000,000 shares of our common stock. To date, we have purchased 4,895,792 shares of our common stock under these programs. These programs have no approved dollar amounts, nor any expiration dates.

Table of Contents

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Amont Isle of Capri Casinos, Inc., The NASDAQ Composite Index
And The Dow Jones US Gambling Index

*: $100 invested on 4/25/04 in stock or 4/30/04 in index, including reinvestment of dividends.
Indexes calculated on month-end basis.

Table of Contents

ITEM 6. SELECTED FINANCIAL DATA.

The following table presents our selected consolidated financial data for the five most recent fiscal years, which is derived from our audited consolidated financial statements and the notes to those statements. Because the data in this table does not provide all of the data contained in our consolidated financial statements, including the related notes, you should read "Management's Discussion and Analysis of Financial Condition and Results of Operations," our consolidated financial statements, including the related notes contained elsewhere in this document and other data we have filed with the U.S. Securities and Exchange Commission.

				Fiscal Year Ended(1)

				April 26, 2009			April 27, 2008			April 29, 2007			April 30, 2006			April 24, 2005
				(dollars in millions, except per share data)
Statement of Operations
Revenues:
	Casino			$	1,066.1		$	1,107.2		$	1,007.5		$	996.6		$	950.6
	Rooms				46.4			49.5			49.5			37.0			33.1
	Pari-mutuel, food, beverage and other				140.0			151.6			147.1			145.5			143.9
	Hurricane and other insurance recoveries				62.9			0.3			2.8			—			—

		Gross revenues			1,315.4			1,308.6			1,206.9			1,179.1			1,127.6
		Less promotional allowances			(196.8	)		(200.9	)		(214.4	)		(200.0	)		(188.1	)

			Net revenues		1,118.6			1,107.7			992.5			979.1			939.5
Operating expenses:
	Casino				154.5			154.3			156.5			148.2			153.9
	Gaming taxes				270.9			286.8			210.0			219.1			214.8
	Rooms				12.2			12.0			9.8			8.5			7.4
	Pari-mutuel, food, beverage and other				53.2			58.6			46.1			46.5			44.0
	Marine and facilities				65.5			66.7			59.8			56.7			56.4
	Marketing and administrative				263.1			279.1			264.5			242.6			221.9
	Corporate and development				41.3			48.6			57.0			50.3			41.1
	Valuation charges				36.1			6.5			7.8			3.8			4.3
	Hurricane and other insurance recoveries				(32.3	)		(1.8	)		—			—			—
	Preopening				—			3.7			11.4			0.3			0.2
	Depreciation and amortization				122.5			128.9			97.0			86.9			79.8

			Total operating expenses		987.0			1,043.4			919.9			862.9			823.8

Operating income					131.6			64.3			72.6			116.2			115.7
	Interest expense				(92.1	)		(106.8	)		(88.1	)		(75.2	)		(64.6	)
	Interest income				2.1			3.3			7.1			2.3			1.2
	Gain (loss) on early extinguishment of debt				57.7			(15.3	)		—			(2.1	)		(5.3	)

Income (loss) from continuing operations before income taxes and minority interest					99.3			(54.5	)		(8.4	)		41.2			47.0
	Income tax benefit (provision)				(39.9	)		21.3			(2.8	)		(8.4	)		(16.1	)
	Minority interest				—			(4.9	)		(3.6	)		(6.5	)		(5.8	)

Income (loss) from continuing operations					59.4			(38.1	)		(14.8	)		26.3			25.1
(Loss) income from discontinued operations, net of income taxes					(15.8	)		(58.8	)		10.2			(7.4	)		(5.4	)

Net income (loss)				$	43.6		$	(96.9	)	$	(4.6	)	$	18.9		$	19.7

Table of Contents

			Fiscal Year Ended(1)

			April 26, 2009			April 27, 2008			April 29, 2007			April 30, 2006			April 24, 2005
			(dollars in millions, except per share data)
Statement of Operations Data (continued):
Income (loss) per common share:
	Basic
		Income (loss) from continuing operations	$	1.89		$	(1.24	)	$	(0.49	)	$	0.88		$	0.85
		Income (loss) from discontinued operations		(0.50	)		(1.92	)		0.34			(0.25	)		(0.19	)

		Net Income (loss)	$	1.39		$	(3.16	)	$	(0.15	)	$	0.63		$	0.66

	Diluted
		Income (loss) from continuing operations	$	1.89		$	(1.24	)	$	(0.49	)	$	0.84		$	0.81
		Income (loss) from discontinued operations		(0.50	)		(1.92	)		0.34			(0.24	)		(0.17	)

		Net Income (loss)	$	1.39		$	(3.16	)	$	(0.15	)	$	0.60		$	0.64

Other Data:
Net cash provided by (used in):
	Operating activities		$	190.6		$	133.4		$	70.9		$	86.7		$	169.6
	Investing activities		$	(27.9	)	$	(302.4	)	$	(197.3	)	$	(176.4	)	$	(213.8	)
	Financing activities		$	(157.2	)	$	72.5		$	193.5		$	64.9		$	55.4
Capital expenditures*			$	58.6		$	190.5		$	451.4		$	224.4		$	187.9
Operating Data:
Number of slot machines				15,666			15,756			14,484			12,875			12,672
Number of table games				414			463			370			483			485
Number of hotel rooms				3,104			3,107			2,672			2,652			2,129
Average daily occupancy rate				70.2	%		71.2	%		79.2	%		81.7	%		84.8	%
Balance Sheet Data:
Cash and cash equivalents			$	96.7		$	91.8		$	188.1		$	121.0		$	146.5
Total assets			$	1,782.7		$	1,974.2		$	2,075.7		$	1,877.7		$	1,735.5
Long-term debt, including current portion			$	1,301.1		$	1,507.3		$	1,418.0		$	1,219.1		$	1,153.8
Stockholders' equity			$	228.4		$	188.0		$	281.8		$	280.2		$	260.1

*: Excludes: destroyed Biloxi casino barge of $7.4 million in fiscal 2005 and $36.8 million in fiscal 2006, and Biloxi temporary casino of $37.9 million in fiscal 2006 and discontinued operations of Vicksburg and Bossier City
(1): Our fiscal year ended April 30, 2006 includes 53 weeks while all other fiscal years include 52 weeks. The results reflect Bossier City, Blue Chip, Colorado Grand-Cripple Creek, Coventry and Vicksburg discontinued operations. We opened new casino operations in Pompano and Waterloo in April 2007 and June 2007, respectively. We acquired our casino operations in Caruthersville in June 2007.

Table of Contents

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion together with the financial statements, including the related notes and the other financial information, contained in this Annual Report on Form 10-K.

Executive Overview

We are a leading developer, owner and operator of branded gaming facilities and related lodging and entertainment facilities in regional markets in the United States. We have intentionally sought geographic diversity to limit the risks caused by weather, regional economic difficulties and local gaming authorities and regulations. We currently operate casinos in Mississippi, Louisiana, Missouri, Iowa, Colorado and Florida. We also operate a harness racing track at our casino in Florida. Internationally we currently operate casinos in Dudley and Wolverhampton, England, which are classified as discontinued operations and in Freeport, Grand Bahamas.

Our operating results for the periods presented have been affected, both positively and negatively, by current economic conditions and several other factors discussed in detail below. This Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with and giving consideration to the following:

Our historical operating results may not be indicative of our future results of operations because of these factors and the changing competitive landscape in each of our markets, as well as by factors discussed elsewhere in this Annual Report.

Impact of Current Economic Conditions —The current state of the United States economy has negatively impacted our results of operations through fiscal 2009. The turmoil in the credit and other financial markets, and in the broader global economy has exacerbated these trends and consumer confidence has been significantly impacted, as evidenced by broader indications of consumer behavior such as trends in auto and other retail sales. We believe that our customers have reduced their discretionary spending as a result of these adverse economic conditions. Given these economic conditions, we have increasingly focused on managing costs. Given the uncertainty in the economy and the unprecedented nature of the situation with the financial and credit markets, forecasting future results has become very difficult.

Items Impacting Income (Loss) from Continuing Operations —Significant items impacting our income (loss) from continuing operations during the fiscal years ended April 26, 2009, April 27, 2008 and April 29, 2007 are as follows:

	Fiscal Year Ended

	April 26, 2009			April 27, 2008			April 29, 2007
Hurricane and other insurance recoveries, net	$	95.2		$	2.1		$	2.8
Valuation charges		(36.1	)		(6.5	)		(7.8	)
Pre-opening expenses		—			(3.6	)		(11.4	)
Minority interest		—			(4.9	)		(3.6	)
Gain (loss) on early extinguishment of debt		57.7			(15.3	)		—

Hurricane and Other Insurance Recoveries, net —Our insurance recoveries for fiscal year 2009 include $92.2 million relating to the final settlement of our Hurricane Katrina claim at our Biloxi property and other insurance recoveries.

Valuation Charges —As a result of our annual impairment tests of goodwill and long-lived intangible assets under SFAS 142, we recorded impairment charges of $18.3 million at our Black Hawk property

Table of Contents

in fiscal 2009 and $7.8 million at our Lula property in fiscal year 2007. The results from operations for the fiscal year 2009 also include a $11.9 million write-off of construction in progress at our Biloxi property following our decision not to continue a previously anticipated current construction project, in its current form and a $6.0 million charge following our termination of an agreement for a potential development of a casino in Portland, Oregon. Fiscal year 2008 results also include $6.5 million of charges related to the termination of our plans to develop a new casino in west Harrison County, Mississippi and the cancellation of construction projects in Davenport, Iowa and Kansas City, Missouri.

Opening/Acquisition of New Properties and Pre-opening Expenses —During fiscal year 2008, our operating results were impacted by the opening of the slot gaming facility at our Pompano facility in April 2007, the acquisition of our Caruthersville, Missouri casino in June 2007 and the opening of our Waterloo, Iowa casino in June 2007. The periods prior to the opening of each of our new casino operations were impacted by pre-opening expenses.

Acquisition of Minority Interest —On January 27, 2008, we acquired the remaining 43% minority interest in our Black Hawk, Colorado casino properties for $64.8 million.

Gain (Loss) on Early Extinguishment of Debt —During February of 2009, we retired $142.7 million of our senior subordinated notes, through a tender offer, for a cash payment of $82.8 million. After expenses related to the elimination of deferred financing costs and transactions costs, we recognized a pretax gain of $57.9 million related to the transaction. During March 2009, we permanently repaid $35.0 million of our variable rate term loans as required under our senior secured credit facility with proceeds from our Hurricane Katrina insurance settlement resulting in a loss on early extinguishment of debt of $0.2 million due to the write-off of deferred financing cost.

We recorded a total of $15.3 million in losses associated with the early extinguishment of debt during fiscal year 2008, including a $9.0 million call premium paid to retire $200.0 million of our 9% Senior Subordinated Notes, and $6.3 million of deferred financing costs associated with the retired debt instruments.

Discontinued Operations —Discontinued operations include the results of our Coventry, Blue Chip, Bossier City and Vicksburg Properties. On April 23, 2009, we completed the sale of our assets and terminated our lease of Arena Coventry Convention Center relating to our casino operations in Coventry, England. Our lease termination costs and other expenses, net of cash proceeds from our assets sales, resulted in a pretax charge of $12.0 million recorded in fiscal year 2009 related to our discontinued Coventry operations. Our Blue Chip casino operations are classified as discontinued operations with assets held for sale at the end of fiscal year 2009 and we recorded a $1.4 million charge to reduce the assets held for sale to their estimated fair value. Our Bossier City and Vicksburg properties were sold during fiscal year 2007 and our discontinued operating results include a pretax gain of $23.2 million.

Smoking Restrictions —While we have benefited at our Bettendorf and Davenport Iowa properties from a smoking ban that impacts a competitor, the smoking ban enacted in Colorado during January 2008 has had a continuing adverse impact on our overall operating results at our Black Hawk, Colorado properties.

Increased Competition —The introduction of table games and expansion of Class III gaming at competing Native American casinos, beginning July 2008, has had a negative impact on our Pompano property's net revenues and operating results. The opening of a competing land-based facility, which replaced a riverboat operation in the Quad Cities area during December 2008, has had a negative impact on net revenues and operating results at our Bettendorf and Davenport, Iowa properties. Following the impact of Hurricane Katrina in the fall of 2005, our Mississippi properties in Biloxi and Natchez experienced strong revenue growth as a result of limited competition on the Gulf Coast. Since

Table of Contents

that time, the Gulf Coast has seen recovery in casino development which, combined with the closure of the Biloxi/Ocean Springs bridge through November 1, 2007, has significantly reduced our market share in Biloxi from their artificially high post-Katrina levels. Patron counts have decreased at our Natchez property as gaming patrons who were displaced by hurricanes have returned to the Gulf Coast. In Louisiana, our Lake Charles property experienced higher gaming revenues in fiscal year 2007 due to the closure of competitors' facilities as a result of Hurricane Rita. Competition has reopened which has resulted in decreased gaming revenues at our Lake Charles property in fiscal years 2008 and 2009 as compared to fiscal year 2007.

Results of Operations

Our results of continuing operations for the fiscal years ended April 26, 2009, April 27, 2008 and April 29, 2007 reflect the consolidated operations of all of our subsidiaries. Fiscal year 2008 and 2007 results have been reclassified to reflect the classification of certain operations as discontinued. This includes our Coventry and Blue Chip Casino operations in the UK classified as discontinued operations in the fourth quarter of fiscal 2009 and our Vicksburg, Mississippi and the Bossier City, Louisiana properties which were sold on July 31, 2006.

Our fiscal year ends on the last Sunday in April. This fiscal year convention creates more comparability of our quarterly operations, by generally having an equal number of weeks (13) and weekend days (26) in each quarter. Periodically, this convention necessitates a 53-week year. The fiscal years ended April 26, 2009, April 27, 2008 and April 29, 2007 were 52-week years.

Table of Contents

ISLE OF CAPRI CASINOS, INC.
(In thousands)

		Net Revenues Fiscal Year Ended						Operating Income (Loss) Fiscal Year Ended

(in thousands)		April 26, 2009		April 27, 2008		April 29, 2007		April 26, 2009			April 27, 2008			April 29, 2007
Mississippi
	Biloxi	$	83,519	$	90,586	$	147,825	$	(7,952	)	$	(3,538	)	$	26,948
	Natchez		35,936		35,707		40,864		9,674			7,412			9,391
	Lula		70,987		75,399		83,068		11,498			11,034			12,031

	Mississippi Total		190,442		201,692		271,757		13,220			14,908			48,370
Louisiana
	Lakes Charles		152,112		159,470		168,540		22,041			20,623			19,868
Missouri
	Kansas City		74,435		75,630		82,269		10,369			8,121			7,258
	Boonville		78,581		79,816		81,156		20,737			19,485			17,884
	Caruthersville(1)		31,579		26,857		—		1,638			2,574			—

	Missouri Total		184,595		182,303		163,425		32,744			30,180			25,142
Iowa
	Bettendorf		91,657		92,429		87,699		20,090			18,967			17,120
	Davenport		49,005		52,333		60,483		10,351			8,834			8,094
	Marquette		29,875		32,968		37,593		3,704			4,380			4,802
	Waterloo(2)		80,543		64,650		—		11,377			5,661			(36	)

	Iowa Total		251,080		242,380		185,775		45,522			37,842			29,980
Colorado
	Black Hawk/Colorado
	Central Station		123,382		144,521		153,718		16,588			30,811			27,894
Florida
	Pompano(2)		142,672		160,831		29,453		(8,324	)		(7,442	)		(10,370	)
International
	Our Lucaya		10,969		15,548		16,777		(2,934	)		(835	)		7,192

Insurance Recoveries(3)			62,932		348		2,817		95,209			2,105			2,817
Valuation Charges(4)			—		—		—		(36,125	)		(6,526	)		(7,800	)
Pre-opening(2)			—		—		—		—			(3,654	)		(11,433	)
Corporate and Other			458		597		233		(46,341	)		(53,689	)		(59,135	)

	From Continuing Operations	$	1,118,642	$	1,107,690	$	992,495	$	131,600		$	64,323		$	72,525

Note: The table excludes our Vicksburg, Bossier City and United Kingdom properties which have been classified as discontinued operations.

(1): Reflects results since the June 2007 acquisition effective date.
(2): Waterloo and Pompano opened for operations in June 2007 and April 2007, respectively. Pre-opening expenses related to these properties are included in pre-opening and other.
(3): Insurance recoveries include proceeds under insurance policies related to hurricanes, floods and insurable events. Fiscal year 2009 includes $92,179 of insurance proceeds from the final settlement of our Hurricane Katrina claim at our Biloxi property.
(4): Valuation charges for fiscal years 2009 and 2007 include goodwill and other intangible impairments of $18,269 and $7,800 related to our Black Hawk and Lula properties, respectively. Other valuation charges for fiscal 2009 and 2008 result from our decisions to discontinue certain development projects and included; $11,856 in fiscal year 2009 related to our Biloxi property and $6,000 for

Table of Contents

termination of a development project in Portland; and $6,526 in fiscal year 2008 related to Kansas City, Davenport and a former development project.

Fiscal Year 2009 Compared to Fiscal Year 2008

Revenues

Revenues for the fiscal years 2009 and 2008 are as follows:

					Fiscal Year Ended

(in thousands)					April 26, 2009			April 27, 2008			Variance			Percentage Variance
Revenues:
	Casino				$	1,066,162		$	1,107,246		$	(41,084	)		-3.7	%
	Rooms					46,380			49,498			(3,118	)		-6.3	%
	Pari-mutuel, food, beverage and other					139,957			151,530			(11,573	)		-7.6	%
	Hurricane and other insurance recoveries					62,932			348			62,584			N/M

		Gross revenues				1,315,431			1,308,622			6,809			0.5	%
			Less promotional allowances			(196,789	)		(200,932	)		4,143			2.1	%

				Net revenues	$	1,118,642		$	1,107,690			10,952			1.0	%

Casino Revenues —Casino revenues decreased $41.1 million, or 3.7% in fiscal year 2009 compared to fiscal year 2008. We experienced a decrease in casino revenues at most of our properties primarily as a result of the continued deterioration in discretionary consumer spending in conjunction with poor economic conditions. Our Black Hawk properties' $24.2 million decline in casino revenues as compared to fiscal year 2008 also reflects the impact of a statewide smoking ban effective for Colorado casinos on January 1, 2008. The $8.4 million decrease in casino revenues at our Pompano slot facility also reflects the expansion of nearby competing Native American casinos. Decreases in our casino revenues were partially offset by increases in casino revenues of $20.5 million at our Waterloo and Caruthersville properties due to the casinos being opened for a full twelve months in fiscal 2009 compared to only ten and nine months, respectively, in fiscal 2008.

Rooms Revenue —Rooms revenue decreased $3.1 million, or 6.3% in fiscal year 2009 compared to fiscal year 2008 primarily resulting from decreased occupancy and lower average room rates as a result of reduced consumer demand for rooms.

Pari-mutuel, Food, Beverage and Other Revenues —Pari-mutuel, food, beverage and other revenues decreased $11.6 million, or 7.6% in fiscal year 2009 compared to fiscal year 2008 corresponding to an overall reduction in casino revenues and due to decreases in consumer spending caused by current economic conditions. Pari-mutuel commissions and fees earned at Pompano decreased $3.3 million, or 17.1% compared to the prior fiscal year due to decreases in wagering. These decreases were offset by increases at our Waterloo and Caruthersville properties due to the casinos being opened for a full twelve months in fiscal 2009 compared to only ten and nine months, respectively in fiscal 2008.

Promotional Allowances —Promotional allowances, which are made up of complimentary revenues, cash points and coupons, are rewards that we give our loyal customers to encourage them to continue to patronize our properties. These allowances decreased by $4.1 million in fiscal year 2009 compared to fiscal year 2008 primarily due to a decrease in patrons. For fiscal year 2009 and 2008, promotional allowances as a percentage of casino revenues were 18.5% and 18.1%, respectively.

Table of Contents

Operating Expenses

Operating expenses for the fiscal years 2009 and 2008 are as follows:

			Fiscal Year Ended

(in thousands)			April 26, 2009			April 27, 2008			Variance			Percentage Variance
Operating expenses:
	Casino		$	154,538		$	154,263		$	275			0.2	%
	Gaming taxes			270,882			286,746			(15,864	)		-5.5	%
	Rooms			12,175			12,031			144			1.2	%
	Pari-mutuel, food, beverage and other			53,143			58,676			(5,533	)		-9.4	%
	Marine and facilities			65,504			66,656			(1,152	)		-1.7	%
	Marketing and administrative			263,164			279,009			(15,845	)		-5.7	%
	Corporate and development			41,331			48,619			(7,288	)		-15.0	%
	Valuation charges			36,125			6,526			29,599			453.6	%
	Hurricane and other insurance recoveries			(32,277	)		(1,757	)		(30,520	)		N/M
	Pre-opening			—			3,654			(3,654	)		-100.0	%
	Depreciation and amortization			122,457			128,944			(6,487	)		-5.0	%

		Total operating expenses	$	987,042		$	1,043,367			(56,325	)		-5.4	%

Casino —Casino operating expenses increased nominally year over year. These expenses are primarily comprised of salaries, wages and benefits and other operating expenses of our casinos. Casino properties opened in fiscal year 2008 experienced a $7.6 million increase in year over year casino expenses while casino properties operating for both years experienced a $7.3 million reduction in casino expenses corresponding to an overall decrease in gaming revenues and management's increased focus on cost management.

Gaming Taxes —State and local gaming taxes decreased by $15.9 million, or 5.5%, in fiscal year 2009 compared to fiscal year 2008. This reduction in gaming taxes is primarily a result of a 3.7% decrease in casino gaming revenue and changes in gaming revenues among states with differing gaming tax rates and refund of a $1.9 million in gaming taxes at our Pompano facility following an agreement reached with the State of Florida regarding the interpretation of the gaming tax calculation based on gaming taxes paid since Pompano's opening.

Pari-mutuel, Food, Beverage and Other —Pari-mutuel, food, beverage and other expenses decreased $5.5 million, or 9.4%, in fiscal year 2009 as compared to fiscal year 2008. The reduction in food and beverage expenses corresponds to a reduction in overall food and beverage revenues with food and beverage expenses as a percentage of gross food and beverage revenues remaining consistent at approximately 37% in both fiscal year 2009 and 2008. These expenses consist primarily of the cost of goods sold, salaries, wages and benefits and other operating expenses of these departments. This decrease reflects the reductions in our food, beverage and other revenues. Pari-mutuel operating costs of Pompano decreased $3.0 million in fiscal year 2009 compared to fiscal year 2008. Such costs consist primarily of compensation, benefits, purses, simulcast fees and other direct costs of track operations. The decreases in current year as compared to prior year are a result of cost reductions related to our pari-mutuel operations.

Marine and Facilities —These expenses include salaries, wages and benefits of the marine and facilities departments, operating expenses of the marine crews, maintenance of public areas, housekeeping and general maintenance of the riverboats and pavilions. Marine and facilities expenses decreased $1.2 million, or 1.7%, in fiscal year 2009 compared to fiscal year 2008 and is the result of headcount reductions and cost management.

Table of Contents

Marketing and Administrative —These expenses include salaries, wages and benefits of the marketing and sales departments, as well as promotions, direct mail, advertising, special events and entertainment. Administrative expenses include administration and human resource department expenses, rent, professional fees, insurance and property taxes. The $15.8 million decrease in marketing and administrative expenses in fiscal year 2009 compared to fiscal year 2008, reflects our decision to reduce marketing costs to less profitable customer segments and to reduce our administrative costs.

Corporate and Development —During fiscal year 2009, our corporate and development expenses were $41.3 million compared to $48.6 million for fiscal year 2008. This decrease in corporate and development expense reflects our continued efforts to reduce our corporate overhead and includes reductions of $3.5 million in professional and consulting services as well as reductions in other corporate expenses.

Depreciation and Amortization —Depreciation and amortization expense decreased by $6.5 million, or 5.0%, in fiscal year 2009 compared to fiscal year 2008 primarily due to certain assets becoming fully depreciated during the current year.

Other Income (Expense), Income Taxes, Minority Interest and Discontinued Operations

Interest expense, interest income, loss on early extinguishment of debt, income tax (provision) benefit, minority interest and income from discontinued operations, net of income taxes for the fiscal years 2009 and 2008 are as follows:

	Fiscal Year Ended

(in thousands)	April 26, 2009			April 27, 2008			Variance			Percentage Variance
Interest expense	$	(92,065	)	$	(106,826	)	$	14,761			-13.8	%
Interest income		2,112			3,293			(1,181	)		-35.9	%
Gain (loss) on early extinguishment of debt		57,693			(15,274	)		72,967			-477.7	%
Income tax (provision) benefit		(39,942	)		21,288			(61,230	)		-287.6	%
Minority interest		—			(4,868	)		4,868			-100.0	%
Loss from discontinued operations, net of income taxes		(15,823	)		(58,810	)		42,987			-73.1	%

Interest Expense —Interest expense decreased $14.8 million, or 13.8%, in fiscal year 2009 compared to fiscal year 2008. This decrease is primarily attributable to a lower average debt balance resulting from the pay down of $142.7 million of our senior subordinated 7% notes and a $35.0 million repayment on our senior secured credit facility debt in February and March 2009, respectively, and a decrease in the interest rate on the variable interest rate components of our debt.

Interest Income —During fiscal year 2009, our interest income decreased $1.2 million as compared to fiscal year 2008. The change in interest income reflects changes in our invested cash and marketable securities balances and lower interest rates.

Income Tax (Provision) Benefit —Our income tax (provision) benefit from continuing operations and our effective income tax rate has been impacted by amount of annual taxable income (loss) for financial statement purposes as well as our percentage of permanent items in relation to such income or loss. Effective income tax rates were as follows:

	Fiscal Year Ended

	April 26, 2009			April 27, 2008
Continuing operations		40.2	%		39.1	%
Total		41.7	%		41.3	%

Table of Contents

Fiscal Year 2008 Compared to Fiscal Year 2007

Revenues

Revenues for the fiscal years ended 2008 and 2007 are as follows:

					Fiscal Year Ended

(in thousands)					April 27, 2008			April 29, 2007			Variance			Percentage Variance
Revenues:
	Casino				$	1,107,246		$	1,007,523		$	99,723			9.9	%
	Rooms					49,498			49,584			(86	)		-0.2	%
	Pari-mutuel, food, beverage and other					151,530			147,036			4,494			3.1	%
	Hurricane and other insurance recoveries					348			2,817			(2,469	)		-87.6	%

		Gross revenues				1,308,622			1,206,960			101,662			8.4	%
			Less promotional allowances			(200,932	)		(214,465	)		13,533			6.3	%

				Net revenues	$	1,107,690		$	992,495			115,195			11.6	%

Casino Revenues —Casino revenues increased $99.7 million, or 9.9%, compared to fiscal year 2007. Our increased casino revenues were primarily a result of the opening or acquisition of new casino properties in Caruthersville, Waterloo and Pompano, and increased casino revenues at Bettendorf driven by the opening of our new hotel in May 2007. Casino revenues from our new casino operations were $226.2 million for fiscal year 2008. Same property casino revenues decreased $119.2 million for fiscal year 2008. This included decreased casino revenues at Biloxi of $62.7 million for fiscal year 2008, due to increased competition and post-hurricane normalization, and at Lake Charles of $11.1 million for fiscal year 2008, due to post-hurricane normalization, and $11.5 million at our Black Hawk operations primarily due to planned reductions in our complimentary allowances and the impact of a state smoking ban at casinos effective January 2008.

Rooms Revenue —Rooms revenue decreased $0.1 million, or 0.2%, for fiscal year 2008, compared to the fiscal year 2007. These revenues decreased in total at our Biloxi and Lula properties by $5.1 million for fiscal year 2008, primarily related to increased competition and post-hurricane normalization and the closure since October of over 170 rooms in Lula for repair. Rooms revenue increased $5.4 million in Iowa driven by the new hotel tower in Bettendorf and the opening of our Waterloo facility.

Pari-mutuel, Food, Beverage and Other Revenues —Pari-mutuel, food, beverage and other revenues increased $4.5 million, or 3.1%, for fiscal year 2008, compared to fiscal year 2007. Our increased food, beverage and other revenues were primarily a result of the opening or acquisition of new casino properties in Caruthersville, Waterloo and Pompano. Considering the acquisition or opening of new properties for which our food, beverage and other revenues increased $21.3 million for fiscal year 2008, same property food beverage and other revenues decreased $18.4 million for fiscal year 2008. This included decreased food, beverage and other revenues at Biloxi of $9.2 million for fiscal year 2008, due to increased competition and post-hurricane normalization, and at Lake Charles of $4.1 million for fiscal year 2008, primarily due to the collection of $2.2 million in business interruption proceeds reflected in the prior year and post-hurricane normalization. Pari-mutuel commissions earned at Pompano for fiscal year 2008 decreased $0.9 million, or 4.5% compared to fiscal year 2007 due primarily to decreased wagering on simulcast races.

Promotional Allowances —Promotional allowances, which are made up of complimentaries, cash points and coupons, are rewards that we give our loyal customers to encourage them to continue to patronize our properties. Promotional allowances decreased $13.5 million, or 6.3%, for fiscal year 2008,

Table of Contents

compared to fiscal year 2007. Considering the acquisition or opening of new properties for which our promotional allowances increased $19.7 million for fiscal year 2008, same property promotional allowances decreased $33.3 million for fiscal year 2008. Decreases in such promotional allowances reflect decreases in gross revenues at certain of our properties with Biloxi accounting for $18.2 million of the decrease for fiscal year 2008, due to increased competition and post-hurricane normalization. Our decision to reduce certain marketing incentives to our less profitable customer segments has also reduced our overall promotional allowances.

Operating Expenses

Operating expenses for the fiscal years 2008 and 2007 are as follows:

			Fiscal Year Ended

(in thousands)			April 27, 2008			April 29, 2007		Variance			Percentage Variance
Operating expenses:
	Casino		$	154,263		$	156,496	$	(2,233	)		-1.4	%
	Gaming taxes			286,746			209,971		76,775			36.6	%
	Rooms			12,031			9,811		2,220			22.6	%
	Pari-mutuel, food, beverage and other			58,676			46,188		12,488			27.0	%
	Marine and facilities			66,656			59,834		6,822			11.4	%
	Marketing and administrative			279,009			264,501		14,508			5.5	%
	Corporate and development			48,619			56,938		(8,319	)		-14.6	%
	Valuation charges			6,526			7,800		(1,274	)		-16.3	%
	Hurricane and other insurance recoveries			(1,757	)		—		(1,757	)		100.0	%
	Pre-opening			3,654			11,433		(7,779	)		-68.0	%
	Depreciation and amortization			128,944			96,998		31,946			32.9	%

		Total operating expenses	$	1,043,367		$	919,970		123,397			13.4	%

Casino —Casino operating expenses decreased $2.2 million, or 1.4%, for fiscal year 2008 compared to fiscal year 2007. Considering the acquisition or opening of new properties for which our casino expenses increased $22.9 million for fiscal year 2008, same property casino expenses decreased $25.1 million for fiscal year 2008. Overall casino expenses for fiscal year 2008 compared to fiscal year 2007, decreased in proportion to casino revenue from 15.8% to 13.9%.

Gaming Taxes —State and local gaming taxes increased $76.8 million, or 36.6%, for fiscal year 2008, as compared to the prior fiscal year. Considering the acquisition or opening of new properties for which our gaming taxes increased $91.8 million for fiscal year 2008, same property gaming taxes decreased $15.0 million for fiscal year 2008. This decrease in same property gaming taxes for the comparative fiscal years 2008 and 2007 corresponds to the reductions in gaming revenues. The effective rate for gaming taxes as a percentage of gaming revenue increased from 20.8% to 25.9% for the fiscal year 2008, due to an increase in the mix of gaming revenues derived from our Pompano, Florida casino with a higher gaming tax rates, partially offset by decreased gaming revenues in Mississippi.

Rooms —Rooms expense increased $2.2 million, or 22.6% for fiscal year 2008 as compared to fiscal year 2007. Rooms expense reflects increased room capacity due to the opening of the Waterloo property hotel and the Bettendorf property hotel expansion. These expenses directly relate to the cost of providing hotel rooms. A reduction in complimentary hotel rooms provided to our customers also increases our rooms expense as the cost of rooms expense allocated to casino expense is reduced.

Pari-mutuel, Food, Beverage and Other —Pari-mutuel, food, beverage and other expenses increased $12.5 million, or 27.0% in fiscal year 2008 as compared to fiscal year 2007. Same property food,

Table of Contents

beverage and other expenses decreased $2.5 million for fiscal year 2008. This decrease in same property food, beverage and other expenses for fiscal year 2008, reflects reductions in our food, beverage and other revenues. Pari-mutuel operating costs of the Pompano property increased $1.5 million for fiscal year 2008 compared to fiscal year 2007. Such costs consist primarily of compensation, benefits, purses, simulcast fees and other direct costs of track operations.

Marine and Facilities —These expenses include salaries, wages and benefits of the marine and facilities departments, operating expenses of the marine crews, maintenance of public areas, housekeeping and general maintenance of the riverboats and pavilions. Marine and facilities expenses increased $6.8 million, or 11.4%, in fiscal year 2008. Same property marine and facilities expenses decreased $3.4 million for fiscal year 2008. This decrease in same property marine and facilities expenses for fiscal year 2008 as compared to fiscal year 2007 is primarily the result of staff reductions and labor cost management.

Marketing and Administrative —These expenses include salaries, wages and benefits of the marketing and sales departments, as well as promotions, direct mail, advertising, special events and entertainment. Administrative expenses include administration and human resource department expenses, rent, professional fees and property taxes. Marketing and administrative expenses increased $14.5 million, or 5.5%, in fiscal year 2008 compared to fiscal year 2007. Same property marketing and administrative expenses decreased $28.3 million for fiscal year 2008. This decrease in same property marketing and administrative expenses for fiscal year 2008 reflects our decision to reduce marketing costs to less profitable customer marketing segments and to reduce our administrative costs.

Corporate and Development —During fiscal year 2008, our corporate and development expenses were $48.6 million compared to $56.9 million for fiscal year 2007. This overall decrease in corporate and development expenses is due primarily to a $10.0 million decrease in development expense as fiscal year 2007 included $11.8 million in development expenses primarily associated with opportunities in Pittsburgh and Singapore.

Depreciation and Amortization —Depreciation and amortization expense for fiscal year 2008 increased $31.9 million, or 32.9% due primarily to our hotel expansion at our Bettendorf property, the acquisition of Caruthersville, the opening of our Waterloo property, and the opening of the slot gaming facility at our Pompano property. Depreciation and amortization expense at our new casino properties increased by $28.3 million compared to fiscal year 2007.

Other Income (Expense), Income Taxes, Minority Interest and Discontinued Operations

	Fiscal Year Ended

(in thousands)	April 27, 2008			April 29, 2007			Variance			Percentage Variance
Interest expense	$	(106,826	)	$	(88,058	)	$	(18,768	)		21.3	%
Interest income		3,293			7,132			(3,839	)		-53.8	%
Loss on early extinguishment of debt		(15,274	)		—			(15,274	)		100.0	%
Income tax (provision) benefit		21,288			(2,837	)		24,125			-850.4	%
Minority interest		(4,868	)		(3,568	)		(1,300	)		36.4	%
Income (loss) from discontinued operations, net of income taxes		(58,810	)		10,169			(68,979	)		-678.3	%

Table of Contents

Interest Expense —Interest expense increased $18.8 million for fiscal year 2008 compared to fiscal year 2007. This increase is primarily attributable to higher debt balances under our senior secured credit facility to fund acquisitions, and property and equipment additions.

Interest Income —During fiscal year 2008, our interest income was $3.3 million compared to $7.1 million for fiscal year 2007. The change in interest income reflects changes in our invested cash and marketable securities balances and lower interest rates.

	Fiscal Year Ended

	April 27, 2008			April 29, 2007
Continuing operations		39.1	%		-33.8	%
Total		41.3	%		108.2	%

Liquidity and Capital Resources

Cash Flows from Operating Activities —During fiscal year 2009, we provided $190.6 million in cash flows from operating activities compared to providing $133.4 million during fiscal year 2008. The increase in cash flows from operating activities is primarily due to improvements in net income which included $60.0 million in pretax business interruption insurance proceeds from our Hurricane Katrina settlement at our Biloxi property and collection of $20.9 million of income tax refunds.

Cash Flows used in Investing Activities —During fiscal year 2009 we used $27.9 million for investing activities compared to using $302.4 million during fiscal year 2008. Significant investing activities for fiscal year 2009 included purchases of property and equipment of $58.6 million primarily offset by the collection of property related insurance proceeds of $32.2 million. During fiscal year 2008, our significant investing activities included the acquisition of the 43% minority interest in our Black Hawk, Colorado casino properties for $64.8 million, the acquisition of our Caruthersville casino for $43.3 million and purchases of property and equipment of $190.5 million.

Cash Flows used by Financing Activities —During fiscal year 2009 our net cash flows used by financing activities were $157.2 million primarily comprised of:

•: Repayment of $43.7 million of our senior secured term loans;
•: Repayment of $18.5 million of our revolving credit agreement;
•: Payment of $82.8 million and retire $142.7 million in principal amount of our 7% senior subordinated notes; and
•: Repayment of other long-term liabilities of $11.4 million.

During fiscal year ended 2008 our net cash flows from financing activities were $72.5 million primarily comprised of:

•

Borrowings under our senior secured credit facility used to:

i.: extinguish and repay the February 2005 senior secured credit facility including revolving loans and term loans totaling $503.5 million;
ii.: Repay and retire our $200.0 million, 9% Senior Subordinated notes plus a call premium of $9.0 million; and

Table of Contents

iii.: fund our $64.8 million acquisition of the 43% minority interest in our Black Hawk, Colorado casino properties and repay and retire approximately $195 million of indebtedness under our former Black Hawk credit facility.

•: Payments of deferred financing costs of $8.9 million primarily associated with our new senior secured credit facility.
•: Proceeds from the exercise of stock options of $5.7 million.

Availability of Cash and Additional Capital —At April 26, 2009, we had cash and cash equivalents and marketable securities of $114.2 million. As of April 26, 2009, we had $112.0 million in revolving credit and $825.7 million in term loans outstanding under our senior secured credit facility. Our net line of credit availability at April 26, 2009 was approximately $348.1 million.

Capital Expenditures and Development Activities —Historically, we have made significant investments in property and equipment and expect that our operations will continue to demand ongoing investments to keep our properties competitive.

In fiscal 2010 we expect to invest approximately $40 million in maintenance capital expenditures. Additionally, we have identified approximately $60 million in projects primarily focused on refreshing our hotel room inventory as well as additional improvements to our Black Hawk and Lake Charles properties. The timing an amount of these capital expenditures will be determined as we gain more clarity as to improvement of economic and local market conditions, cash flows from our continuing operations and availability of cash under our senior secured credit facility.

Historically, we have funded our daily operations through net cash provided by operating activities and our significant capital expenditures through operating cash flow and debt financing. While, we believe that existing cash, cash flow from operations, and available borrowings under our senior secured credit facility will be sufficient to support our working capital needs, planned capital expenditures and debt service requirements for the foreseeable future, there is no assurance that these sources will in fact provide adequate funding for our planned and necessary expenditures or that our planned reduced levels of capital investments will be sufficient to allow us to remain competitive in our existing markets.

We are highly leveraged and may be unable to obtain additional debt or equity financing on acceptable terms if our current sources of liquidity are not sufficient or if we fail to stay in compliance with the covenants of our senior secured credit facility. We will continue to evaluate our planned capital expenditures at each of our existing locations in light of the operating performance of the facilities at such locations.

As part of our business development activities, historically we have entered into agreements which have resulted in the acquisition or development of businesses or assets. These business development efforts and related agreements typically require the expenditure of cash, which may be significant. The amount and timing of our cash expenditures relating to development activities may vary based upon our evaluation of development opportunities, our financial condition and the condition of the financing markets. Our development activities are subject to a variety of factors including but not limited to: obtaining permits, licenses and approvals from appropriate regulatory and other agencies, legislative changes and, in certain circumstances, negotiating acceptable leases.

Critical Accounting Estimates

Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles that require our management to make estimates and assumptions that affect reported amounts and related disclosures. Management identifies critical accounting estimates as:

•: those that require the use of assumptions about matters that are inherently and highly uncertain at the time the estimates are made;

Table of Contents

•: those estimates where, had we chosen different estimates or assumptions, the resulting differences would have had a material impact on our financial condition, changes in financial condition or results of operations; and
•: those estimates that, if they were to change from period to period, likely would result in a material impact on our financial condition, changes in financial condition or results of operations.

Based upon management's discussion of the development and selection of these critical accounting estimates with the Audit Committee of our Board of Directors, we believe the following accounting estimates involve a higher degree of judgment and complexity.

Goodwill and Other Intangible Assets —At April 26, 2009, we had goodwill and other intangible assets of $396.7 million, representing 22.2% of total assets. Statement of Financial Accounting Standards (SFAS) No. 142 "Goodwill and Other Intangible Assets" ("SFAS 142"), requires goodwill and other intangible assets with indefinite useful lives be tested for impairment annually or more frequently if an event occurs or circumstances change that may reduce the fair value of our goodwill and other intangible assets below their carrying value. For properties with goodwill and/or other intangible assets with indefinite lives, this test requires the comparison of the implied fair value of each property to carrying value. The implied fair value includes estimates of future cash flows that are based on reasonable and supportable assumptions and represent our best estimates of the cash flows expected to result from the use of the assets and their eventual disposition and by a market approach based upon valuation multiples for similar companies. Changes in estimates or application of alternative assumptions and definitions could produce significantly different results.

During the fourth quarter of each fiscal year, we engage an independent third party valuation firm to conduct annual impairment testing under SFAS 142. As a result of our annual impairment test, we recorded an impairment charge of $18.3 million to write-down goodwill and indefinite lived intangible assets at Black Hawk during fiscal 2009 and a $7.8 million write-down of goodwill at Lula during fiscal year 2007.

Property and Equipment —At April 26, 2009, we had property and equipment, net of accumulated depreciation of $1,177.5 million, representing 66.1% of total assets. We capitalize the cost of property and equipment. Maintenance and repairs that neither materially add to the value of the property nor appreciably prolong its life are charged to expense as incurred. We depreciate property and equipment on a straight-line basis over their estimated useful lives. The estimated useful lives are based on the nature of the assets as well as our current operating strategy. Future events such as property expansions, new competition, changes in technology and new regulations could result in a change in the manner in which we are using certain assets requiring a change in the estimated useful lives of such assets.

Impairment of Long-lived Assets —We evaluate long-lived assets for impairment using Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS 144"), which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. In assessing the recoverability of the carrying value of property, equipment and other long-lived assets, we make assumptions regarding future cash flows and residual values. If these estimates or the related assumptions are not achieved or change in the future, we may be required to record an impairment loss for these assets. In evaluating impairment of long-lived assets for newly opened operations, estimates of future cash flows and residual values may require some period of actual results to provide the basis for an opinion of future cash flows and residual values used in the determination of an impairment loss for these assets. Such an impairment loss would be recognized as a non-cash component of operating income.

Table of Contents

During the fourth quarter of fiscal 2009, we recorded a charge of $1.4 million to reduce our Blue Chip assets held for sale to their estimated fair value less the cost to sell.

During the fourth quarter of fiscal year 2008, we engaged an independent third party valuation firm to conduct an appraisal of our long-lived assets associated with our Coventry, England due to the continuation of losses from operations, a review of expected future operating trends and the current fair values of our long-lived assets in Coventry. Based upon this appraisal, we recorded an impairment charge of $78.0 million relating to the write-down of long-lived assets at our Coventry, England operations as of the end of fiscal 2008.

Self-Insurance Liabilities —We are self-funded up to a maximum amount per claim for our employee-related health care benefits program, workers' compensation insurance and general liability insurance. Claims in excess of this maximum are fully insured through a stop-loss insurance policy. We accrue a discounted estimate for workers' compensation insurance and general liabilities based on claims filed and estimates of claims incurred but not reported. We rely on independent consultants to assist in the determination of estimated accruals. While the estimated cost of claims incurred depends on future developments, such as increases in health care costs, in our opinion, recorded reserves are adequate to cover future claims payments.

Income Tax Assets and Liabilities —We account for income taxes in accordance with Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"). SFAS 109 requires that we recognize a current tax asset or liability for the estimated taxes payable or refundable based upon application of the enacted tax rates to taxable income in the current year. Additionally, we are required to recognize a deferred tax liability or asset for the estimated future tax effects attributable to temporary differences. Temporary differences occur when differences arise between: (a) the amount of taxable income and pretax financial income for a year and (b) the tax basis of assets or liabilities and their reported amounts in financial statements. SFAS 109 also requires that any deferred tax asset recognized must be reduced by a valuation allowance for any tax benefits that, in our judgment and based upon available evidence, may not be realizable.

As of April 30, 2007, we adopted FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes—an Interpretation of FASB Statement No. 109" ("FIN 48"). FIN 48 requires that tax positions be assessed using a two-step process. A tax position is recognized if it meets a "more likely than not" threshold, and is measured at the largest amount of benefit that is greater than 50 percent likely of being realized. Uncertain tax positions must be reviewed at each balance sheet date. Liabilities recorded as a result of this analysis must generally be recorded separately from any current or deferred income tax accounts, and are classified as current Other accrued liabilities or long-term Other long-term liabilities based on the time until expected payment.

We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense. This policy did not change as a result of the adoption of FIN 48.

Stock Based Compensation —We apply the FASB Statement of Financial Accounting Standards No. 123 (revised 2004), "Share-Based Payment" (SFAS 123(R)). The estimate of the fair value of the stock options is calculated using the Black-Scholes-Merton option-pricing model. This model requires the use of various assumptions, including the historical volatility, the risk free interest rate, estimated expected life of the grants, the estimated dividend yield and estimated rate of forfeitures. Total stock option expense is included in the expense category corresponding to the employees' regular compensation in the accompanying consolidated statements of operations.

New Development Projects and Pre-opening costs —We pursue development opportunities for new gaming facilities in our ongoing efforts to grow and develop the Company. Projects that have not yet been deemed as probable to reach completion because they have not yet met certain conditions, including receipt of sufficient regulatory approvals, site control or related permits and or probable

Table of Contents

financing are considered by us to be in the development stage. In accordance with Statement of Position 98-5 "Reporting on the Costs of Start-Up Activities" ("SOP 98-5"), costs related to projects in the development stage, except for those costs as detailed in SOP 98-5, are recorded as an expense of new development at the corporate level and recorded on the accompanying consolidated statement of operations in the operating expense line item "Corporate & development". Items for which a future value is probable, regardless of the project's outcome, may be subject to capitalization and subsequent depreciation and amortization.

For approved projects, certain eligible costs related to such projects are capitalized. We follow the guidance of Statement of Financial Accounting Standards No. 67 ("SFAS 67") "Accounting for Costs and Initial Rental Operations of Real Estate Projects", which are classified under the line item "Property and equipment, net" on the balance sheet. Costs that are not capital in nature but either retain value or represent future liability, such as refundable utility deposits or a note payable, receive the appropriate balance sheet treatment. All costs that are neither eligible for capitalization nor eligible for other balance sheet treatment, such as payroll, advertising, utilities and travel, are recorded as operating expenses when incurred.

Contingencies —We are involved in various legal proceedings and have identified certain loss contingencies. We record liabilities related to these contingencies when it is determined that a loss is probable and reasonably estimable in accordance with Statement of Financial Accounting Standards No. 5, "Accounting for Contingencies." These assessments are based on our knowledge and experience as well as the advice of legal counsel regarding current and past events. Any such estimates are also subject to future events, court rulings, negotiations between the parties and other uncertainties. If an actual loss differs from our estimate, or the actual outcome of any of the legal proceedings differs from expectations, operating results could be impacted.

Contractual Obligations and Commercial Commitments

The following table provides information as of fiscal year 2009, about our contractual obligations and commercial commitments. The table presents contractual obligations by due dates and related contractual commitments by expiration dates (in millions).

	Payments Due by Period

Contractual Obligations	Total		Less Than 1 Year		1-3 Years		4-5 Years		After 5 Years
Long-Term Debt	$	1,301.1	$	9.7	$	17.5	$	1,270.6	$	3.3
Estimated interest payments on long-term debt(1)		311.1		72.9		124.1		111.4		2.7
Operating Leases		636.7		19.4		38.2		33.3		545.8
Long-Term Obligations(2)		22.8		11.9		7.8		1.1		2.0
Other Long-Term Obligations(3)		24.8		1.1		2.2		2.4		19.1
Total Contractual Cash Obligations		2,296.9		115.0		189.8		1,418.8		573.3

(1): Estimated interest payment on long-term debt are based on principal amounts outstanding at our fiscal year end and forecasted LIBOR rates for our senior secured credit facility.
(2): Long-term obligations include future purchase commitments as well as current and future construction contracts.
(3): Other Long-Term Obligations include our contractual cash payments associated with assets accounted for under EITF 97-10.

Table of Contents

Recently Issued Accounting Standards

Recently Issued Accounting Standards —New Pronouncements—In December 2007, the FASB issued SFAS No. 141 (revised), " Business Combinations " ("SFAS 141(R)"), which is intended to improve reporting by creating greater consistency in the accounting and financial reporting of business combinations. SFAS 141(R) requires that the acquiring entity in a business combination recognize all (and only) the assets and liabilities assumed in the transaction, establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed, and requires the acquirer to disclose to investors and other users all of the information that they need to evaluate and understand the nature and financial effect of the business combination. In addition, SFAS 141(R) modifies the accounting for transaction and restructuring costs. SFAS 141(R) is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. We will apply SFAS 141(R) after the effective date of the accounting standard.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk of loss arising from adverse changes in market rates and prices, including interest rates, foreign currency exchange rates, commodity prices and equity prices. Our primary exposure to market risk is interest rate risk associated with our senior secured credit facility (the "July 2007 Credit Facility").

Senior Secured Credit Facility

During the fiscal year 2009, we maintained six interest rate swap arrangements with an aggregate notional value of $500.0 million as of April 26, 2009. The swap agreements effectively convert portions of the July 2007 Credit Facility variable debt to a fixed-rate basis until the respective swap agreements terminate, which occurs during fiscal years 2010, 2011, and 2012. These swap agreements meet the criteria for hedge accounting for cash flow hedges and have been evaluated, as of fiscal year 2009, as being fully effective.

The following table provides information at April 26, 2009 about our financial instruments that are sensitive to changes in interest rates. The table presents principal cash flows and related weighted average interest rates by expected maturity dates.

Table of Contents

Interest Rate Sensitivity
Principal (Notional) Amount by Expected Maturity
Average Interest (Swap) Rate

(dollars in millions)		2010			2011			2012			2013			2014			Thereafter			Total			Fair Value 4/26/2009

Liabilities
Long-term debt, including current portion
	Fixed rate	$	0.2		$	0.2		$	0.2		$	0.2		$	357.5		$	3.0		$	361.3		$	266.6
	Average interest rate		7.01	%		7.01	%		7.01	%		7.01	%		7.01	%		7.01	%
	Variable rate	$	9.5		$	8.6		$	8.6		$	120.6		$	792.3		$	0.2		$	939.8		$	766.4
	Average interest rate(1)		3.64	%		2.96	%		4.56	%		5.05	%		5.25	%		3.45	%
Interest Rate Derivative Financial Instruments Related to Debt
Interest rate swaps
	Pay fixed/receive variable(2)	$	100.0		$	300.0		$	50.0		$	—		$	50.0		$	—		$	500.0		$	25.8
	Average pay rate		4.59	%		4.52	%		4.20	%		4.00	%		4.00	%		0.00	%		4.58	%
	Average receive rate		1.99	%		0.98	%		2.37	%		2.98	%		3.17	%		0.00	%		1.78	%

(1): Represents the annual average LIBOR from the forward yield curve at April 26, 2009 plus the weighted average margin above LIBOR on all consolidated variable rate debt.
(2): Fair value represents the amount we would pay to the respective counter party if we had terminated the swap agreements on April 26, 2009.

We are also exposed to market risks relating to fluctuations in currency exchange rates related to our remaining ownership interests in the UK classified as discontinued operations as of April 26, 2009. We finance a portion of our UK investments in the local currency of the UK and due to the limited scope and nature of our UK operations, our market risks are immaterial.

Table of Contents

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The following consolidated financial statements are included in this report:


Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting
Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements
Consolidated Balance Sheets—April 26, 2009 and April 27, 2008
Fiscal Years Ended April 26, 2009, April 27, 2008 and April 29, 2007
	Consolidated Statements of Operations
	Consolidated Statements of Cash Flows
	Consolidated Statements of Stockholders' Equity
Notes to Consolidated Financial Statements
Schedule II—Valuation and Qualifying Accounts—Fiscal Years Ended April 26, 2009, April, 27, 2008 and April 29, 2007

Table of Contents

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
Isle of Capri Casinos, Inc.

We have audited Isle of Capri Casinos, Inc.'s internal control over financial reporting as of April 26, 2009, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Isle of Capri Casinos, Inc.'s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Isle of Capri Casinos, Inc. maintained, in all material respects, effective internal control over financial reporting as of April 26, 2009, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Isle of Capri Casinos, Inc. as of April 26, 2009, and April 27, 2008, and the related consolidated statements of operations, stockholders' equity, and cash flows for the fiscal years April 26, 2009, April 27, 2008 and April 29, 2007, and our report dated June 22, 2009, expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP
Saint Louis, Missouri

June 22, 2009

Table of Contents

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
Isle of Capri Casinos, Inc.

We have audited the accompanying consolidated balance sheets of Isle of Capri Casinos, Inc. as of April 26, 2009 and April 27, 2008, and the related consolidated statements of operations, stockholders' equity, and cash flows for the fiscal years ended April 26, 2009, April 27, 2008, and April 29, 2007. Our audits also included the financial statement schedule listed in the Index at Item 15(a). These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Isle of Capri Casinos, Inc. at April 26, 2009 and April 27, 2008, and the consolidated results of its operations and its cash flows for the years ended April 26, 2009, April 27, 2008, and April 29, 2007, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Isle of Capri Casinos, Inc.'s internal control over financial reporting as of April 26, 2009, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated June 22, 2009, expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP
Saint Louis, Missouri

June 22, 2009

Table of Contents

ISLE OF CAPRI CASINOS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

			April 26, 2009			April 27, 2008

ASSETS
Current assets:
	Cash and cash equivalents		$	96,654		$	91,790
	Marketable securities			17,548			18,533
	Accounts receivable, net of allowance for doubtful accounts of $5,106 and $4,258, respectively			10,421			12,195
	Income taxes receivable			7,744			28,663
	Deferred income taxes			16,295			12,606
	Prepaid expenses and other assets			23,234			27,905
	Insurance receivable			1,514			7,689
	Assets held for sale			4,183			—

		Total current assets		177,593			199,381
Property and equipment, net				1,177,540			1,328,986
Other assets:
	Goodwill			313,136			307,649
	Other intangible assets, net			83,588			89,252
	Deferred financing costs, net			9,314			13,381
	Restricted cash			2,774			4,802
	Prepaid deposits and other			18,717			22,948
	Deferred income taxes			—			7,767

		Total assets	$	1,782,662		$	1,974,166

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Current maturities of long-term debt		$	9,688		$	9,698
	Accounts payable			16,246			29,283
Accrued liabilities:
	Payroll and related			47,209			47,618
	Property and other taxes			31,487			30,137
	Interest			9,280			8,580
	Progressive jackpots and slot club awards			13,647			13,768
	Other			38,548			44,353
	Liabilities related to assets held for sale			1,888			—

		Total current liabilities		167,993			183,437
Long-term debt, less current maturities				1,291,384			1,497,591
Deferred income taxes				24,970			—
Other accrued liabilities				52,575			52,821
Other long-term liabilities				17,314			52,305
Stockholders' equity:
	Preferred stock, $.01 par value; 2,000,000 shares authorized; none issued			—			—
	Common stock, $.01 par value; 45,000,000 shares authorized; shares issued: 36,111,089 at April 26, 2009 and 35,229,006 at April 27, 2008			361			353
	Class B common stock, $.01 par value; 3,000,000 shares authorized; none issued			—			—
	Additional paid-in capital			193,827			188,036
	Retained earnings			101,828			58,253
	Accumulated other comprehensive (loss) income			(15,191	)		(5,601	)

				280,825			241,041
	Treasury stock, 4,340,436 shares at April 26, 2009 and 4,372,073 shares at April 27, 2008			(52,399	)		(53,029	)

		Total stockholders' equity		228,426			188,012

		Total liabilities and stockholders' equity	$	1,782,662		$	1,974,166

See accompanying notes to consolidated financial statements.

Table of Contents

ISLE OF CAPRI CASINOS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)

					Fiscal Year Ended

					April 26, 2009			April 27, 2008			April 29, 2007
Revenues:
	Casino				$	1,066,162		$	1,107,246		$	1,007,523
	Rooms					46,380			49,498			49,584
	Pari-mutuel, food, beverage and other					139,957			151,530			147,036
	Hurricane and other insurance recoveries					62,932			348			2,817

		Gross revenues				1,315,431			1,308,622			1,206,960
			Less promotional allowances			(196,789	)		(200,932	)		(214,465	)

				Net revenues		1,118,642			1,107,690			992,495
Operating expenses:
	Casino					154,538			154,263			156,496
	Gaming taxes					270,882			286,746			209,971
	Rooms					12,175			12,031			9,811
	Pari-mutuel, food, beverage and other					53,143			58,676			46,188
	Marine and facilities					65,504			66,656			59,834
	Marketing and administrative					263,164			279,009			264,501
	Corporate and development					41,331			48,619			56,938
	Valuation charges					36,125			6,526			7,800
	Hurricane and other insurance recoveries					(32,277	)		(1,757	)		—
	Preopening					—			3,654			11,433
	Depreciation and amortization					122,457			128,944			96,998

		Total operating expenses				987,042			1,043,367			919,970

Operating income (loss):						131,600			64,323			72,525
	Interest expense					(92,065	)		(106,826	)		(88,058	)
	Interest income					2,112			3,293			7,132
	Gain (loss) on early extinguishment of debt					57,693			(15,274	)		—

Income (loss) from continuing operations before income taxes and minority interest						99,340			(54,484	)		(8,401	)
	Income tax benefit (provision)					(39,942	)		21,288			(2,837	)
	Minority interest					—			(4,868	)		(3,568	)

Income (loss) from continuing operations						59,398			(38,064	)		(14,806	)
Income (loss) from discontinued operations including gain (loss) on sale, net of income tax benefit (provision) of $8,790, $43,532 and ($11,220) for the fiscal years ended 2009, 2008 and 2007, respectively						(15,823	)		(58,810	)		10,169

Net income (loss)					$	43,575		$	(96,874	)	$	(4,637	)

Earnings (loss) per common share basic:
	Income (loss) from continuing operations				$	1.89		$	(1.24	)	$	(0.49	)
	Income (loss) from discontinued operations including gain on sale, net of income taxes					(0.50	)		(1.92	)		0.34

	Net income (loss)				$	1.39		$	(3.16	)	$	(0.15	)

Earnings (loss) per common share diluted:
	Income (loss) from continuing operations				$	1.89		$	(1.24	)	$	(0.49	)
	Income (loss) from discontinued operatons, net of income taxes					(0.50	)		(1.92	)		0.34

	Net income (loss)				$	1.39		$	(3.16	)	$	(0.15	)

Weighted average basic shares						31,372,670			30,699,457			30,384,255
Weighted average diluted shares						31,379,016			30,699,457			30,384,255

See accompanying notes to consolidated financial statements.

Table of Contents

ISLE OF CAPRI CASINOS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In thousands, except share amounts)

		Common Stock		Additional Paid-in Capital			Unearned Compen- sation			Retained Earnings			Accum. Other Compre- hensive Income (Loss)			Treasury Stock			Total Stock- holders' Equity

Balance, April 30, 2006	34,293,263	$	343	$	163,548		$	(1,383	)	$	159,764		$	131		$	(42,156	)	$	280,247
Net loss	—		—		—			—			(4,637	)		—			—			(4,637	)
Foreign currency translation adjustments	—		—		—			—			—			3,227			—			3,227

Comprehensive loss																				(1,410	)
Exercise of stock options, including
income tax benefit of $849	389,271		4		5,617			—			—			—			—			5,621
Issuance of deferred bonus shares from
treasury stock	—		—		(429	)		—			—			—			429			—
Purchase of treasury stock	—		—		—			—			—			—			(10,415	)		(10,415	)
Other	—		—		548			—			—			—			—			548
Stock compensation expense	—		—		7,231			—			—			—			—			7,231
Reclassification of unearned compensation due to the adoption of SFAS 123(R)	—		—		(1,383	)		1,383			—			—			—			—

Balance, April 29, 2007	34,682,534		347		175,132			—			155,127			3,358			(52,142	)		281,822
Net loss	—		—		—						(96,874	)		—			—			(96,874	)
Unrealized loss on interest rate swap contracts net of income tax benefit of $5,159	—		—		—			—			—			(8,555	)		—			(8,555	)
Foreign currency translation adjustments	—		—		—			—			—			(404	)		—			(404	)

Comprehensive loss	—		—		—			—			—			—			—			(105,833	)
Exercise of stock options, including income tax benefit of $977	546,472		6		5,741			—			—			—			—			5,747
Issuance of deferred bonus shares from treasury stock	—		—		(414	)		—			—			—			414			—
Purchase of treasury stock	—		—		—			—			—			—			(1,301	)		(1,301	)
Other	—		—		265			—			—			—			—			265
Stock compensation expense	—		—		7,312			—			—			—			—			7,312

Balance, April 27, 2008	35,229,006		353		188,036			—			58,253			(5,601	)		(53,029	)		188,012
Net income	—		—		—						43,575			—			—			43,575
Unrealized loss on interest rate swap contracts net of income tax benefit of $3,720	—		—		—			—			—			(6,255	)		—			(6,255	)
Foreign currency translation adjustments	—		—		—			—			—			(3,335	)		—			(3,335	)

Comprehensive income	—		—		—			—			—			—			—			33,985
Exercise of stock options	36,414		—		110			—			—			—			—			110
Issuance of deferred bonus shares from treasury stock	—		—		(630	)		—			—			—			630			—
Other	664		—		(806	)		—			—			—			—			(806	)
Issuance of restricted stock, net of forfeitures	845,005		8		(8	)		—			—			—			—			—
Stock compensation expense	—		—		7,125			—			—			—			—			7,125

Balance, April 26, 2009	36,111,089	$	361	$	193,827		$	—		$	101,828		$	(15,191	)	$	(52,399	)	$	228,426

See accompanying notes to consolidated financial statements.

Table of Contents

ISLE OF CAPRI CASINOS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

		Fiscal Year Ended

		April 26, 2009			April 27, 2008			April 29, 2007
Operating activities:
Net income (loss)		$	43,575		$	(96,874	)	$	(4,637	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
	Depreciation and amortization		127,222			136,127			99,506
	Amortization of deferred financing costs		2,470			2,700			2,636
	(Gain) loss on early extinguishment of debt		(57,693	)		15,274			—
	Property insurance recoveries		(32,179	)		—			—
	Valuation charges		36,525			85,184			8,466
	Deferred income taxes		32,751			(35,194	)		(12,374	)
	Stock compensation expense		7,125			7,312			7,231
	Deferred compensation expense		175			265			548
	Loss on derivative instruments		—			550			1,045
	Loss (gain) on disposal of assets		12,161			(90	)		(26,244	)
	Minority interest		—			4,868			3,568
Changes in operating assets and liabilities:
	Sales (purchases) of trading securities		985			(1,364	)		558
	Accounts receivable		1,548			10,276			(4,797	)
	Income taxes receivable		20,919			(32,562	)		6,940
	Insurance receivable		5,486			48,393			1,359
	Prepaid expenses and other assets		8,551			(1,098	)		(15,985	)
	Accounts payable and accrued liabilities		(19,011	)		(10,410	)		3,075

Net cash provided by operating activities			190,610			133,357			70,895

Investing activities:
Purchase of property and equipment			(58,579	)		(190,459	)		(451,422	)
Property insurance recoveries			32,179			—			21,963
Payments towards gaming license			(4,000	)		(4,000	)		(4,013	)
Net cash paid for acquisitions			—			(107,895	)		—
Proceeds from sales of assets held for sale			954			—			238,725
Restricted cash			1,579			65			(2,524	)
Other			—			(157	)		—

Net cash used in investing activities			(27,867	)		(302,446	)		(197,271	)

Financing activities:
Principal repayments on long-term debt			(127,457	)		(697,108	)		(7,089	)
Net (repayments) borrowings on line of credit			(18,484	)		(99,355	)		205,421
Termination payment relating to other long-term liabilities			(11,352	)		—			—
Proceeds from long-term debt borrowings			—			875,000			—
Payment of deferred financing costs			—			(8,881	)		—
Purchase of treasury stock			—			(1,301	)		(10,415	)
Distribution to minority interests			—			(1,588	)		—
Proceeds from exercise of stock options including tax benefit			110			5,747			5,621

Net cash (used by) provided by financing activities			(157,183	)		72,514			193,538

Effect of foreign currency exchange rates on cash			(696	)		251			(97	)

Net increase (decrease) in cash and cash equivalents			4,864			(96,324	)		67,065
Cash and cash equivalents at beginning of year			91,790			188,114			121,049

Cash and cash equivalents at end of year		$	96,654		$	91,790		$	188,114

See accompanying notes to consolidated financial statements.

Table of Contents

ISLE OF CAPRI CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(amounts in thousands, except share and per share amounts)

1. Organization

Organization —Isle of Capri Casinos, Inc., a Delaware corporation, was incorporated in February 1990. Except where otherwise noted, the words "we," "us," "our" and similar terms, as well as "Company," refer to Isle of Capri Casinos, Inc. and all of its subsidiaries. We are a leading developer, owner and operator of branded gaming facilities and related lodging and entertainment facilities in markets throughout the United States. Our wholly owned subsidiaries own and operate thirteen casino gaming facilities in the United States located in Black Hawk, Colorado; Lake Charles, Louisiana; Lula, Biloxi and Natchez, Mississippi; Kansas City, Caruthersville and Boonville, Missouri; Bettendorf, Davenport, Waterloo and Marquette, Iowa; and Pompano Beach, Florida. Effective January 27, 2008, we own 100% of our operations in Black Hawk, Colorado following the acquisition of our minority partner's 43% interest in those operations. Our international gaming interests include a wholly owned casino in Freeport, Grand Bahamas and a two-thirds ownership interest in casinos in Dudley and Wolverhampton, England.

2. Summary of Significant Accounting Policies

Basis of Presentation —The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany balances and transactions have been eliminated. We view each property as an operating segment and all such operating segments have been aggregated into one reporting segment.

Discontinued operations include our remaining casino operations in England held for sale at April 26, 2009, and our formerly wholly owned casinos; in Coventry, England sold in April 2009, and in Vicksburg, Mississippi and Bossier City, Louisiana sold in July 2006.

Fiscal Year-End —Our fiscal year ends on the last Sunday in April. Periodically, this system necessitates a 53-week year. Fiscal years 2009, 2008 and 2007 are all 52-week years, which commenced on April 28, 2008, April 30, 2007 and May 1, 2006, respectively.

Reclassifications —Certain reclassifications of prior year presentations have been made to conform to the fiscal year 2009 presentation.

Use of Estimates —The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Cash and Cash Equivalents —We consider all highly liquid investments purchased with an original maturity of three months or less as cash equivalents. Cash also includes the minimum operating cash balances required by state regulatory bodies, which totaled $22,507 and $23,982 at April 26, 2009 and April 27, 2008, respectively.

Marketable Securities —Marketable securities consist primarily of trading securities primarily held by Capri Insurance Corporation, our captive insurance subsidiary. The trading securities are primarily debt and equity securities that are purchased with the intention to resell in the near term. The trading securities are carried at fair value with changes in fair value recognized in current period income in the accompanying statements of operations.

Table of Contents

ISLE OF CAPRI CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(amounts in thousands, except share and per share amounts)

2. Summary of Significant Accounting Policies (Continued)

Inventories —Inventories are stated at the lower of weighted average cost or market value.

Property and Equipment —Property and equipment are stated at cost or if acquired through acquisition, its value as determined under purchase accounting. Assets subject to impairment write downs are recorded at the lower of net book value or fair value. We capitalize the cost of purchases of property and equipment and capitalize the cost of improvements to property and equipment that increases the value or extends the useful lives of the assets. Costs of normal repairs and maintenance are charged to expense as incurred.

Depreciation is computed using the straight-line method over the following estimated useful lives of the assets:

		Years

Slot machines, software and computers			3-5
Furniture, fixtures and equipment			5-10
Leasehold improvements			Lesser of life of lease or estimated useful life
Buildings and improvements			7-39.5

Certain property currently leased in Bettendorf, Iowa and property formerly leased in Coventry, England, prior to the termination of such lease, are accounted for in accordance with Emerging Issues Task Force 97-10, "The Effect of Lessee Involvement in Asset Construction" ("EITF 97-10").

Capitalized Interest —The interest cost associated with major development and construction projects is capitalized and included in the cost of the project. When no debt is incurred specifically for a project, interest is capitalized on amounts expended on the project using the weighted-average cost of our outstanding borrowings. Capitalization of interest ceases when the project is substantially complete or development activity is suspended for more than a brief period. Capitalized interest was $1,018, $3,335 and $9,528 for fiscal years 2009, 2008 and 2007, respectively, including capitalized interest relating to our discontinued operations of $943 and $3,005 for the fiscal years ending 2008 and 2007, respectively.

Operating Leases —We recognize rent expense for each lease on the straight line basis, aggregating all future minimum rent payments including any predetermined fixed escalations of the minimum rentals. Our liabilities include the aggregate difference between rent expense recorded on the straight-line basis and amounts paid under the leases.

Restricted Cash —We classify cash that is either statutorily or contractually restricted as to its withdrawal or usage as a long term asset due to the duration of the underlying restriction. Restricted cash primarily includes amounts related to state tax bonds and other gaming bonds, amounts held in escrow related to leases and other deposits related to development activities or acquisitions.

Goodwill and Other Intangible Assets —Goodwill represents the excess of the cost over the net identifiable tangible and intangible assets of acquired businesses and is stated at cost, net of impairments, if any. Other intangible assets include values attributable to acquired gaming licenses, customer lists, and trademarks. Statement of Financial Accounting Standards No. 142, Goodwill and

Table of Contents

ISLE OF CAPRI CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(amounts in thousands, except share and per share amounts)

2. Summary of Significant Accounting Policies (Continued)

Other Intangible Assets , ("SFAS 142") requires these assets be reviewed for impairment at least annually. We perform our annual impairment test during our fourth quarter. Goodwill for relevant reporting units is tested for impairment using a discounted cash flow analysis based on our budgeted future results discounted using our weighted average cost of capital and by using a market approach based upon valuation multiples for similar companies. For intangible assets with indefinite lives not subject to amortization, we review, at least annually, the continued use of an indefinite useful life. If these intangible assets are determined to have a finite useful life, they are amortized over their estimated remaining useful lives.

Long-Lived Assets —We periodically evaluate the carrying value of long-lived assets to be held and used in accordance with Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, ("SFAS 144") which requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets.

Deferred Financing Costs —The costs of issuing long-term debt are capitalized and amortized using the effective interest method over the term of the related debt.

Self-Insurance —We are self-funded up to a maximum amount per claim for employee-related health care benefits, workers' compensation insurance and general liability insurance. Claims in excess of this maximum are fully insured through a stop-loss insurance policy. We accrue for workers' compensation and general liability insurance on a discounted basis based on claims filed and estimates of claims incurred but not reported. The estimates have been discounted at 4.1% and 5.3% at April 26, 2009 and April 27, 2008, respectively. We utilize independent consultants to assist in the determination of estimated accruals. As of April 26, 2009 and April 27, 2008, our employee-related health care benefits program and discounted workers' compensation and general liabilities for unpaid and incurred but not reported claims are $29,001 and $27,031, respectively and are included in Accrued liabilities-payroll and related for health care benefits and workers' compensation insurance and in Accrued liabilities-other for general liability insurance in the accompanying consolidated balance sheets. While the total cost of claims incurred depends on future developments, in management's opinion, recorded reserves are adequate to cover future claims payments.

Derivative Instruments and Hedging Activities —SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities ("SFAS 133") requires we recognize all of our derivative instruments as either assets or liabilities in the consolidated balance sheet at fair value. During fiscal year 2009, we adopted SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities—An Amendment of FASB Statement No. 133 ("SFAS 161). SFAS 161 supplements the required disclosures provided under SFAS 133, with additional qualitative and quantitative information. We utilize derivative financial instruments to manage interest rate risk associated with some of our variable rate borrowings. Derivative financial instruments are intended to reduce our exposure to interest rate risk. We account for changes in the fair value of a derivative instrument depending on the intended use of the derivative and the resulting designation, which is established at the inception of a derivative. SFAS 133 requires that a company formally document, at the inception of a hedge, the hedging relationship and the

Table of Contents

ISLE OF CAPRI CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(amounts in thousands, except share and per share amounts)

2. Summary of Significant Accounting Policies (Continued)

entity's risk management objective and strategy for undertaking the hedge, including identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged, the method used to assess effectiveness and the method that will be used to measure hedge ineffectiveness of derivative instruments that receive hedge accounting treatment. For derivative instruments designated as cash flow hedges, changes in fair value, to the extent the hedge is effective, are recognized in other comprehensive income until the hedged item is recognized in earnings. Hedge effectiveness is assessed quarterly based on the total change in the derivative's fair value. The fair value of the estimated interest differential between the applicable future variable rates and the interest rate swap contracts not designated as hedging instruments, $550 and $1,045 was included in our consolidated statement of operations for fiscal years 2008 and 2007, respectively.

Revenue Recognition —In accordance with gaming industry practice, we recognize casino revenues as the net win from gaming activities. Casino revenues are net of accruals for anticipated payouts of progressive slot jackpots and certain table games wherein incremental jackpot amounts owed are accrued for games in which every coin played or wagered adds to the jackpot total. Revenues from rooms, food, beverage, entertainment and the gift shop are recognized at the time the related service or sale is performed or made.

Promotional Allowances —The retail value of rooms, food and beverage and other services furnished to guests without charge is included in gross revenues and then deducted as promotional allowances to arrive at net revenues included in the accompanying consolidated statement of operations. We also record the redemption of coupons and points for cash as a promotional allowance. The estimated cost of providing such complimentary services from continuing operations are included in casino expense in the accompanying consolidated statements of operations are as follows:

		Fiscal Year Ended

		April 26, 2009		April 27, 2008		April 29, 2007
Rooms		$	8,657	$	10,346	$	13,000
Food and beverage			57,704		59,118		64,216
Other			458		574		654

	Total cost of complimentary services	$	66,819	$	70,038	$	77,870

Slot Club Awards —We provide slot patrons with rewards based on the dollar amount of play on slot machines. A liability has been established based on an estimate of the value of these outstanding rewards, utilizing the age and prior history of redemptions.

Advertising —Advertising costs are expensed the first time the related advertisement appears. Total advertising costs from continuing operations were $22,791, $24,082 and $22,774 in fiscal years 2009, 2008 and 2007, respectively.

Development Costs —We pursue development opportunities for new gaming facilities in an ongoing effort to expand our business. In accordance with Statement of Position 98-5 Reporting on the Costs of Start-Up Activities ("SOP 98-5"), costs related to projects in the development stage, except for those costs as detailed in SOP 98-5, are recorded as a development expense. Additionally, following the

Table of Contents

ISLE OF CAPRI CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(amounts in thousands, except share and per share amounts)

2. Summary of Significant Accounting Policies (Continued)

guidance of SFAS No. 67, Accounting for Costs and Initial Rental Operations of Real Estate Projects, development costs are expensed when the development is deemed less than probable. Total development costs expensed from continuing operations were $5,183, $4,473 and $14,495, in fiscal years 2009, 2008 and 2007, respectively, and were recorded in the consolidated statements of operations in corporate and development expenses.

Pre-Opening Costs —In accordance with SOP 98-5, we expense pre-opening costs as incurred. Pre-opening costs include payroll, outside services, advertising, insurance, utilities, travel and various other expenses related to new operations. All such costs are recorded in the consolidated statements of operations in pre-opening. Pre-opening expenses from continuing operations in our consolidated financial statements were incurred in connection with the opening of the Pompano Park racino in April 2007 and Isle-Waterloo in June 2007.

Income Taxes —We account for income taxes in accordance with SFAS No. 109, " Accounting for Income Taxes " ("SFAS 109"). SFAS 109 requires the recognition of deferred income tax assets, net of applicable reserves related to net operating loss carry forwards and certain temporary differences. Recognizable future tax benefits are subject to a valuation reserve, unless such tax benefits are determined to be more likely than not realizable. On April 30, 2007, we adopted the additional provisions of FASB Interpretation No. 48 ("FIN 48"). We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense.

Earnings (Loss) Per Common Share —In accordance with the provisions of SFAS No. 128, " Earnings Per Share " ("SFAS 128"), basic earnings (loss) per share ("EPS") is computed by dividing net income (loss) applicable to common stock by the weighted average common shares outstanding during the period. Diluted EPS reflects the additional dilution for all potentially dilutive securities such as stock options. Any options with an exercise price in excess of the average market price of the our common stock during the periods presented are not considered when calculating the dilutive effect of stock options for diluted earnings per share calculations.

Stock-Based Compensation —Our stock-based compensation is accounted for in accordance with SFAS No. 123 (revised 2004), " Shared-Based Payment " ("SFAS 123(R)"). Stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award and is recognized as expense on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was, in-substance, multiple awards, over the vesting period of the award. We adopted the provisions of SFAS 123(R) effective May 1, 2006, using the modified prospective method.

Foreign Currency Translation —We account for currency translation in accordance with SFAS No. 52, " Foreign Currency Translation " ("SFAS 52"). Assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect at each balance sheet date. Statement of operations accounts are translated monthly at the average rate of exchange prevailing during the period. Translation adjustments resulting from this process are included in stockholders' equity as Accumulated other comprehensive (loss) income. The cumulative (loss) gain from foreign currency translation included in other comprehensive loss is ($358) and $2,977 as of April 26, 2009 and April 27, 2008, respectively. (Losses) gains from foreign currency transactions are included in income (loss) from

Table of Contents

ISLE OF CAPRI CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(amounts in thousands, except share and per share amounts)

2. Summary of Significant Accounting Policies (Continued)

discontinued operations and were ($2), ($356) and $1,846 in fiscal years 2009, 2008 and 2007, respectively.

Allowance for Doubtful Accounts —We reserve for receivables that may not be collected. Methodologies for estimating the allowance for doubtful accounts range from specific reserves to various percentages applied to aged receivables. Historical collection rates are considered, as are customer relationships, in determining specific reserves.

Fair Value Measurements —We adopted Statement of Financial Accounting Standards No. 157, Fair Value Measurements ("FAS 157") for our financial assets and liabilities including marketable securities and derivative instruments on April 28, 2008. SFAS 157 established a framework for measuring the fair value of financial assets and liabilities. A description of the valuation methodologies used to measure fair value, key inputs, and significant assumptions follows:

Marketable securities— The estimated fair values of our marketable securities are based upon quoted prices available in active markets and represent the amounts we would expect to receive if we sold these marketable securities.

Derivative instruments— The estimated fair value of our derivative instruments is based on market prices obtained from dealer quotes, which are based on interest yield curves and such quotes represent the estimated amounts we would receive or pay to terminate the contracts.

Recently Issued Accounting Standards —In December 2007, the FASB issued SFAS No. 141 (revised), " Business Combinations " ("SFAS 141(R)"). SFAS 141(R) requires that the acquiring entity in a business combination recognize all (and only) the assets and liabilities assumed in the transaction, establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed, and requires the acquirer to disclose to investors and other users all of the information that they need to evaluate and understand the nature and financial effect of the business combination. In addition, SFAS 141(R) modifies the accounting for transaction and restructuring costs. SFAS 141(R) became effective for us for business combinations on or after April 27, 2009. We will apply SFAS 141(R) to any future acquisitions.

Table of Contents

ISLE OF CAPRI CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(amounts in thousands, except share and per share amounts)

3. Discontinued Operations

Discontinued operations include casino properties in Coventry, England, Bossier City, Louisiana, and Vicksburg, Mississippi which have been sold as well as our Blue Chip casino properties which are currently classified as held for sale.

On April 23, 2009, we completed the sale of our assets and terminated our lease of Arena Coventry Convention Center relating to our casino operations in Coventry, England. Our lease termination costs and other expenses, net of cash proceeds from our assets sales, resulted in a pretax charge of $12,016 recorded in fiscal year 2009.

On July 31, 2006, we completed the sale of our Bossier City and Vicksburg properties for cash proceeds of $238,725 net of transaction costs and a working capital adjustment.

During March 2009, we began the sale process related to our Blue Chip casino properties under a plan of administration. While we are currently operating the Blue Chip casino properties, we do not expect to have any continuing involvement following the completion of the sale. The assets held for sale and liabilities related to assets held for sale are as follows:

			April 26, 2009

Current assets:
	Accounts receivable, net		$	260
	Prepaid expenses and other assets			146

		Total current assets		406
Property and equipment, net				3,777

		Total assets		4,183

Current liabilities:
	Accounts payable			540
	Other accrued liabilities			1,348

		Total current liabilities		1,888

		Net assets	$	2,295

The results of our discontinued operations are summarized as follows:

	Discontinued Operatons Fiscal Year Ended

	April 26, 2009			April 27, 2008			April 29, 2007
Net revenues	$	16,659		$	17,662		$	50,237
Valuation charges		(1,400	)		(78,658	)		(666	)
Pretax (loss) gain on sale of discontinued operations		(12,016	)		—			23,244
Pretax (loss) income from discontinued operations		(24,613	)		(102,342	)		21,389
Income tax benefit (provision) from discontinued operations		8,790			43,532			(11,220	)
Income (loss) from discontinued operations		(15,823	)		(58,810	)		10,169

Table of Contents

ISLE OF CAPRI CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(amounts in thousands, except share and per share amounts)

3. Discontinued Operations (Continued)

During fiscal 2009, we recorded a pretax charge of $1,400 to reduce our Blue Chip assets held for sale to their estimated fair value less the cost to sell. During fiscal years 2008 and 2007, we recorded write-offs and other charges for impairment charges at our United Kingdom ("UK") properties based upon a review of expected future operating trends and the current fair value of our long-lived assets. The current fair values used in our determination of the impairment charge were based upon a third party appraisal, a review of historical costs and other relevant information.

Net interest expense of $1,973, 1,939 and 4,054 for fiscal years 2009, 2008 and 2007, respectively, has been allocated to discontinued operations. Interest expense allocated to our UK operations was based upon long term debt and other long-term obligations specific to our UK operations as our UK entities are not guarantors under our senior secured credit facility. Interest expense for our Bossier City and Vicksburg properties was based upon the ratio of net assets to be sold to the sum of total net assets of the Company plus our debt that was not attributable to a particular operation. Such interest allocations are in accordance with EITF 87-24, "Allocation of Interest to Discontinued Operations."

4. Acquisitions

Acquisition of Minority Interest in Black Hawk, Colorado Operations —During January 2009, we finalized our purchase accounting for our January 2008 acquisition of the 43% minority membership interest in our Black Hawk, Colorado subsidiaries. During January 2008, a preliminary allocation of the $64,800 purchase price, including transaction costs and after consideration of minority interest of $29,819, was made by us based upon the estimated fair value of the purchased assets and assumed liabilities. This preliminary purchase price allocation resulted in values being assigned of $14,000 to property and equipment, $10,600 to other intangible assets and $10,381 to goodwill. After completion of third party valuations of the assets acquired, the final purchase price allocation included a $8,331 reduction in the acquired historical cost basis in property and final allocation amounts of $20,855 for intangible assets, $411 for other liabilities and $22,868 in goodwill. The intangible assets included $2,021 of trademarks and $4,257 related to our gaming licenses both with indefinite lives, as well as $14,577 relating to customers lists with a 4 year life. Goodwill resulting from our acquisition of this minority interest is deductible or tax purposes. We accounted for the purchase using the purchase method of accounting in accordance with SFAS No. 141 "Business Combinations" ("SFAS 141").

Acquisition of Caruthersville —On June 10, 2007, we acquired 100% of the membership interests of Atzar Missouri Riverboat Gaming Company, L.L.C., a Missouri limited liability company located in Caruthersville, Missouri. The purchase price, including transaction costs, was approximately $46,241, including $2,940 of cash acquired. The purchase price for these membership interests was determined based upon estimates of future cash flows and evaluations of the net assets acquired. During January 2008, we finalized certain post closing date adjustments with the seller. Third party valuations were obtained for the property and equipment, and other intangible assets. Trademarks were amortized over a one year life and customer lists over a 3 year life. The purchase price included $959 in net working capital, $39,861 in property and equipment, and $5,421 in other intangible assets. The purchase was accounted for using the purchase method of accounting in accordance with SFAS 141.

Table of Contents

ISLE OF CAPRI CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(amounts in thousands, except share and per share amounts)

5. Property and Equipment, Net

Property and equipment, net consists of the following:

	April 26, 2009			April 27, 2008

Property and equipment:
Land and land improvements	$	159,574		$	151,747
Leasehold improvements		332,762			323,155
Buildings and improvements		649,020			719,175
Riverboats and floating pavilions		142,715			142,444
Furniture, fixtures and equipment		516,523			517,591
Construction in progress		12,537			35,438

Total property and equipment		1,813,131			1,889,550
Less accumulated depreciation and amortization		(635,591	)		(560,564	)

Property and equipment, net	$	1,177,540		$	1,328,986

6. Intangible Assets and Goodwill

Intangible assets consist of the following:

		April 26, 2009							April 27, 2008

		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Indefinite-lived assets
Gaming licenses		$	66,126	$	—		$	66,126	$	73,891	$	—		$	73,891
Trademarks			7,149		—			7,149		12,500		—			12,500
Intangible assets—subject to amortization
Trademarks			—		—			—		102		(93	)		9
Customer lists			15,384		(5,071	)		10,313		3,307		(455	)		2,852

	Total	$	88,659	$	(5,071	)	$	83,588	$	89,800	$	(548	)	$	89,252

Our indefinite-lived intangible assets consist primarily of gaming licenses and trademarks for which it is reasonably assured that we will continue to renew indefinitely. Our finite-lived assets consist primarily of customer lists amortized over 3 to 4 years and trademarks which have a contractual term or it has been decided not to renew, are amortized over their remaining legal or contractual life. The weighted average remaining life of our other intangible assets subject to amortization is approximately 2.7 years.

We recorded amortization expense of $4,624, $549 and $—for our intangible assets subject to amortization related to our continuing operations for the fiscal years ended 2009, 2008, and 2007, respectively.

Table of Contents

ISLE OF CAPRI CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(amounts in thousands, except share and per share amounts)

6. Intangible Assets and Goodwill (Continued)

Future amortization expense of our amortizable intangible assets is as follows:


2010	$	3,935
2011		3,644
2012		2,734

Total	$	10,313

A roll forward of goodwill is as follows:

	April 26, 2009			April 27, 2008

Balance, beginning of period	$	307,649		$	297,268
Acquisition of minority interest in Black Hawk, Colorado operations		12,487			10,381
Impairment		(7,000	)		—

Balance, end of period	$	313,136		$	307,649

During the fiscal year 2009, we recorded a pretax impairment charge of $7,000 for goodwill at our Black Hawk, Colorado property.

7. Valuation Charges

We recorded pretax valuation charges from continuing operations as follows:

Fiscal Year 2009 —An impairment charge of $18,269 was recorded at our Black Hawk, Colorado property as a result of our annual impairment test required under SFAS 142. The Black Hawk impairment charge included $7,000, $7,072 and $4,197 related to goodwill, trademarks and gaming licenses, respectively. Fair values were determined using methods as follows: discounted cash flow and multiples of earnings for goodwill, relief from royalty method for trademarks; and the cost approach for the gaming license. The impairment was a result of decreased operating performance caused by a recently effective smoking ban and declines in the economy resulting in lower market valuation multiples for gaming assets and higher discount rates.

Following our decision not to complete our construction plan as originally designed for our Biloxi property, we recorded a valuation charge of $11,856 to construction in progress.

Following our termination of an agreement for a potential development of a casino project in Portland Oregon, we recorded a $6,000 charge consisting of a non-cash write-off of $5,000 representing our rights under a land option and $1,000 termination fee. Under the terms of the agreement, we retain certain rights but no continuing obligations with regard to this development project.

Fiscal Year 2008 —We recorded valuation charge of $6,526 related to the termination of the Company's plans to develop a new casino in west Harrison County, Mississippi and the cancellation of construction projects in Davenport, Iowa and Kansas City, Missouri

Fiscal Year 2007 —An impairment charge of $7,800 relating to goodwill was recorded at our Lula, Mississippi property as a result of our annual impairment test required under SFAS 142. Fair value of goodwill was determined using discounted cash flow and market based valuation multiple methods.

Table of Contents

ISLE OF CAPRI CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(amounts in thousands, except share and per share amounts)

8. Long-Term Debt

Long-term debt consists of the following:

			April 26, 2009		April 27, 2008

Senior Secured Credit Facility:
	July 2007 Credit Facility:
		Revolving line of credit, expires July 26, 2012, interest payable at least quarterly at either LIBOR and/or prime, plus a margin	$	112,000	$	130,500
		Variable rate term loans, mature November 25, 2013, principal and interest payments due quarterly at either LIBOR and/or prime, plus a margin		825,651		869,313
Senior Subordinated Notes:
	7% Senior Subordinated Notes, interest payable semi-annually March 1 and September 1			357,275		500,000
Other				6,146		7,476

				1,301,072		1,507,289
Less current maturities				9,688		9,698

Long-term debt			$	1,291,384	$	1,497,591

July 2007 Credit Facility —On July 26, 2007, we entered into a $1,350,000 senior secured credit facility ("July 2007 Credit Facility"), replacing our previous senior credit facility and $200,000 of 9% senior subordinated notes. The July 2007 Credit Facility is secured on a first priority basis by substantially all of our assets and guaranteed by all of our significant domestic subsidiaries. The July 2007 Credit Facility consists of a $475,000 five-year revolving line of credit and an $875,000 term loan facility.

Our net line of credit availability at April 26, 2009 was approximately $348,122, after consideration of $14,878 in outstanding letters of credit. We have an annual commitment fee related to the unused portion of the credit facility of up to 0.5% which is included in Interest expense in the accompanying consolidated statements of operations. The weighted average effective interest rates of the July 2007 Credit Facility for the fiscal years 2009 and 2008 were 5.33% and 6.55%, respectively.

The July 2007 Credit Facility includes a number of affirmative and negative covenants. Additionally, we must comply with certain financial covenants including maintenance of a leverage ratio and minimum interest coverage ratio. The July 2007 Credit Facility also restricts our ability to make certain investments or distributions. We are in compliance with the covenants as of April 26, 2009.

During March 2009, we permanently repaid $35,000 of our variable rate term loans under our July 2007 Credit Facility with proceeds from our hurricane insurance settlement resulting in a loss on early extinguishment of debt of $199 due to the write-off of deferred financing cost.

7% Senior Subordinated Notes —During 2004, we issued $500,000 of 7% Senior Subordinated Notes due 2014 ("7% Senior Subordinated Notes"). The 7% Senior Subordinated Notes are guaranteed, on a

Table of Contents

ISLE OF CAPRI CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(amounts in thousands, except share and per share amounts)

8. Long-Term Debt (Continued)

joint and several basis, by all of our significant domestic subsidiaries and certain other subsidiaries as described in Note 18. All of the guarantor subsidiaries are wholly owned by us. The 7% Senior Subordinated Notes are general unsecured obligations and rank junior to all of our senior indebtedness. The 7% Senior Subordinated Notes are redeemable, in whole or in part, at our option at any time on or after March 1, 2009, with call premiums as defined in the indenture governing the 7% Senior Subordinated Notes.

The indenture, governing the 7% Senior Subordinated Notes limits, among other things, our ability and our restricted subsidiaries ability to borrow money, make restricted payments, use assets as security in other transactions, enter into transactions with affiliates or pay dividends on or repurchase stock. The indenture also limits our ability to issue and sell capital stock of subsidiaries, sell assets in excess of specified amounts or merge with or into other companies.

Gain (Loss) on Early Extinguishment of Debt —During February 2009, we retired $142,725 of the 7% Senior Subordinated Notes, through a tender offer, for $82,773 from our available cash and cash equivalents. After expenses related to the elimination of deferred finance costs and transactions costs, we recognized a pretax gain of $57,892 during fiscal year 2009. During fiscal year 2008, we recorded a total of $15,274 in losses associated with the redemption of $200,000 of 9% Senior Subordinated Notes refinanced by our July 2007 Credit Facility and the replacement of the February 2005 Credit Facility with the July 2007 Credit Facility and the early extinguishment of other debt instruments.

Future Principal Payments of Long-term Debt —The aggregate principal payments due on long-term debt as of April 26, 2009 over the next five years and thereafter, are as follows:


Fiscal Years Ending:
2010	$	9,688
2011		8,749
2012		8,768
2013		120,788
2014		1,149,760
Thereafter		3,319

Total	$	1,301,072

9. Other Long-Term Obligations

Bettendorf Regional Convention Center —We have entered into agreements with the City of Bettendorf, Iowa under which the City has constructed a regional convention center, which opened during January 2009, adjacent to our hotel. We lease, manage, and provide financial and operating support for the regional convention center. We have determined the regional convention center is a transaction to which Emerging Issues Task Force Issue No. 97-10 ("EITF 97-10"), " The Effect of Lessee Involvement in Asset Construction " applies. As such, the Company was deemed, for accounting purposes only, to be the owner of the regional convention center during the construction period. Upon completion of the regional convention center we were precluded from accounting for the transaction as a sale and leaseback under SFAS No. 98 " Accounting for Leases " ("SFAS 98") due to our continuing involvement. Therefore, we are accounting for the transaction using the direct financing method in

Table of Contents

ISLE OF CAPRI CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(amounts in thousands, except share and per share amounts)

9. Other Long-Term Obligations (Continued)

accordance with SFAS No. 66 " Accounting for the Sales of Real Estate " ("SFAS 66"). As of April 26, 2009, we have recorded in Other long-term obligations $17,314 related to our liability under SFAS 66 related to the convention center. Under the terms of our agreements for the regional convention center, we have guaranteed certain obligations related to $13,815 of notes issued by the City of Bettendorf, Iowa for the regional convention center.

The Other long term obligation will be reflected in our consolidated balance sheets until completion of the lease term, when the related fixed assets, net of accumulated depreciation, will be removed from our consolidated financial statements. At such time, the net remaining obligation over the net carrying value of the fixed asset will be recognized as a gain (loss) on sale of the facility.

Future minimum payments due under Other long-term obligations as of April 26, 2009 are as follows:


Fiscal Years Ending:
2010	$	1,100
2011		1,100
2012		1,100
2013		1,100
2014		1,267
Thereafter		19,136

Total minimum payments	$	24,803

Coventry Convention Center —We entered into an agreement during fiscal year 2004 to lease space for a casino in Coventry, England in the sub-level of the Arena Coventry Convention Center. The convention center was developed, and is owned and operated by a non-affiliated entity. Prior to our termination of this lease in fiscal year 2009, we were required to be treated for accounting purposes as the owner of the Arena Coventry Convention Center under EITF 97-10 because of certain prepaid lease payments we made and certain structural elements which were installed by us during the construction of the convention center. Upon completion of the convention center we were precluded from accounting for the transaction as a sale and leaseback under SFAS No. 98 due to our continuing involvement as a tenant, as a result of our lease prepayments during the construction period of the convention center. Therefore, we were accounting for the transaction using the direct financing method in accordance with SFAS No. 66. As of April 27, 2008, we recorded an Other long-term obligation of $48,058.

Upon termination of the convention center lease during fiscal year 2009, our continuing involvement ceased and the remaining net carrying value of the fixed asset over the remaining obligation relating to the convention center were removed from our consolidated balance sheets with a pretax loss included in our loss from discontinued operations.

Table of Contents

ISLE OF CAPRI CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(amounts in thousands, except share and per share amounts)

10. Common Stock

Earnings per Share of Common Stock —The following table sets forth the computation of basic and diluted earnings (loss) per share (in thousands, except share and per share amounts):

			Fiscal Year Ended

			April 26, 2009			April 27, 2008			April 29, 2007
Numerator:
	Income (loss) applicable to common shares:
		Income (loss) from continuing operations	$	59,398		$	(38,064	)	$	(14,806	)
		Income (loss) from discontinued operations		(15,823	)		(58,810	)		10,169

Net income (loss)			$	43,575		$	(96,874	)	$	(4,637	)

Denominator:
		Denominator for basic earnings (loss) per share—weighted average shares		31,372,670			30,699,457			30,384,255
		Effect of dilutive securities Employee stock options		6,346			—			—

		Denominator for diluted earnings (loss) per share—adjusted weighted average shares and assumed conversions		31,379,016			30,699,457			30,384,255

Basic earnings (loss) per share:
		Income (loss) from continuing operations	$	1.89		$	(1.24	)	$	(0.49	)
		Income (loss) from discontinued operations		(0.50	)		(1.92	)		0.34

Net income (loss)			$	1.39		$	(3.16	)	$	(0.15	)

Diluted earnings (loss) per share:
		Income (loss) from continuing operations	$	1.89		$	(1.24	)	$	(0.49	)
		Income (loss) from discontinued operations		(0.50	)		(1.92	)		0.34

Net income (loss)			$	1.39		$	(3.16	)	$	(0.15	)

Potentially dilutive common stock options excluded from the computation of diluted earnings per share due to anti-dilution were 1,520,040 for fiscal year 2009. Potentially dilutive common stock options excluded from the computation of diluted earnings (loss) per share which were anti-dilutive due to our

Table of Contents

ISLE OF CAPRI CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(amounts in thousands, except share and per share amounts)

10. Common Stock (Continued)

loss from continuing operations were 3,872,513, and 3,057,054 for fiscal years 2008 and 2007, respectively

Stock Based Compensation —Under our amended and restated 2000 Long Term Incentive Plan we have issued stock options and restricted stock.

Stock Options —We have issued incentive stock options and nonqualified stock options which have a maximum term of 10 years and are, generally, exercisable in yearly installments of 20% commencing one year after the date of grant. During the fiscal year ended April 26, 2009, our estimate of forfeitures for executives increased from 27.2% to 39.6%, and for optionees beneath the executive level, it increased from 45.7% to 56.5%. The impact of these changes in estimated forfeitures decreased expense by $1,378 and was recorded as a cumulative adjustment in the consolidated statements of operations for the fiscal year ended April 26, 2009.

The fair value of each option grant is estimated on the date of the grant using the Black-Scholes-Merton option-pricing model with the range of assumptions disclosed in the following table:

	April 26, 2009			April 27, 2008			April 29, 2007

Weighted average expected volatility		42.29	%		43.02	%		52.28	%
Expected dividend yield		0.00	%		0.00	%		0.00	%
Weighted average expected term (in years)		6.79			6.79			5.89
Weighted average risk-free interest rate		3.50	%		3.94	%		4.69	%
Weighted average fair value of options granted	$	2.73		$	7.72		$	13.67

Weighted average volatility is calculated using the historical volatility of our stock price over a range of dates equal to the expected term of a grant's options. The weighted average expected term is calculated using historical data that is representative of the option for which the fair value is to be determined. The expected term represents the period of time that options granted are expected to be outstanding. The weighted average risk-free rate is based on the U.S. Treasury yield curve in effect at the time of the grant for the approximate period of time equivalent to the grant's expected term.

Tender Offer —On October 7, 2008, we completed a tender offer whereby certain employees and directors exchanged 2,067,201 of then outstanding stock options for 293,760 shares of restricted common stock and the payment of $155 in cash to eligible participants in accordance with the terms of the tender offer. Restricted shares issued as part of the tender offer vest three years from the date of issuance. At April 26, 2009, our estimated forfeiture rate for such shares was 20.8%.

Restricted Stock —During the fiscal year 2009, in addition to the shares of restricted stock issued pursuant to the tender offer described above, we issued 565,080 shares of restricted common stock to employees and directors under the 2000 Long Term Incentive Plan. Restricted stock awarded to employees vests one-third on each anniversary of the grant date and for directors vests one-half on the grant date and one-half on the first anniversary of the grant date. Our estimate of forfeitures for restricted stock for employees is 10%. No forfeiture rate is estimated for directors.

Stock Compensation Expense —Total stock compensation expense from continuing operations in the accompanying consolidated statements of operations was $7,103, $7,263 and $7,231 for the fiscal years

Table of Contents

ISLE OF CAPRI CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(amounts in thousands, except share and per share amounts)

10. Common Stock (Continued)

2009, 2008 and 2007, respectively. We recognize compensation expense for these awards on a straight-line basis over the requisite service period for each separately vesting portion of the award.

Activity Under Our Share Based Plans —A summary of restricted stock and option activity for fiscal year 2009 is presented below:

			Restricted Stock			Weighted Average Grant-Date Fair Value		Options			Weighted Average Exercise Price

Outstanding at April 27, 2008				—		$	—		3,832,346		$	18.15
Granted				565,080			6.09		210,000			5.60
Exercised				—			—		(36,414	)		3.03
Vested				(83,475	)		6.13		—
Tender offer conversion				293,760			4.70		(2,067,201	)		21.18
Forfeited and expired				(13,835	)		5.97		(418,691	)		19.47

Outstanding at April 26, 2009				761,530			5.55		1,520,040		$	12.30

As of April 26, 2009:
	Outstanding exercisable options			n/a					668,560		$	15.21
	Weighted average remaining contractual term			1.7 years					7.0 years
	Aggregate intrinsic value:
		Outstanding exerciseable		n/a				$	2.00
		Outstanding	$	5.55				$	2.02
	Nonvested:
		Unrecognized compensation cost	$	5,249				$	2,188
		Weighted average remaining vesting period		1.7 years					3.7

Additional information relating to our share based plans is as follows:

		April 26, 2009		April 27, 2008		April 29, 2007

Restricted Stock:
	Fair value of restricted stock vested during the year	$	512	$	—	$	—
Stock Options:
	Intrinsic value of stock options exercised		141		5,423		4,992
	Income tax benefit from stock options exercised		—		977		849
	Proceeds from stock option exercises		110		4,770		4,772

We have 1,780,930 shares available for future issuance under our equity compensation plan as of April 26, 2009. Upon issuance of restricted shares or exercise of stock options, shares may be issued from available treasury or common shares.

Table of Contents

ISLE OF CAPRI CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(amounts in thousands, except share and per share amounts)

10. Common Stock (Continued)

Stock-Based Compensation—Deferred Bonus Plan —Our stockholders have approved the Deferred Bonus Plan which provides for the issuance of non-vested stock to eligible officers and employees who agree to receive a deferred bonus in the form of non-vested stock. The vesting of the stock is dependent upon continued service to the Company for a period of five years and the fair value of the non-vested stock at the grant date is amortized ratably over the vesting period. Compensation expense related to stock-based compensation under the Deferred Bonus Plan for fiscal years 2009, 2008, and 2007 totaled $175, $265, and $548, respectively. We do not plan to award any further compensation under the Deferred Bonus Plan, however, any grants that have been awarded prior to the Deferred Bonus Plan's discontinuation will be paid provided the vesting requirements are met.

A summary of activity for fiscal year 2009 under the deferred bonus plan is as follows:

			Weighted Average Fair Value

Non-vested stock at April 27, 2008	72,892		$	19.66
Shares granted	—			—
Shares vested	(32,408	)		15.89
Shares forfeited	(10,783	)		22.18

Non-vested stock at April 26, 2009	29,701		$	22.86

The total weighted average fair value of shares vested related to the Deferred Bonus Plan for fiscal years 2009, 2008 and 2007 was $515, $873 and $266, respectively.

Stock Repurchase —Our Board of Directors has approved a stock repurchase program, as amended, allowing up to 6,000,000 shares of our common stock to be repurchased. As of April 26, 2009, we have repurchased 4,895,792 shares of common stock, and retired 553,800 shares of common stock under this stock repurchase program.

11. Deferred Compensation Plans

2005 Deferred Compensation Plan —Our 2005 Deferred Compensation Plan (the "Plan"), as amended and restated, is an unfunded deferred compensation arrangement for the benefit of key management officers and employees of the Company and its subsidiaries. The terms of the Plan include the ability of the participants to defer, on a pre-tax basis, salary, bonus payments and any voluntary deferrals to the Company's Retirement Trust and Savings Plan in excess of the amount permitted under IRS Code Section 401(k). The terms also allow for a discretionary annual matching contribution by the Company. The Plan allows for the aggregation and investment of deferred amounts in notional investment alternatives, including units representing shares of our common stock. The liability related to the Plan as of fiscal 2009 and 2008 was $2,726 and $3,242, respectively. Expense for our contributions related to the Plan was $104, $85 and $31 in fiscal years 2009, 2008 and 2007, respectively.

Table of Contents

ISLE OF CAPRI CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(amounts in thousands, except share and per share amounts)

12. Supplemental Disclosure of Cash Flow Information

For the fiscal years 2009, 2008 and 2007 we made cash payments of interest, net of capitalized interest for $90,706, $108,090 and $90,620, respectively. We collected an income tax refund net of payments of $20,164 for fiscal year 2009. We paid income taxes, net of refunds, of $7,949 and $18,528 in fiscal years 2008 and 2007, respectively.

For the fiscal years 2009 and 2008, we purchased property and equipment financed with a long term obligation of $14,384 and $4,247, respectively as discussed in Note 9. Also for the fiscal year ended April 27, 2008 we purchased land financed with a note payable for $3,096.

13. Income Taxes

Income tax (benefit) provision from continuing operations consists of the following (in thousands):

	Fiscal Year Ended

	April 26, 2009		April 27, 2008			April 29, 2007
Current:
Federal	$	—	$	(14,393	)	$	2,614
State		2,874		(466	)		852

		2,874		(14,859	)		3,466
Deferred:
Federal		34,301		(5,164	)		(2,905	)
State		2,767		(1,265	)		2,276

		37,068		(6,429	)		(629	)

Income tax (benefit) provision	$	39,942	$	(21,288	)	$	2,837

There is no international tax expense or benefit in our consolidated tax provision for any fiscal year because either our international operations are based in a jurisdiction that does not impose a corporate income tax or the jurisdiction only taxes our local operations and those local operations generate losses for which we have established full valuation allowances. These international losses will be tax benefited at such time that the related international operations generate operating earnings, subject to statutory limitations. Effective April 27, 2008, all of our international operations are subject to taxation in the United States.

Table of Contents

ISLE OF CAPRI CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(amounts in thousands, except share and per share amounts)

13. Income Taxes (Continued)

A reconciliation of income taxes from continuing operations at the statutory corporate federal tax rate of 35% to the income tax (benefit) provision reported in the accompanying consolidated statements of operations is as follows (in thousands):

			Fiscal Year Ended

			April 26, 2009			April 27, 2008			April 29, 2007
Statutory tax (benefit) provision			$	34,769		$	(19,101	)	$	(2,940	)
Effects of:
	State taxes			5,641			(1,731	)		3,291
	Other
		Various permanent differences		1,304			1,589			1,518
		Goodwill impairment		—			—			2,730
		Employment tax credits		(1,333	)		(1,351	)		(1,798	)
		Minority interest		—			(1,943	)		(1,874	)
		Bahamas impairment		—			—			845
		Qualified stock option expense		659			828			1,103
		Other		(1,098	)		421			(38	)

Income tax (benefit) provision			$	39,942		$	(21,288	)	$	2,837

Significant components of our domestic net deferred income tax asset (liability) are as follows (in thousands):

		Fiscal Year Ended

		April 26, 2009			April 27, 2008
Deferred tax liabilities:
	Property and equipment	$	(85,122	)	$	(24,560	)
	Gain on early extinguishment of debt		(22,450	)		—
	Other		(8,583	)		(8,034	)

Total deferred tax liabilities			(116,155	)		(32,594	)

Deferred tax assets:
	Accrued expenses		17,111			21,895
	Alternative minimum tax credit		3,610			2,704
	Employment tax credits		13,609			1,848
	Capital loss carryover		1,576			1,576
	Net operating losses		63,959			22,011
	Other		17,702			12,276

Total deferred tax assets			117,567			62,310
Valuation allowance on deferred tax assets			(10,087	)		(9,343	)

Net deferred tax asset			107,480			52,967

Net deferred tax asset/(liability)		$	(8,675	)	$	20,373

Table of Contents

ISLE OF CAPRI CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(amounts in thousands, except share and per share amounts)

13. Income Taxes (Continued)

At April 26, 2009, we have federal net operating loss carryforwards of $147,826 for income tax purposes, with expiration dates from fiscal year 2011 to 2029. Approximately $33,950 of these net operating losses are attributable to IC Holdings Colorado, Inc. and its wholly-owned subsidiary CCSC/Blackhawk, Inc. ("IC Holdings, Inc. & Sub") and can only be used to offset income earned by these entities. The remaining federal net operating losses are subject to limitations under the internal revenue code and underlying treasury regulations, which may limit the amount ultimately utilized; however, we believe that all federal net operating losses will be utilized prior to expiration. IC Holdings, Inc. & Sub also has a federal capital loss carryforward of $4,146 that expires in 2011 for which it has established a full valuation allowance because it does not expect to benefit from the capital loss. We also have state income tax net operating loss carryforwards of $247,228 with expiration dates from fiscal year 2009 to 2029. We have determined that it is more likely than not that we will not be able to utilize $155,929 of the state income tax net operating losses and have established a valuation reserve accordingly. If or when recognized, the tax benefits relating to any reversal of the valuation allowance on deferred tax assets at April 26, 2009 will be accounted for as a reduction of income tax expense. We also have a federal general business credit carryforward of $13,609 for income tax purposes, which expires in the fiscal year 2028. We believe that these credits will be utilized prior to expiration. Deferred income taxes related to NOL carryforwards have been classified as noncurrent to reflect the expected utilization of the carryforwards. The property and equipment deferred tax liability at April 27, 2008 is net of the deferred tax asset related to the Coventry impairment of $29,295. As a result of the Sale of Coventry, this deferred tax asset is $0 at April 26, 2009.

We adopted the provisions of FIN No. 48 on April 30, 2007. The adoption of FIN 48 did not have any impact on our consolidated statement of operations or stockholders' equity within the consolidated balance sheet. A reconciliation of the beginning and ending amounts of unrecognized tax benefits are as follows:

	April 26, 2009			April 27, 2008

Beginning Balance	$	21,819		$	24,152
Gross increases—tax positions in current period		—			949
Gross increases—tax positions in prior periods		347			8,539
Gross decreases—tax positions in prior periods		—			(486	)
Settlements		(550	)		(11,335	)
Lapse of statute of limitations		(2,134	)		—

Ending Balance	$	19,482		$	21,819

Included in the balance of unrecognized tax benefits at April 26, 2009 are $8,395 of tax benefits that, if recognized, would affect the effective tax rate. Also included in the balance of unrecognized tax benefits at April 26, 2009 are $6,704 of tax benefits that, if recognized, would result in adjustments to deferred taxes.

We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense. This policy did not change as a result of the adoption of FIN 48. Related to the unrecognized tax benefits noted above, we accrued interest of ($142) and no penalties during the fiscal year ended

Table of Contents

ISLE OF CAPRI CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(amounts in thousands, except share and per share amounts)

13. Income Taxes (Continued)

2009. In total, as of April 26, 2009, we have recognized a liability of $5,371 for interest and no amount for penalties.

We believe that an increase in unrecognized tax benefits related to federal and state exposures in the coming year, though possible, cannot be reasonably estimated and will not be significant. In addition, we believe that it is reasonably possible that an amount between $10,600 and $15,000 of its currently remaining unrecognized tax positions may be recognized by the end of the fiscal year ending April 25, 2010. These amounts relate to positions taken or to be taken on federal, Louisiana, and Mississippi income tax returns for the fiscal years ending April 2002 through April 2007. These amounts are expected to be resolved during the next twelve months as a result of the anticipated completion of federal, Louisiana, and Mississippi income tax examinations.

We file income tax returns in the U.S. federal jurisdiction, various state jurisdictions, and foreign jurisdictions. As of April 26, 2009, we were no longer subject to examination of our U.S. federal income tax returns filed for tax years prior to 2006, due to statute expirations and settlements. The IRS is currently examining our federal income tax returns for the 2006 and 2007 tax years which relate to our fiscal years ended April 29, 2007 and April 27, 2008, respectively. In addition, various state jurisdictions are currently examining our state income tax returns for various subsidiaries. The tax returns for subsequent years are also subject to examination.

We file in numerous state jurisdictions with varying statutes of limitations. Our unrecognized state tax benefits are related to state tax returns open from tax years 2001 through 2009 depending on each state's statute of limitations.

14. Hurricane and Other Insurance Recoveries

During fiscal years 2009, 2008 and 2007, we have received insurance recoveries related to various claims. These insurance recoveries are from claims filed pertaining to our properties in Biloxi, Mississippi, Lake Charles, Louisiana and Pompano Beach, Florida, which were struck in the fall of 2005 by Hurricanes Katrina, Rita and Wilma, respectively. Additionally, we have received insurance recoveries relating to flood claims at our Davenport property during fiscal year 2009 and at our Natchez property during fiscal years 2008 and 2009.

Business interruption insurance proceeds are included as revenues under Hurricane and other insurance recoveries in our consolidated statement of operations. Other insurance proceeds, after collection of insurance receivables are included as a reduction of operating expenses under Hurricane and other insurance recoveries in our consolidated statement of operations.

The significant component of our fiscal year 2009 insurance recoveries is the final payment of our $225,000 settlement related to Hurricane Katrina which had damaged our Biloxi, Mississippi property. As a result of this settlement, we received an additional $95,000 in insurance proceeds. After first applying the proceeds to our remaining insurance receivable, we recognized $92,179 of pretax income including $60,000 of business interruption proceeds included in net revenues and other insurance recoveries of $32,179 are recorded as a reduction of operating expenses.

Table of Contents

ISLE OF CAPRI CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(amounts in thousands, except share and per share amounts)

15. Employee Benefit Plan

401(k) Plan —We have a 401(k) plan covering substantially all of our employees who have completed one year of service. Expense for our contributions for our continuing operations related to the 401(k) plan was $1,500, $742 and $1,921 in fiscal years 2009, 2008 and 2007, respectively. Our contribution is based on a percentage of employee contributions and may include an additional discretionary amount. The 401(k) plan allows employees to invest no more than 5% of their contribution in our common stock.

16. Related Party Transactions

We lease approximately eight acres of land on a month-to-month basis from an entity owned by our chairman and members of his family. The land is used for parking and warehouse space by the Isle-Bettendorf. The initial term of the lease expires sixty days after written notice is given to either party and rent under the lease is currently $23 per month.

In 2004, we entered into a contract with a member of the Board of Directors for consulting fees related to on-going contracts and transactions in the United Kingdom. The total fees paid under this contract were $10, $60 and $60 in fiscal years 2009, 2008 and 2007, respectively.

We reimbursed Alter Trading Corporation (a private entity owned by our chairman and his family) for annual lease payments of approximately $34 and $46 in fiscal years 2008 and 2007, respectively, for property leased by Alter Trading Corporation. The land was leased at our request in order to secure sites for possible casino operations.

A member of the Board of Directors has provided consulting services to us related to on-going contracts and real estate transactions in the United States. The total fees paid were $78 and $56 plus expenses in fiscal years 2008, and 2007.

In 2005, one of our wholly owned subsidiaries, Isle of Capri Bettendorf, L.C., entered into a Development Agreement with the City of Bettendorf, Iowa and Green Bridge Company relating to the development of a conference/events center in Bettendorf, Iowa, the expansion of the hotel at Bettendorf and related facilities, including a skywalk between the hotel and conference/events center and a parking facility. Green Bridge Company is indirectly wholly owned by our chairman and members of his family. As part of the transaction, Isle of Capri Bettendorf, L.C. purchased certain real estate owned by Green Bridge Company at its fair market value of $393 in fiscal year 2008. Isle of Capri Bettendorf, L.C. will hold Green Bridge Company harmless from certain future increases in assessments on adjacent property owned by Green Bridge Company, capped at $4,500.

Table of Contents

ISLE OF CAPRI CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(amounts in thousands, except share and per share amounts)

17. Fair Value Measurements

Interest Rate Swap Agreements —We have entered into various interest rate swap agreements pertaining to the July 2007 Credit Facility for an aggregate notional value of $500,000 with maturity dates ranging from fiscal year 2010 to 2014 in order to manage market risk on variable rate term loans outstanding, as well as comply with, in part, requirements under the July 2007 Credit Facility.

These swap agreements meet the criteria for hedge accounting for cash flow hedges and have been evaluated, as of April 26, 2009, as being fully effective. As a result, there is no impact on our consolidated statement of operations from changes in fair value. As April 26, 2009, the weighted average fixed LIBOR interest rate of our interest rate swap agreements was 4.58%.

The fair value of derivatives included in our consolidated balance sheet and change in our unrealized loss are as follows:

Type of Derivative Instrument		Balance Sheet Location	April 26, 2009		April 27, 2008		Fiscal Year Ended April 26, 2009, Change in Unrealized Loss

Interest rate swap contracts		Accrued interest	$	2,258	$	—
Interest rate swap contracts		Other long-term liabilities		21,454		13,714

	Total		$	23,712	$	13,714	$	9,998

The fair value of our interest swap contracts are measured using Level 3 inputs at the present value of all expected future cash flows based on the LIBOR-based swap yield curve as of the date of the valuation, subject to a credit adjustment to the LIBOR-based yield curve's implied discount rates. The credit adjustment reflects our best estimate as to the inherent credit risk as of our balance sheet date. The fair value of our interest rate swap contracts as recorded in our consolidated balance sheet is recorded net of deferred income tax benefits of $8,879 and $5,159, for fiscal years 2009 and 2008, respectively.

The amount of the gain (loss) reclassified from Accumulated other comprehensive income (loss) into earnings and its location in the consolidated statements of income is as follows:

		Fiscal Year Ended

Type of Derivative Instrument	Income Statement Location	April 26, 2009			April 27, 2008			April 27, 2008
Interest rate swap contracts	Interest expense	$	(10,165	)	$	(70	)	$	—

The amount of gain (loss) recognized in Accumulated other comprehensive income (loss) is as follows:

	Fiscal Year Ended

Type of Derivative Instrument	April 26, 2009			April 27, 2008			April 29, 2007
Interest rate swap contracts	$	(6,255	)	$	(8,555	)	$	—

Table of Contents

ISLE OF CAPRI CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(amounts in thousands, except share and per share amounts)

17. Fair Value Measurements (Continued)

A detail of Accumulated other comprehensive income (loss) is a follows:

Type of Derivative Instrument	April 26, 2009			April 27, 2008

Interest rate swap contracts	$	(14,832	)	$	(8,578	)
Foreign Currency Translation Gain (loss)		(359	)		2,977

	$	(15,191	)	$	(5,601	)

Financial Instruments —The estimated carrying amounts and fair values of our other financial instruments are as follows:

	April 26, 2009				April 27, 2008

	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Cash and cash equivalents	$	96,654	$	96,654	$	91,790	$	91,790
Marketable securities		17,548		17,548		18,533		18,533
Restricted cash		2,774		2,774		4,802		4,802
Notes receivable		3,000		3,000		5,000		5,000
Financial liabilities:
Revolver	$	112,000	$	112,000	$	130,500	$	130,500
Variable rate term loans		825,651		652,264		869,313		756,302
7% Senior subordinated notes		357,275		262,597		500,000		377,500
Other long-term debt		6,146		6,146		7,476		7,476
Other long-term obligations		17,314		17,314		52,305		52,305

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:

Cash and cash equivalents, restricted cash and notes receivable are carried at cost, which approximates fair value due to their short-term maturities.

Marketable securities are based upon Level 1 inputs obtained from quoted prices available in active markets and represent the amounts we would expect to receive if we sold these marketable securities.

The fair value of our long-term debt or other long-term obligations is estimated based on the quoted market price of the underlying debt issue or, when a quoted market price is not available, the discounted cash flow of future payments utilizing current rates available to us for debt of similar remaining maturities. Debt obligations with a short remaining maturity are valued at the carrying amount.

Table of Contents

ISLE OF CAPRI CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(amounts in thousands, except share and per share amounts)

18. Consolidating Condensed Financial Information

Certain of our wholly owned subsidiaries have fully and unconditionally guaranteed on a joint and several basis, the payment of all obligations under our 7% Senior Subordinated Notes.

The following wholly owned subsidiaries of the Company are guarantors, on a joint and several basis, under the 7% Senior Subordinated Notes: Riverboat Corporation of Mississippi; Riverboat Services, Inc.; CSNO, L.L.C.; St. Charles Gaming Company, Inc.; IOC Holdings, L.L.C.; Grand Palais Riverboat, Inc.; LRGP Holdings, L.L.C.; P.P.I, Inc.; Isle of Capri Casino Colorado, Inc.; IOC-Coahoma, Inc.; IOC-Natchez, Inc.; IOC-Lula, Inc.; IOC-Boonville, Inc.; IOC-Kansas City, Inc.; Isle of Capri Bettendorf, L.C.; Isle of Capri Marquette, Inc.; IOC-Davenport, Inc.; IOC-Black Hawk County, Inc.; IOC-Manufacturing, Inc.; Riverboat Corporation of Mississippi—Vicksburg; Isle of Capri Black Hawk, L.L.C.; Isle of Capri Black Hawk Capital Corp.; IC Holdings Colorado, Inc.; CCSC/Blackhawk, Inc.; IOC-Black Hawk Distribution Company, L.L.C.; Casino America of Colorado, Inc.; Black Hawk Holdings, L.L.C.; Louisiana Riverboat Gaming Partnership; Isle of Capri UK Holdings, Inc.; Isle of Capri Bahamas Holdings, Inc.; and IOC-Caruthersville, L.L.C. Each of the subsidiaries' guarantees is joint and several with the guarantees of the other subsidiaries.

Consolidating condensed balance sheets as of April 26, 2009 and April 27, 2008 are as follows (in thousands):

	As of April 26, 2009

	Isle of Capri Casinos, Inc. (Parent Obligor)			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidating and Eliminating Entries			Isle of Capri Casinos, Inc. Consolidated
Balance Sheet
Current assets	$	38,145		$	93,538		$	46,013		$	(103	)	$	177,593
Intercompany receivables		1,141,189			(316,376	)		(33,920	)		(790,893	)		—
Investments in subsidiaries		337,218			—			—			(337,218	)		—
Property and equipment, net		10,158			1,158,839			8,543			—			1,177,540
Other assets		12,363			415,013			153			—			427,529

Total assets	$	1,539,073		$	1,351,014		$	20,789		$	(1,128,214	)	$	1,782,662

Current liabilities	$	40,440		$	94,935		$	32,721		$	(103	)	$	167,993
Intercompany payables		—			790,563			330			(790,893	)		—
Long-term debt, less current maturities		1,286,526			4,650			208			—			1,291,384
Other accrued liabilities		(16,319	)		107,301			3,877			—			94,859
Stockholders' equity		228,426			353,565			(16,347	)		(337,218	)		228,426

Total liabilities and stockholders' equity	$	1,539,073		$	1,351,014		$	20,789		$	(1,128,214	)	$	1,782,662

Table of Contents

ISLE OF CAPRI CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(amounts in thousands, except share and per share amounts)

18. Consolidating Condensed Financial Information (Continued)

	As of April 27, 2008

	Isle of Capri Casinos, Inc. (Parent Obligor)		Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidating and Eliminating Entries			Isle of Capri Casinos, Inc. Consolidated
Balance Sheet
Current assets	$	46,683	$	107,235		$	45,568		$	(105	)	$	199,381
Intercompany receivables		1,441,591		(382,547	)		20,394			(1,079,438	)		—
Investments in subsidiaries		162,496		—			—			(162,496	)		—
Property and equipment, net		18,714		1,238,222			72,050			—			1,328,986
Other assets		70,358		368,316			7,125			—			445,799

Total assets	$	1,739,842	$	1,331,226		$	145,137		$	(1,242,039	)	$	1,974,166

Current liabilities	$	38,368	$	107,672		$	37,502		$	(105	)	$	183,437
Intercompany payables		—		889,382			190,056			(1,079,438	)		—
Long-term debt, less current maturities		1,491,063		5,041			1,487			—			1,497,591
Other accrued liabilities		22,399		24,670			58,057			—			105,126
Minority interest		—		—			—			—			—
Stockholders' equity		188,012		304,461			(141,965	)		(162,496	)		188,012

Total liabilities and stockholders' equity	$	1,739,842	$	1,331,226		$	145,137		$	(1,242,039	)	$	1,974,166

Table of Contents

ISLE OF CAPRI CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(amounts in thousands, except share and per share amounts)

18. Consolidating Condensed Financial Information (Continued)

Consolidating condensed statements of operations for the fiscal years ended April 26, 2009, April 27, 2008 and April 29, 2007 are as follows:

	For the Fiscal Year Ended April 26, 2009

Statement of Operations	Isle of Capri Casinos, Inc. (Parent Obligor)			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidating and Eliminating Entries			Isle of Capri Casinos, Inc. Consolidated
Revenues:
Casino	$	—		$	1,055,695		$	10,467		$	—		$	1,066,162
Pari-mutuel, rooms, food, beverage and other		368			247,536			10,791			(9,426	)		249,269

Gross revenues		368			1,303,231			21,258			(9,426	)		1,315,431
Less promotional allowances		—			(195,966	)		(823	)		—			(196,789	)

Net revenues		368			1,107,265			20,435			(9,426	)		1,118,642
Operating expenses:
Casino		—			151,658			2,880			—			154,538
Gaming taxes		—			269,954			928			—			270,882
Pari-mutuel, rooms, food, beverage and other		47,098			381,787			19,706			(9,426	)		439,165
Management fee expense (revenue)		(30,885	)		39,665			(8,780	)		—			—
Depreciation and amortization		4,853			116,982			622			—			122,457

Total operating expenses		21,066			960,046			15,356			(9,426	)		987,042

Operating income (loss)		(20,698	)		147,219			5,079			—			131,600
Interest expense, net		(7,911	)		(70,153	)		(11,889	)		—			(89,953	)
Gain on extinguishment of debt		57,693			—			—			—			57,693
Equity in income (loss) of subsidiaries		39,231			—			—			(39,231	)		—

Income (loss) from continuing operations
before income taxes and minority interest		68,315			77,066			(6,810	)		(39,231	)		99,340
Income tax (provision) benefit		(8,917	)		(29,582	)		(1,443	)		—			(39,942	)
Minority interest		—			—			—			—			—

Income (loss) from continuining operations		59,398			47,484			(8,253	)		(39,231	)		59,398

Income (loss) from discontinued operations,net of tax		—			—			(15,823	)		—			(15,823	)
Equity in income (loss) of discontinued operations		(15,823	)		—			—			15,823			—

Income (loss) from discontinued operations,net of tax		(15,823	)		—			(15,823	)		15,823			(15,823	)

Net income (loss)	$	43,575		$	47,484		$	(24,076	)	$	(23,408	)	$	43,575

Table of Contents

ISLE OF CAPRI CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(amounts in thousands, except share and per share amounts)

18. Consolidating Condensed Financial Information

	For the Fiscal Year Ended April 27, 2008

Statement of Operations	Isle of Capri Casinos, Inc. (Parent Obligor)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating and Eliminating Entries			Isle of Capri Casinos, Inc. Consolidated
Revenues:
Casino	$	—		$	1,092,292		$	14,954		$	—		$	1,107,246
Pari-mutuel, rooms, food, beverage and other		359			199,582			14,450			(13,015	)		201,376

Gross revenues		359			1,291,874			29,404			(13,015	)		1,308,622
Less promotional allowances		—			(200,141	)		(791	)		—			(200,932	)

Net revenues		359			1,091,733			28,613			(13,015	)		1,107,690
Operating expenses:
Casino		—			150,925			3,338			—			154,263
Gaming taxes		—			285,444			1,302			—			286,746
Pari-mutuel, rooms, food, beverage and other		55,466			409,426			21,537			(13,015	)		473,414
Management fee expense (revenue)		(29,886	)		37,635			(7,749	)		—			—
Depreciation and amortization		5,089			123,264			591			—			128,944

Total operating expenses		30,669			1,006,694			19,019			(13,015	)		1,043,367

Operating income (loss)		(30,310	)		85,039			9,594			—			64,323
Interest expense, net		(25,196	)		(71,037	)		(7,300	)		—			(103,533	)
Loss on extinguishment of debt		(13,660	)		(1,614	)		—			—			(15,274	)
Equity in income (loss) of subsidiaries		3,369			—			—			(3,369	)		—

Income (loss) from continuing operations before income taxes and minority interest		(65,797	)		12,388			2,294			(3,369	)		(54,484	)
Income tax (provision) benefit		27,733			(1,094	)		(5,351	)		—			21,288
Minority interest		—			(4,868	)		—			—			(4,868	)

Income (loss) from continuing operations		(38,064	)		6,426			(3,057	)		(3,369	)		(38,064	)

Income (loss) from discontinued operations, net of taxes		—			—			(58,810	)		—			(58,810	)
Equity in income (loss) of discontinued operations		(58,810	)		—			—			58,810			—

Income (loss) from discontinued operations, net of taxes		(58,810	)		—			(58,810	)		58,810			(58,810	)

Net income (loss)	$	(96,874	)	$	6,426		$	(61,867	)	$	55,441		$	(96,874	)

Table of Contents

ISLE OF CAPRI CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(amounts in thousands, except share and per share amounts)

18. Consolidating Condensed Financial Information (Continued)

	For the Fiscal Year Ended April 29, 2007

Statement of Operations	Isle of Capri Casinos, Inc. (Parent Obligor)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating and Eliminating Entries			Isle of Capri Casinos, Inc. Consolidated
Revenues:
Casino	$	—		$	991,399		$	16,124		$	—		$	1,007,523
Pari-mutuel, rooms, food, beverage and other		94			196,578			17,020			(14,255	)		199,437

Gross revenues		94			1,187,977			33,144			(14,255	)		1,206,960
Less promotional allowances		—			(213,624	)		(841	)		—			(214,465	)

Net revenues		94			974,353			32,303			(14,255	)		992,495
Operating expenses:
Casino		—			153,286			3,210			—			156,496
Gaming taxes		—			213,715			(3,744	)		—			209,971
Pari-mutuel, rooms, food, beverage and other		51,491			387,093			31,043			(13,122	)		456,505
Management fee expense (revenue)		(31,350	)		37,585			(6,235	)		—			—
Depreciation and amortization		1,955			94,268			775			—			96,998

Total operating expenses		22,096			885,947			25,049			(13,122	)		919,970

Operating income (loss)		(22,002	)		88,406			7,254			(1,133	)		72,525
Interest expense, net		(27,772	)		(48,790	)		(4,364	)		—			(80,926	)
Equity in income (loss) of subsidiaries		17,486			—			—			(17,486	)		—

Income (loss) from continuing operations before income taxes and minority interest		(32,288	)		39,616			2,890			(18,619	)		(8,401	)
Income tax (provision) benefit		17,482			(20,023	)		(296	)		—			(2,837	)
Minority interest		—			—			—			(3,568	)		(3,568	)

Income (loss) from continuing operations		(14,806	)		19,593			2,594			(22,187	)		(14,806	)

Income (loss) from discontinued operations, net of taxes		—			17,620			(7,451	)		—			10,169
Equity in income (loss) of discontinued operations		10,169			—			—			(10,169	)		—

Income (loss) from discontinued operations, net of taxes		10,169			17,620			(7,451	)		(10,169	)		10,169

Net income (loss)	$	(4,637	)	$	37,213		$	(4,857	)	$	(32,356	)	$	(4,637	)

Table of Contents

ISLE OF CAPRI CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(amounts in thousands, except share and per share amounts)

18. Consolidating Condensed Financial Information

Consolidating condensed statements of cash flows for the fiscal years ended April 26, 2009, April 27, 2008 and April 29, 2007 are as follows:

	For the Fiscal Year Ended April 26, 2009

Statement of Cash Flows	Isle of Capri Casinos, Inc. (Parent Obligor)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating and Eliminating Entries			Isle of Capri Casinos, Inc. Consolidated
Net cash provided by (used in) operating activities	$	10,188		$	193,237		$	(12,815	)	$	—		$	190,610
Net cash provided by (used in) investing activities		138,049			(16,748	)		(4,809	)		(144,359	)		(27,867	)
Net cash provided by (used in) financing activities		(144,824	)		(175,165	)		18,447			144,359			(157,183	)
Effect of foreign currency exchange rates on cash and cash equivalents		—			—			(696	)		—			(696	)

Net increase (decrease) in cash and cash equivalents		3,413			1,324			127			—			4,864
Cash and cash equivalents at beginning of the period		5,363			67,540			18,887			—			91,790

Cash and cash equivalents at end of the period	$	8,776		$	68,864		$	19,014		$	—		$	96,654

	For the Fiscal Year Ended April 27, 2008

Statement of Cash Flows	Isle of Capri Casinos, Inc. (Parent Obligor)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating and Eliminating Entries			Isle of Capri Casinos, Inc. Consolidated
Net cash provided by (used in) operating activities	$	(59,756	)	$	204,239		$	(11,126	)	$	—		$	133,357
Net cash provided by (used in) investing activities		(301,245	)		(271,981	)		(20,507	)		291,287			(302,446	)
Net cash provided by (used in) financing activities		283,469			49,816			30,516			(291,287	)		72,514
Effect of foreign currency exchange rates on cash and cash equivalents		—			—			251			—			251

Net increase (decrease) in cash and cash equivalents		(77,532	)		(17,926	)		(866	)		—			(96,324	)
Cash and cash equivalents at beginning of the period		82,895			85,466			19,753			—			188,114

Cash and cash equivalents at end of the period	$	5,363		$	67,540		$	18,887		$	—		$	91,790

Table of Contents

ISLE OF CAPRI CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(amounts in thousands, except share and per share amounts)

18. Consolidating Condensed Financial Information (Continued)

	For the Fiscal Year Ended April 29, 2007

Statement of Cash Flows	Isle of Capri Casinos, Inc. (Parent Obligor)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating and Eliminating Entries			Isle of Capri Casinos, Inc. Consolidated
Net cash provided by (used in) operating activities	$	(382	)	$	79,308		$	(8,031	)	$	—		$	70,895
Net cash provided by (used in) investing activities		16,105			(149,463	)		(118,495	)		54,582			(197,271	)
Net cash provided by (used in) financing activities		37,980			72,887			137,253			(54,582	)		193,538
Effect of foreign currency exchange rates on cash and cash equivalents		—			—			(97	)		—			(97	)

Net increase (decrease) in cash and cash equivalents		53,703			2,732			10,630			—			67,065
Cash and cash equivalents at beginning of the period		29,192			82,734			9,123			—			121,049

Cash and cash equivalents at end of the period	$	82,895		$	85,466		$	19,753		$	—		$	188,114

Table of Contents

ISLE OF CAPRI CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(amounts in thousands, except share and per share amounts)

19. Selected Quarterly Financial Information (unaudited)

Our selected quarterly financial information has included reclassifications for amounts show in our previously filed reports on Forms 10-Q to reflect the discontinued operations presentation for our UK casino properties.

		Fiscal Quarters Ended

		July 27, 2008			October 26, 2008			January 25, 2009			April 26, 2009
Net revenues		$	277,395		$	249,576		$	304,452		$	287,219
Operating income			21,426			5,768			101,344			3,062
Income (loss) from continuing operations			(2,640	)		(10,670	)		47,924			24,784
Income (loss) from discontinued operations, net of income taxes			(986	)		(2,830	)		(1,811	)		(10,196	)
Net income (loss)			(3,626	)		(13,500	)		46,113			14,588
Earnings (loss) per common share basic:
	Income (loss) from continuing operations	$	(0.09	)	$	(0.34	)	$	1.51		$	0.78
	Income (loss) from discontinued operations, net of income taxes		(0.03	)		(0.09	)		(0.06	)		(0.32	)

	Net income (loss)	$	(0.12	)	$	(0.43	)	$	1.45		$	0.46

Earnings (loss) per common share diluted:
	Income (loss) from continuing operations	$	(0.09	)	$	(0.34	)	$	1.51		$	0.78
	Income (loss) from discontinued operations, net of income taxes		(0.03	)		(0.09	)		(0.06	)		(0.32	)

	Net income (loss)	$	(0.12	)	$	(0.43	)	$	1.45		$	0.46

Weighted average basic and dilutive shares			30,866,687			31,171,903			31,765,365			31,770,653

Table of Contents

ISLE OF CAPRI CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(amounts in thousands, except share and per share amounts)

19. Selected Quarterly Financial Information (unaudited) (Continued)

		Fiscal Quarters Ended

		July 29, 2007			October 28, 2007			January 27, 2008			April 27, 2008
Net revenues		$	275,653		$	275,184		$	264,229		$	292,624
Operating income			22,974			8,853			11,656			20,840
Income (loss) from continuing operations			(4,129	)		(19,058	)		(8,861	)		(6,016	)
Income (loss) from discontinued operations, net of income taxes			(2,986	)		(5,577	)		(4,988	)		(45,259	)
Net income (loss)			(7,115	)		(24,635	)		(13,849	)		(51,275	)
Earnings (loss) per common share basic and diluted:
	Income (loss) from continuing operations	$	(0.14	)	$	(0.62	)	$	(0.29	)	$	(0.20	)
	Income (loss) from discontinued operations, net of income taxes		(0.09	)		(0.18	)		(0.16	)		(1.46	)

	Net income (loss)	$	(0.23	)	$	(0.80	)	$	(0.45	)	$	(1.66	)

Weighted average basic and dilutive shares			30,417,036			30,726,768			30,836,139			30,845,436

Table of Contents

ISLE OF CAPRI CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(amounts in thousands, except share and per share amounts)

19. Selected Quarterly Financial Information (unaudited) (Continued)

Our continuing operations include new casino operations in Pompano and Waterloo in April 2007 and June 2007, respectively. We acquired our casino operations in Caruthersville in June 2007.

A summary of certain revenues and expenses from our continuing operations impacting our quarterly financial results is as follows:

	Fiscal Quarters Ended

	July 27, 2008			October 26, 2008		January 25, 2009		April 26, 2009
(Expense) Revenue:
Hurricane and other insurance recoveries	$	—		$	—	$	92,179	$	3,030
Valuation charges		(6,000	)		—		—		(30,125	)
Gain on early extinguishment of debt		—			—		—		57,693

	Fiscal Quarters Ended

	July 29, 2007			October 28, 2007			January 27, 2008		April 27, 2008
(Expense) Revenue:
Hurricane and other insurance recoveries	$	348		$	—		$	1,757	$	—
Valuation charges		—			(6,526	)		—		—
Preopening		(3,330	)		(324	)		—		—
(Loss) on early extinguishment of debt		(2,192	)		(11,468	)		—		(1,614	)

Hurricane and other Insurance Recoveries —Reflect receipts relating to property and business interruption claims. During the third quarter of fiscal year 2009 we received our final settlement of Hurricane Katrina claim.

Valuation Charges —During the fourth quarter of 2009 our valuation charges included $18,269 in goodwill and intangible asset impairment at our Black Hawk, Colorado property as a result of our annual valuation review required under SFAS 142 and $11,856 to write-off construction in progress at our Biloxi property. During the second quarter of fiscal year 2008, we recorded $6,526 of charges primarily related to costs previously capitalized in connection with a proposed project in west Harrison County, Mississippi and the write-off of construction projects in Davenport, Iowa and Kansas City, Missouri.

Preopening Expense —Were incurred prior to the opening of our casinos in Pompano and Waterloo.

Gain (loss) on Extinguishment of Debt —During the fourth quarter of fiscal year 2009, we retired $142,725 of our Senior Subordinated Notes, through a tender offer, for $82,773 from our available cash and cash equivalents. After expenses related to the elimination of deferred finance costs and transactions costs, we recognized a pretax gain of $57,892 during fiscal year 2009. During the fourth quarter of fiscal year 2009, we permanently repaid $35,000 of our variable rate term loans under our 2007 Credit facility with proceeds from our hurricane insurance settlement resulting in a loss on early extinguishment of debt of $199 due to the write-off of deferred financing cost.

Table of Contents

ISLE OF CAPRI CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(amounts in thousands, except share and per share amounts)

19. Selected Quarterly Financial Information (unaudited) (Continued)

During fiscal year 2008, we extinguished our 9% Subordinated Notes and Black Hawk Credit Facility, and we refinanced our previous credit facility.

Discontinued Operations —The fiscal quarter ended April 26, 2009 includes losses of $13,416 associated with our the sale and of our Coventry UK operations and the planned discontinuance of our other UK operations. The fiscal quarter ended April 27, 2008 includes a pretax impairment charge of $78,658 for our UK operations.

20. Commitments and Contingencies

Operating Leases —Future minimum payments over the lease term of non-cancelable operating leases with initial terms of one year or more consisted of the following at April 26, 2009:

Fiscal Years Ending:

2010	$	19,359
2011		19,380
2012		18,850
2013		16,551
2014		16,703
Therafter		545,841

Total minimum lease payments	$	636,684

Rent expense from continuing operations was $36,175, $39,806 and $39,388 in fiscal years 2009, 2008, and 2007, respectively. Such amounts include contingent rentals of $6,103, $9,182 and $10,208 in fiscal years 2009, 2008 and 2007, respectively.

Legal and Regulatory Proceedings —Lady Luck Gaming Corporation (now our wholly owned subsidiary) and several joint venture partners have been defendants in the Greek Civil Courts and the Greek Administrative Courts in similar lawsuits brought by the country of Greece. The actions allege that the defendants failed to make specified payments in connection with the gaming license bid process for Patras, Greece. Although it is difficult to determine the damages being sought from the lawsuits, the action may seek damages up to that aggregate amount plus interest from the date of the action.

Table of Contents

ISLE OF CAPRI CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(amounts in thousands, except share and per share amounts)

20. Commitments and Contingencies (Continued)

rejected Greece's appeal on procedural grounds. On December 22, 2008 and January 23, 2009, Greece appealed the ruling to the Supreme Administrative Court. A hearing has not yet been scheduled.

We are subject to certain federal, state and local environmental protection, health and safety laws, regulations and ordinances that apply to businesses generally, and are subject to cleanup requirements at certain of our facilities as a result thereof. We have not made, and do not anticipate making material expenditures, nor do we anticipate incurring delays with respect to environmental remediation or protection. However, in part because our present and future development sites have, in some cases, been used as manufacturing facilities or other facilities that generate materials that are required to be remediated under environmental laws and regulations, there can be no guarantee that additional pre-existing conditions will not be discovered and we will not experience material liabilities or delays.

We are subject to various contingencies and litigation matters and have a number of unresolved claims. Although the ultimate liability of these contingencies, this litigation and these claims cannot be determined at this time, we believe they will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.

Table of Contents

ISLE OF CAPRI CASINOS, INC.

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS

(In thousands)

Accounts Receivable Reserve

	Balance at Beginning of Year		Charged to Costs and Expenses		Deductions from Reserves			Balance at End of Year
Period
Year Ended April 26, 2009	$	4,258	$	973	$	(125	)	$	5,106
Year Ended April 27, 2008		4,335		3,407		(3,484	)		4,258
Year Ended April 29, 2007		1,909		2,716		(290	)		4,335

Other Receivables Reserve

	Balance at Beginning of Year		Charged to Costs and Expenses		Deductions from Reserves			Balance at End of Year
Period
Year Ended April 26, 2009	$	3,194	$	—	$	—		$	3,194
Year Ended April 27, 2008		3,194		—		—			3,194
Year Ended April 29, 2007		2,345		1,000		(151	)		3,194

Table of Contents

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

Evaluation of Disclosure Controls and Procedures —Based on their evaluation as of April 26, 2009, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were sufficiently effective to ensure that the information required to be disclosed by us in this Report was recorded, processed, summarized and reported within the time periods specified in the SEC's rules and instructions for Form 10-K.

Management's Report on Internal Control over Financial Reporting —Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our management, including our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting as of April 26, 2009. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework. Our management has concluded that, as of April 26, 2009, our internal control over financial reporting is effective based on these criteria. Ernst & Young LLP, an independent registered public accounting firm, who audited and reported on the consolidated financial statements included in this Annual Report on Form 10-K, has issued an attestation report on the effectiveness of the Company's internal control over financial reporting as stated in their report which is included in Item 8.

Changes in Internal Controls over Financial Reporting —There have been no changes in our internal controls over financial reporting during the quarter ended April 26, 2009 that have materially affected, or are reasonably likely to materially affect our internal controls over financial reporting, other than the remediation of the material weakness discussed below.

Inherent Limitations on Effectiveness of Controls —Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

This item has been omitted from this report and is incorporated by reference to Isle of Capri's definitive proxy statement to be filed with the U.S. Securities and Exchange Commission within 120 days after the end of the fiscal year covered by this report.

Table of Contents

ITEM 11. EXECUTIVE COMPENSATION

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

The following documents are filed as part of this Form 10-K.

(a): Consolidated financial statements filed as part of this report are listed under Part II, Item 8.
(b): The exhibits listed on the "Index to Exhibits" are filed with this report or incorporated by reference as set forth below.

All other schedules are omitted because they are not applicable or not required, or because the required information is included in the consolidated financial statement or notes thereto.

Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	ISLE OF CAPRI CASINOS, INC.
Dated: June 24, 2009	By:	/s/ JAMES B. PERRY James B. Perry, Chief Executive Officer, Executive Vice Chairman and Director

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


Dated: June 24, 2009		/s/ JAMES B. PERRY James B. Perry, Chief Executive Officer, Executive Vice Chairman of the Board and Director (Principal Executive Officer)
Dated: June 24, 2009		/s/ DALE R. BLACK Dale R. Black, Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)
Dated: June 24, 2009		/s/ BERNARD GOLDSTEIN Bernard Goldstein, Chairman of the Board and Director
Dated: June 24, 2009		/s/ ROBERT S. GOLDSTEIN Robert S. Goldstein, Vice Chairman of the Board and Director
Dated: June 24, 2009		/s/ ALAN J. GLAZER Alan J. Glazer, Director
Dated: June 24, 2009		/s/ LEE WIELANSKY Lee Wielansky, Director
Dated: June 24, 2009		/s/ W. RANDOLPH BAKER W. Randolph Baker, Director

Table of Contents


Dated: June 24, 2009		/s/ JEFFREY D. GOLDSTEIN Jeffrey D. Goldstein, Director
Dated: June 24, 2009		/s/ JOHN BRACKENBURY John Brackenbury, Director
Dated: June 24, 2009		/s/ SHAUN R. HAYES Shaun R. Hayes, Director

Table of Contents

INDEX TO EXHIBITS

EXHIBIT NUMBER			DESCRIPTION

	3.1A		Certificate of Incorporation of Casino America, Inc. (Incorporated by reference to the Registration Statement on Form S-1 filed September 3, 1993)
	3.1B		Amendment to Certificate of Incorporation of Casino America, Inc. (Incorporated by reference to the Proxy Statement for the fiscal year ended April 26, 1998)
	3.2A		By-laws of Casino America, Inc. (Incorporated by reference to the Registration Statement on Form S-1 filed September 3, 1993)
	3.2B		Amendment to By-laws of Casino America, Inc., dated February 7, 1997 (Incorporated by reference to Exhibit 3.2A to the Annual Report on Form 10-K filed on July 28, 1997)
	4.1		Indenture, dated as of March 3, 2004, among Isle of Capri Casinos, Inc., the subsidiary guarantors named therein and U.S. Bank National Association, as Trustee (Incorporated by reference to Exhibit 4.3 to the Registration Statement on Form S-4 filed on May 12, 2004)
	4.2		Registration Rights Agreement, dated as of March 3, 2004, among Isle of Capri Casinos, Inc., the subsidiary guarantors named therein and Deutsche Bank Securities Inc. and CIBC World Markets Corp. on behalf of themselves and as representatives of the other initial purchasers (Incorporated by reference to Exhibit 4.4 to the Registration Statement on Form S-4 filed on May 12, 2004)
	10.1†		Amended Casino America, Inc. 1993 Stock Option Plan (Incorporated by reference to the Proxy Statement filed on August 25, 1997)
	10.2†		Amended and Restated Isle of Capri Casinos, Inc. 2000 Long-Term Stock Incentive Plan (Incorporated by reference to the Proxy Statement filed on August 27, 2007)
	10.3†		Isle of Capri Casinos, Inc. Deferred Bonus Plan (Incorporated by reference to the Proxy Statement filed on August 15, 2000)
	10.4†*		Isle of Capri Casinos, Inc. Deferred Bonus Plan Code Section 409A Compliance Amendment
	10.5†*		Isle of Capri Casinos, Inc.'s Amended and Restated Deferred Compensation Plan
	10.6†*		Isle of Capri Casino, Inc. Amended and Restated Deferred Compensation Plan Adoption Agreement
	10.7†		Letter of Stock Option and Compensation Committee dated November 1, 2008 (Incorporated by reference to Exhibit 99.1 to the 8-K filed on November 6, 2008)
	10.8†		Isle of Capri Casinos, Inc.'s 2005 Non-employee Director Deferred Compensation Plan (Incorporated by reference to Exhibit 10.33 to the Quarterly Report Form 10-Q filed on March 1, 2005)
	10.9†*		Isle of Capri Casinos, Inc. Non-employee Director Deferred Compensation Plan
	10.10†*		Isle of Capri Casinos, Inc. Medical Expense Reimbursement Plan (MERP)
	10.11†		Isle of Capri Casinos, Inc. Master retirement Plan (Incorporated by reference to Exhibit 10.26 to the Annual Report of From 10-K filed on July 6, 2005)
	10.11†		Employment Agreement, dated January 13, 2006, between Isle of Capri Casinos, Inc. and Donn R. Mitchell II (Incorporated by reference to Exhibit 99.2 to the Current Report on Form 8-K filed on January 19, 2006).

Table of Contents

EXHIBIT NUMBER			DESCRIPTION

	10.12†		Employment Agreement, dated as of July 16, 2007, between Isle of Capri Casinos, Inc. and Virginia McDowell (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on July 20, 2007)
	10.13†		Employment Agreement dated as of December 3, 2007, between Isle of Capri Casinos, Inc. and Dale R. Black (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on December 12, 2007)
	10.14†		Employment Agreement, dated as of March 4, 2008, between Isle of Capri Casinos, Inc. and James B. Perry (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on March 10, 2008)
	10.15†		Employment Agreement, dated as of July 1, 2008, between Isle of Capri Casinos, Inc. and Edmund L. Quatmann, Jr. (Incorporated by reference to Exhibit 10.18 to the Annual Report on Form 10-K filed on July 11, 2008)
	10.16†		Isle of Capri Casinos, Inc. Employment Agreement Compliance Addendum—James B. Perry (Incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q filed on March 6, 2009)
	10.17†		Isle of Capri Casinos, Inc. Employment Agreement Compliance Addendum—Virginia M. McDowell (Incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q filed on March 6, 2009)
	10.18†		Isle of Capri Casinos, Inc. Employment Agreement Compliance Addendum—Dale R. Black (Incorporated by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q filed on March 6, 2009)
	10.19†		Isle of Capri Casinos, Inc. Employment Agreement Compliance Addendum—Edmund L. Quatmann, Jr. (Incorporated by reference to Exhibit 10.4 to the Quarterly Report on Form 10-Q filed on March 6, 2009)
	10.20†		Form Employment Agreement for Senior Vice Presidents of Isle of Capri Casinos, Inc. (Incorporated by reference to Exhibit 10.19 to the Annual Report on Form 10-K filed on July 11, 2008)
	10.21†		Form Stock Option Award Agreement (Incorporated by reference to Exhibit 10.20 to the Annual Report on Form 10-K filed on July 11, 2008)
	10.22†*		Form of Restricted Stock Award Agreement
	10.23		Credit Agreement, dated as of July 26, 2007 among Isle of Capri Casinos, Inc., the Lenders listed herein, Credit Suisse, Cayman Island Branch, as administrative agent, issuing bank and swing line lender, Credit Suisse Securities (USA) LLC, as lead arranger and bookrunner, Deutsche Bank Securities Inc. and CIBC World Markets Corp., as co-syndication agents and U.S. Bank, N.A. and Wachovia Bank, National Association, as co-documentation agents (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on July 31, 2007)
	10.24		Security Agreement, dated as of July 26, 2007, among Isle of Capri Casinos, Inc., its material subsidiaries party thereto, and Credit Suisse, Cayman Islands Branch, as Administrative Agent for and representative of the financial institutions party to the Credit Agreement and any Hedge Providers (as defined therein) (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on July 31, 2007)
	10.25		Biloxi Waterfront Project Lease dated May 12, 1986 with Point Cadet Development Corporation (Biloxi) (Incorporated by reference to an exhibit to the Annual Report on Form 10-K for the fiscal year ended April 30, 1992)

Table of Contents

EXHIBIT NUMBER			DESCRIPTION

	10.26		Addendum to Lease Agreement, dated August 1, 1992, between the City of Biloxi, Mississippi, Point Cadet Development Corporation (Biloxi) (Incorporated by reference to an exhibit to the Annual Report on Form 10-K for the fiscal year ended April 30, 1992)
	10.27		Second Addendum to Lease, dated April 9, 1994, by and between the City of Biloxi, Mississippi, Point Cadet Development Corporation, the Biloxi Port Commission and Riverboat Corporation of Mississippi (Biloxi) (Incorporated by reference to an exhibit to the Annual Report on Form 10-K for the fiscal year ended April 30, 1994)
	10.28		Third Addendum to Casino Lease, dated April 26, 1995, by and between the City of Biloxi, Mississippi, Point Cadet Development Corporation, the Biloxi Port Commission and Riverboat Corporation of Mississippi (Biloxi) (Incorporated by reference to an exhibit to the Annual Report on Form 10-K for the fiscal year ended April 30, 1995)
	10.29		Biloxi Waterfront Project Lease dated as of April 9, 1994 by and between the City of Biloxi, Mississippi and Riverboat Corporation of Mississippi (Biloxi) (Incorporated by reference to an exhibit to the Annual Report on Form 10-K for the fiscal year ended April 30, 1994)
	10.30		First Amendment to Biloxi Waterfront Project Lease (Hotel Lease), dated as of April 26, 1995, by and between Riverboat Corporation of Mississippi (Biloxi) (Incorporated by reference to an exhibit to the Annual Report on Form 10-K for the fiscal year ended April 30, 1995)
	10.31		Point Cadet Compromise and Settlement Agreement, dated August 15, 2002, by and between the Secretary of State of the State of Mississippi, the City of Biloxi, Mississippi, the Board of Trustees of State Institutions of Higher Learning and Isle of Capri Casinos, Inc. and Riverboat Corporation of Mississippi (Biloxi) (Incorporated by reference to an Exhibit 10.29 to the Annual Report on Form 10-K filed on July 30, 2007)
	10.32		Biloxi Waterfront Project Garage-Podium Lease and Easement dated as of August 15, 2002, by and between the Secretary of State of the State of Mississippi, the City of Biloxi, Mississippi, the Board of Trustees of State Institutions of Higher Learning and Isle of Capri Casinos, Inc. and Riverboat Corporation of Mississippi (Biloxi) (Incorporated by reference to an Exhibit 10.30 to the Annual Report on Form 10-K filed on July 30, 2007)
	10.33		Amended and Restated Berth Rental Agreement dated May 12, 1992 between the Biloxi Port Commission and Riverboat Corporation of Mississippi (Biloxi) (Incorporated by reference to an exhibit to the Annual Report on Form 10-K for the fiscal year ended April 30, 1992)
	10.34		Second Amendment to Berth Rental Agreement dated August 13, 1996, (ii) Third Amendment to Berth Rental Agreement dated December 14, 1999 and (iii) Letter Agreement to Berth Rental Agreement dated October 17, 2006 (Biloxi) (Incorporated by reference to an Exhibit 10.32 to the Annual Report on Form 10-K filed on July 30, 2007)
	10.35		Agreement on Casino Berth Tract dated as of August 15, 2002, State consented to dredging, wharfing and filling by Isle of areas to reconfigure Berth Tract to accommodate a larger gaming vessel (Biloxi) (Incorporated by reference to an Exhibit 10.33 to the Annual Report on Form 10-K filed on July 30, 2007)

Table of Contents

EXHIBIT NUMBER			DESCRIPTION

	10.36		Amended and Restated Lease, dated as of April 19, 1999, among Port Resources, Inc. and CRU, Inc., as landlords and St. Charles Gaming Company, Inc., as tenant (St. Charles) (Incorporated by reference to an Exhibit 10.28 to the Annual Report on Form 10-K filed on July 02, 1999)
	10.37		Lease of property in Coahoma, Mississippi dated as of November 16, 1993 by and among Roger Allen Johnson, Jr., Charles Bryant Johnson and Magnolia Lady, Inc. (Incorporated by reference to the Registration Statement on Form S-4/A filed June 19, 2002)
	10.38		Addendum to Lease dated as of June 22, 1994 by and among Roger Allen Johnson, Jr., Charles Bryant Johnson and Magnolia Lady, Inc. (Incorporated by reference to an Exhibit 10.46 to the Annual Report on Form 10-K filed on July 28, 2000)
	10.39		Second addendum to Lease dated as of October 17, 1995 by and among Roger Allen Johnson, Jr., Charles Bryant Johnson and Magnolia Lady, Inc. (Incorporated by reference to an Exhibit 10.47 to the Annual Report on Form 10-K filed on July 28, 2000)
	10.40		Master Lease between The City of Boonville, Missouri and IOC-Boonville, Inc. formally known as Davis Gaming Boonville, Inc. dated as of July 18, 1997. (Incorporated by reference to an Exhibit 10.40 to the Annual Report on Form 10-K filed on July 11, 2008)
	10.41		Amendment to Master Lease between The City of Boonville, Missouri and IOC-Boonville, Inc. formally known as Davis Gaming Boonville, Inc. dated as of April 19, 1999. (Incorporated by reference to an Exhibit 10.41 to the Annual Report on Form 10-K filed on July 11, 2008)
	10.42		Second Amendment to Master Lease between The City of Boonville, Missouri and IOC-Boonville, Inc. formerly known as Davis Gaming Boonville, Inc. dated as of September 17, 2001. (Incorporated by reference to an Exhibit 10.42 to the Annual Report on Form 10-K filed on July 11, 2008)
	10.43		Third Amendment to Master Lease between The City of Boonville, Missouri and IOC-Boonville, Inc. formerly known as Gold River's Boonville Resort, Inc. and Davis Gaming Boonville, Inc. dated as of November 19, 2001. (Incorporated by reference to an Exhibit 10.43 to the Annual Report on Form 10-K filed on July 11, 2008)
	10.44*		Amended and Restated lease Agreement by and between the Port Authority of Kansas City, Missouri ("Landlord") and Tenant dated as of August 21, 1995
	10.45*		First Amendment to amended and Restated Lease Agreement by and between the Port Authority of Kansas City, Missouri ("Landlord") and Tenant dated as of October 31, 1995
	10.46*		Second Amendment to amended and Restated Lease Agreement by and between the Port Authority of Kansas City, Missouri ("Landlord") and Tenant dated as of June 10, 1996
	10.47		Assignment and Assumption Agreement (Lease Agreement) between Flamingo Hilton Riverboat Casino, LP, Isle of Capri Casinos, Inc. and IOC-Kansas City, Inc. dated as of June 6, 2000. (Incorporated by reference to an Exhibit 10.44 to the Annual Report on Form 10-K filed on July 11, 2008)

Table of Contents

EXHIBIT NUMBER			DESCRIPTION

	10.48		Lease and Agreement-Spring 1995 between Andrianakos Limited Liability Company and Isle of Capri Black Hawk, LLC. dated as of August 15, 1995. (Incorporated by reference to an Exhibit 10.45 to the Annual Report on Form 10-K filed on July 11, 2008)
	10.49		Addendum to the Lease and Agreement-Spring 1995 between Andrianakos Limited Liability Company and Isle of Capri Black Hawk, LLC. dated as of April 4, 1996. (Incorporated by reference to an Exhibit 10.46 to the Annual Report on Form 10-K filed on July 11, 2008)
	10.50		Second Addendum to the Lease and Agreement-Spring 1995 between Andrianakos Limited Liability Company and Isle of Capri Black Hawk, LLC. dated as of March 21, 2003.(Incorporated by reference to an Exhibit 10.47 to the Annual Report on Form 10-K filed on July 11, 2008)
	10.51		Third Addendum to the Lease and Agreement-Spring 1995 between Andrianakos Limited Liability Company and Isle of Capri Black Hawk, LLC. dated as of April 22, 2003. (Incorporated by reference to an Exhibit 10.48 to the Annual Report on Form 10-K filed on July 11, 2008)
	10.52		Operator's Contract dated August 11, 1994; as amended by: (i) Amendment to Operator's Contract dated August 15, 1998; and (ii) Second Amendment to Operator's Contract dated June 30, 2004 (Bettendorf) (Incorporated by reference to an Exhibit 10.38 to the Annual Report on Form 10-K filed on July 30, 2007)
	10.53†		Allan B. Solomon Retirement Agreement dated October 31, 2008 (Incorporated by reference to Exhibit 99.1 to the 8-K filed on November 4, 2008)
	10.54†		Allan B. Solomon Consulting Agreement dated October 31, 2008 (Incorporated by reference to Exhibit 99.2 to the 8-K filed on November 4, 2008)
	21.1*		Significant Subsidiaries of Isle of Capri Casinos, Inc.
	23.1*		Consent of Ernst & Young LLP
	31.1*		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934
	31.2*		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934
	32.1*		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350
	32.2*		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350
	99.1*		Description of Governmental Regulation.

*: Filed herewith.
†: Management contract or compensatory plan or arrangement.

Exhibit 10.4

ISLE OF CAPRI CASINOS, INC.
DEFERRED BONUS PLAN
Code Section 409A Compliance Amendment

Whereas, Isle of Capri Casinos, Inc. , a corporation organized and existing under the laws of the State of Delaware (the “Company”), maintains the Deferred Bonus Plan, which plan was first established as of April 26, 1998, and subsequently amended from time to time (the “Plan”);

Whereas, such Plan now constitutes a “deferred compensation” arrangement within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended, and must be amended to comply with the final regulations promulgated thereunder;

Now, Therefore, the Plan shall be amended as follows, such amendment to be effective as of January 1, 2009, or at the earlier time or times set forth below.

1. Bonus Deferrals and Payments:

Section 2 of the Plan shall be amended and restated in its entirety as follows:

“2. The Deferred Bonus:

(a) No portion of any Cash Bonus shall be subject to deferral hereunder.

(b) Any Cash Bonus previously deferred hereunder (a “Deferred Bonus”) shall be paid in the form of a single-sum upon the earlier of:

i. An Eligible Employee’s death or Disability;

ii. The fifth anniversary of the last day of the Company’s fiscal year immediately preceding the Bonus Award Date; or

iii. The occurrence of an Extraordinary Transaction, provided that if such transaction does not also constitute a “change in control” within the meaning of Code Section 409A and the regulations promulgated hereunder, payment shall be made upon the earlier of (x) the occurrence of a Separation From Service in connection with such transaction or during the 24-month period thereafter, or (y) as otherwise provided herein.

(c) Notwithstanding the generality of the foregoing, effective for any payment made on or after January 1, 2005, if an Eligible Employee is a Specified Employee as of his or her Separation Date, the commencement of any payment made on account of his or her Separation From Service, as determined in accordance with Code Section 409A, shall be delayed until the first business day of the seventh whole calendar month following his or her Separation Date. In the event of any delay required hereunder, payment shall be made without liability for interest or loss of investment opportunity thereon.”

2. Compliance Definitions:

Notwithstanding any provision of the Plan to the contrary, the following Section 16 shall be added to the Plan to read in its entirety as follows, effective as of January 1, 2005:

“16. Compliance Definitions. Capitalized terms used herein shall have the meanings ascribed to them below; in the event of a conflict between a definition included herein and the same or a similar term defined elsewhere in the Plan, the terms of this Section 16 shall govern.

(a) The term “Disability” shall mean that an Eligible Employee, by reason of a medically determinable physical or mental impairment that can be expected to result in death or last for a continuous period of not less than 12 months, (i) has been receiving income replacement benefits for a period of not less than three months under a separate long-term disability plan or policy maintained by the Company or an Affiliate, or (ii) is unable to engage in any substantial gainful employment.

(b) The term “Specified Employee” shall be determined in accordance with Code Section 409A and shall generally mean that an Eligible Employee is a ‘key employee’ of the Company or an Affiliate within the meaning of Code Section 416(i), (ii) or (iii), but determined without regard to paragraph (i)(5) thereof, as of his or her Separation Date. An Eligible Employee who satisfies such requirement as of a December 31st shall be considered a Specified Employee hereunder during the 12-month period commencing on the immediately following April lst.

(c) The term “Separation Date” or “Separation From Service” shall mean the later of the date on which (a) an Eligible Employee’s employment with the Company and its affiliates ceases, or (b) the Company and such Eligible Employee reasonably anticipate that the Eligible Employee will perform no further services for the Company and its affiliates, whether as a common law employee or independent contractor. Notwithstanding the foregoing, an Eligible Employee may be deemed to incur a Separation Date if he or she continues to provide services to the Company or an affiliate, provided such services are not more than 20% of the average level of services performed by such Eligible Employee, whether as an employee or independent contractor, during the immediately preceding 36-month period.”

This 409 Compliance Amendment was adopted this 22 nd day of December, 2008, to be effective as of the date or dates set forth herein.

	Isle of Capri Casinos, Inc.:

	By:	/s/ R. Ronald Burgess

	Its:	SVP, Human Resources

	Date:	12/22/08

Exhibit 10.5

THE EXECUTIVE NONQUALIFIED EXCESS PLAN
PLAN DOCUMENT

THE EXECUTIVE NONQUALIFIED EXCESS PLAN

Section 1. Purpose:

By execution of the Adoption Agreement, the Employer has adopted the Plan set forth herein, and in the Adoption Agreement, to provide a means by which certain management Employees or Independent Contractors of the Employer may elect to defer receipt of current Compensation from the Employer in order to provide retirement and other benefits on behalf of such Employees or Independent Contractors of the Employer, as selected in the Adoption Agreement. The Plan is intended to be a nonqualified deferred compensation plan that complies with the provisions of Section 409A of the Internal Revenue Code (the “Code”). The Plan is also intended to be an unfunded plan maintained primarily for the purpose of providing deferred compensation benefits for a select group of management or highly compensated employees under Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974 (“ERISA”) and independent contractors. Notwithstanding any other provision of this Plan, this Plan shall be interpreted, operated and administered in a manner consistent with these intentions.

Section 2. Definitions:

As used in the Plan, including this Section 2, references to one gender shall include the other, unless otherwise indicated by the context:

2.1 “Active Participant” means, with respect to any day or date, a Participant who is in Service on such day or date; provided, that a Participant shall cease to be an Active Participant (i) immediately upon a determination by the Committee that the Participant has ceased to be an Employee or Independent Contractor, or (ii) at the end

of the Plan Year that the Committee determines the Participant no longer meets the eligibility requirements of the Plan.

2.2 “Adoption Agreement” means the written agreement pursuant to which the Employer adopts the Plan. The Adoption Agreement is a part of the Plan as applied to the Employer.

2.3 “Beneficiary” means the person, persons, entity or entities designated or determined pursuant to the provisions of Section 13 of the Plan.

2.4 “Board” means the Board of Directors of the Company, if the Company is a corporation. If the Company is not a corporation, “Board” shall mean the Company.

2.5 “Change in Control Event” means an event described in Section 409A(a)(2)(A)(v) of the Code (or any successor provision thereto) and the regulations thereunder.

2.6 “Committee” means the persons or entity designated in the Adoption Agreement to administer the Plan. If the Committee designated in the Adoption Agreement is unable to serve, the Employer shall satisfy the duties of the Committee provided for in Section 9.

2.7 “Company” means the company designated in the Adoption Agreement as such.

2.8 “Compensation” shall have the meaning designated in the Adoption Agreement.

2.9 “Crediting Date” means the date designated in the Adoption Agreement for crediting the amount of any Participant Deferral Credits to the Deferred Compensation Account of a Participant. Employer Credits may be credited to the

Deferred Compensation Account of a Participant on any day that securities are traded on a national securities exchange.

2.10 “Deferred Compensation Account” means the account maintained with respect to each Participant under the Plan. The Deferred Compensation Account shall be credited with Participant Deferral Credits and Employer Credits, credited or debited for deemed investment gains or losses, and adjusted for payments in accordance with the rules and elections in effect under Section 8. The Deferred Compensation Account of a Participant shall include any In-Service or Education Account of the Participant, if applicable.

2.11 “Disabled” means Disabled within the meaning of Section 409A of the Code and the regulations thereunder. Generally, this means that the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering Employees of the Employer.

2.12 “ Education Account” is an In-Service Account which will be used by the Participant for educational purposes.

2.13 “Effective Date” shall be the date designated in the Adoption Agreement.

2.14 “Employee” means an individual in the Service of the Employer if the relationship between the individual and the Employer is the legal relationship of

employer and employee. An individual shall cease to be an Employee upon the Employee’s separation from Service.

2.15 “Employer” means the Company, as identified in the Adoption Agreement, and any Participating Employer which adopts this Plan. An Employer may be a corporation, a limited liability company, a partnership or sole proprietorship.

2.16 “Employer Credits” means the amounts credited to the Participant’s. Deferred Compensation Account by the Employer pursuant to the provisions of Section 4.2.

2.17 “Grandfathered Amounts” means, if applicable, the amounts that were deferred under the Plan and were earned and vested within the meaning of Section 409A of the Code and regulations thereunder as of December 31, 2004. Grandfathered Amounts shall be subject to the terms designated in the Adoption Agreement.

2.18 “Independent Contractor” means an individual in the Service of the Employer if the relationship between the individual and the Employer is not the legal relationship of employer and employee. An individual shall cease to be an Independent Contractor upon the termination of the Independent Contractor’s Service. An Independent Contractor shall include a director of the Employer who is not an Employee.

2.19 “In-Service Account” means a separate account to be kept for each Participant that has elected to take in-service distributions as described in Section 5.4. The In-Service Account shall be adjusted in the same manner and at the same time as the Deferred Compensation Account under Section 8 and in accordance with the rules and elections in effect under Section 8.

2.20 “ Normal Retirement Age” of a Participant means the age designated in the Adoption Agreement.

2.21 “Participant” means with respect to any Plan Year an Employee or Independent Contractor who has been designated by the Committee as a Participant and who has entered the Plan or who has a Deferred Compensation Account under the Plan; provided that if the Participant is an Employee, the individual must be a highly compensated or management employee of the Employer within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA.

2.22 “ Participant Deferral Credits” means the amounts credited to the Participant’s Deferred Compensation Account by the Employer pursuant to the provisions of Section 4.1.

2.23 “ Participating Employer” means any trade or business (whether or not incorporated) which adopts this Plan with the consent of the Company identified in the Adoption Agreement.

2.24 “Participation Agreement ” means a written agreement entered into between a Participant and the Employer pursuant to the provisions of Section 4.1.

2.25 “Performance-Based Compensation” means compensation where the amount of, or entitlement to, the compensation is contingent on the satisfaction of preestablished organizational or individual performance criteria relating to a performance period of at least twelve months. Organizational or individual performance criteria are considered preestablished if established in writing within 90 days after the commencement of the period of service to which the criteria relates, provided that the outcome is substantially uncertain at the time the criteria are established. Performance-

based compensation may include payments based upon subjective performance criteria as provided in regulations and administrative guidance promulgated under Section 409A of the Code.

2.26 “Plan” means The Executive Nonqualified Excess Plan, as herein set out and as set out in the Adoption Agreement, or as duly amended. The name of the Plan as applied to the Employer shall be designated in the Adoption Agreement.

2.27 “Plan-Approved Domestic Relations Order” shall mean a judgment, decree, or order (including the approval of a settlement agreement) which is:

2.27.1 Issued pursuant to a State’s domestic relations law;

2.27.2 Relates to the provision of child support, alimony payments or marital property rights to a Spouse, former Spouse, child or other dependent of the Participant;

2.27.3 Creates or recognizes the right of a Spouse, former Spouse, child or other dependent of the Participant to receive all or a portion of the Participant’s benefits under the Plan;

2.27.4 Requires payment to such person of their interest in the Participant’s benefits in an immediate lump payment; and

2.27.5 Meets such other requirements established by the Committee.

2.28 “Plan Year” means the twelve-month period ending on the last day of the month designated in the Adoption Agreement; provided that the initial Plan Year may have fewer than twelve months.

2.29 “Qualifying Distribution Event” means (i) the Separation from Service of the Participant, (ii) the date the Participant becomes Disabled, (iii) the death of the Participant, (iv) the time specified by the Participant for an In-Service or Education Distribution, (v) a Change in Control Event, or (vi) an Unforeseeable Emergency, each to the extent provided in Section 5.

2.30 “Seniority Date” shall have the meaning designated in the Adoption Agreement.

2.31 “Separation from Service” or “ Separates from Service ” means a “separation from service” within the meaning of Section 409A of the Code.

2.32 “Service” means employment by the Employer as an Employee. For purposes of the Plan, the employment relationship is treated as continuing intact while the Employee is on military leave, sick leave, or other bona fide leave of absence if the period of such leave does not exceed six months, or if longer, so long as the Employee’s right to reemployment is provided either by statute or contract. If the Participant is an Independent Contractor, “Service” shall mean the period during which the contractual relationship exists between the Employer and the Participant. The contractual relationship is not terminated if the Participant anticipates a renewal of the contract or becomes an Employee.

2.33 “Service Bonus” means any bonus paid to a Participant by the Employer which is not Performance-Based Compensation.

2.34 “ Specified Employee” means an employee who meets the requirements for key employee treatment under Section 416(i)(1)(A)(i), (ii) or (iii) of the Code (applied in accordance with the regulations thereunder and without regard to Section 416(i)(5) of the Code) at any time during the twelve month period ending on December 31 of each year (the “identification date”). Unless binding corporate action is taken to establish different rules for determining Specified Employees for all plans of the Company and its controlled group members that are subject to Section 409A of the Code, the foregoing rules and the other default rules under the regulations of Section 409A of the Code shall

apply. If the person is a key employee as of any identification date, the person is treated as a Specified Employee for the twelve-month period beginning on the first day of the fourth month following the identification date.

2.35 “Spouse” or “Surviving Spouse” means, except as otherwise provided in the Plan, a person who is the legally married spouse or surviving spouse of a Participant.

2.36 “Unforeseeable Emergency” means an “unforeseeable emergency” within the meaning of Section 409A of the Code.

2.37 “Years of Service” means each Plan Year of Service completed by the Participant. For vesting purposes, Years of Service shall be calculated from the date designated in the Adoption Agreement and Service shall be based on service with the Company and all Participating Employers.

Section 3. Participation:

The Committee in its discretion shall designate each Employee or Independent Contractor who is eligible to participate in the Plan. A Participant who separates from Service with the Employer and who later returns to Service will not be an Active Participant under the Plan except upon satisfaction of such terms and conditions as the Committee shall establish upon the Participant’s return to Service, whether or not the Participant shall have a balance remaining in the Deferred Compensation Account under the Plan on the date of the return to Service.

Section 4. Credits to Deferred Compensation Account:

4.1 Participant Deferral Credits. To the extent provided in the Adoption Agreement, each Active Participant may elect, by entering into a Participation Agreement with the Employer, to defer the receipt of Compensation from the Employer by a dollar

amount or percentage specified in the Participation Agreement. The amount of Compensation the Participant elects to defer, the Participant Deferral Credit, shall be credited by the Employer to the Deferred Compensation Account maintained for the Participant pursuant to Section 8. The following special provisions shall apply with respect to the Participant Deferral Credits of a Participant:

4.1.1 The Employer shall credit to the Participant’s Deferred Compensation Account on each Crediting Date an amount equal to the total Participant Deferral Credit for the period ending on such Crediting Date.

4.1.2 An election pursuant to this Section 4.1 shall be made by the Participant by executing and delivering a Participation Agreement to the Committee. Except as otherwise provided in this Section 4.1, the Participation Agreement shall become effective with respect to such Participant as of the first day of January following the date such Participation Agreement is received by the Committee. A Participant’s election may be changed at any time prior to the last permissible date for making the election as permitted in this Section 4.1, and shall thereafter be irrevocable. The election of a Participant shall continue in effect for subsequent years until modified by the Participant as permitted in this Section 4.1.

4.1.3 A Participant may execute and deliver a Participation Agreement to the Committee within 30 days after the date the Participant first becomes eligible to participate in the Plan to be effective as of the first payroll period next following the date the Participation Agreement is fully executed. Whether a Participant is treated as newly eligible for participation under this Section shall be determined in accordance with Section 409A of the Code and the regulations thereunder, including (i) rules that treat all elective deferral account balance plans as one plan, and (ii) rules that treat a previously eligible employee as newly eligible if his benefits had been previously distributed or if he has been ineligible for 24 months. For Compensation that is earned based upon a specified performance period (for example, an annual bonus), where a deferral election is made under this Section but after the beginning of the performance period, the election will only apply to the portion of the Compensation equal to the total amount of the Compensation for the service period multiplied by the ratio of the number of days remaining in the performance period after the election over the total number of days in the performance period.

4.1.4 A Participant may unilaterally modify a Participation Agreement (either to terminate, increase or decrease the portion of his future Compensation which is subject to deferral within the percentage limits set forth in Section 4.1 of the Adoption Agreement) by providing a written modification of the Participation Agreement to the Committee. The modification shall become effective as of the first day of January following the date such written modification is received by the Committee.

4.1.5 If the Participant performed services continuously from the later of the beginning of the performance period or the date upon which the performance criteria are established through the date upon which the Participant makes an initial deferral election, a Participation Agreement relating to the deferral of Performance-Based Compensation may be executed and delivered to the Committee no later than the date which is 6 months prior to the end of the performance period, provided that in no event may an election to defer Performance-Based Compensation be made after such Compensation has become readily ascertainable.

4.1.6 If the Employer has a fiscal year other than the calendar year, Compensation relating to Service in the fiscal year of the Employer (such as a bonus based on the fiscal year of the Employer), of which no amount is paid or payable during the fiscal year, may be deferred at the Participant’s election if the election to defer is made not later than the close of the Employer’s fiscal year next preceding the first fiscal year in which the Participant performs any services for which such Compensation is payable.

4.1.7 Compensation payable after the last day of the Participant’s taxable year solely for services provided during the final payroll period containing the last day of the Participant’s taxable year (i.e., December 31) is treated for purposes of this Section 4.1 as Compensation for services performed in the subsequent taxable year.

4.1.8 The Committee may from time to time establish policies or rules consistent with the requirements of Section 409A of the Code to govern the manner in which Participant Deferral Credits may be made.

4.1.9 If a Participant becomes Disabled or applies for and is eligible for a distribution on account of an Unforeseeable Emergency during a Plan Year, his deferral election for such Plan Year shall be cancelled.

4.2 Employer Credits. If designated by the Employer in the Adoption Agreement, the Employer shall cause the committee to credit to the Deferred Compensation Account of each Active Participant an Employer Credit as determined in accordance with the Adoption Agreement. A Participant must make distribution elections with respect to any Employer Credits credited to his Deferred Compensation Account by the deadline that would apply under Section 4.1 for distribution elections with respect to Participant Deferral Credits credited at the same time, on a Participation

Agreement that is timely executed and delivered to the Committee pursuant to Section 4.1.

4.3 Deferred Compensation Account. All Participant Deferral Credits and Employer Credits shall be credited to the Deferred Compensation Account of the Participant as provided in Section 8.

Section 5 . Qualifying Distribution Events:

5.1 Separation from Service. If the Participant Separates from Service with the Employer, the vested balance in the Deferred Compensation Account shall be paid to the Participant by the Employer as provided in Section 7. Notwithstanding the foregoing, no distribution shall be made earlier than six months after the date of Separation from Service (or if earlier, the date of death) with respect to a Participant who as of the date of Separation from Service is a Specified Employee of a corporation the stock in which is traded on an established securities market or otherwise. Any payments to which such Specified Employee would be entitled during the first six months following the date of Separation from Service shall be accumulated and paid on the first day of the seventh month following the date of Separation from Service.

5.2 Disability. If the Employer designates in the Adoption Agreement that distributions are permitted under the Plan when a Participant becomes Disabled, and the Participant becomes Disabled while in Service, the vested balance in the Deferred Compensation Account shall be paid to the Participant by the Employer as provided in Section 7.

5.3 Death. If the Participant dies while in Service, the Employer shall pay a benefit to the Participant’s Beneficiary in the amount designated in the Adoption Agreement. Payment of such benefit shall be made by the Employer as provided in Section 7.

5.4 In-Service or Education Distributions. If the Employer designates in the Adoption Agreement that in-service or education distributions are permitted under the Plan, a Participant may designate in the Participation Agreement to have a specified amount credited to the Participant’s In-Service or Education Account for in-service or education distributions at the date specified by the Participant. In no event may an in-service or education distribution of an amount be made before the date that is two years after the first day of the year in which such amount was credited to the In-Service or Education Account. Notwithstanding the foregoing, if a Participant incurs a Qualifying Distribution Event prior to the date on which the entire balance in the In-Service or Education Account has been distributed, then the balance in the In-Service or Education Account on the date of the Qualifying Distribution Event shall be paid as provided under Section 7.1 for payments on such Qualifying Distribution Event.

5.5 Change in Control Event. If the Employer designates in the Adoption Agreement that distributions are permitted under the Plan upon the occurrence of a Change in Control Event, the Participant may designate in the Participation Agreement to have the vested balance in the Deferred Compensation Account paid to the Participant upon a Change in Control Event by the Employer as provided in Section 7.

5.6 Unforeseeable Emergency. If the Employer designates in the Adoption Agreement that distributions are permitted under the Plan upon the occurrence of an

Unforeseeable Emergency event, a distribution from the Deferred Compensation Account may be made to a Participant in the event of an Unforeseeable Emergency, subject to the following provisions:

5.6.1 A Participant may, at any time prior to his Separation from Service for any reason, make application to the Committee to receive a distribution in a lump sum of all or a portion of the vested balance in the Deferred Compensation Account (determined as of the date the distribution, if any, is made under this Section 5.6) because of an Unforeseeable Emergency. A distribution because of an Unforeseeable Emergency shall not exceed the amount required to satisfy the Unforeseeable Emergency plus amounts necessary to pay taxes reasonably anticipated as a result of such distribution, after taking into account the extent to which the Unforeseeable Emergency may be relieved through reimbursement or compensation by insurance or otherwise or by liquidation of the Participant’s assets (to the extent the liquidation of such assets would not itself cause severe financial hardship) or by stopping current deferrals under the Plan pursuant to Section 4.1.9.

5.6.2 The Participant’s request for a distribution on account of Unforeseeable Emergency must be made in writing to the Committee. The request must specify the nature of the financial hardship, the total amount requested to be distributed from the Deferred Compensation Account, and the total amount of the actual expense incurred or to be incurred on account of the Unforeseeable Emergency.

5.6.3 If a distribution under this Section 5.6 is approved by the Committee, such distribution will be made as soon as practicable following the date it is approved. The processing of the request shall be completed as soon as practicable from the date on which the Committee receives the properly completed written request for a distribution on account of an Unforeseeable Emergency. If a Participant’s Separation from Service occurs after a request is approved in accordance with this Section 5.6.3, but prior to distribution of the full amount approved, the approval of the request shall be automatically null and void and the benefits which the Participant is entitled to receive under the Plan shall be distributed in accordance with the applicable distribution provisions of the Plan.

5.6.4 The Committee may from time to time adopt additional policies or rules consistent with the requirements of Section 409A of the Code to govern the manner in which such distributions may be made so that the Plan may be conveniently administered.

Section 6. Vesting:

A Participant shall be fully vested in the portion of his Deferred Compensation

Account attributable to Participant Deferral Credits, and all income, gains and losses attributable thereto. A Participant shall become fully vested in the portion of his Deferred Compensation Account attributable to Employer Credits, and income, gains and losses attributable thereto, in accordance with the vesting schedule and provisions designated by the Employer in the Adoption Agreement. If a Participant’s Deferred Compensation Account is not fully vested upon Separation from Service, the portion of the Deferred Compensation Account that is not fully vested shall thereupon be forfeited.

Section 7. Distribution Rules:

7.1 Payment Options. The Employer shall designate in the Adoption Agreement the payment options which may be elected by the Participant (lump sum, annual installments, or a combination of both). Different payment options may be made available for each Qualifying Distribution Event, and different payment options may be available for different types of Separations from Service, all as designated in the Adoption Agreement. The Participant shall elect in the Participation Agreement the method under which the vested balance in the Deferred Compensation Account will be distributed from among the designated payment options. The Participant may at such time elect a different method of payment for each Qualifying Distribution Event as specified in the Adoption Agreement. If the Participant is permitted by the Employer in the Adoption Agreement to elect different options and does not make a valid election, the vested balance in the Deferred Compensation Account will be distributed as a lump sum.

Notwithstanding the foregoing, if certain Qualifying Distribution Events occur prior to the date on which the vested balance of a Participant’s Deferred Compensation Account is completely paid pursuant to this Section 7.1 following the occurrence of certain initial Qualifying Distribution Events, the following rules apply:

7.1.1 If the initial Qualifying Distribution Event is a Separation from Service or Disability, and the Participant subsequently dies, the remaining unpaid vested balance of a Participant’s Deferred Compensation Account shall be paid as a lump sum.

7.1.2 If the initial Qualifying Distribution Event is a Change in Control Event, and any subsequent Qualifying Distribution Event occurs (except an In-Service or Education Distribution described in Section 2.29(iv)), the remaining unpaid vested balance of a Participant’s Deferred Compensation Account shall be paid as provided under Section 7.1 for payments on such subsequent Qualifying Distribution Event.

7.2 Timing of Payments. Payment shall be made in the manner elected by the Participant and shall commence as soon as practicable after (but no later than 60 days after) the distribution date elected for the Qualifying Distribution Event. In the event the Participant fails to make a valid election of the payment method, the distribution will be made in a single lump sum payment as soon as practicable after (but no later than 60 days after) the Qualifying Distribution Event. A payment may be further delayed to the extent permitted in accordance with regulations and guidance under Section 409A of the Code.

7.3 Installment Payments. If the Participant elects to receive installment payments upon a Qualifying Distribution Event, the payment of each annual installment shall be made on the anniversary of the date of the first installment payment, and the amount of the annual installment shall be adjusted on such anniversary for credits or debits to the Participant’s account pursuant to Section 8 of the Plan. Such adjustment shall be made by dividing the balance in the Deferred Compensation Account on such date by the number of annual installments remaining to be paid hereunder; provided that the last

annual installment due under the Plan shall be the entire amount credited to the Participant’s account on the date of payment.

7.4 De Minimis Amounts. Notwithstanding any payment election made by the Participant, if the Employer designates a pre-determined de minimis amount in the Adoption Agreement, the vested balance in the Deferred Compensation Account of the Participant will be distributed in a single lump sum payment if at the time of a permitted Qualifying Distribution Event the vested balance does not exceed such pre-determined de minimis amount; provided, however, that such distribution will be made only where the Qualifying Distribution Event is a Separation from Service, death, Disability (if applicable) or Change in Control Event (if applicable). Such payment shall be made on or before the later of (i) December 31 of the calendar year in which the Qualifying Distribution Event occurs, or (ii) the date that is 2-1/2 months after the Qualifying Distribution Event occurs. In addition, the Employer may distribute a Participant’s vested balance at any time if the balance does not exceed the limit in Section 402(g)(1)(B) of the Code and results in the termination of the Participant’s entire interest in the Plan as provided under Section 409A of the Code.

7.5 Subsequent Elections. With the consent of the Committee, a Participant may delay or change the method of payment of the Deferred Compensation Account subject to the following requirements:

7.5.1 The new election may not take effect until at least 12 months after the date on which the new election is made.

7.5.2 If the new election relates to a payment for a Qualifying Distribution Event other than the death of the Participant, the Participant becoming Disabled, or an Unforeseeable Emergency, the new election must provide for the deferral of the payment for a period of at least five years from the date such payment would otherwise have been made.

7.5.3 If the new election relates to a payment from the In-Service or Education Account, the new election must be made at least 12 months prior to the date of the first scheduled payment from such account.

For purposes of this Section 7.5 and Section 7.6, a payment is each separately identified amount to which the Participant is entitled under the Plan; provided, that entitlement to a series of installment payments is treated as the entitlement to a single payment.

7.6 Acceleration Prohibited. The acceleration of the time or schedule of any payment due under the Plan is prohibited except as expressly provided in regulations and administrative guidance promulgated under Section 409A of the Code (such as accelerations for domestic relations orders and employment taxes). It is not an acceleration of the time or schedule of payment if the Employer waives or accelerates the vesting requirements applicable to a benefit under the Plan.

Section 8. Accounts; Deemed Investment; Adjustments to Account:

8.1 Accounts. The Committee shall establish a book reserve account, entitled the “Deferred Compensation Account,” on behalf of each Participant. The Committee shall also establish an In - Service or Education Account as a part of the Deferred Compensation Account of each Participant, if applicable. The amount credited to the Deferred Compensation Account shall be adjusted pursuant to the provisions of Section 8.3.

8.2 Deemed Investments. The Deferred Compensation Account of a Participant shall be credited with an investment return determined as if the account were invested in one or more investment funds made available by the Committee. The Participant shall elect the investment funds in which his Deferred Compensation Account shall be deemed to be invested. Such election shall be made in the manner prescribed by

the Committee and shall take effect upon the entry of the Participant into the Plan. The investment election of the Participant shall remain in effect until a new election is made by the Participant. In the event the Participant fails for any reason to make an effective election of the investment return to be credited to his account, the investment return shall be determined by the Committee.

8.3 Adjustments to Deferred Compensation Account. With respect to each Participant who has a Deferred Compensation Account under the Plan, the amount credited to such account shall be adjusted by the following debits and credits, at the times and in the order stated:

8.3.1 The Deferred Compensation Account shall be debited each business day with the total amount of any payments made from such account since the last preceding business day to him or for his benefit.

8.3.2 The Deferred Compensation Account shall be credited on each Crediting Date with the total amount of any Participant Deferral Credits and Employer Credits to such account since the last preceding Crediting Date.

8.3.3 The Deferred Compensation Account shall be credited or debited on each day securities are traded on a national stock exchange with the amount of deemed investment gain or loss resulting from the performance of the investment funds elected by the Participant in accordance with Section 8.2. The amount of such deemed investment gain or loss shall be determined by the Committee and such determination shall be final and conclusive upon all concerned.

Section 9. Administration by Committee:

9.1 Membership of Committee . If the Committee consists of individuals appointed by the Board, they will serve at the pleasure of the Board. Any member of the Committee may resign, and his successor, if any, shall be appointed by the Board.

9.2 General Administration. The Committee shall be responsible for the operation and administration of the Plan and for carrying out its provisions. The Committee shall have the full authority and discretion to make, amend, interpret, and

enforce all appropriate rules and regulations for the administration of this Plan and decide or resolve any and all questions, including interpretations of this Plan, as may arise in connection with this Plan. Any such action taken by the Committee shall be final and conclusive on any party. To the extent the Committee has been granted discretionary authority under the Plan, the Committee’s prior exercise of such authority shall not obligate it to exercise its authority in a like fashion thereafter. The Committee shall be entitled to rely conclusively upon all tables, valuations, certificates, opinions and reports furnished by any actuary, accountant, controller, counsel or other person employed or engaged by the Employer with respect to the Plan. The Committee may, from time to time, employ agents and delegate to such agents, including employees of the Employer, such administrative or other duties as it sees fit.

9.3 Indemnification. To the extent not covered by insurance, the Employer shall indemnify the Committee, each employee, officer, director, and agent of the Employer, and all persons formerly serving in such capacities, against any and all liabilities or expenses, including all legal fees relating thereto, arising in connection with the exercise of their duties and responsibilities with respect to the Plan, provided however that the Employer shall not indemnify any person for liabilities or expenses due to that person’s own gross negligence or willful misconduct.

Section 10. Contractual Liability:

10.1 Contractual Liability. Unless otherwise elected in the Adoption Agreement, the Company shall be obligated to make all payments hereunder. This obligation shall constitute a contractual liability of the Company to the Participants, and such payments shall be made from the general funds of the Company. The Company

shall not be required to establish or maintain any special or separate fund, or otherwise to segregate assets to assure that such payments shall be made, and the Participants shall not have any interest in any particular assets of the Company by reason of its obligations hereunder. To the extent that any person acquires a right to receive payment from the Company, such right shall be no greater than the right of an unsecured creditor of the Company.

10.2 Trust . The Employer may establish a trust to assist it in meeting its obligations under the Plan. Any such trust shall conform to the requirements of a grantor trust under Revenue Procedures 92-64 and 92-65 and at all times during the continuance of the trust the principal and income of the trust shall be subject to claims of general creditors of the Employer under federal and state law. The establishment of such a trust would not be intended to cause Participants to realize current income on amounts contributed thereto, and the trust would be so interpreted and administered.

Section 11. Allocation of Responsibilities:

The persons responsible for the Plan and the duties and responsibilities allocated to each are as follows:

11.1 Board.

(i) To amend the Plan;

(ii) To appoint and remove members of the Committee; and

(iii) To terminate the Plan as permitted in Section 14.

11.2 Committee.

(i) To designate Participants;

(ii) To interpret the provisions of the Plan and to determine the rights of the Participants under the Plan, except to the extent otherwise provided in Section 16 relating to claims procedure;

(iii) To administer the Plan in accordance with its terms, except to the

extent powers to administer the Plan are specifically delegated to another person or persons as provided in the Plan;

(iv) To account for the amount credited to the Deferred Compensation Account of a Participant;

(v) To direct the Employer in the payment of benefits;

(vi) To file such reports as may be required with the United States Department of Labor, the Internal Revenue Service and any other government agency to which reports may be required to be submitted from time to time; and

(vii) To administer the claims procedure to the extent provided in Section 16.

Section 12. Benefits Not Assignable; Facility of Payments:

12.1 Benefits Not Assignable. No portion of any benefit credited or paid under the Plan with respect to any Participant shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, and any attempt so to anticipate, alienate, sell, transfer, assign, pledge, encumber or charge the same shall be void, nor shall any portion of such benefit be in any manner payable to any assignee, receiver or any one trustee, or be liable for his debts, contracts, liabilities, engagements or torts. Notwithstanding the foregoing, in the event that all or any portion of the benefit of a Participant is transferred to the former Spouse of the Participant incident to a divorce, the Committee shall maintain such amount for the benefit of the former Spouse until distributed in the manner required by an order of any court having jurisdiction over the divorce, and the former Spouse shall be entitled to the same rights as the Participant with respect - to such benefit.

12.2 Plan-Approved Domestic Relations Orders. The Committee shall establish procedures for determining whether an order directed to the Plan is a Plan-Approved Domestic Relations Order. If the Committee determines that an order is a

Plan-Approved Domestic Relations Order, the Committee shall cause the payment of amounts pursuant to or segregate a separate account as provided by (and to prevent any payment or act which might be inconsistent with) the Plan-Approved Domestic Relations Order.

12.3 Payments to Minors and Others. If any individual entitled to receive a payment under the Plan shall be physically, mentally or legally incapable of receiving or acknowledging receipt of such payment, the Committee, upon the receipt of satisfactory evidence of his incapacity and satisfactory evidence that another person or institution is maintaining him and that no guardian or committee has been appointed for him, may cause any payment otherwise payable to him to be made to such person or institution so maintaining him. Payment to such person or institution shall be in full satisfaction of all claims by or through the Participant to the extent of the amount thereof.

Section 13 . Beneficiary:

The Participant’s beneficiary shall be the person, persons, entity or entities designated by the Participant on the beneficiary designation form provided by and filed with the Committee or its designee. If the Participant does not designate a beneficiary, the beneficiary shall be his Surviving Spouse. If the Participant does not designate a beneficiary and has no Surviving Spouse, the beneficiary shall be the Participant’s estate. The designation of a beneficiary may be changed or revoked only by filing a new beneficiary designation form with the Committee or its designee. If a beneficiary (the “primary beneficiary”) is receiving or is entitled to receive payments under the Plan and dies before receiving all of the payments due him, the balance to which he is entitled shall be paid to the contingent beneficiary, if any, named in the Participant’s current

beneficiary designation form. If there is no contingent beneficiary, the balance shall be paid to the estate of the primary beneficiary. Any beneficiary may disclaim all or any part of any benefit to which such beneficiary shall be entitled hereunder by filing a written disclaimer with the Committee before payment of such benefit is to be made. Such a disclaimer shall be made in a form satisfactory to the Committee and shall be irrevocable when filed. Any benefit disclaimed shall be payable from the Plan in the same manner as if the beneficiary who filed the disclaimer had predeceased the Participant.

Section 14. Amendment and Termination of Plan:

The Company may amend any provision of the Plan or terminate the Plan at any time; provided, that in no event shall such amendment or termination reduce the balance in any Participant’s Deferred Compensation Account as of the date of such amendment or termination, nor shall any such amendment affect the terms of the Plan relating to the payment of such Deferred Compensation Account. Notwithstanding the foregoing, the following special provisions shall apply:

14.1 Termination in the Discretion of the Employer. Except as otherwise provided in Sections 14.2, the Company in its discretion may terminate the Plan and distribute benefits to Participants subject to the following requirements and any others specified under Section 409A of the Code:

14.1.1 All arrangements sponsored by the Employer that would be aggregated with the Plan under Section 1.409A-1(c) of the Treasury Regulations are terminated.

14.1.2 No payments other than payments that would be payable under the terms of the Plan if the termination had not occurred are made within 12 months of the termination date.

14.1.3 All benefits under the Plan are paid within 24 months of the termination date.

14.1.4 The Employer does not adopt a new arrangement that would be aggregated with the Plan under Section 1.409A-1(c) of the Treasury Regulations providing for the deferral of compensation at any time within 3 years following the date of termination of the Plan.

14.1.5 The termination does not occur proximate to a downturn in the financial health of the Employer.

14.2 Termination Upon Change in Control Event. If the Company terminates the Plan within thirty days preceding or twelve months following a Change in Control Event, the Deferred Compensation Account of each Participant shall become fully vested and payable to the Participant in a lump sum within twelve months following the date of termination, subject to the requirements of Section 409A of the Code.

Section 15. Communication to Participants:

The Employer shall make a copy of the Plan available for inspection by Participants and their beneficiaries during reasonable hours at the principal office of the Employer.

Section 16. Claims Procedure:

The following claims procedure shall apply with respect to the Plan:

16.1 Filing of a Claim for Benefits. If a Participant or Beneficiary (the “claimant”) believes that he is entitled to benefits under the Plan which are not being paid to him or which are not being accrued for his benefit, he shall file a written claim therefore with the Committee.

16.2 Notification to Claimant of Decision. Within 90 days after receipt of a claim by the Committee (or within 180 days if special circumstances require an extension of time), the Committee shall notify the claimant of the decision with regard to the claim. In the event of such special circumstances requiring an extension of time, there shall be

furnished to the claimant prior to expiration of the initial 90-day period written notice of the extension, which notice shall set forth the special circumstances and the date by which the decision shall be furnished. If such claim shall be wholly or partially denied, notice thereof shall be in writing and worded in a manner calculated to be understood by the claimant, and shall set forth: (i) the specific reason or reasons for the denial; (ii) specific reference to pertinent provisions of the Plan on which the denial is based; (iii) a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; and (iv) an explanation of the procedure for review of the denial and the time limits applicable to such procedures, including a statement of the claimant’s right to bring a civil action under ERISA following an adverse benefit determination on review. Notwithstanding the foregoing, if the claim relates to a disability determination, the Committee shall notify the claimant of the decision within 45 days (which may be extended for an additional 30 days if required by special circumstances).

16 .3 Procedure for Review. Within 60 days following receipt by the claimant of notice denying his claim, in whole or in part, or, if such notice shall not be given, within 60 days following the latest date on which such notice could have been timely given, the claimant may appeal denial of the claim by filing a written application for review with the Committee. Following such request for review, the Committee shall fully and fairly review the decision denying the claim. Prior to the decision of the Committee, the claimant shall be given an opportunity to review pertinent documents and to submit issues and comments in writing.

16.4 Decision on Review. The decision on review of a claim denied in whole or in part by the Committee shall be made in the following manner:

16.4.1 Within 60 days following receipt by the Committee of the request for review (or within 120 days if special circumstances require an extension of time), the Committee shall notify the claimant in writing of its decision with regard to the claim. In the event of such special circumstances requiring an extension of time, written notice of the extension shall be furnished to the claimant prior to the commencement of the extension. Notwithstanding the foregoing, if the claim relates to a disability determination, the Committee shall notify the claimant of the decision within 45 days (which may be extended for an additional 45 days if required by special circumstances).

16.4.2 With respect to a claim that is denied in whole or in part, the decision on review shall set forth specific reasons for the decision, shall be written in a manner calculated to be understood by the claimant, and shall set forth:

(i) the specific reason or reasons for the adverse determination;

(ii) specific reference to pertinent Plan provisions on which the adverse determination is based;

(iii) a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant’s claim for benefits; and

(iv) a statement describing any voluntary appeal procedures offered - by the Plan and the claimant’s right to obtain the information about such procedures, as well as a statement of the claimant’s right to bring an action under ERISA section 502(a).

16.4.3 The decision of the Committee shall be final and conclusive.

16.5 Action by Authorized Representative of Claimant. All actions set forth in this Section 16 to be taken by the claimant may likewise be taken by a representative of the claimant duly authorized by him to act in his behalf on such matters. The Committee may require such evidence as either may reasonably deem necessary or advisable of the authority to act of any such representative.

Section 17. Miscellaneous Provisions:

17.1 Set off. Notwithstanding any other provision of this Plan, the Employer may reduce the amount of any payment otherwise payable to or on behalf of a Participant hereunder (net of any required withholdings) at the time payment is due by the amount of any loan, cash advance, extension of credit or other obligation of the Participant to the Employer that is then due and payable, and the Participant shall be deemed to have consented to such reduction. In addition, the Employer may at any time offset a Participant’s Deferral Compensation Account by an amount up to $5,000 to collect any such amount in accordance with the requirements of Section 409A of the Code.

17.2 Notices. Each Participant who is not in Service and each Beneficiary shall be responsible for furnishing the Committee or its designee with his current address for the mailing of notices and benefit payments. Any notice required or permitted to be given to such Participant or Beneficiary shall be deemed given if directed to such address and mailed by regular United States mail, first class, postage prepaid. If any check mailed to such address is returned as undeliverable to the addressee, mailing of checks will be suspended until the Participant or Beneficiary furnishes the proper address. This provision shall not be construed as requiring the mailing of any notice or notification otherwise permitted to be given by posting or by other publication.

17.3 Lost Distributees. A benefit shall be deemed forfeited if the Committee is unable to locate the Participant or Beneficiary to whom payment is due on or before the fifth anniversary of the date payment is to be made or commence; provided, that the deemed investment rate of return pursuant to Section 8.2 shall cease to be applied to the Participant’s account following the first anniversary of such date; provided further,

however, that such benefit shall be reinstated if a valid claim is made by or on behalf of the Participant or Beneficiary for all or part of the forfeited benefit.

17.4 Reliance on Data. The Employer and the Committee shall have the right to rely on any data provided by the Participant or by any Beneficiary. Representations of such data shall be binding upon any party seeking to claim a benefit through a Participant, and the Employer and the Committee shall have no obligation to inquire into the accuracy of any representation made at any time by a Participant or Beneficiary.

17.5 Receipt and Release for Payments. Subject to the provisions of Section 17.1, any payment made from the Plan to or with respect to any Participant or Beneficiary, or pursuant to a disclaimer by a Beneficiary, shall, to the extent thereof, be in full satisfaction of all claims hereunder against the Plan and the Employer with respect to the Plan. The recipient of any payment from the Plan may be required by the Committee, as a condition precedent to such payment, to execute a receipt and release with respect thereto in such form as shall be acceptable to the Committee.

17.6 Headings. The headings and subheadings of the Plan have been inserted for convenience of reference and are to be ignored in any construction of the provisions hereof.

17.7 Continuation of Employment. The establishment of the Plan shall not be construed as conferring any legal or other rights upon any Employee or any persons for continuation of employment, nor shall it interfere with the right of the Employer to discharge any Employee or to deal with him without regard to the effect thereof under the Plan.

17.8 Merger or Consolidation; Assumption of Plan. No Employer shall consolidate or merge into or with another corporation or entity, or transfer all or substantially all of its assets to another corporation, partnership, trust or other entity (a “Successor Entity”) unless such Successor Entity shall assume the rights, obligations and liabilities of the Employer under the Plan and upon such assumption, the Successor Entity shall become obligated to perform the terms and conditions of the Plan. Nothing herein shall prohibit the assumption of the obligations and liabilities of the Employer under the Plan by any Successor Entity.

17.9 Construction. The Employer shall designate in the Adoption Agreement the state according to whose laws the provisions of the Plan shall be construed and enforced, except to the extent that such laws are superseded by ERISA and the applicable requirements of the Code.

17.10 Taxes. The Employer or other payor may withhold a benefit payment under the Plan or a Participant’s wages, or the Employer may reduce a Participant’s Account balance, in order to meet any federal, state, or local or employment tax withholding obligations with respect to Plan benefits, as permitted under Section 409A of the Code. The Employer or other payor shall report Plan payments and other Plan-related information to the appropriate governmental agencies as required under applicable laws.

Section 18. Transition Rules:

This Section 18 does not apply to plans newly established on or after January 1, 2009.

18.1 2005 Election Termination. Notwithstanding Section 4.1.4, at any time during 2005, a Participant may terminate a Participation Agreement, or modify a Participation Agreement to reduce the amount of Compensation subject to the deferral election, so long as the Compensation subject to the terminated or modified participation

Agreement is includible in the income of the Participant in 2005 or, if later, in the taxable year in which the amounts are earned and vested.

18.2 2005 Deferral Election. The requirements of Section 4.1.2 relating to the timing of the Participation Agreement shall not apply to any deferral elections made on or before March 15, 2005, provided that (a) the amounts to which the deferral election relate have not been paid or become payable at the time of the election, (b) the Plan was in existence on or before December 31, 2004, (c) the election to defer compensation is made in accordance with the terms of the Plan as in effect on December 31, 2005 (other than a requirement to make a deferral election after March 15, 2005), and (d) the Plan is otherwise operated in accordance with the requirements of Section 409A of the Code.

18.3 2005 Termination of Participation; Distribution. Notwithstanding anything in this Plan to the contrary, at any time during 2005, a Participant may terminate his or her participation in the Plan and receive a distribution of his Deferred Compensation Account balance on account of that termination, so long as the full amount of such distribution is includible in the Participant’s income in 2005 or, if later, in the taxable year of the Participant in which the amount is earned and vested.

18.4 Payment Elections. Notwithstanding the provisions of Sections 7.1 or 7.5 of the Plan, a Participant may elect on or before December 31, 2008, the time or form of payment of amounts subject to Section 409A of the Code provided that such election applies only to amounts that would not otherwise be payable in the year of the election and does not cause an amount to paid in the year of the election that would not otherwise be payable in such year.

Exhibit 10.6

NOTE: Execution of this Adoption Agreement creates a legal liability of the Employer with significant tax consequences to the Employer and Participants. The Employer should obtain legal and tax advice from its professional advisors before adopting the Plan. Principal Life Insurance Company disclaims all liability for the legal and tax consequences which result from the elections made by the Employer in this Adoption Agreement.

Principal Life Insurance Company, Raleigh, NC 27612

A member of the Principal Financial Group®

THE EXECUTIVE NONQUALIFIED “EXCESS” PLAN

ADOPTION AGREEMENT

THIS AGREEMENT is the adoption by Isle of Capri Casinos, Inc. (the “Company”) of the Executive Nonqualified Excess Plan (“Plan”).

W I T N E S S E T H:

WHEREAS, the Company desires to adopt the Plan as an unfunded, nonqualified deferred compensation plan; and

WHEREAS, the provisions of the Plan are intended to comply with the requirements of Section 409A of the Code and the regulations thereunder and shall apply to amounts subject to section 409A; and

WHEREAS, the Company has been advised by Principal Life Insurance Company to obtain legal and tax advice from its professional advisors before adopting the Plan,

NOW, THEREFORE, the Company hereby adopts the Plan in accordance with the terms and conditions set forth in this Adoption Agreement:

ARTICLE I

Terms used in this Adoption Agreement shall have the same meaning as in the Plan, unless some other meaning is expressly herein set forth. The Employer hereby represents and warrants that the Plan has been adopted by the Employer upon proper authorization and the Employer hereby elects to adopt the Plan for the benefit of its Participants as referred to in the Plan. By the execution of this Adoption Agreement, the Employer hereby agrees to be bound by the terms of the Plan.

ARTICLE II

The Employer hereby makes the following designations or elections for the purpose of the Plan:

2.6 Committee: The duties of the Committee set forth in the Plan shall be satisfied by:

o (a) Company

o (b) The administrative committee appointed by the Board to serve at the pleasure of the Board.

o (c) Board.

x (d) Other (specify): The Compensation Committee of the Board, which shall act as administrator of this plan, subject to the delegation of duties by the committee to the officers and employees of the Company.

2.8 Compensation: The “Compensation” of a Participant shall mean all of a Participant’s:

x (a) Base salary.

x (b) Service Bonus.

x (c) Performance-Based Compensation earned in a period of 12 months or more.

o (d) Commissions.

o (e) Compensation received as an Independent Contractor reportable on Form 1099.

o (f) Other: .

2.9 Crediting Date: The Deferred Compensation Account of a Participant shall be credited with the amount of any Participant Deferral to such account at the time designated below:

o (a) The last business day of each Plan Year.

o (b) The last business day of each calendar quarter during the Plan Year.

o (c) The last business day of each month during the Plan Year.

o (d) The last business day of each payroll period during the Plan Year.

o (e) Each pay day as reported by the Employer.

x (f) Any business day on which Participant Deferrals are received by the administrative recordkeeper.

o (g) Other: .

2.13 Effective Date:

o (a) This is a newly-established Plan, and the Effective Date of the Plan is .

x (b) “This is an amendment of a plan named Isle of Capri Casinos, Inc. 2005 Deferred Compensation Plan with an effective date of January 1, 2005. The effective date of this amended and restated plan is January 1, 2009. This is amendment number “1”

x (i) All amounts in Deferred Compensation Accounts shall be subject to the provisions of this amended and restated Plan.

o (ii) Any Grandfathered Amounts shall be subject to the Plan rules in effect on October 3, 2004.

2.20 Normal Retirement Age: The Normal Retirement Age of a Participant shall be:

o (a) Age .

o (b) The later of age or the anniversary of the participation commencement date. The participation commencement date is the first day of the first Plan Year in which the Participant commenced participation in the Plan.

x (c) Other: N/A.

2.23 Participating Employer(s): As of the Effective Date, the following Participating Employer(s) are parties to the Plan:

“Exhibit A, as it may be amended from time to time, includes those members of the controlled group including Isle of Capri Casinos, Inc., who shall be deemed participating employers, without the necessity of further action; each such employer shall be deemed to have delegated to Isle of Capri Casinos, Inc., including the Compensation Committee of its Board of Directors, the authority to administer this plan and to amend, modify terminate or replace this plan, as they deem necessary or appropriate.”

2.26 Plan: The name of the Plan is

Isle of Capri Casinos, Inc. Amended and Restated Deferred Compensation Plan.

2.28 Plan Year: The Plan Year shall end each year on the last day of the month of December .

2.30 Seniority Date: The date on which a Participant has:

o (a) Attained age .

o (b) Completed Years of Service from First Date of Service.

o (c) Attained age and completed Years of Service from First Date of Service.

o (d) Attained an age as elected by the Participant.

x (e) Not applicable – distribution elections for Separation from Service are not based on Seniority Date

4.1 Participant Deferral Credits: Subject to the limitations in Section 4.1 of the Plan, a Participant may elect to have his Compensation (as selected in Section 2.8 of this Adoption Agreement) deferred within the annual limits below by the following percentage or amount as designated in writing to the Committee:

x (a) Base salary:

minimum deferral: %

maximum deferral: $ or 100%

x (b) Service Bonus:

minimum deferral: %

maximum deferral: $ or 100%

x (c) Performance-Based Compensation:

minimum deferral: %

maximum deferral: $ or 100%

o (d) Commissions:

minimum deferral: %

maximum deferral: $ or %

o (e) Form 1099 Compensation:

minimum deferral: %

maximum deferral: $ or %

o (f) Other:

minimum deferral: %

maximum deferral: $ or %

o (g) Participant deferrals not allowed.

4.2 Employer Credits: Employer Credits will be made in the following manner:

x (a) Employer Discretionary Credits: The Employer may make discretionary credits to the Deferred Compensation Account of each Active Participant in an amount determined as follows:

x (i) An amount determined each Plan Year by the Employer.

o (ii) Other: .

o (b) Other Employer Credits: The Employer may make other credits to the Deferred Compensation Account of each Active Participant in an amount determined as follows:

o (i) An amount determined each Plan Year by the Employer.

o (ii) Other: .

o (c) Employer Credits not allowed.

5.2 Disability of a Participant:

x (a) A Participant’s becoming Disabled shall be a Qualifying Distribution Event and the Deferred Compensation Account shall be paid by the Employer as provided in Section 7.1.

o (b) A Participant becoming Disabled shall not be a Qualifying Distribution Event.

5.3 Death of a Participant: If the Participant dies while in Service, the Employer shall pay a benefit to the Beneficiary in an amount equal to the vested balance in the Deferred Compensation Account of the Participant determined as of the date payments to the Beneficiary commence, plus:

o (a) An amount to be determined by the Committee.

o (b) Other: .

x (c) No additional benefits.

5.4 In-Service or Education Distributions: In-Service and Education Accounts are permitted under the Plan:

o (a) In-Service Accounts are allowed with respect to:

o Participant Deferral Credits only.

o Employer Credits only.

o Participant Deferral and Employer Credits.

In-service distributions may be made in the following manner:

o Single lump sum payment.

o Annual installments over a term certain not to exceed 5 years.

Education Accounts are allowed with respect to:

o Participant Deferral Credits only.

o Employer Credits only.

o Participant Deferral and Employer Credits.

Education Accounts distributions may be made in the following manner:

o Single lump sum payment.

o Annual installments over a term certain not to exceed years.

If applicable, amounts not vested at the time payments due under this Section cease will be:

o Forfeited

o Distributed at Separation from Service if vested at that time

x (b) No In-Service or Education Distributions permitted.

5.5 Change in Control Event:

o (a) Participants may elect upon initial enrollment to have accounts distributed upon a Change in Control Event.

x (b) A Change in Control shall not be a Qualifying Distribution Event.

5.6 Unforeseeable Emergency Event:

x (a) Participants may apply to have accounts distributed upon an Unforeseeable Emergency event.

o (b) An Unforeseeable Emergency shall not be a Qualifying Distribution Event

6. Vesting: An Active Participant shall be fully vested in the Employer Credits made to the Deferred Compensation Account upon the first to occur of the following events:

o	(a)	Normal Retirement Age.

o	(b)	Death.

o	(c)	Disability.

o	(d)	Change in Control Event

o	(e)	Other:

x	(f)	Satisfaction of the vesting requirement as specified below:

	x	Employer Discretionary Credits:

		x	(i)	Immediate 100% vesting unless otherwise specified by the the employer at the time of credit.

		o	(ii)	100% vesting after Years of Service.

		o	(iii)	100% vesting at age .

		o	(iv)	Number of Years		Vested
				of Service		Percentage

				Less than	1		%
					1		%
					2		%
					3		%
					4		%
					5		%
					6		%
					7		%
					8		%
					9		%
					10 or more		%

		For this purpose, Years of Service of a Participant shall be calculated from the date designated below:

		o	(1)	First Day of Service.

		o	(2)	Effective Date of Plan Participation.

		o	(3)	Each Crediting Date. Under this option (3), each Employer Credit shall vest based on the Years of Service of a Participant from the Crediting Date on which each Employer Discretionary Credit is made to his or her Deferred Compensation Account.

o	Other Employer Credits:

	o	(i)	Immediate 100% vesting.

	o	(ii)	100% vesting after Years of Service.

	o	(iii)	100% vesting at age .

	o	(iv)	Number of Years		Vested
			of Service		Percentage

			Less than	1		%
				1		%
				2		%
				3		%
				4		%
				5		%
				6		%
				7		%
				8		%
				9		%
				10 or more		%

For this purpose, Years of Service of a Participant shall be calculated from the date designated below:

o	(1)	First Day of Service.

o	(2)	Effective Date of Plan Participation.

o	(3)	Each Crediting Date. Under this option (3), each Employer Credit shall vest based on the Years of Service of a Participant from the Crediting Date on which each Employer Discretionary Credit is made to his or her Deferred Compensation Account.

7.1 Payment Options: Any benefit payable under the Plan upon a permitted Qualifying Distribution Event may be made to the Participant or his Beneficiary (as applicable) in any of the following payment forms, as selected by the Participant in the Participation Agreement:

(a) Separation from Service prior to Seniority Date , or Separation from Service if Seniority Date is Not Applicable

x (i) A lump sum.

x (ii) Annual installments over a term certain as elected by the Participant not to exceed 10 years.

x (iii) Other: Upon separation from the company and its affiliates; or the later of the date a participant ceases to be employed or a specified age (not later than age 65)

Note: Regardless of your election, distribution will be delayed until the first day of the calendar month that is at least six months after your employment ceases, unless your employment ends on account of your death or disability.

(b) Separation from Service on or After Seniority Date, If Applicable

o (i) A lump sum.

o (ii) Annual installments over a term certain as elected by the Participant not to exceed years.

o (iii) Other: .

x (i) A lump sum.

o (ii) Annual installments over a term certain as elected by the Participant not to exceed years.

o (iii) Other: .

(d) Death

x (i) A lump sum.

o (ii) Annual installments over a term certain as elected by the Participant not to exceed years.

o (iii) Other: .

(e) Disability

x (i) A lump sum.

o (ii) Annual installments over a term certain as elected by the Participant not to exceed years.

o (iii) Other: .

o (iv) Not applicable.

If applicable, amounts not vested at the time payments due under this Section cease will be:

o Forfeited

o Distributed at Separation from Service if vested at that time

(f) Change in Control Event

o (i) A lump sum.

o (ii) Annual installments over a term certain as elected by the Participant not to exceed years.

o (iii) Other: .

x (iv) Not applicable.

If applicable, amounts not vested at the time payments due under this Section cease will be:

o Forfeited

o Distributed at Separation from Service if vested at that time

7.4 De Minimis Amounts.

x (a) Notwithstanding any payment election made by the Participant, the vested balance in the Deferred Compensation Account of the Participant will be distributed in a single lump sum payment at the time designated under the Plan if at the time of a permitted Qualifying Distribution Event that is either a Separation from Service, death, Disability (if applicable) or Change in Control Event (if applicable) the vested balance does not exceed $ 10,000. In addition, the Employer may distribute a Participant’s vested balance at any time if the balance does not exceed the limit in Section 402(g)(1)(B) of the Code and results in the termination of the Participant’s entire interest in the Plan.

o (b) There shall be no pre-determined de minimis amount under the Plan; however, the Employer may distribute a Participant’s vested balance at any time if the balance does not exceed the limit in Section 402(g)(l)(B) of the Code and results in the termination of the Participant’s entire interest in the Plan.

10.1 Contractual Liability: Liability for payments under the Plan shall be the responsibility of the:

x (a) Company.

o (b) Employer or Participating Employer who employed the Participant when amounts were deferred.

14. Amendment and Termination of Plan: Notwithstanding any provision in this Adoption Agreement or the Plan to the contrary, Section 2.23 of the Plan shall be amended to read as provided in attached Exhibit A.

17.9 Construction: The provisions of the Plan shall be construed and enforced according to the laws of the State of Missouri, except to the extent that such laws are superseded by ERISA and the applicable provisions of the Code.

IN WITNESS WHEREOF, this Agreement has been executed as of the day and year stated below.

	Isle of Capri Casinos, Inc.
	Name of Employer

	By:	/s/ R. Ronald Burgess
	Authorized Person
	Date:	12/4/08

ISLE OF CAPRI CASINOS, INC.
AMENDED AND RESTATED DEFERRED COMPENSATION PLAN

Exhibit A

The following entities, each of which is a member of the controlled group of corporations or other entities including Isle of Capri Casinos, Inc., within the meaning of Section 414 of the Internal Revenue Code of 1986, as amended, shall be deemed participating employers in the Amended and Restated Deferred Compensation Plan, without the necessity of further action. Each such entity shall be deemed to have delegated to the Compensation Committee of the Board of Directors of Isle of Capri Casinos, Inc. the power and authority to administer such plan on its behalf, to amend, restated, replace, modify or terminate such plan, to designate participants thereunder, and to take such other action as may be necessary or appropriate, all without notice or affirmative consent.

Riverboat Corporation of Mississippi

St. Charles Gaming Company, Inc.

IOC-Kansas City, Inc.

IOC-Davenport, Inc.

Grand Palais Riverboat, Inc.

IOC-Boonville, Inc.

IOC-Lula, Inc.

IOC-Natchez, Inc.

Isle of Capri Marquette, Inc.

Isle of Capri Black Hawk, LLC

Isle of Capri Bettendorf, LLC

PPI, Inc.

CCSC/Blackhawk, Inc.

Exhibit 10.9

ISLE OF CAPRI CASINOS, INC.
NONEMPLOYEE DIRECTOR DEFERRED COMPENSATION PLAN
COMPLIANCE AMENDMENT
(2007 Transitional Payment Election)

Whereas, Isle of Capri Casinos, Inc., (the “Company”) maintains the Isle of Capri Casinos, Inc. Nonemployee Director Deferred Compensation Plan, which plan is intended to be a nonqualified deferred compensation plan, first effective as of January 11, 2005 (the “Plan”);

Whereas, Article 9 of the Plan permits amendment by the Board of Directors of the Company or the Compensation Committee thereof, and such committee has authorized the amendment of the Plan to permit certain transitional elections contemplated under Section 409A of the Internal Revenue Code of 1986, as amended, and the guidance promulgated thereunder;

Now, Therefore, effective as of October 15, 2007, the following Paragraph 7.9 shall be added to the Plan to read in its entirety as follows:

“7.9 Transitional Elections. Notwithstanding any provision of the Plan to the contrary, a Participant herein as of October 30, 2007, who has not yet received his or her benefits hereunder (or the distribution of such benefits has not yet commenced) (a “Continuing Participant”) shall be entitled to:

a. Designate a time of payment with respect to his or her interest in the Plan, which shall not be earlier than the date on which he or she is deemed to separate from service as a member of the Board of Directors of the Company within the meaning of Code Section 409A or January 1, 2008, if later.

b. Elect either (i) to receive his or her benefits in the form of a single-sum payment or not more than ten annual installments, or (ii) to increase or decrease the number of installment payments previously in effect.

Any such designation shall be made on forms provided by the Committee or its designee and shall be given effect provided it is received and accepted by the Committee or its designee not later than December 31, 2007, or such earlier date as may be deemed necessary or appropriate. Unless a Continuing Participant otherwise provides, any such election shall apply to such Participant’s entire Plan interest.

If a Continuing Participant fails to timely submit an election hereunder, he or she shall be deemed to have elected the distribution of his or her interest in the Plan in accordance with the provisions of Paragraph 7.1 thereof. Any designation or deemed designation hereunder shall be subject to modification as provided in Paragraph 7.4 hereof.”

This 2007 Transitional Payment Election was approved by the Compensation Committee of the Board of Directors of the Company on October 15, 2007.

ISLE OF CAPRI CASINOS, INC.

Exhibit 10.10

MEDICAL EXECUTIVE REIMBURSEMENT PLAN

(MERP)

Revised 1/2009

Certain key employees of Isle of Capri Casinos, Inc. are eligible to participate in the Medical Executive Reimbursement Plan (MERP). Eligible participants will be designated by the Compensation Committee. Individual participation will be confirmed by the Sr. VP of Human Resources. Participation will begin concurrent with the effective date of coverage under the company’s group health plans.

Coverage under the plan will include:

· The employee

· Employee’s spouse

· Employee’s legal dependents (as defined in the group health insurance plan)

The maximum amount of benefit provided under this plan will be 5% of the participant’s compensation for the prior calendar year.

Compensation is defined as the participant’s base annual salary.

Compensation for a new participant in the first year of participation will be determined as follows:

· If the participant was an employee during the preceding full calendar year, then the compensation amount will be the amount for the preceding calendar year, as defined above, prorated for the number of months the person will be a participant in the first year of participation.

· If the participant did not work the full preceding calendar year, the compensation amount will be the current rate of pay and fees annualized and prorated for the number of months the person will be a participant in the first year of participation.

Benefits payable under this plan will be reimbursements of health care expenses incurred by covered individuals. These include, but may not be limited to:

· Items covered but not reimbursed by the Company’s group health plans such as deductibles, coinsurance and copayments.

· Dental out-of-pocket expenses (excluding cosmetic procedures).

· Vision exams and prescription corrective lenses, limited to one pair of glasses and contact lenses for vision correction, per calendar year per covered person. (This is in addition to any pair of glasses or contact lenses that may be purchased through Vision Service Plan (VSP) benefit plan, if you elected that benefit.) Additional replacement glasses may be allowed if glasses are lost or broken.

· Hearing exams and hearing aids.

· Durable medical equipment such as canes, walkers, crutches, wheelchairs.

· Certain over-the-counter medications allowed under IRS Code 213. Over-the-counter medications and certain home medical equipment will be limited to $5,000 per plan year.

Expenses not covered include, but not limited to:

· Cosmetic procedures

· Vitamins, dietary supplements

· Cosmetics

· Toiletries

· Massage therapy

· Missed appointment fees

· Expenses for non-compliance under the group health plans

The Compensation Committee has given authority to the Sr. VP of Human Resources to take any action which in his sole discretion is deemed necessary or advisable in order to maintain the program’s integrity.

Benefits under this plan will be paid directly to the participant after consideration by the appropriate group health plan. For medical and prescription drug claims that are processed through the Coventry Health Plan, participants will automatically receive reimbursement checks directly from their MERP account, mailed to their home address. You will not need to

submit a paper reimbursement request form. You can manage your MERP account through www.mycoventryhealth.com.

After you receive your Explanation of Benefits (EOB) from the dental or vision plans, you will submit the EOB for reimbursement consideration for any eligible, out-of-pockets expenses. For expenses not subject to Explanation of Benefits (eyeglasses, over-the-counter medications, etc.) you will need to submit a paid receipt along with a reimbursement request form.

Benefits paid will be reported as taxable income in accordance with IRS regulations. Participants agree that any benefits received under this plan and also paid to the participant from another insurance carrier or any other source will be refunded to the Medical Executive Reimbursement Plan.

Participants are required to submit Explanation of Benefits, invoices, or paid receipts for services to be considered under this plan within 180 days of their occurrence, using the appropriate MERP paper reimbursement form.

Reimbursement Forms should be faxed to:

Coventry Health Care

606-330-1377

Exhibit 10.22

RESTRICTED STOCK AGREEMENT

ISLE OF CAPRI CASINOS, INC.

AMENDED AND RESTATED

2000 LONG-TERM INCENTIVE PLAN

This AGREEMENT, entered into as of the Grant Date (as defined in paragraph 1), by and between the Participant and Isle of Capri Casinos, Inc. (the “Company”);

WITNESSETH THAT :

WHEREAS, the Company maintains the Isle of Capri Casinos, Inc. Amended and Restated 2000 Long-Term Incentive Plan (the “Plan”), which is incorporated into and forms a part of this Agreement, and the Participant has been selected by the committee administering the Plan (the “Committee”) to receive a Restricted Stock Award under the Plan;

NOW, THEREFORE, IT IS AGREED, by and between the Company and the Participant as follows:

1. Terms of Award . The following words and phrases used in this Agreement shall have the meanings set forth in this paragraph 1:

(a) The “Participant” is .

(b) The “Grant Date” is .

(c) The number of “Covered Shares” awarded under the Agreement is shares. Covered Shares are shares of Stock granted under this Agreement and are subject to the terms of this Agreement and the Plan.

(d) The “Restricted Period” with respect to any Covered Share is the period beginning on the Grant Date and ending on the date that such Covered Share is fully vested in accordance with the terms of this Agreement. The Restricted Period applicable to the Covered Shares is set forth in paragraph 5 of this Agreement.

(e) Other words and phrases used in this Agreement are defined in the Plan or elsewhere in this Agreement. Except where the context clearly implies or indicates the contrary, a word, term, or phrase used in the Plan is similarly used in this Agreement.

2. Award . The Participant is hereby granted the number of Covered Shares set forth in paragraph 1.

3. Dividends and Voting Rights . The Participant shall be entitled to receive any dividends paid with respect to the Covered Shares that become payable during the Restricted Period; provided, however, that no dividends shall be payable to or for the benefit of the Participant for Covered Shares with respect to record dates occurring prior to the Grant Date, or with respect to record dates occurring on or after the date, if any, on which the Participant has forfeited those Covered Shares. The Participant shall be entitled to vote the Covered Shares during the Restricted Period to the same extent as would have been applicable to the Participant

if the Participant was then vested in the shares; provided, however, that the Participant shall not be entitled to vote the shares with respect to record dates for such voting rights arising prior to the Grant Date, or with respect to record dates occurring on or after the date, if any, on which the Participant has forfeited those Covered Shares.

4. Deposit of Covered Shares . During the Restricted Period, each Covered Share granted under this Agreement shall be registered in the name of the Participant and shall be deposited with the Company’s transfer agent (either on a certificated or uncertificated basis as determined by the Committee). The grant of the Covered Shares is conditioned upon the Participant endorsing in blank a stock power for the Covered Shares.

5. Transfer, Vesting and Forfeiture of Shares . Subject to the terms and conditions of this Agreement, if the Date of Termination does not occur during the Restricted Period with respect to any Installment of the Covered Shares, then, at the end of the Restricted Period for such shares, the Participant shall become vested in those Covered Shares, and shall own the shares free of all restrictions otherwise imposed by this Agreement, other than those set forth in paragraph 6 hereof. With respect to any of the Covered Shares, the period during which such Covered Shares are not vested (and are therefore subject to forfeiture) is referred to herein as the “Restricted Period”. The Restricted Period shall begin on the Grant Date with respect to all of the Covered Shares and shall end on the third anniversary of the Grant Date. Upon the vesting of any Covered Share, the Participant shall own such share free of all restrictions otherwise imposed by this Agreement, other than the restrictions imposed by paragraph 6 hereof. Notwithstanding the foregoing provisions of this paragraph 5, the Participant shall become vested in the Covered Shares and shall become the owner of the shares free of all restrictions otherwise imposed by this Agreement, other than the restrictions of paragraph 6, and the Restricted Period with respect to all of the Covered Shares shall terminate and expire prior to the date otherwise indicated above upon the vesting of the Covered Shares upon (a) a Change in Control that occurs on or before the Date of Termination, (b) the Date of Termination if such Date of Termination occurs on account of the Participant’s death, Disability or Retirement, or, if applicable (c) the occurrence of any other acceleration event described in a written employment agreement, if any, between the Participant and the Company or a subsidiary of the Company. Except as otherwise provided in this paragraph 5, the Participant shall forfeit any of the Covered Shares which have not vested as of his Date of Termination.

6. Compliance with Applicable Laws; Limits on Distribution .

(a) Compliance with Securities Laws . If the Participant is subject to Section 16(a) and 16(b) of the Exchange Act, the Committee may, at any time, add such conditions and limitations to any of the Covered Shares (or the shares of Stock after the Restricted Period has lapsed) as the Committee, in its sole discretion, deems necessary or desirable to comply with Section 16(a) or 16(b) of the Exchange Act and the rules and regulations thereunder or to obtain any exemption therefrom.

(b) Certificates; Cash in Lieu of Fractional Shares . To the extent that the Plan or this Agreement provides for issuance of certificates to reflect the transfer of Covered Shares, the transfer of such shares may be effected on a non-certificated basis, to the extent not prohibited by applicable law or the rules of any securities exchange or similar entity. In lieu of issuing a fraction of a share of Stock pursuant to the Plan or this Agreement, the Company may pay to the Participant an amount equal to the Fair Market Value of such fractional share.

(c) Lock-Up Period . The Participant hereby agrees that, if so requested by the Company or any representative of the underwriters (the “Managing Underwriter”) in connection with any registration of the offering of any securities of the Company under the Securities Act of 1933, as amended (the “Securities Act”), the Participant shall not sell or otherwise transfer any Stock or other securities of the Company during the 180-day period, or such other period as may be requested in writing by the Managing Underwriter and agreed to in writing by the Company (the “Market Standoff Period”) following the effective date of a registration statement of the Company filed under the Securities Act. Such restriction shall apply only to the first registration statement of the Company to become effective under the Securities Act that includes securities to be sold on behalf of the Company to the public in an underwritten public offering under the Securities Act. The Company may impose stop-transfer instructions with respect to securities subject to the foregoing restrictions until the end of such Market Standoff Period.

7. Withholding . The grant and vesting of shares of Stock under this Agreement are subject to withholding of all applicable taxes. At the election of the Participant, and subject to such rules and limitations as may be established by the Committee from time to time, such withholding obligations may be satisfied through the surrender of shares of Stock which the Participant already owns, or to which the Participant is otherwise entitled under the Plan; provided, however, that such shares may be used to satisfy not more than the Company’s minimum statutory withholding obligation (based on minimum statutory withholding rates for Federal and state tax purposes, including payroll taxes, that are applicable to such supplemental taxable income).

8. Nontransferability . During the Restricted Period for a Covered Share, the Covered Share may not be sold, assigned, transferred pledged or otherwise encumbered in any manner otherwise than by will or by the laws of descent or distribution.

9. Heirs and Successors . This Agreement shall be binding upon, and inure to the benefit of, the Company and its successors and assigns, and upon any person acquiring, whether by merger, consolidation, purchase of assets or otherwise, all or substantially all of the Company’s assets and business. If any rights exercisable by the Participant or benefits deliverable to the Participant under this Agreement have not been exercised or delivered, respectively, at the time of the Participant’s death, such rights shall be exercisable by the Designated Beneficiary, and such benefits shall be delivered to the Designated Beneficiary, in accordance with the provisions of this Agreement and the Plan.

10. Administration . The authority to manage and control the operation and administration of this Agreement shall be vested in the Committee, and the Committee shall have all powers with respect to this Agreement as it has with respect to the Plan. Any interpretation of the Agreement by the Committee and any decision made by it with respect to the Agreement is final and binding on all persons.

11. Plan Governs . Notwithstanding anything in this Agreement to the contrary, the terms of this Agreement shall be subject to the terms of the Plan, a copy of which may be obtained by the Participant from the office of the Secretary of the Company and this Agreement is subject to all interpretations, amendments, rules and regulations promulgated by the Committee from time to time pursuant to the Plan.

12. Not An Employment Contract or Contract of Continued Service . The grant of Covered Shares pursuant to this Agreement will not confer on the Participant any right with respect to continuance of employment or other service with the Company or any Subsidiary, nor will it interfere in any way with any right the Company or any Subsidiary would otherwise have to terminate or modify the terms of such Participant’s employment or other service at any time.

13. Amendment . This Agreement may be amended in accordance with the provisions of the Plan and may otherwise be amended by written agreement of the Participant and the Company without the consent of any other person.

14. Severability . The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.

15. Applicable Law . The provisions of this Agreement shall be construed in accordance with the laws of the State of Delaware, without regard to the conflict of law provisions of any jurisdiction.

16. Entire Agreement . The Plan and this Agreement constitute all of the terms with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Participant with respect to the subject matter hereof.

17. Definitions . For purposes of this Agreement, words and phrases used in this Agreement shall be defined as follows:

(a) Date of Termination . The term “Date of Termination” means, as applicable (i) the first day occurring on or after the Grant Date on which the Participant is not employed by the Company or any Subsidiary, regardless of the reason for the termination of employment or (ii) the first day occurring on or after the Grant Date on which the Participant ceases to be a member of the Board of Directors of the Company, regardless of the reason for such cessation of services as a director. Notwithstanding the foregoing, a termination of employment shall not be deemed to occur by reason of a transfer of the Participant between the Company and a Subsidiary or between two Subsidiaries and the Participant’s employment shall not be considered terminated while the Participant is on a leave of absence from the Company or a Subsidiary approved by the Participant’s employer. If, as a result of a sale or other transaction, the Participant’s employer ceases to be a Subsidiary (and the Participant’s employer is or becomes an entity that is separate from the Company), the occurrence of such transaction shall be treated as the Date of Termination caused by the Participant being discharged by the employer.

(b) Designated Beneficiary . The “Designated Beneficiary” shall be the beneficiary or beneficiaries designated by the Participant in a writing filed with the Committee in such form and at such time as the Committee shall require. If a deceased Participant fails to designate a beneficiary, or if the Designated Beneficiary does not survive the Participant, any rights that would have been exercisable by the Participant and any benefits distributable to the Participant shall be exercised by or distributed to the legal representative of the estate of the Participant. If a deceased Participant designates a beneficiary and the Designated Beneficiary survives the Participant but dies before the Designated Beneficiary’s

exercise of all rights under this Agreement or before the complete distribution of benefits to the Designated Beneficiary under this Agreement, then any rights that would have been exercisable by the Designated Beneficiary shall be exercised by the legal representative of the estate of the Designated Beneficiary, and any benefits distributable to the Designated Beneficiary shall be distributed to the legal representative of the estate of the Designated Beneficiary.

(c) Disability . Except as otherwise provided by the Committee, the Participant shall be considered to have a “Disability” during the period in which the Participant is unable, by reason of a medically determinable physical or mental impairment, to engage in any substantial gainful activity, which condition, in the opinion of a physician selected by the Committee, is expected to have a duration of not less than 120 days.

(d) Retirement . The term “Retirement shall mean the termination by a Participant of his employment or service as a director, as applicable, by reason of reaching the age of 65 or such later date approved by the Board of Directors of the Company.

(e) Plan Definitions . Except where the context clearly implies or indicates the contrary, a word, term, or phrase used in the Plan is similarly used in this Agreement.

IN WITNESS WHEREOF, the Company has caused these presents to be executed in its name and on its behalf, all as of the Grant Date.

	Isle of Capri Casinos, Inc.


	By:

	Its:

	[ Participant]

Exhibit 10.44

AMENDED AND RESTATED LEASE AGREEMENT

by and between

THE PORT AUTHORITY OF KANSAS CITY, MISSOURI
(“LANDLORD”)

and

HILTON HOTELS CORPORATION
(“TENANT”)

dated as of

AUGUST 21, 1995

TABLE OF CONTENTS

ARTICLE I Demised Premises			2
Section 1.01.	DEMISE		2
Section 1.02.	TERM		4
Section 1.03.	TERMINATION		4
Section 1.04.	HOLDING OVER		4

ARTICLE II Rent			5
Section 2.01.	AMOUNT AND MEDIUM OF PAYMENT		5
Section 2.02.	INTERIM FIXED RENT		5
Section 2.03.	MINIMUM NET RENT		6
Section 2.04.	PARTIAL MONTH		6
Section 2.05.	PERCENTAGE RENT		6
Section 2.06.	OBLIGATION TO OPERATE		6
Section 2.07.	QUARTERLY STATEMENT/PAYMENT OF PERCENTAGE RENT		7
Section 2.08.	ACCOUNTING RECORDS AND AUDITING RIGHTS		7
Section 2.08.1.		Accounting Records	7
Section 2.08.2.		Audit Procedures	8
Section 2.09.	NET LEASE		8
Section 2.10.	ADDITIONAL RENT		9
Section 2.11.	ABSOLUTE RIGHT TO RENT		9
Section 2.12.	ABSOLUTE MINIMUM RENT		9
Section 2.13.	GRANT AND CREDIT AGAINST RENT		9
Section 2.14.	BOND ISSUE		9

ARTICLE III Payment of Taxes, Assessments, Etc.			10
Section 3.01.	IMPOSITIONS		10
Section 3.02.	FURNISHED RECEIPTS		11
Section 3.03.	SEEKING OF REDUCTION OF IMPOSITIONS BY TENANT
			11
Section 3.04.	JOINING OF LANDLORD		11
Section 3.05.	PRIMA FACIE EVIDENCE		11
Section 3.06.	UTILITIES		11

ARTICLE IV Surrender			12
Section 4.01.	REMOVAL OF PERSONALTY AND FIXTURES		12
Section 4.02.	SURRENDER AND DELIVERY OF DEMISED PREMISES
			13
Section 4.03.	PERSONAL PROPERTY NOT REMOVED		13
Section 4.04.	LANDLORD NOT RESPONSIBLE		13
Section 4.05.	SURVIVAL		13

ARTICLE V Insurance			13
Section 5.01.	FULL REPLACEMENT COST INSURANCE		13
Section 5.02.	OTHER INSURANCE		14
Section 5.03.	TYPE OF POLICIES		16
Section 5.04.	NAMED INSUREDS		16
Section 5.05.	CANCELLATION NOTICE		17

ARTICLE VI Landlord’s Right to Perform Tenant’s Covenants			17
Section 6.01.	RIGHT TO MAKE PAYMENTS		17
Section 6.02.	REPAYMENT BY TENANT		17

ARTICLE VII Repairs and Maintenance of the Demised Premises
Section 7.01.	REPAIRS		18
Section 7.02.	MAINTENANCE		18
Section. 7.03.	NO SERVICES FURNISHED		18

ARTICLE VIII General and Specific Compliance with Laws, Insurance, Development Agreement and Exhibits Thereto, Etc.			18
Section 8.01.	GENERAL COMPLIANCE		18
Section 8.02.	SPECIFIC COMPLIANCE		19
Section 8.02.1		Building Laws	19
Section 8.02.2		Toxic/Hazardous Substances ; Tenant’s Responsibilities	20
Section 8.02.3		Toxic/Hazardous Substances ; Landlord Responsibilities	23
Section 8.03.	COMPLIANCE WITH INSURANCE		25
Section 8.04.	COMPLIANCE WITH DEVELOPMENT AGREEMENT		25
Section 8.05.	CONTEST OF LAWS		25

ARTICLE IX Improvements, Etc.			26
Section 9.01.	IMPROVEMENTS		26
Section 9.02.	TITLE TO TENANT’S PERSONALTY AND FIXTURES
Section 9.03.	DESTRUCTION/DAMAGE		26
Section 9.04.	CHANGES AND ALTERATIONS		26
Section 9.05.	PERFORMANCE BOND		27
Section 9.06.	INSURANCE ENDORSEMENTS		27
Section 9.07.	ADDITIONAL IMPROVEMENTS		27
Section 9.08.	COMPLIANCE WITH LAWS		27
Section 9.09.	SURRENDER OF IMPROVEMENTS		27

ARTICLE X Discharge of Liens			27
Section 10.01.	NO LIENS		27
Section 10.02.	DEFENSE OF LIEN CLAIM		28
Section 10.03.	NO CONSENT		28

ARTICLE XI No Waste			28

ARTICLE XII Use of Property			28
Section 12.01.	PROPER USE		28
Section 12.02.	PROHIBITED USE		28

ARTICLE XIII Entry on Demised Premises by Landlord			29
Section 13.01.	RIGHT TO ENTER		29
Section 13.02.	STORAGE		29

ARTICLE XIV Indemnification of and by Landlord and Tenant			29

ARTICLE XV Damage or Destruction		31
Section 15.01.	REPAIR/RESTORATION BY TENANT	31
Section 15.02.	NOTICE	32
Section 15.03.	NO RIGHT TO TERMINATE/SURRENDER	32

ARTICLE XVI Condemnation		32
Section 16.01.	TAKING	32
Section 16.02.	SUBSTANTIAL/COMPLETE TAKING	32
Section 16.03.	TERMINATION FROM TAKING	33
Section 16.04.	PARTIAL TAKING	33
Section 16.05.	EASEMENT TYPE TAKING	33

ARTICLE XVII Assignments, Mortgages and Subleases of Tenant’s Interest
		34
ARTICLE XVIII Default		35
Section 18.01.	“EVENT OF DEFAULT” BY TENANT DEFINED	35
Section 18.02.	REMEDIES	37
Section 18.03.	DAMAGES	38
Section 18.04.	REMEDIES IN EVENT OF BANKRUPTCY OR OTHER PROCEEDING	40
Section 18.05.	CONTINUED OBLIGATION	43
Section 18.06.	WAIVER BY TENANT	43
Section 18.07.	NO WAIVER BY LANDLORD OR TENANT	43
Section 18.08.	INJUNCTION	43
Section 18.09.	CUMULATIVE RIGHTS	44
Section 18.10.	MITIGATION	44
Section 18.11.	DEFAULT BY LANDLORD; TENANT REMEDIES	44

ARTICLE XIX Renewal Privileges		44
Section 19.01.	EIGHT RENEWAL TERMS	44
Section 19.02.	NO WAIVER OR RELEASE	46

ARTICLE XX Representations and Warranties		46
Section 20.01.	REPRESENTATIONS AND WARRANTIES OF LANDLORD	46
Section 20.02.	REPRESENTATIONS AND WARRANTIES OF TENANT	46
		47
ARTICLE XXI Invalidity of Particular Provisions		47

ARTICLE XXII Notices		48

ARTICLE XXIII Rent Abatement/Claim for Damages		49

ARTICLE XXIV Estoppel Certificates		49
Section 24.01.	TENANT’S CERTIFICATE	49
Section 24.02.	LANDLORD’S CERTIFICATE	49

ARTICLE XXV Miscellaneous		50
Section 25.01.	GOVERNING LAW/VENUE	50
Section 25.02.	CONFLICT AMONG PROVISIONS	50
Section 25.03.	INTEREST RATE	50
Section 25.04.	SPECIAL REPORTS	51

iii

ARTICLE XXVI Consent of Landlord and Tenant		51
Section 26.01.	STANDARD	51
Section 26.02.	OTHER ACTS	51

ARTICLE XXVII Payments Under Protest		51

ARTICLE XXVIII No Oral Modification		51

ARTICLE XXIX Covenants to Bind and Benefit Respective Parties
		51
ARTICLE XXX Captions, Table of Contents and Exhibits		52
Section 30.01.	CAPTIONS	52
Section 30.02.	TABLE OF CONTENTS	52
Section 30.03.	EXHIBITS	52

AMENDED AND RESTATED

LEASE AGREEMENT

THIS AMENDED AND RESTATED LEASE AGREEMENT (the “Lease”) is made and entered into by and between THE PORT AUTHORITY OF KANSAS CITY, MISSOURI (the “Landlord”) and HILTON HOTELS CORPORATION, a Delaware corporation (the “Tenant”), as of the 21 day of August, 1995.

RECITALS

The following recitals are a material part of this Lease:

A. Landlord is a body politic created and formed by the city of Kansas City, Missouri (the “City”) under Ordinance Number 47523 adopted February 11, 1983 by virtue of the power granted to the City under Sections 68.010 et. seq. of the Revised Statutes of Missouri.

B. Tenant submitted a proposal dated December 30, 1992, and supplemented on January 11, 1993 (collectively, the “Proposal”), to construct gaming facilities on property leased by Landlord from the City. Landlord and Tenant signed a Development Agreement on March 12, 1993, under which Tenant attempted to develop such facilities on Site B and agreed to construct related infrastructure on behalf of Landlord and the City. Because of difficult site constraints, changing regulatory requirements, changes in the Missouri gaming laws, and concern of Landlord and Tenant with potential problems relating to environmental and archaeological issues at Site B, Landlord and Tenant have agreed, subject to the Development Agreement (as defined herein), to construct Tenant, s gaming enterprise at Site A instead of at Site B and to modify the requirements of the Development Agreement relating to infrastructure construction and development.

C. The City, as present owner of the Demised Premises (as defined herein) has, under that certain Kansas City Riverfront Lease Agreement dated May 14, 1993 as amended by agreements dated September 30, 1994 and August 21, 1995 (collectively “City Lease”), leased the Demised Premises (as herein defined) to Landlord with all necessary right, title and interest thereto in order for Landlord to have the full legal ability to further sublease the same to other parties such as Tenant.

D. Subject to and in connection with that certain Development Agreement made and entered into b y and between the Landlord and Tenant on March 12, 1993, and amended by Addenda One through Fourteen (collectively the “Development Agreement”), the first and signature pages of each of which are attached hereto identified as Exhibit A, Landlord has agreed to sublease to Tenant the Demised Premises and the Easements (as defined herein) and Tenant has agreed to sublease the same from Landlord.

E. On March 12, 1993, Landlord and Tenant entered into a certain Lease Agreement (the “Lease”) under which Landlord leased to Tenant the Demised Premises and additional real property.

F. In the Twelfth and Thirteenth Addendums to the Development Agreement (Exhibit D) the parties agreed that Tenant would construct its riverboat gaming floating facility (“Riverboat Gaming Facility”) in a basin adjacent to the Missouri River.

G. The parties hereto have determined that the Lease should be amended and restated.

WITNESSETH, that for and in consideration of the sum of Ten and NO/100 Dollars ($10.00) to each of them paid by the other, and other good and valuable consideration, the receipt, adequacy and sufficiency of which is hereby acknowledged by each of them, the parties hereto do hereby covenant and agree as follows:

ARTICLE I

Demised Premises

Section 1.01. DEMISE . Landlord hereby subleases to Tenant, and Tenant hereby leases from Landlord, the real property described in Exhibit B attached hereto, together with all buildings and improvements to be constructed in accordance with the Development Agreement -(“Site Improvements”) (collectively the “Demised Premises”), and specifically including the Riverboat Gaming Facility and including the following easements and appurtenances:

(a) That certain driveway easement conveyed to Landlord by Kansas City Power and Light Company (“KCPL”) in the document entitled “Service Access Easement Agreement,” which is recorded as Document No. in Volume at Page of the Recorder of Deeds Office of Jackson County, Missouri and which was executed by such parties for the purpose of ingress and egress to and from the Demised Premises and Riverfront Road and which such easement is described in Exhibit B-1, which is attached hereto and incorporated herein by reference; and

(b) A certain pedestrian easement (the “Pedestrian Access Easement”) to be conveyed to and inuring to the benefit of Landlord in accordance with the Development Agreement and providing access for pedestrians crossing Front Street for the purpose of using Tenant’s Riverboat Gaming Facility (to be attached to this Lease and identified as Exhibit B-2, as part of a future amendment to this Lease); and

(c) Any other easements or other rights in adjoining property inuring to the benefit of Landlord by reason of the City Lease including any and all easements reasonably required for the installation, maintenance, operation and service of sewer, water, gas, power, and other utility lines and services.

(d) All machinery, equipment and fixtures and other items of personal property and any replacements thereof, attached to or used

in connection with the use, occupation and operation of the Demised Premises and the Easements, except those items specifically referred to as Tenant’s Personalty and Fixtures in Section 4.01 hereof, and all alterations, additions and improvements hereafter made to the Demised Premises, title to which may now or hereafter vest in City and/or Landlord.

Following the conveyance of the Pedestrian Access Easement to Landlord, this Lease shall be amended by the addition of the legal description for such easement.

The Pedestrian Access Easement and the Service Access Easement referred to in subsections (a) and (b) are hereinafter referred to as “the Easements.”

Landlord warrants that it and no other entity now has the right to sublease the Demised Premises and the Easements to Tenant, and that so long as Tenant is not in default hereunder or under the Development Agreement, Tenant shall have peaceful and quiet use of the Demised Premises and the Easements, subject to all matters presently of record and all other agreements and encumbrances to which this Lease is or may hereafter be subordinated or otherwise made subject to as permitted herein or in the Development Agreement, and such use by Tenant shall also be subject to the following:

(i) any state of facts which an accurate survey may show; and

(ii) easements, covenants and restrictions of record, if any, to the extent that the same are in force or effect; and

(iii) present and future zoning laws, ordinances , resolutions and regulations of the City, and all present and future ordinances, laws, regulations and orders of all boards, bureaus, commissions and bodies of any municipal, county, state or federal government or governmental authority now or hereafter having or acquiring jurisdiction of the Demised Premises and/or the use and improvement thereof and/or the operation of gaming or other enterprises thereat or in connection therewith; and

(iv) violations of law, ordinances, orders and requirements, whether or not of record, of any federal, state or municipal department or authority having jurisdiction over or affecting the Demised Premises, as the same may exist on the date hereof or may be hereafter enacted; and

(v) condition and state of repair of the Demised Premises as the same may be on the date of execution hereof.

Notwithstanding anything to the contrary contained herein, the Demised Premises, the Easements, and all improvements presently existing thereon, Landlord’s interest therein and City’s title thereto have been examined by Tenant and when accepted by it as evidenced by its execution hereof or by its use thereof shall be

deemed to have been accepted by it in its then present “as is” condition, except as set out in Article VIII hereof.

Section 1.02. TERM . The term of this Lease (the “Term”) shall commence on the date hereof (the “Commencement Date”) and shall terminate on the Termination Date (as defined herein), except as renewed under Article XIX hereof or as earlier terminated under Article XVIII hereof. The date on which the Term shall terminate (the “Termination Date”) shall be the earlier of:

(a) Ten (10) years after the date on which Tenant begins operation of its riverboat gaming enterprise (“Actual Opening Date”) on the Demised Premises; or

(b) Ten (10) years after the Deemed Opening Date (which shall be twenty-four (24) months after the Commencement Date, subject to extension for force majeure delay as defined in Section 5.4 of the Development Agreement) (the Actual Opening Date or the Deemed Opening Date, whichever first occurs is sometimes referred to herein as the “Opening Date”).

Landlord and Tenant agree, upon demand of the other, to execute and deliver to the other party hereto, a declaration setting forth the Termination Date (in conformance herewith) as soon as it has been determined.

Section 1.03. TERMINATION . This Lease shall terminate on the Termination Date (unless renewed in accordance with the provisions for renewal contained in Article XIX hereof, or unless otherwise extended by written agreement of Landlord and Tenant), without the necessity of any additional notice from either Landlord or Tenant to terminate the same, and Tenant hereby waives notice to then vacate or quit the Demised Premises and agrees that Landlord shall then be entitled to the benefit of all provisions of law respecting the summary recovery of possession of the Demised Premises from a tenant holding over to the same extent as if statutory notice had been given. Tenant hereby agrees that if it fails to surrender the Demised Premises and the Easements on the Termination Date, Tenant will be liable to Landlord for any and all damages which Landlord shall suffer by reason thereof including, but not being limited to, damages under Section 1.04 hereof and liquidated damages as described in Section 2.06 hereof or elsewhere described herein.

Section 1.04. HOLDING OVER . If Tenant shall be in possession of the Demised Premises after the expiration of the Term, or, if applicable, after any validly exercised renewal thereof as provided for herein, the tenancy under this Lease shall become one from month to month, terminable by either party on thirty (30) days prior written notice, and shall be subject to all of the terms and conditions of this Lease as though the Term had been extended from month to month, except that: (i) the Minimum Net Rent (as defined herein) payable hereunder for each month during said holdover period shall be equal to twice the monthly installment of Minimum Net Rent (as defined herein) payable during the last month of the Term (or any such renewal thereof), (ii) the installment of

Percentage Rent (as defined herein) payable hereunder for each such month shall be equal to one-twelfth (l/12th) of the average annual Percentage Rent payable hereunder, if any, for the immediately preceding three (3) years of the Term (or any renewal thereof); and (iii) all Additional Rent payable hereunder shall be prorated for each month during such holdover period.

ARTICLE II
Rent

Section 2.01. AMOUNT AND MEDIUM OF PAYMENT . Throughout the Term and any renewal thereof, Tenant shall pay Landlord, without notice or demand, in lawful money of the United States of America, at the office of Landlord or at such other place as Landlord shall designate within the City, State of Missouri, as rent hereunder (collectively, the “Rent”) the following:

a. Interim Fixed Rent as called for in Section 2.02 hereof; plus

b. Minimum Net Rent as called for in Section 2.03 hereof; plus

c. Percentage Rent as called for in Section 2.05 hereof; plus

d. Additional Rent as called for in Section 2.10 hereof.

Section 2.02. INTERIM FIXED RENT . In lieu of Tenant’s otherwise agreeing to reimburse Landlord for expenses paid and/or incurred by Landlord for attorneys, accountants and other consultants retained by Landlord in connection with its requesting Tenant’s Proposal and selecting Tenant as developer (which led to the execution of this Lease by Landlord), and so as to insure that Landlord shall incur no expense with respect to the riverboat gaming enterprise of Tenant, as Tenant agreed to so do under the Proposal, Tenant agrees (i) that any payments made by it to Landlord on or before June 30, 1994 which might under prior agreements have been a credit against Minimum Net Rent, shall not be so deemed and Landlord shall not be obligated to credit such payments or any part thereof against monies due to Landlord hereunder, and (ii) that beginning on July 1, 1994 and continuing through the Opening Date or the Termination Date, whichever first occurs, Tenant shall pay monthly interim fixed rent (“Interim Fixed Rent”) to Landlord at the rate of Twenty-Five Thousand and NO/100 Dollars ($25,000.00) per calendar month, payable in advance on the first day of each such calendar month, three-fifths (3/5) of which sum, as so paid, shall on Opening Date be credited against Minimum Net Rent due hereunder. Tenant shall have no further liability to Landlord for any such Landlord expenses.

Section 2.03. MINIMUM NET RENT . Subject to credit therefor under Sections 2.02, 2.04 and 2.13 hereof, beginning on the Opening Date and continuing during the remainder of the Term and any renewal thereof (as adjusted under Section 2.04 with respect

thereto), Tenant shall pay to Landlord a minimum net annual rent, over and above the other payments to be made by Tenant as hereinafter provided, at the rate of Two Million and NO/100 Dollars ($2,000,000.00) per year (as the same may be adjusted during any renewal term hereof). Such minimum net rental (the “Minimum Net Rent”) shall be paid in equal annual installments of Two Million and NO/100 Dollars ($2,000,000.00) each, in advance, on the Opening Date and on the date of each and every annual anniversary of the Opening Date thereafter.

Section 2.04. PARTIAL MONTH . If the Commencement Date and/or the Opening Date shall occur on any day other than the first day of a calendar month, Tenant shall pay Landlord on the Commencement Date and receive a credit on the Opening Date, as applicable, of the proportionate amount of Interim Fixed Rent accrued for the balance of such current calendar month.

Section 2.05. PERCENTAGE RENT . Beginning with the Opening Date and continuing throughout the entire remaining Term of this Lease and any renewal thereof, pursuant to the terms of Section 2.07 hereof Tenant shall pay to Landlord as minimum percentage rent (the “Percentage Rent”) a sum of money equal to three and one quarter percent (3 1/4%) of Gross Revenues (as defined herein) less Minimum Net Rent paid hereunder. As used herein, the term “Gross Revenues” shall mean the sum of “adjusted gross receipts” as such term is defined under the Missouri Gaming Laws of the Revised Statutes of Missouri, plus all revenues from admissions, sales of food, beverages, merchandise, services, parking charges, and all other business endeavors at the Demised Premises and/or Tenant’s riverboat gaming enterprise as are derived from use of the Demised Premises and/or operation of Tenant’s riverboat gaming enterprise (including any parking facilities or concessions operated with respect thereto) by Tenant or any licensee, sublessee, franchisee or other operator of all or any portion of any such business endeavors, on or in connection with all or any portion of the Demised Premises or the Easements.

Section 2.06. OBLIGATION TO OPERATE . At all times from and after the Opening Date during the Term of this Lease (including any validly exercised renewals of the original or any extended term hereof), Tenant will continuously use and occupy the Demised Premises and operate its riverboat gaming enterprise in connection therewith in good faith and in such a manner as shall assure the transaction of a maximum volume of business in and at the Demised Premises and from said riverboat gaming enterprise. If Tenant shall fail to cause its said riverboat gaming enterprise to be operated as required under the immediately preceding sentence, then, in addition to any other remedy available to Landlord under this Lease, Tenant shall pay to the Landlord in lieu of Percentage Rent and in addition to any other Rent payable hereunder, and as liquidated damages for such failure to so operate, a sum equal to fifty percent (50%) of the then applicable Minimum Net Rent applicable to each day or portion thereof during which Tenant shall fail to so operate (e.g. if not operating for forty (40) days, 40/365th of 50% of the then applicable Minimum Net Rent as

Percentage Rent for such forty (40) days). Notwithstanding the foregoing, solely for the purposes of this Section 2.06 Tenant’s failure to so operate shall be deemed unavoidable and not a failure to so operate, if and so long as non-operation shall be directly caused by fire or other casualty, national emergency, condemnation, enemy action, civil commotion, strikes, lockouts, or national defense pre-emptions, acts of God, energy shortages, changes in the Missouri law which prohibits the continuation of Tenant’s business, changes in the Kansas City, Missouri gaming industry which make Tenant’s gaming operations unprofitable for a continuous period of one (1) year or more, or any other similar causes beyond the reasonable control of Tenant, and provided further that Tenant shall continually thereafter use its diligent best efforts to alleviate the cause for such cessation of operation and commence operation as soon thereafter as is practicable.

Section 2.07. QUARTERLY STATEMENT/PAYMENT OF PERCENTAGE RENT. Tenant shall deliver to Landlord, within thirty (30) days after the end of each third month of the Term of this Lease after Opening Date, a written statement, in form reasonably acceptable to Landlord, certified to as true, complete and accurate by an authorized officer of Tenant, setting out its Gross Revenues during the immediately preceding three (3) month period (“Tenant’s Quarterly statement”). A similar statement, certified as correct by Tenant’s chief financial officer shall be delivered to Landlord within thirty (30) days after each anniversary of the Opening Date (“Tenant’s Annual Statement”). Tenant shall pay any Percentage Rent due, based on Tenant’s Quarterly Annual Statement, within thirty (30) days after the end of the quarter or year reported in Tenant’s Quarterly or Annual Statement, which statement reflects that any Percentage Rent is due hereunder, as a result of 3-1/4% of Gross Revenues during the total period of time reflected therein exceeding the Minimum Net Rent due for the 12-month period of time as to which said Quarterly or Annual Statement relates.

Section 2.08. ACCOUNTING RECORDS AND AUDITING RIGHTS .

2.08.1 Accounting Records . Tenant shall maintain at the Demised Premises or at a central accounting location maintained in the City, and identified to Landlord upon request, account records and procedures complying with generally accepted accounting principles consistently applied, as defined by the American Institute of Certified Public Accountants (“AICPA”) and the Financial Accounting Standards Board (“FASB”); provided, however, that such principles shall comply in all respects and conform to all rules, regulations and requirements of the Gaming Commission of the State of Missouri or any similar body established in Missouri relating to accounting principles for the determination of adjusted gross receipts of Tenant, so as to enable Tenant to calculate, and Landlord to verify, any Percentage Rent due under this Lease. Tenant shall preserve Tenant’s said books and records relating to each calendar year for at least three (3) years after the end of such calendar. If at the conclusion of such three-year period, a dispute is pending between Landlord and Tenant regarding the amount

of Percentage Rent due, then Tenant shall continue to preserve such records pending the final disposition of such dispute.

2.08.2 Audit Procedures : Within (and in no event later than) seventy-five (75) days after the end of each calendar year of Tenant, Tenant shall cause the certified public accountant then regularly auditing Tenant’s books and records (which CPA shall be licensed in Missouri and shall be a member of AICPA) to audit Tenant’s (and/or any subtenant’s, licensee’s, franchisee’s or concessionaire’s) books and records relevant to the calculation of Rents and other payments and Gross Revenues reported by Tenant and/or which should have been reported by Tenant during its preceding calendar year and to certify to Landlord the correctness of same and the compliance thereof with the definitions and requirements of this Lease. Tenant shall provide to Landlord, at the time of filing thereof, copies of all financial reports and tax returns furnished to the State of Missouri and/or the Gaming Commission thereof in connection with the determination of Tenant’s taxable gaming revenue and/or adjusted gross receipts. Further, if Tenant shall fail to so provide to Landlord such certification and/or copies as and when due hereunder or if Landlord shall desire to audit such statement(s), Landlord, in conjunction with the City Auditor and Director of Finance for the City, shall have the right to audit the books and records of Tenant with respect to Percentage Rent or other payments provided for in this Lease at any time upon reasonable notice; provided that Landlord agrees to exercise this audit right not more frequently than once per fiscal year. Any such audit shall be performed in accordance with generally accepted auditing standards, during ordinary business hours and without unreasonably interfering with Tenant’s business. If such certification was not provided or if any such audit reveals that Gross Revenue or any portion of Percentage Rent due hereunder was understated, then within thirty (30) days after receipt of the audit with appropriate backup documentation, Tenant shall pay to Landlord the additional Percentage Rent due on account of the audit or audit corrections. Any adjusting payment due on account of previous underpayment shall bear interest at the Interest Rate (as defined herein) from the date it would have been paid had Tenant’s Quarterly Statement been correct, until the date actually paid. If such certification was not so provided or if Percentage Rent reported therein was understated by more than two percent (2%) for any audited period of time, then Tenant shall pay the reasonable cost of the audit showing same and/or disclosing such understatement; otherwise the audit shall be conducted at Landlord’s expense.

Section 2.09. NET LEASE . It is the purpose and intent of Landlord and Tenant that this is a net lease and that from and after the Opening Date, the Minimum Net Rent (and any Percentage Rent and/or Additional Rent) shall, except as herein otherwise provided, be absolutely net to Landlord, so that this Lease shall thereafter yield, net, to Landlord, the Minimum Net Rent specified in section 2.03 hereof in each remaining year during the Term and any renewal thereof, together with the Percentage Rent provided for in Section 2.05 hereof, and the Additional Rent provided for in

Section 2.10 hereof, and that all costs, expenses and obligations of every kind and nature whatsoever relating to the Demised Premises and/or the operation of Tenant’s riverboat gaming enterprise thereon and/or in connection therewith, except as herein otherwise provided, which may arise or become due during or out of the original or any renewal Term of this Lease, shall be paid by Tenant, and that Landlord shall be protected, defended, indemnified and held harmless by Tenant from and against the payment of same or any obligation to pay the same.

Section 2.10. ADDITIONAL RENT . Except as herein otherwise provided, Tenant shall also pay without notice except as may be required in this Lease, and without abatement, deduction or setoff, as additional rent (“Additional Rent”), all sums, Impositions (as defined in Article III hereof), costs, expenses and other payments which Tenant assumes or agrees to pay hereunder, and, in the event of any non-payment thereof, Landlord shall have all the rights and remedies provided for herein or by law.

Section 2.11. ABSOLUTE RIGHT TO RENT . Rent due hereunder shall be paid to Landlord without notice or demand and without abatement, deduction or set-off, except as herein otherwise specifically provided.

Section 2.12. ABSOLUTE MINIMUM RENT . Notwithstanding anything to the contrary contained herein, the Minimum Net Rent shall never be less than $2,000,000.00 per year (subject to sums credited under Section 2.03, 2.04 and 2.13 hereof as rent received) and the amount of Additional Rent due hereunder shall always reflect the expenses incurred or made upon which Additional Rent is due.

Section 2.13. GRANT AND CREDIT AGAINST RENT . As additional consideration to Landlord for Landlord’s entering into this Lease and the Development Agreement, Tenant shall make a grant to Landlord in the amount of TEN MILLION DOLLARS ($10,000,000.00), payable in all events as follows: ONE MILLION AND NO/100 DOLLARS ($1,000,000.00) on the Opening Date, and a like sum of ONE MILLION AND NO/100 DOLLARS ($1,000,000.00) on the anniversary of the Opening Date in each of the next nine (9) consecutive years after the year in which the Opening Date occurs. This grant, in the aggregate, shall be known as the “Riverfront Park Grant”. Said Riverfront Park Grant, along with Minimum Net Rent payable during the initial ten (10) year term hereof, shall be utilized, interalia , for completion of the work described in Exhibit I of the Development Agreement (or for bond financing payments due with respect thereto), and for the purposes set out in Exhibit D attached hereto.

Section 2.14. Bond Issue . Tenant acknowledges that Landlord intends to employ the Rents and Riverfront Park Grant in part to cover debt service under and other costs of a tax exempt revenue bond issue (the “Bond Issuance”) utilizing the Tenant’s credit and its payment, obligations hereunder in order to fund the costs of the work described in Exhibit I to the Development Agreement. Tenant

further acknowledges that its obligations hereunder are not subordinate to any of its most senior or other debts or obligations and that Landlord has not subordinated this Lease and/or Tenant’s obligation hereunder to any other debt or obligations of Tenant. Tenant also acknowledges that in order to complete such work, it is necessary for Landlord to have net proceeds totalling in the aggregate not less than $20,000,000.00, in addition to amounts sufficient to fund interest reserves and to pay costs of issuance of the bonds, available to it as a result of the sale of such bonds.

In addition, should said net proceeds be less than $20,000,000.00, Tenant shall on Opening Date waive that portion of the credit to be given Under Section 2.02 of this Lease which is equal to the amount by which $20,000,000.00 exceeds the actual net proceeds of the Bond Issuance (provided however, such waiver shall not exceed the sum of $195,000.00).

As additional consideration for Landlord entering into this Lease with Tenant, Tenant agrees, that, on the Commencement Date, it shall pay Landlord in lieu of the anticipated cost of a forward interest rate swap or other derivative or financing device selected by Landlord, the sum of Three Hundred Fifty Thousand Dollars ($350,000.00).

ARTICLE III

Payment of Taxes, Assessments, Etc.

Section 3.01. IMPOSITIONS . Tenant shall pay or cause to be paid (except as in Section 3.03 hereof provided), before any fine, penalty, interest or cost may be added thereto for the non-payment thereof, all taxes, general and/or special assessments, water, fire line, steam and sewer rents, fees, rates and charges, levies, license and permit fees and all other governmental charges, general and special, ordinary and extraordinary, foreseen or unforeseen, of any kind and nature whatsoever, which at any time on or after the Commencement Date may be assessed, levied, confirmed, imposed upon, and/or become due and payable during the balance, if any, of the original Term or any renewal or extension thereof, out of or in respect of, or become a lien on, the Demised Premises, or any part thereof or any appurtenance thereto and/or Tenant’s riverboat gaming enterprise (all such taxes, assessments, water, fire line, steam and sewer rents, fees, rates and charges, levies, license and permit fees and other governmental charges being hereinafter referred to as “Impositions”, and any of the same being hereinafter referred to as an “Imposition”); provided, however, that

(a) if, by law, any Imposition may, at the option of the taxpayer, be paid in installments, Tenant may pay the same in equal installments over the period of time allowed under the terms thereof, provided, however that Tenant shall pay all such installments remaining unpaid at the expiration or earlier termination of the Term of this Lease or any properly exercised renewal or extension thereof; and

(b) all Impositions for the calendar or tax years in which the Commencement Date occurs and the Term or any renewal term ends shall be apportioned so that Tenant shall pay only those portions thereof which correspond with the portion of said calendar years as are within the Term and/or any renewal or extension thereof and are payable by Tenant hereunder.

Section 3.02. FURNISHED RECEIPTS . Tenant, upon request of Landlord, shall furnish to Landlord or, if requested by Landlord, to City and/or any mortgagee of Landlord, within thirty (30) days after the date when any Imposition would become delinquent, official receipts of payment issued by the appropriate taxing authority, or other evidence satisfactory to Landlord, City and/or such mortgagee, evidencing the payment thereof.

Section 3.03. SEEKING OF REDUCTION OF IMPOSITIONS BY TENANT . Tenant shall be entitled to seek a reduction in the valuation of the Demised Premises for tax purposes and to contest in good faith by appropriate proceedings, at Tenant’s sole cost and expense, and at no cost or expense to Landlord, the amount, rate, or validity in whole or in part of any Imposition, and if permitted by law may defer payment thereof, so long as no interest or penalty shall accrue thereon or with respect thereto or provided that such interest or penalty is deposited with Landlord or such taxing authority by Tenant to protect Landlord’s interest if Tenant does not prevail in such proceeding.

Section 3.04. JOINING OF LANDLORD . Landlord shall not be required to join in any proceedings to contest any Imposition unless the provisions of any law, rule or regulation at the time in effect shall require that such proceedings be brought by or in the name of Landlord, in which event Landlord shall join in such proceedings or permit the same to be brought in its name. Landlord shall not ultimately be subjected to any liability for the payment of any costs or expenses in connection with any such proceedings, and Tenant shall protect, defend, indemnify and hold Landlord harmless from any such costs and expenses. Tenant shall be entitled to any refund of any Imposition and penalties or interest thereon which are recovered by Landlord and which have already been paid by Tenant, or which have been paid by Landlord and previously reimbursed in full by Tenant.

Section 3.05. PRIMA FACIE EVIDENCE . The certificate, advice, receipt or bill of the appropriate official designated by law to make or issue the same or to receive payment of any Imposition or of non-payment of such Imposition shall be prima facie evidence that such Imposition is due and unpaid or has been paid at the time of the making or issuance of such certificate, advice, receipt or bill.

Section 3.06. UTILITIES . During the Term hereof, and any renewals thereof, Tenant shall be responsible for obtaining, maintaining, supplying and paying for all utilities required for operation of its business on and in connection with the Demised Premises and shall make all payments for or with respect to the

same on a timely basis. Such payments as and when due shall also be considered “Impositions” hereunder.

ARTICLE IV

Surrender

Section 4.01. REMOVAL OF PERSONALTY AND FIXTURES . The Riverboat Gaming Facility, together with its contents and including trade fixtures and personalty shall, until termination of this Agreement, be the absolute property of the Tenant. Following the termination of this Agreement, Tenant shall have a period of sixty days (60) in which to remove all or part of the furniture, trade fixtures and business equipment within the Riverboat Gaming Facility (“Removal Period”). Tenant’s furniture, trade fixtures and business equipment shall include and be limited to the following: (1) all gaming equipment including slot machines, table games (Blackjack, Craps, Poker, Mini Baccarat), slot bases, slot systems (tracking, data and communications), cards, chips, cups, etc.; (2) All gaming-related furnishings, fixtures and equipment including tables, chairs and stools; (3) unattached casino bar equipment and related items (e. g. mixers and blenders), office furniture and portable panel systems and equipment other than that located in general business offices; (4) All computers and equipment other than that located in general business offices (5) All interior and exterior signage (attached and freestanding); (6) All security and surveillance and specialized audio visual equipment and systems related to casino operation only and not to any portion of the Demised Premises as a structure; (7) All (i) other special decorative elements and (ii) advertising elements, related to or expressing the brand name of Tenant or concerning Tenant’s corporate identity; (8) reader or other message type boards whether installed on the interior or exterior and (9) special decorative doors, windows or lighting fixtures but only if Tenant on such removal replaces such items with items of comparable functional and decorative quality. In addition, Tenant will reasonably repair any material damage to the Riverboat Gaming Facility caused by Tenant’s exercise of its right to remove Tenant’s Personalty and Fixtures. Provided, however, Tenant shall not have the right to remove any: (i) wiring or other apparatus or devise (including that for general building security systems) that is installed within the walls, floors or ceilings of the Riverboat Gaming Facility on a permanent or semi-permanent basis, or (ii) signage that is of a generic nature such as that for exits and restrooms. All of the above is referred to herein as “Tenant’s Personalty and Fixtures”. Following Removal Period and subject to Tenant’s absolute right to remove Tenant’s Personalty and Fixtures, any furniture, trade fixtures and business equipment remaining within the Riverboat Gaming Facility following the Removal period shall become the property of Landlord and Tenant shall transfer all title and interest in the Riverboat Gaming Facility and remaining personalty, equipment and fixtures to Landlord.

Section 4.02. SURRENDER AND DELIVERY OF DEMISED PREMISES . Except as is herein otherwise provided, Tenant shall on the last day of the Term hereof, or any valid renewal or extension thereof,

or upon the date of any earlier termination of this Lease, well and truly surrender and deliver up the Demised Premises and the Easements to the possession and use of Landlord without fraud or delay and in good order, condition and repair, except for reasonable wear and tear after the last necessary repair, replacement, restoration or renewal made by Tenant pursuant to its obligations, or the obligations of any of its subtenants, franchisees, licensees or invitees hereunder, and the transfer to Landlord of any reserve accounts with respect thereto, free and clear of all lettings and occupancies other than subleases then immediately terminable at the option of the Landlord or subleases to which Landlord shall have specifically consented, and free and clear of all liens and encumbrances other than those, if any, presently existing, or hereafter created and specifically consented to in writing by Landlord, without any payment or allowance whatever by Landlord for or on account of any improvements which may then be on the Demised Premises.

Section 4.03. PERSONAL PROPERTY NOT REMOVED . Any personal property of Tenant which shall remain in or on the Demised Premises after the expiration of the Removal Period may, at the option of Landlord, be deemed to have been abandoned by Tenant and either may be retained by Landlord as its property or be disposed of, without accountability, in such manner as Landlord may see fit, or if Landlord shall give written notice to Tenant to such effect, such property shall be immediately removed by Tenant at Tenant’s sole cost and expense. Upon entering into any agreement with any subleasee, licensee, franchise or other operator which occupies or is entitled to place any personal property on or in the Demised Premises, Tenant shall advise Landlord of same (appropriately redacted by Tenant to protect proprietary or confidential information) and furnish to Landlord a copy of the agreement between Tenant and such party, so that Landlord may notify such third party of Landlord’s right to any personal property remaining in or on the Demised Premises after the end of the Renewal Period.

Section 4.04. LANDLORD NOT RESPONSIBLE . Landlord shall not be responsible for any loss or damage occurring to any personal property owned by Tenant or any sublessee, licensee or franchisee of Tenant or any of their respective suppliers, customers or invitees.

Section 4.05. SURVIVAL . The provisions of this Article IV shall survive any termination of this Lease.

ARTICLE V

Insurance

Section 5.01. FULL REPLACEMENT COST INSURANCE . Tenant, at its sole cost and expense and at no cost or expense to Landlord, shall keep all of the improvements on the Demised Premises (now or hereafter existing) or used in connection therewith including, without limitation the Riverboat Gaming Facility, insured, during the Term and each renewal and extension thereof, against any loss or damage by fire, flood, earthquake and all other casualties and

perils, and including, without limitation, all other perils as are included within what is commonly known as “all risk coverage” for any improvements on the Demised Premises, as the same shall from time to time be customary for premises similarly situated in Kansas City, Jackson County, Missouri, with full replacement cost insurance, in amounts sufficient to prevent City, Landlord or Tenant from being or becoming a co-insurer within the terms of the policy or policies in question and in no event less than the full replacement cost value thereof, exclusive of the cost of foundations, excavations, and footings below the lowest basement floor, and without any deduction being made for depreciation. Such full replacement cost value shall be determined from time to time, but not more frequently than once in any twelve (12) consecutive calendar months, at the request of Landlord, by an appraiser, architect, ship builder and/or contractor or one or more of same, as applicable, who shall be acceptable to Landlord in its sole discretion. No omission on the part of Landlord to request any such determination shall relieve Tenant of its obligation hereunder.

Section 5.02. OTHER INSURANCE . Tenant, at its sole cost and expense and at no cost or expense to Landlord, shall maintain during the Term and all renewals thereof:

(a) for the mutual benefit of City, Landlord and Tenant, general commercial (comprehensive) public liability insurance, and specifically including but not being limited to indemnity insurance against claims for personal injury, bodily injury, death or property damage, occurring upon, in or about or adjacent to the Demised Premises, and/or any adjacent public improvements, garage, bridge, walkway or elevators, and on, in or about the adjoining sidewalks, walkways and passageways, including, without limitation, insurance protecting against claims for personal injury, bodily injury or claim, death or property damage resulting directly or indirectly from ownership, use, occupancy or maintenance thereof including any change, alteration, improvement or repair thereof, to afford protection for at least $200,000,000.00 to any one individual per occurrence combined single limit and $200,000,000.00 in the aggregate; and

(b) rental value insurance against loss of rental or other income to be derived by Landlord from the operation of Tenant’s business in connection with the Demised Premises due to the risks referred to in Section 5.01 hereof (including those embraced by “all perils coverage”) in an amount sufficient to prevent Tenant from becoming a co-insurer within the terms of the policy or policies in question, but in no event in an amount or amounts less than the aggregate amount of the Minimum Net Rent and Percentage Rent, the Additional Rent payable hereunder for a period of one (1) year; and Tenant hereby assigns to Landlord the proceeds of such insurance so

that in the event the improvements on the Demised Premises shall be destroyed or seriously damaged, such proceeds shall be held as security for the payment of such sums due hereunder until the restoration of such improvements and, as Tenant shall make payment of such sums to Landlord, Landlord shall, if Tenant shall not then be in default under this Lease, pay out to Tenant from said amount the sums which shall have been so paid by insurance proceeds. Tenant may, at its election, carry such insurance as a coverage contained in a business interruption insurance policy; and

(c) such other insurance, and in such amounts, as may from time to time be reasonably required by Landlord against other insurable hazards and liabilities which at the time are customarily insured against in the case of premises and/or business operations similarly situated in the State of Missouri, due regard being or to be given to the type of improvements and the construction, use and occupancy thereof, including but not being limited to workers’ compensation and other comparable insurance; and

(d) with respect to any construction or remodeling of improvements on the Demised Premises, Tenant shall provide or shall require that e ach contractor performing such work shall carry and maintain, at no cost or expense to Landlord, with customary deductibles:

(i) commercial (comprehensive) liability insurance, including (but not limited to) contractor’s liability coverage, contractual liability coverage, completed operations coverage, broad form property damage endorsement and contractor’s protective liability coverage, to afford protection, with respect to personal injury, bodily injury, death or property damage of not less than $1,000,000.00 per occurrence combined single limit; and

(ii) comprehensive automobile liability insurance with limit’s for each occurrence of not less than $1,000,000.00 combined single limit; and

(iii) workers’ compensation insurance or similar insurance in form and amounts required by law, including employer’s liability in the amount of not less than $1,000,000.00 each occurrence, $1,000,000.00 by disease and $1,000,000.00 each person by disease;

(iv) Builder’s risk insurance, insuring the Demised Premises and related property under construction or remodeling of improvements thereon with limits previously approved by Landlord; and

(v) umbrella and excess umbrella insurance with limits previously approved by Landlord.

(e) The amount of the coverages set out herein shall be subject to increase or decrease at the time of each renewal of this Lease in accordance with Consumer Price Index provisions of Section 19.01 below.

Section 5.03. TYPE OF POLICIES .

A. All insurance provided for in this Article shall be effected and continuously maintained under valid and enforceable policies issued by insurers of recognized responsibility licensed to do business in the State of Missouri, or be a recognized insurance facility, in either case acceptable to Landlord, which acceptance shall not be unreasonably withheld. Upon the execution of this Lease, and thereafter not less than fifteen (15) days prior to the expiration dates of the expiring policies theretofore furnished pursuant to this Article V, originals or binders of the policies (or, in the case of general public liability insurance, certificates of the insurers) bearing notations evidencing the payment of premiums in full, or accompanied by other evidence satisfactory to Landlord of such payment, shall be delivered by Tenant to Landlord.

B. Nothing in this Article V shall prevent Tenant from taking out insurance of the kind and in the amounts provided for under this Article V under a blanket insurance policy or policies covering properties in addition to the Demised Premises, provided, however, that any such policy or policies of blanket insurance (i) shall specify therein, or Tenant shall furnish Landlord with a written statement from the insurers under such policy or policies specifying, the amount of the total insurance allocated to the Demised Premises, which amounts shall not be less than the amounts required by Sections 5.01 and 5.02 hereof and (ii) with respect to property coverage, such amounts so specified shall be sufficient to prevent any one of the insureds from becoming a co-insurer within the terms of the applicable policy or policies, and provided further, however, that any such policy or policies of blanket insurance, as to the Demised Premises, shall otherwise comply as to endorsements and coverage with the provisions of this Article.

Section 5.04. NAMED INSUREDS .

A. All policies of insurance provided for in this Article V shall name City, Landlord and Tenant as the insured, as their respective interests may appear, and also each fee and/or each leasehold mortgagee of the Demised Premises, when requested, as the interest of any such mortgagee may appear, by standard mortgagee clause, if obtainable, provided that any such mortgagee shall agree that the proceeds of such insurance shall be applied in accordance with this Lease. In case of any particular casualty resulting in damage or destruction not exceeding $500,000.00 in the aggregate, the loss under such policies shall be adjusted by Tenant and the insurance companies. In case of such damage or destruction in

excess of $500,000.00, the loss shall be adjusted with the insurance companies by Tenant and Landlord. Notwithstanding the foregoing, Tenant shall adjust any loss with respect to the Riverboat Gaming Facility unless an Event of Default shall exist and be uncured on the date of any such loss, in which case any such loss shall be adjusted by Landlord.

B. All such policies shall provide that the loss, if any, thereunder shall be adjusted and paid as hereinabove provided. Each such policy shall contain a provision that no involuntary act or omission of Tenant or anyone operating under rights granted by it shall affect or limit the obligation of the issuing insurance company to so pay the amount of any loss sustained.

Section 5.05. CANCELLATION NOTICE . Each such policy or certificate therefor issued by the insurer shall contain an agreement by the insurer that such policy shall not be canceled or amended without at least thirty (30) days prior written notice to Landlord and wording such that the insurer must notify Landlord of any such impending cancellation or amendment.

ARTICLE VI

Landlord’s Right to Perform Tenant’s Covenants

Section 6.01. RIGHT TO MAKE PAYMENTS . If Tenant shall at any time fail to pay any Imposition or utility cost or charge in accordance with the provisions of Article III hereof, or to take out, pay for, maintain or deliver any of the insurance policies or certificates therefor as provided for in Article V hereof, or shall fail to make any other payment or perform any other act on its part to be made or performed under this Lease, then Landlord, after ten (10) days notice to Tenant (or without notice in case of an emergency) and Tenant’s failure to cure the same with the time period, if any, allowed for such cure, and without waiving or releasing Tenant from any obligation of Tenant contained in this Lease or from any default by Tenant hereunder and without waiving Landlord’s right to take such action as may be permissible under this Lease as a result of such default, may (but shall be under no obligation to):

(a) pay any Imposition or other charge payable by Tenant pursuant to the provisions of Article III hereof, or

(b) take out, pay for and maintain any of the insurance policies provided for in Article V hereof, or

and may enter upon the Demised Premises for any such purpose, and take all such action thereon, as may be necessary therefor or in connection therewith.

Section 6.02. REPAYMENT BY TENANT . All sums so paid by Landlord under this Article VI and or as a result of the exercise

by Landlord of any of its rights under this Article VI, and all costs and expenses incurred by Landlord with respect thereto or in connection therewith, including, without limitation, reasonable attorneys’ fees in connection with the performance of any such act, together with interest thereon at the Interest Rate from the date of such payment or incurrence by Landlord of such cost and expense, shall constitute Additional Rent payable by Tenant under this Lease and shall be paid by Tenant to Landlord on demand.

ARTICLE VII

Repairs and Maintenance of the Demised Premises

Section 7.01. REPAIRS . Throughout the Term of this Lease and any renewal thereof, Tenant shall, at its sole cost and expense and at no cost or expense to Landlord, take good care of the Demised Premises and all improvements and additions thereon or thereto, including, without limitation, all alleyways, walkways, passageways, sidewalks, curbs and streets, parking facilities and bridges adjoining the same and shall keep the same in good order and condition, except for reasonable wear and tear after the last necessary repair, replacement, restoration or renewal made by Tenant pursuant to its obligations hereunder, and shall make all necessary repairs thereto, interior and exterior, structural and non-structural, ordinary and extraordinary, and foreseen and unforeseen. All repairs, replacements, restorations and renewals made by Tenant shall be at least equal in quality and class to the original work with respect thereto.

Section 7.02. MAINTENANCE . Tenant shall at its sole cost and expense, and at no cost or expense to Landlord, put, keep and maintain all portions of the Demised Premises and the sidewalks, curbs, streets, bridges, alleyways, walkways and passageways, bridges and parking facilities adjoining the same in a clean and orderly condition, free of dirt, rubbish, snow, ice and unlawful obstructions. Tenant shall also provide for structural maintenance, repair and replacement of the portions of the Demised Premises normally requiring same.

Section 7.03. NO SERVICES FURNISHED . Landlord shall not be required to furnish to Tenant any utilities, facilities or services of any kind whatsoever during the Term hereof or any renewal thereof, such as, but not limited to, water, steam, heat, gas, telephone, cable televisions, hot water, electricity, light, and/or power. Landlord shall in no event be required to make any alterations, rebuildings, replacements, changes, additions, improvements or repairs during the Term of this Lease or any renewal thereof.

ARTICLE VIII

General and Specific Compliance with Laws, Insurance,

Development Agreement and Exhibits Thereto, Etc.

Section 8.01. GENERAL COMPLIANCE . Throughout the Term of this Lease and any renewal thereof, Tenant, at its sole cost and

expense and at no cost or expense to Landlord, shall promptly comply with all present and future laws, ordinances, orders, rules, regulations and requirements of all federal, state and municipal governments, departments, commissions, boards and officers, and all other body or bodies exercising similar functions, foreseen or unforeseen, ordinary as well as extraordinary, which may be applicable to the Demised Premises and the Easements or any portion thereof, and/or the sidewalks, alleyways, walkways, passageways, curbs, streets, parking facilities and bridges adjoining the same or to the use or manner of use of the Demised Premises and the Easements or any portion thereof, or the owners or occupants thereof, including but not limited to the operation of any Riverboat Gaming Facility used in connection therewith and the operation of any riverboat gaming enterprise in connection with the Demised Premises and the Easements, whether or not such compliance is required by reason of any condition, event or circumstance existing prior to or after the commencement of the Term or any renewal thereof. Provided, however, that nothing in this Lease shall be construed to invalidate the Frustration of Purpose provisions found in Section 5.7 of the Development Agreement, which provisions are hereby incorporated herein by reference.

Section 8.02. SPECIFIC COMPLIANCE . Notwithstanding the foregoing or anything else contained in this Lease to the contrary, and not intending to limit the same, Tenant agrees that after its improvement and/or construction of improvements on the Demised Premises, or the modification of same, Tenant shall do and/or comply with each and all of the following:

Section 8.02.1 Building Laws . Such improvements and their use by Tenant, its sublessees, franchisees, licensees and its and/or their respective agents, employees, contractors or invitees, shall comply fully with all environmental, air quality, zoning, flood plain, planning, subdivision, building, health, labor, discrimination, fire, traffic, safety, wetlands, shoreline and other governmental and regulatory rules, laws, ordinances, statutes, codes and requirements applicable to the Demised Premises or any portion thereof, including, without limitation, the Fair Housing Act of 1968 (as amended) and the Americans with Disabilities Act of 1990 (collectively, the “Building Laws”). Tenant shall obtain such final certificates as may be required or customary and evidencing compliance with all building codes and permits, and approval of full occupancy of such improvements (as improved) and of all installations therein or improvements thereto. Tenant shall cause the Demised Premises to be continuously in compliance with all Building Laws (as the same may be amended or enacted from time to time). Tenant agrees to protect, defend, (with counsel reasonably satisfactory to Landlord) indemnify and hold City and Landlord and Landlord’s Commissioners, officers, employees, contractors and agents harmless from and against all liability threatened against or suffered by them or either of them by reason of a breach by Tenant of any of the foregoing representations and warranties contained herein. The foregoing indemnity shall include the cost of all alterations to the Demised Premises (including, without limitation, all architectural,

engineering, legal and accounting costs), all fines, fees and penalties, and all legal and other expenses (including, without limitation, reasonable attorneys’ fees), incurred in connection with the Demised Premises or any portion thereof, being in violation of any Building Law and for the cost of collection of the sums due under this indemnity.

Section 8.02.2 Toxic/Hazardous Substances; Tenant’s Responsibilities . With respect to environmental liabilities and risks, the following shall apply:

i. Definitions . “Toxic or Hazardous Substances” shall be interpreted broadly to include, but not be limited to, any material or substance that is defined or classified under federal, state or local laws as: (a) a “hazardous substance” pursuant to Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. $9601(14), or $311 of the Federal Water Pollution Control Act, 33 U.S.C. $1321, as now or hereafter amended; (b) a “hazardous waste” pursuant to §1004 or §3001 of the Resource Conservation and Recovery Act, 42 U.S.C. §6921, as now or hereafter amended; (c) a “toxic pollutant” under $307(1)(a) of the Federal Water Pollution Control Act, 33 U.S.C. §1317(1)(a), as now or hereafter amended; (d) a “hazardous air pollutant” under §112 of the Clean Air Act, 42 U.S.C. §7412, as now or hereafter amended; (e) a “hazardous material” under the Hazardous Material Transportation Act, 49 U.S.C. §1802(2), as now or hereafter amended; (f) toxic or hazardous pursuant to regulations promulgated now or hereafter under any of the aforementioned laws; or (g) presenting a risk to human health or the environment under other applicable federal, state or local laws, ordinances or regulations, as now or as may be passed or promulgated in the future. “Toxic or Hazardous Substances” shall also mean any substance that after release in the environment and upon exposure, ingestion, inhalation or assimilation, either directly from the environment or directly by ingestion through food chains, will or may reasonably be anticipated to cause death, disease, behavior abnormalities, cancer or genetic abnormalities. “Toxic or Hazardous substance” specifically includes, but is not limited to, asbestos, polychlorinated biphenyls (PCBs), petroleum and petroleum based derivatives, and urea formaldehyde.

ii. Use Restrictions/Compliance with Applicable Laws . Tenant, its sublessees, franchisees, licensees, and its and their respective agents, employees, contractors and invitees, shall not use the Demised Premises in a manner that violates any applicable federal, state or local law, regulation or ordinance, including, but not limited to, any such law, regulation or ordinance pertaining to air and water quality, the handling, transportation, storage, treatment, usage or disposal of Toxic or Hazardous

Substances, air emissions, other environmental matters or any zoning and/or other land use matters. Tenant shall not cause or permit the release or disposal of any Toxic or Hazardous Substance on or from the Demised Premises. Tenant shall obtain prior written approval from Landlord before causing or permitting any Toxic or Hazardous Substance to be brought upon, kept or used in or about the Demised Premises by Tenant, its sublessees, franchisees, licensees, and/or its or their respective agents, employees, contractors or invitees.

iii. Representations and Warranties . Tenant represents and warrants to Landlord that:

a. Tenant is financially capable of performing and satisfying in full its obligations pursuant to this Lease, including the provisions of this Article.

b. Tenant is not in violation of, or subject to, any existing, pending or threatened investigation by any governmental authority under any applicable federal, state or local law, regulation or ordinance pertaining to air and water quality, the handling, transportation, storage, treatment, usage or disposal of Toxic or Hazardous Substances, air emissions, other environmental matters, or any zoning or other land use matter.

c. Prior to the signing of this Amended and Restated Lease Agreement, Tenant has made ‘all appropriate inquiry,’ into the previous ownership and uses of the Demised premises within the meaning of the Comprehensive Environmental Response, Compensation and Liability Act, as amended, or any other environmental law described or referred to herein. Based on the conclusions reached by its environmental consultant after performing a site assessment and based on Landlord’s representations and warranties herein, Tenant does not know and has no reason to know or suspect that any Toxic or Hazardous Substance has been disposed of or released on, in or at the Demised Premises.

d. Tenant’s intended use of the Demised Premises will not result in the disposal or release of any Toxic or Hazardous Substance on or to the Demised Premises or adjacent river.

e. Tenant does not and will not use any Toxic or Hazardous Substance on the Demised Premises or

adjacent river without the prior written approval of Landlord.

f. Tenant will not change its intended use of the Demised Premises or the nature of its said operations in connection therewith without prior notice to, and written approval of, Landlord.

iv. Indemnities and Financial Assurances . Tenant agrees to protect, indemnify, defend (with counsel reasonably satisfactory to Landlord) and hold City and Landlord and all of their respective commissioners, officers, employees, contractors and agents harmless from any and all claims, judgments, damages, penalties, fines, expenses, liabilities and losses arising during or after the Term of this Lease or any renewals thereof, out of or in any way relating to the presence, release or disposal of any Toxic or Hazardous Substance on or from all or any portion of the Demised Premises or the Easements if such Toxic or Hazardous Substance is proved to be first present after the Commencement Date solely as a result of the actions of Tenant (or its employees, contractors or agents) or a third party or to a breach of the environmental warranties made by Tenant in this Lease. Such indemnity shall include, without limitation, all costs incurred in connection with any Toxic or Hazardous Substance present on or under the Demised Premises or adjacent river as a result of any discharge, dumping or spilling (accidental or otherwise) on the Demised Premises or in the adjacent river after the Commencement Date.

To the extent directly involved with an indemnifiable occurrence described above, the indemnification provided by this Article shall also specifically cover, without limitation, all costs incurred in connection with any investigation of site conditions or any cleanup, remedial, removal and restoration work required by any federal, state or local governmental agency or political subdivision or other third party because of the presence or suspected presence of any Toxic or Hazardous Substance in the soil, groundwater, or soil vapor on or under the Demised Premises and/or adjacent river. Such costs may include, but not be limited to, diminution in the value of the Demised Premises, damages for the loss or restriction on use of rentable or useable space or of any amenity of the Demised Premises, sums paid in settlements of claims, attorneys’ fees, consultants’ fees, and expert fees. The foregoing environmental indemnity shall survive the expiration or earlier termination of this Lease and/or any transfer of all or any portion of the Demised Premises, or of any interest in this Lease.

v. Notification Requirements . Tenant shall promptly notify Landlord in writing of all spills or releases of any Toxic or Hazardous Substance, all failures to comply with any federal, state, or local law, regulation or

ordinance, all inspections of the Demised Premises and/or adjacent river by any regulatory entity concerning the same, all notices, orders, fines and communications of any kind from any governmental entity or third party that relate to the existence of or potential for environmental pollution of any kind existing on or resulting from the use of the Demised Premises or any portion thereof and/or adjacent river, or any activity conducted thereon, and all responses or interim cleanup action taken by or proposed to be taken by Tenant or any government entity or private party on the Demised Premises or any portion thereof or adjacent river.

Upon request by Landlord, Tenant shall provide Landlord with a written report (a) listing each Toxic or Hazardous Substance that was/is used or stored on the Demised Premises; (b) discussing all releases of any Toxic or Hazardous Substance that occurred or were discovered on the Demised Premises and all compliance activities related to such Toxic or Hazardous Substance or adjacent river, including all contacts with and all requests from third parties for cleanup or compliance; (c) providing copies of all permits, manifests, business plans, consent agreements or other contracts relating to any Toxic or Hazardous Substance executed or requested during the time period requested; and (d) including such other information as may be reasonably requested by Landlord. The report shall include copies of all documents and correspondence related to such activities and written reports of verbal contacts.

vi. Inspection Rights . Landlord, its officers, employees, contractors and agents shall have the right, but not the duty, to inspect the Demised Premises and Tenant’s relevant environmental and land use documents upon reasonable notice to Tenant and to perform such tests on the Demised Premises and/or adjacent river as are reasonably necessary to determine whether Tenant is complying with the terms of this Lease. Tenant shall be responsible for paying for any testing that is conducted if it is determined that Tenant is not in compliance with this Lease due to Tenant’s or any of its sublessee’s, franchisee’s or licensee’s operations or use of the Demised Premises and/or adjacent river.

Section 8.02.3. Toxic/Hazardous Substances; Landlord Responsibilities .

i. Representations and Warranties . Landlord hereby represents and warrants to Tenant that to the best of its knowledge and based on The Phase II Environmental Report dated November 23, 1994 by Woodward-Clyde Consultants and prepared on behalf of Tenant,:

(a) No Toxic or Hazardous substance is present on, in, under or migrating onto or from the Demised Premises;

(b) There has been no release or discharge, or threat of release or discharge, of any Toxic or Hazardous Substance on, in, under or migrating onto or from the Demised Premises;

(c) The Demised Premises and any previous or current uses and operations concerning the Demised Premises are not in violation of any applicable federal, state or local statute, ordinance, law, regulation, consent decree, administrative order, guidance document, remediation directive, or common law relating to the public health and safety and protection of the environment (hereinafter “Environmental Law”);

(d) Landlord has no actual or constructive knowledge of any notice of any governmental entity or third party claiming that the Demised Premises or any uses of and operations on or of the Demised Premises have resulted in any violation of any Environmental Law;

(e) No litigation is pending or proposed, threatened, or anticipated with respect to any Toxic or Hazardous Substance at the Demised Premises or any proposed use thereon or thereto; and

(f) No underground storage tank containing petroleum or any other Toxic or Hazardous substance is or was located on or under the Demised Premises at any time.

ii. Indemnities and Financial Assurances . Landlord agrees to protect, indemnify, defend (with counsel reasonably satisfactory to Tenant), and hold Tenant and all of its officers, employees, contractors and agents harmless from any and all claims, judgments, damages, penalties, fines, expenses, liabilities and losses arising during or after the Term of this Lease or any renewals thereof, out of or in any way relating to (1) the presence, release or disposal of any Toxic or Hazardous Substance on or from all or any portion of the Demised Premises or the Easements, unless such Toxic or Hazardous Substance is proved to be first present after the Commencement Date solely as a result of the actions of Tenant (or its officers, employees, contractors or agents) or a third party; or (2) the breach of the environmental warranties made by Landlord in this Lease; or (3) the underground abandoned oil pipeline identified by Woodward-Clyde Consultants in that certain Phase II Environmental Report dated November 23, 1994, and prepared by Woodward-Clyde on behalf of Tenant, and any related Toxic or Hazardous Substances. To the extent directly

involved within an indemnifiable occurrence described above, the indemnification provided by this Article shall also specifically cover, without limitation, all costs incurred in connection with any investigation of site conditions or any cleanup, remedial, removal or restoration work required by any federal, state or local governmental agency or political subdivision or other third party because of the presence or suspected presence of any Toxic or Hazardous Substance in the soil, groundwater, or soil vapor or under the Demised Premises, the Easements and/or adjacent river. Such costs may include, but not be limited to, diminution in the value of the Demised Premises and the Easements, damages for the loss or restriction on use of rentable or useable space or of any amenity of the Demised Premises and the Easements, sums paid in settlement of claims, attorneys’ fees, consultants’ fees and expert fees. The foregoing environmental indemnity shall survive the expiration or earlier termination of this Lease and/or any transfer of all or any portion of the Demised Premises, the Easements, or of any interest in this Lease.

Section 8.03. COMPLIANCE WITH INSURANCE . Tenant shall likewise observe and comply with the requirements of all insurance policies of public liability, property and all other policies of insurance required to be supplied by Tenant and at any time in force with respect to the Demised Premises or the Easements, whether or not such observance or compliance is required by reason of any condition, event or circumstance existing prior to or after the Commencement Date, and Tenant shall, upon learning of the existence of any violation or any attempted violation of any of the provisions of this Article of this Lease by any other person or entity, take steps, immediately upon knowledge of such violation or attempted violation, to remedy or prevent the same as the case may be.

Section 8.04. COMPLIANCE WITH DEVELOPMENT AGREEMENT . Tenant shall strictly observe and fully comply with all of the requirements, terms and conditions of the Development Agreement and all Exhibits thereto.

Section 8.05. CONTEST OF LAWS . Tenant shall have the right, after prior written notice to Landlord, to contest by appropriate administrative and/or legal proceedings, diligently conducted in good faith, in the name of Tenant or Landlord or both, without cost or expense to Landlord and/or the City, the validity or application of any law, ordinance, order, rule, regulation or requirement of the nature referred to herein, subject to the following:

a. if by the terms of any such law, ordinance, order, rule, regulation or requirement, compliance therewith pending the prosecution of any such proceeding may legally be delayed without the incurrence of any lien, charge or liability of any kind against the Demised Premises, the Easements, or any part thereof or operation of the Riverboat Gaming Facility, and without subjecting Tenant or Landlord and/or the City to any liability, civil or

criminal, for failure so to comply therewith, Tenant may delay compliance therewith until the final determination of such proceeding; or

b. if any lien, charge or civil liability would be incurred by reason of any such delay, Tenant nevertheless may contest as aforesaid and delay as aforesaid, provided that such delay would not subject Landlord and/or the City to criminal liability or fine, and Tenant (i) furnishes to Landlord security, reasonably satisfactory to Landlord, against any loss or injury by reason of such contest or delay, and (ii) prosecutes the contest with due diligence.

Landlord, without cost to it, shall, subject to the foregoing, execute and deliver any appropriate documents and instruments which may be reasonably requested by Tenant in order to permit Tenant to so contest the validity or application of any such law, ordinance, order, rule, regulation or requirement.

ARTICLE IX

Improvements, Etc.

Section 9.01. IMPROVEMENTS . Tenant shall construct the Site Improvements as that term is defined in the Development Agreement. All construction, improvement or renovation of or to the improvements by Tenant pursuant to this Lease shall be done in strict and full compliance with all provisions hereof and of the Development Agreement, shall be commenced within sixty (60) days after the execution of the Contingencies Waiver Addendum, subject to the provisions in the Development Agreement made for Unavoidable Delays as that term is defined in Section 5.4 of the Development Agreement, and shall be completed in accordance with Critical Path timing requirements of the Development Agreement.

Section 9.02. TITLE TO TENANT’S PERSONALTY AND FIXTURES . Title to Tenant’s Personalty and Fixtures shall at all times during the Term of this Lease be that of the Tenant. Title to all other Site Improvements including the Riverboat Gaming Facility, any equipment and/or appurtenances thereto and all changes, additions and alterations therein and all renewals and replacements thereof when made, erected, constructed, installed or placed upon the Demised Premises or the Easements by Tenant shall be the property of the Landlord.

Section 9.03. DESTRUCTION/DAMAGE . If any of the improvements as erected and constructed on the Demised Premises hereunder or under the Development Agreement shall be substantially damaged by fire or other casualty or as a result of a taking mentioned herein, the provisions hereof shall govern.

Section 9.04. CHANGES AND ALTERATIONS . Tenant shall erect new buildings or improvements on the Demised Premises, the Easements, and/or make changes or additions to existing improvements thereon only subject to, and in compliance with, the

provisions hereof and the relevant provisions of the Development Agreement. Before beginning any such improvement and/or construction, Tenant shall submit to Landlord a copy of the plans and specifications for same, and any amendments thereto, together with an estimate which shall show in reasonable detail, allocated among the various trades, the approximate cost of same. Such plans and specifications shall comply with all relevant legal requirements, the provisions hereof, and of the relevant provisions of the Development Agreement.

Section 9.05. PERFORMANCE BOND . Before beginning the addition or change to any improvements which may at any time be on, adjacent to, or a part of the Demised Premises, or the construction of any new building or other improvement with respect thereto, Tenant will comply with all performance bond requirements of City and/or other governmental authorities having jurisdiction with respect thereto.

Section 9.06. INSURANCE ENDORSEMENTS . Before making any such change or alteration or before beginning the letting of any contracts relating to the construction of any new improvement on the Demised Premises, Tenant shall supply Landlord with such endorsements to the existing insurance policies by Tenant as shall be necessary to cover the contemplated work.

Section 9.07. ADDITIONAL IMPROVEMENTS . If, after satisfactory completion of all work to be done by it hereunder and under the Development Agreement, Tenant desires to alter, enlarge or structurally change any improvements then on the Demised Premises, Tenant may do so provided that Landlord has first approved in writing Tenant’s written plans and specifications for same, which approval shall not be unreasonably withheld by Landlord if Tenant performs the same subject to the provisions of this Lease and in particular this Article IX, as if such additional work were called for under the Development Agreement.

Section 9.08. COMPLIANCE WITH LAWS . All improvements and/or additions made and/or erected hereunder shall be designed, constructed and completed in compliance with all requirements of law and with all ordinances, regulations and orders of any and all Federal, State, County and Municipal and other public authorities relating thereto. On completion of same, Tenant will procure a final Certificate of Occupancy and deliver to Landlord the original or a copy thereof.

Section 9.09. SURRENDER OF IMPROVEMENTS . Any and all buildings, structures, alterations, additions and improvements upon the Demised Premises and the Easements, at the expiration or sooner termination of this Lease, shall then become the property of Landlord and shall be surrendered in accordance with the provisions hereof.

ARTICLE X

Discharge of Liens

Section 10.01. NO LIENS . Tenant shall not create or permit to be created or to remain, and shall discharge, any and all mechanic’s, laborer’s or materialman’s liens and any and all conditional sale, title retention agreements, chattel mortgages or security interests, which might be or become a lien, encumbrance or charge upon or claim against the Demised Premises and the Easements or any part thereof and having any priority or preference over or ranking on a parity with the estate, rights and interest of Landlord in the Demised Premises or any part thereof.

Section 10.02. DEFENSE OF LIEN CLAIM . If any mechanic’s, laborer’s, architect’s, engineer’s, materialman’s or nurseryman’s lien shall at any time be filed against the Demised Premises and the Easements or any part thereof, Tenant, within ten (10) days after notice of the filing thereof, shall cause the same to be discharged of record by payment, deposit, bond, order of a court of competent jurisdiction, or otherwise. If Tenant shall fail to cause such lien to be so discharged within the period aforesaid, then, in addition to any other right or remedy hereunder, Landlord, after ten (10) days’ notice to Tenant, may, but shall not be obligated to, discharge the same either by paying the amount claimed to be due or by procuring the discharge of such lien by deposit or by bonding proceedings, and in any such event Landlord shall be entitled, if Landlord so elects, to compel the prosecution of an action for the foreclosure of such lien by the lienor and to pay the amount of the judgment in favor of the lienor with interest, costs and allowances. Any amount so paid by Landlord and all costs and expenses incurred by Landlord in connection therewith, together with interest thereon at the Interest Rate (as defined herein) per annum from the respective dates of Landlord’s making of the payment or incurring of the cost and expense shall constitute Additional Rent payable by Tenant under this Lease and shall be paid by Tenant to Landlord on demand.

Section 10.03. NO CONSENT . Nothing in this Lease contained shall be deemed or construed in any way as constituting the consent or request of Landlord, express or implied, by inference or otherwise, to any contractor, subcontractor, laborer, supplier or materialman for the performance of any labor or the furnishing of any materials for any specific improvement, alteration to or repair of the Demised Premises, the Easements, or any part of either of same.

ARTICLE XI

No Waste

Tenant shall not do or suffer any material waste or damage, disfigurement or injury to the Demised Premises or any part thereof.

ARTICLE XII

Use of Property

Section 12.01. PROPER USE . Tenant shall not use or allow the Demised Premises, the Easements, or any improvements thereon or any appurtenances thereto, for any unlawful purpose or in violation of any certificate of occupancy or license covering or affecting the use of the Demised Premises or the Easements or which may, by law,. constitute a nuisance, public or private, or which may make void or voidable any insurance then in force with respect thereto.

Section 12.02. PROHIBITED USE . Tenant shall not suffer or permit the Demised Premises or any portion thereof to be used by the public as such, without restriction or in such manner as might reasonably tend to impair Landlord’s or City’s title to the Demised Premises and the Easements or any portion thereof, or in such manner as might reasonably make possible a claim or claims of adverse usage, adverse possession or prescription by the public, as such, or of implied dedication, of the Demised Premises and the Easements or any portion thereof. Tenant hereby acknowledges that Landlord does not hereby consent, expressly or by implication, to the unrestricted use or possession of the whole or any portion of the Demised Premises by the public, as such.

ARTICLE XIII

Entry on Demised Premises by Landlord

Section 13.01. RIGHT TO ENTER . Tenant shall permit Landlord and its authorized representatives to enter the Demised Premises at all reasonable times for the purpose of (a) inspecting the same, and (b) making any necessary repairs by reason of Tenant’s failure to make any such repairs or perform any such work or to commence the same within ten (10) days after written notice from Landlord (or without notice in case of emergency). Nothing herein shall imply any duty upon the part of Landlord to do any such work, and performance thereof by Landlord shall not constitute a waiver of Tenant’s default in failing to perform the same.

Section 13.02. STORAGE . During the progress of any work in, on, or to the Demised Premises and the Easements performed by Landlord pursuant to any of the provisions hereof, Landlord may keep and store therein all necessary materials, tools, supplies and equipment. Landlord shall not be liable for inconvenience, annoyance, disturbance, loss of business or other damage of Tenant by reason of making such repairs or the performance of any such work, or on account of bringing materials, tools, supplies and equipment into the Demised Premises during the course thereof and the obligations of Tenant under this Lease shall not be affected thereby.

ARTICLE XIV

Indemnification of and by Landlord and Tenant

Effective upon the date hereof, Tenant shall fully indemnify and save harmless Landlord and City and their respective elected

and/or appointed officials, agents, servants, employees, officers and directors, from and against any and all liabilities, obligations, damages, penalties, claims, costs, charges and expenses, and any and all suits and proceedings in connection therewith, even if any such suit, claim or proceeding is false, groundless or fraudulent, including, without limitation, reasonable architects’, engineers’, accountants’, expert witnesses’ and attorneys’ fees, which may be imposed upon or incurred by or asserted against Landlord and/or City, their said elected and/or appointed officials, agents, servants, officers, directors and employees by reason of or arising in whole or in part from any of the following or other actual or alleged matters, occurrences, events, transactions, acts and omissions during the Term of this Lease or any renewal or extension thereof or for so long as Tenant shall be in possession of the Demised Premises or any part thereof:

a. any work or thing done or permitted to be done in, on or about the Demised Premises and the Easements or any part thereof by Tenant, its sublessees, franchisees, licensees and any of their respective officers, directors, agents, contractors, employees, and invitees;

b. any use, non-use, possession, occupation, condition, operation, maintenance or management of the Demised Premises and the Easements or any part thereof or any alley, sidewalk, curb, street, bridge, walkway, garage, passageway or space adjacent thereto or any riverboat gaming enterprise associated therewith for which Tenant is responsible hereunder;

c. any negligent or intentional act or omission on the part of Tenant or any of its agents, contractors, servants, employees, subtenants, licensees or invitees;

d. any accident, injury or damage to any person or property occurring in, on or about or arising from the Demised Premises and the Easements or any part thereof, or any alley, sidewalk, curb, street, bridge, walkway, passageway or space adjacent thereto;

e. any failure on the part of Tenant to perform or comply with any of the covenants, agreements, terms, provisions, conditions or limitations contained in this Lease and/or the Development Agreement, to be performed or complied with by it; and/or

f. any obligation of the Tenant or Tenant’s contractors and/or their subcontractors under workers’ compensation laws or the laws of the federal government or any state’s government as to any employee benefits or any employment related problems under ERISA or any other statutory liabilities, be they state, local or federal.

Notwithstanding the foregoing, Tenant shall not be obligated hereunder with respect to the liability or responsibility for any

pre-existing environmental conditions described in Section 8.02.3 hereof.

In case any action or proceeding is brought against Landlord or City by reason of any such claim, Tenant, upon written notice from Landlord or City, shall at Tenant’s sole cost and expense resist and defend such action or proceeding by counsel approved by Landlord in writing, which approval Landlord agrees not to unreasonably withhold.

Landlord shall fully indemnify and save harmless Tenant and its agents, servants, employees, officers and directors, with respect to any failure on the part of Landlord to perform or comply with any of the covenants, agreements, terms, provisions, conditions, or limitations contained in this Lease and/or the Development Agreement, to be performed or complied with by Landlord and any and all liabilities, obligations, damages, penalties, claims, costs, charges and expenses, and any and all suits and proceedings in connection therewith, even if any such suit, claim or proceeding is false, groundless or fraudulent, including, without limitation, reasonable architects’, engineers’, accountants’, expert witnesses’ and attorneys’ fees, which may be imposed upon or incurred by or asserted against Tenant, its said agents, servants, officers, directors and employees by reason of or arising in whole or in part from any such actual or alleged matters, occurrences, events, transactions, acts and omissions during the Term of this Lease or any renewal or extension thereof or for so long as Tenant shall be in possession of the Demised Premises or any part thereof. In case any action or proceeding is brought against Tenant by reason of any such claim, Landlord, upon written notice from Tenant, shall at Landlord’s sole cost and expense resist and defend such action or proceeding by counsel approved by Tenant in writing, which approval Tenant agrees not to unreasonably withhold.

Neither Landlord nor the City shall be responsible or liable to Tenant, or to those claiming by, through, or under Tenant, nor shall Landlord or the City be required to protect, defend, indemnify or hold Tenant or any of such persons or entities harmless from and against any loss or damage which may be occasioned by or through Tenant or others (including Tenant’s business invitees), as a result of the occupancy or use of the Demised Premises and the Easements or any damage or injury of any nature whatsoever, including, without limitation, any loss or damage which arises from any defect in or failure of or danger in connection with the Demised Premises and the Easements or any improvement thereon or adjacent thereto, or any utility or other service furnished in connection therewith all except as described in Section 8.02.3 hereof. Other than as described in Section 8.02.3 hereof, Tenant shall use and occupy the Demised Premises and the Easements, and all parts thereof and make same available to its business invitees and others at Tenant’s sole risk and at no risk or liability to Landlord or the City.

ARTICLE XV

Damage or Destruction

Section 15.01. REPAIR/RESTORATION BY TENANT . In case of damage to or destruction of any improvements now or hereafter existing on the Demised Premises and the Easements, including the Site Improvements as defined herein), Tenant shall be obligated to repair and/or restore the same. If Tenant shall, as soon as is practical after any such damage or destruction considering the extent of the damage, commence repair and/or construction of a new building and/or other improvements, as applicable, the proceeds of any insurance payable by reason of such damage or destruction shall be paid to Tenant. If Tenant shall fail to so commence such repair/construction and diligently pursue completion within such period of time, such proceeds of insurance shall be the property of and shall be paid to Landlord, except for proceeds payable with respect to Tenant’s Personalty and Fixtures. Notwithstanding the foregoing, Landlord shall have all rights to direct use of payments made under insurance provided under Section 5.02(b) hereof.

Section 15.02. NOTICE . In case of damage to or destruction of any improvements on the Demised Premises and the Easements or any part thereof, by fire or otherwise, Tenant shall promptly give written notice thereof to Landlord, and Tenant shall, at Tenant’s sole cost and expense, and whether or not the insurance proceeds, if any, shall be sufficient for such purpose, restore, repair, replace, rebuild or alter the same as nearly as possible to its value immediately prior to such damage or destruction, with such changes or alterations as may be made from time to time at Tenant’s election, all in conformity with and subject to the applicable terms and conditions hereof and of the Development Agreement.

Section 15.03. NO RIGHT TO TERMINATE/SURRENDER . No destruction of or damage to the improvements on the Demised Premises and the Easements or any part thereof, by fire or any other casualty, shall permit Tenant to surrender this Lease or shall relieve Tenant from its liability to pay the full Minimum Net Rent, Percentage Rent, Additional Rent, the Riverfront Park Grant and other charges payable under this Lease or from any of its other obligations under this Lease or under the Development Agreement, and Tenant waives all rights now or hereafter conferred upon it by statute or otherwise to quit or surrender this Lease or the Demised Premises or any part thereof or to cease its operations hereunder or to any suspension, diminution, abatement or reduction of Rent on account of any such destruction or damage.

ARTICLE XVI

Condemnation

Section 16.01. TAKING . In the event that the Demised Premises or the Easements, or any part thereof, shall be taken in condemnation proceedings or by exercise of any right of eminent domain or by agreement between Landlord and Tenant (any such matters being hereinafter referred to as a “taking”), Landlord and Tenant shall have the right to participate in any such condemnation

proceedings or agreement for the purpose of protecting their interests hereunder. Each party so participating shall pay its own expenses therein.

Section 16.02. SUBSTANTIAL/COMPLETE TAKING . If at any time during the term of this Lease or any renewal or extension thereof there shall be a taking of the whole or substantially all of the Demised Premises, this Lease shall terminate and expire on the date of such taking and the Rent payable hereunder shall be equitably apportioned and paid to the date of such taking and Tenant shall have no further liability to Landlord under this Lease. For the purpose of this Article, “substantially all of the Demised Premises” shall be deemed to have been taken if (i) the untaken part of the Demised Premises and/or the Easements shall be insufficient for the economic and feasible continued operation of the riverboat gambling enterprise in connection therewith, or (ii) if the taken part of the Demised Premises and/or Easements includes the Riverboat Gaming Facility.

Section 16.03. TERMINATION FROM TAKING . If this Lease shall have terminated as a result of such taking:

As to all of any award (regardless of basis for the making of same), Tenant shall be entitled to that portion of the award which is equivalent to a fraction in which the numerator is equal to the number of years remaining in the initial Term (and any potential renewal term) and the denominator is fifty (50) years (“Tenant’s Award”) and Landlord shall be entitled to the remainder of such award, provided however that in no event shall Landlord’s share of such award be less than that amount of money required to retire all then outstanding bonds secured by Landlord’s interest in this Lease on the earliest redemption date to occur after termination of this Lease. Provided further such minimum Landlord’s share shall not exceed the total principal interest and redemption premium, if any, that would have been due and owing as of the next redemption date under the first occurring Bond Issuance contemplated and described in Section 2.14 of this Lease.

Section 16.04. PARTIAL TAKING . If this Lease shall not have been terminated as above provided and shall continue after the taking, then in such event all of the Award (regardless of the basis for the making of same) shall be distributed as follows:

a. Tenant shall be tendered that portion of the award received for all purposes (including land acquisition) of replacing, improving or making usable any improvement on or adjacent to the Demised Premises that needs replacement or alteration or improvement as a result of the taking; and

b. The remainder of the Award shall be divided between Landlord and Tenant as set forth in Section 16.03 above, except that the provisions therein for Landlord’s minimum share respecting outstanding bonds shall not apply.

Notwithstanding the foregoing, in the event of exercise of power of eminent domain by the Missouri Highway and Transportation Department (“MHTD”) or a successor thereof, of all or part of Parking Parcel A as that term is defined in that certain Cooperative Agreement between the City, Landlord and Tenant dated July 31, 1995, Tenant and Landlord shall not be entitled to damages for such taking and in such event the parties shall modify this Lease as therein provided.

Section 16.05. EASEMENT TYPE TAKING . In the event of the taking of an easement or any other taking which shall be of an interest or estate in the land less than a fee simple, as a result of which the Demised Premises shall be insufficient for the economic and feasible continued operation of its business thereon by Tenant, this Lease shall terminate and expire with the same force and effect as in the case of a taking pursuant to Section 16.03 hereof. Otherwise, such taking shall be deemed a taking insufficient to terminate this Lease, and the division of the award shall be governed by Section 16.04 in so far as that Section shall be applicable; provided, however, that if there shall be any payment or award predicated on a change in the grade of a street or avenue on which the Demised Premises abut, Tenant shall be entitled, after making such change in restoration as may be necessary and appropriate by reason of such change of grade, to reimbursement for the expense thereof to the extent of the net amount of any payment or award, after deduction of costs of collection, including, without limitation, attorneys’ fees and expenses, which may be awarded for such change of grade. Any part of an award for change of grade which shall remain unexpended after such restoration shall be the property of Landlord. If any award shall include change of grade and any other item or element of damage, that part thereof shall be applied in accordance with this Section 16.05 which shall be specifically attributed to change of grade by the condemnation award or, if not so attributed, shall be determined by agreement between the parties.

ARTICLE XVII

Assignments, Mortgages and Subleases of Tenant’s Interest

Except as specifically provided herein and in the Development Agreement, Tenant, and its permitted successors and assigns, shall have the right to assign, sublet, mortgage, encumber or otherwise affect this Lease or any interest therein, with the prior written consent of Landlord, which consent shall not be unreasonably withheld. Landlord’s withholding of such consent snail be deemed reasonable hereunder unless Tenant and its proposed assignee comply with requirements substantially similar to those set forth in Section 18.04 B viii, (b) and (c) herein.

With the prior written consent of Landlord, not to be unreasonably withheld or delayed, Tenant shall have the right to enter into sublease, license, franchise and concessionaire agreements with persons or entities to operate various types of ancillary and/or supporting business enterprises to Tenant’s gaming

business enterprise at the Demised Premises including, without limitation, those for the serving of food and beverages.

No assignment or sublease, even if so consented to, shall be effective unless and until Landlord shall have received an executed counterpart of such assignment or sublease, in recordable form, under which the assignee shall have assumed all obligations of Tenant under this Lease and shall have specifically agreed to perform and observe the covenants and conditions in this Lease contained on Tenant’s part to be performed and observed.

Notwithstanding the foregoing, Landlord acknowledges that Tenant is obligated under provisions’ of the Development Agreement to cause its riverboat gaming enterprise to be conducted by an enterprise which is ninety percent (90%) owned by Tenant and ten percent (10%) owned by minority interests. To the extent necessary to enable such joint venture to so operate, Tenant may assign its interest hereunder (but specifically without relieving it of any obligation or liability hereunder), provided, however, that such enterprise is formed pursuant to the minority ownership requirements of the Development Agreement and/or any Exhibit thereto and that on the Opening Date and for a period equal to the lesser of (i) five (5) years after the date hereof, or (ii) three (3) years after the Opening Date, and such enterprise shall in fact be ten percent (10%) minority owned. Tenant further agrees that said ten percent (10%) minority interest shall be such that such minority interest in the aggregate shall enjoy, receive and benefit from its aggregate ten percent (10%) ownership interest in the riverboat gaming enterprise herein provided for.

Landlord shall have the right to, or to allow City to, convey, assign, pledge, encumber or mortgage any part of its respective interest in the Demised Premises and/or this Lease, specifically including but not being limited to any assignment by Landlord to a third party bond trustee, as security for bonds issued by Landlord and secured by this Lease so long as any such transfer is not to any person or party in direct competition with Tenant, and, in the event of a pledge, encumbrance or mortgage, such mortgagee(s) and Tenant enter into a Non-Disturbance and Attornment Agreement in standard form reasonably satisfactory to Tenant. Tenant may pledge, encumber or mortgage its leasehold estate or any part thereof so long as any such transfer is subordinate to the City’s and to Landlord’s (or its mortgagee’s) estates and provided further that Landlord and any such mortgagee(s) shall enter into a Non-Disturbance and Attornment Agreement in standard form reasonably satisfactory to Landlord and the City.

ARTICLE XVIII

Default

Section 18.01. “EVENT OF DEFAULT” BY TENANT DEFINED . Any one or more of the following events shall constitute an “Event of Default” by Tenant hereunder:

a. The sale, assignment or other transfer of all or any of Tenant’s interest in this Lease and/or the Demised Premises or any portion thereof (other than as is permitted under Article XVII hereof) voluntarily, or under attachment, execution or similar legal process, or if Tenant is adjudicated as bankrupt or insolvent under any state bankruptcy or insolvency law and such adjudication or order is not vacated within ninety (90) days and Tenant is not otherwise in default hereunder.

b. The commencement of a case under any chapter of the Federal Bankruptcy Code by or against Tenant or any operating entity of Tenant’s riverboat gaming enterprise (“Operator”) in connection with the Demised Premises or any portion thereof, or the filing of a voluntary or involuntary petition thereunder proposing the adjudication of Tenant or Operator as bankrupt or insolvent, or the reorganization of Tenant, or Operator or an arrangement by Tenant or any such Operator with its creditors, unless the petition filed or case commenced is withdrawn or dismissed within ninety (90) days after the date of its filing and Tenant is not otherwise in default hereunder.

c. The appointment of a receiver or trustee for the business or property of Tenant or any such Operator, unless such appointment shall be vacated within ninety (90) days of its entry.

d. The making by Tenant or any such Operator of an assignment for the benefit of its creditors, or if in any other manner Tenant’s interest in this Lease shall pass to another person, firm or entity by operation of law except a merger or reorganization of Tenant in which Tenant shall be the survivor and/or the same persons or entities in control of Tenant shall remain in control of such merged or reorganized entity.

e. The failure of Tenant to pay any portion of properly due Rent within five (5) days after the giving of notice thereof by Landlord that the same is due hereunder. Tenant’s failure to pay Percentage Rent greater than the Minimum Net Rent shall not be sufficient ground for termination of this Lease by Landlord if such failure is the result of a bona fide dispute as to the amount due and payable and Tenant promptly pays any Percentage Rent underpayment with interest at the Interest Rate from the due date until paid upon resolution of such dispute.

f. Material default by Tenant in the performance or observance of any covenant or agreement of this Lease (other than a default involving the payment of Rent), or any obligation of Tenant under the Development Agreement or any Exhibit thereto, which default is not cured within ten (10) days after the giving of notice thereof by

Landlord, unless such default is of such nature that it cannot reasonably be cured within such ten (10) day period, in which case no Event of Default shall occur so long as Tenant shall commence the curing of the default within such ten (10) day period and shall thereafter diligently prosecute the curing of same; provided, however, if Tenant shall default in the performance of any such covenant or agreement of this Lease, the Development Agreement or any Exhibit thereto two (2) or more times in any twelve (12) month period, then notwithstanding that each of such defaults shall have been cured by Tenant, any further default of such covenant or agreement within such twelve (12) month period shall be deemed an Event of Default without the ability for cure.

g. The vacation or abandonment of the Demised Premises at any time after the Commencement Date by Tenant except a vacation or abandonment permitted under Section 2.06 hereof.

h. The occurrence of any other event described as constituting an “Event of Default” elsewhere in this Lease or the Development Agreement or any Exhibit thereto and the continuation of such an Event of Default after the expiration of any cure period provided herein or therein.

Section 18.02. REMEDIES . Upon the occurrence of an Event of Default and the continuation of any such Event of Default after the expiration of any applicable cure period provided for herein, Landlord, without further notice to Tenant in any instance (except as expressly provided for below), may do any one or more of the following:

a. With or without judicial process, enter the Demised Premises and take possession thereof without the necessity of legal proceedings, and remove Tenant and all other persons and property from the Demised Premises, and may store such property in a public warehouse or elsewhere at the cost of and for the account of Tenant without resort to legal process and without Landlord being deemed guilty of trespass or becoming liable for any loss or damage occasioned thereby; and Landlord may, from time to time without terminating this Lease, make such alterations and repairs as may be necessary to relet the Demised Premises or any portion thereof, alone or together with other premises, on behalf of Tenant and for such term or terms (which may be greater or less than the period which otherwise would have constituted the balance of the Term or any then validly exercised renewal thereof) and on such terms and conditions (which may include concessions or free rent and alteration of the Demised Premises) as Landlord, in its sole discretion, may determine, but Landlord shall not be liable for, nor

shall Tenant’s obligations under this Lease be diminished by reason of, any failure by Landlord to relet the Demised Premises or any failure by Landlord to collect any rent due upon such reletting so long as Landlord has reasonably attempted to mitigate damages as required in Section 18.10. No such re-entry or the taking of possession of the Demised Premises or any portion thereof by Landlord shall be construed as an election on its part to terminate this Lease or to accept a surrender thereof unless a written notice of such intention be given to Tenant. Notwithstanding any such reletting without termination, Landlord may at any time thereafter elect to terminate this Lease for such previous breach and receive, in addition to any other damages to which it may be entitled, the Default/Termination Damages defined in 18.03 of this Lease and, in addition, the “Liquidated Damages” described in 18.03(ii) of this Lease; or

b. Perform, on behalf and at the expense of Tenant, any obligation of Tenant under this Lease which Tenant has failed to perform and of which Landlord shall have given Tenant notice, the cost of which performance by Landlord, together with interest thereon at the Interest Rate from the date of such expenditure, shall be deemed Additional Rent and shall be payable by Tenant to Landlord upon demand. Notwithstanding the provisions of this clause (b) and regardless of whether an Event of Default shall have occurred, Landlord may exercise the remedy described in this clause (b) without any notice to Tenant if Landlord, in its good faith judgment, believes it would be materially injured by failure to take rapid action or if the unperformed obligation of Tenant constitutes an emergency; or

c. Elect to terminate this Lease and the tenancy created hereby by giving written notice of such election to Tenant, and reenter the Demised Premises and the Easements, without the necessity of legal proceedings, and remove Tenant and all other persons and property from the Demised Premises and the Easements, and may store such property in a public warehouse or elsewhere at the cost of and for the account of Tenant without resort to legal process and without Landlord being deemed guilty of trespass or becoming liable for any loss or damage occasioned thereby; or

d. Exercise any other legal or equitable right or remedy which it may have.

e. Notwithstanding anything to the contrary contained above or elsewhere herein or as provided by law or equity generally, in recognition of the major investment in Site Improvements, grants and fundings to be made by Tenant for Landlord’s benefit as set out herein or in the Development Agreement, Landlord agrees that after the

Commencement Date, it will only elect the remedies of dispossessing Tenant or terminating this Lease as a last resort in the event that Tenant has materially failed to perform its obligations hereunder and Tenant has failed to compensate Landlord for all reasonable damages and costs caused. Landlord by such breach(es) so long as Tenant in good faith is continuing to operate the riverboat gaming enterprise in substantially the manner contemplated herein.

All costs and expenses incurred by Landlord (including, without limitation, reasonable attorneys’ fees) in enforcing any of its rights and remedies under this Lease shall be deemed to be Additional Rent and shall be paid to Landlord by Tenant upon demand.

Section 18.03 DAMAGES .

Whether or not this Lease is terminated by Landlord pursuant to Section 18.02 hereof, upon the occurrence of an Event of Default and the continuation of any such Event of Default after the expiration of any applicable cure period provided for herein, Tenant shall in all events nevertheless remain liable for (a) any Rent, any installment of the Riverfront Park Grant (the “Grant”), any damages which may be due or sustained prior to the last to occur of the date upon which an Event of Default occurs or the date of expiration of any applicable cure period with respect to such Event of Default, including damages under Section 2.06 hereof, and, in addition, all reasonable costs, fees and expenses, including, but not limited to, reasonable attorneys’ fees, costs and expenses, incurred by Landlord in pursuit of its remedies hereunder, and in renting the Demised Premises and the Easements or any portion thereof to others from time to time (all such Rent, Grant, damages, costs, fees and expenses being referred to herein as “Default/Termination Damages”), and (b) in the event Landlord shall attempt to relet or shall relet all or any portion of the Demised Premises or in the event that this Lease shall be terminated, additional damages (the “Liquidated Damages”), which, at the election of Landlord, shall be as follows:

i. in the event that Landlord has not exercised its right to terminate this Lease, an amount equal to the Rent which would have become due during the remainder of the Term or any exercised renewal thereof, less the amount of rent, additional rent, grant, and other sums, if any, which Landlord shall receive during such period from others to whom the Demised Premises and/or any portion thereof may be rented (other than any rent or other sum received by Landlord as a result of any failure of such other person or entity to perform any of its obligations to Landlord), in which case such Liquidated Damages shall be computed and payable in monthly installments, in advance, on the first day of each calendar month following the occurrence of an uncured Event of Default under this Lease and continuing until the date on which the Term (or any

exercised renewal thereof with no automatic renewals to occur thereafter) is due to expire, and any suit or action brought to collect any such Liquidated Damages for any month shall not in any manner prejudice the right of Landlord to collect any Liquidated Damages for any subsequent month by a similar proceeding or be deemed to require repeated lawsuits hereunder; or

ii. if Landlord shall at any time exercise its right to terminate this Lease, an amount equal to the present worth (as of the date of such termination) of Rent and Grant which, but for such termination of this Lease, would have become due during the remainder of the Term (or any exercised renewal thereof), less the fair rental value of the Demised Premises for the remainder of the Term (or any exercised renewal thereof) with no automatic renewals to occur thereafter, as determined by an independent appraiser named by the presiding judge of the Circuit Court of Jackson County, Missouri, in which case such Liquidated Damages shall be payable to Landlord in one lump sum on demand and shall bear interest at the Interest Rate until paid. For purposes of this clause (ii), “present worth” shall be computed by discounting such amount to present worth at a discount rate equal to the Interest Rate.

If an uncured Event of Default shall take place after the expiration of two or more years after the Opening Date, then, for purposes of computing the Liquidated Damages, the Percentage Rent payable with respect to each calendar year or portion thereof following such uncured Event of Default (including the balance of the year in which such uncured Event of Default shall take place) shall be conclusively presumed to be equal to the average Percentage Rent payable with respect to each complete year preceding such uncured Event of Default. If such uncured Event of Default shall take place before the expiration of two years after Opening Date, then, for purposes of computing the Liquidated Damages, the Percentage Rent payable with respect to each calendar year or portion thereof following such uncured Event of Default (including the balance of the calendar year in which such uncured Event of Default shall take place) shall be conclusively presumed to be equal to twelve (12) times the average monthly amount of Percentage Rent which was due and payable prior to such uncured Event of Default, or if no Percentage Rent shall have been payable during such period, then the Percentage Rent for each year of the unexpired Term shall be conclusively presumed to be a sum equal to that described in Section 2.06 as if there had been a failure of Tenant to operate its riverboat gaming enterprise.

Default/Termination Damages shall be due and payable immediately upon demand by Landlord following any uncured Event of Default of this Lease pursuant to Section 18.02. Liquidated Damages shall be due and payable at the times set forth herein.

Nothing contained in this Lease shall limit or prejudice the right of Landlord to prove for and obtain, in proceedings for the termination of this Lease by reason of bankruptcy or insolvency, an amount equal to the maximum allowed by any statute or rule of law in effect at the time when, and governing the proceedings in which the damages are to be proved, whether or not the amount be greater, equal to, or less than the amount of the loss or damages referred to above. The failure or refusal of Landlord to relet the Demised Premises or any part or parts thereof shall not release or affect Tenant’s liability for damages hereunder so long as Landlord has reasonably attempted to mitigate damages as required in Section 18.10.

Section 18.04. REMEDIES IN EVENT OF BANKRUPTCY OR OTHER PROCEEDING .

A. Anything contained herein to the contrary notwithstanding, if termination of this Lease shall be stayed by order of any court having jurisdiction over any proceeding described in paragraph (b) of Section 18.01, or by federal or state statute, then, following the expiration of any such stay, or if Tenant or Tenant as debtor-in-possession or the trustee appointed in any such proceeding (being collectively referred to as “Tenant” only for the purposes of this Section 18.04) shall fail to assume Tenant’s obligations under this Lease within the period prescribed therefor by law or after entry of the order for relief or as may be allowed by the court, or if Tenant shall fail to provide adequate protection of Landlord’s right, title and interest in and to the Demised Premises or adequate assurance of the complete and continuous future performance of Tenant’s obligations under this Lease, then Landlord, to the extent permitted by law or by leave of the court having jurisdiction over such proceeding, shall have the right, at its election, to terminate this Lease, without written notice to Tenant, and upon the effective date of such termination, this Lease shall cease and expire as aforesaid and Tenant shall immediately quit arid surrender the Demised Premises as aforesaid. Upon the termination of this Lease as provided above, Landlord, without notice, may re-enter and repossess the Demised Premises using such force for that purpose as may be necessary without being liable to indictment, prosecution or damages therefor and may dispossess Tenant by summary proceedings or otherwise.

B. For the purposes of the preceding paragraph (a), adequate protection of Landlord’s right, title and interest in and to the Demised Premises, and adequate assurance of the complete and continuous future performance of Tenant’s obligations under this Lease, shall include, without limitation, the following requirements:

i. that Tenant comply with all of its obligations under this Lease;

ii. that Tenant pay to Landlord, on the first day of each month occurring subsequent to the entry of such order, or the effective date of such stay, a sum equal to the

amount by which the Demised Premises diminished in value during the immediately preceding monthly period, but, in no event, an amount which is less than the aggregate Rent payable for such monthly period;

iii. that Tenant continue to use the Demised Premises in the manner and for the purposes originally required by this Lease;

iv. that Landlord be permitted to supervise the performance of Tenant’s obligations under this Lease;

v. that Tenant pay to Landlord within fifteen (15) days after entry of such order or the effective date of such stay, as partial adequate protection against future diminution in value of the Demised Premises and adequate assurance of the complete and continuous future performance of Tenant’s obligations under this Lease, a security deposit in an amount reasonably acceptable to Landlord;

vi. that Tenant has and will continue to have unencumbered assets after the payment of all secured obligations and administrative expenses adequate to assure Landlord that sufficient funds will be available to fulfill the obligations of Tenant under this Lease;

vii. that if Tenant assumes this Lease and proposes to assign the same (pursuant to Title 11 U.S.C. §365, or as the same may be amended) to any person or entity who/which shall have made a bona fide offer to accept an assignment of this Lease on terms acceptable to such court having competent jurisdiction over Tenant’s estate, then notice of such proposed assignment, setting forth (x) the name and address of such person or entity, (y) all of the terms and conditions of such offer, and (z) if required by law or by any court, the adequate assurance to be provided Landlord to assure such person’s or entity’s future performance under this Lease, including, without limitation, the assurances referred to in Title 11 U.S.C. §365(b)(3), as it may be amended, shall be given to Landlord by Tenant no later than fifteen (15) days after receipt by Tenant of such offer, but in any event no later than thirty (30) days prior to the date that Tenant shall make application to such court for authority and approval to enter into such assignment and assumption, and Landlord shall thereupon have the prior right and option, to be exercised by notice to Tenant given at any time prior to the effective date of such proposed assignment, to accept, or to cause Landlord’s designee to accept, an assignment of this Lease upon the same terms and conditions and for the same consideration, if any, as the bona fide offer made by such person or entity, less any brokerage commissions which may be payable out of the

consideration to be paid by such person or entity for the assignment of this Lease; and

viii. that if Tenant assumes this Lease and proposes to assign the same, and Landlord does not exercise its option pursuant to paragraph (vii) of this Section 18.04, Tenant hereby agrees that:

(a) such assignee shall have a net worth not less than the net worth of Tenant as of the Opening Date, or such Tenant’s obligations under this Lease shall be unconditionally guaranteed by a person or an entity having a net worth equal to Tenant’s net worth as of the Opening Date;

(b) such assignee shall not use the Demised Premises except subject to all restrictions contained in this Lease;

(c) such assignee shall assume in writing all of the terms, covenants and conditions of this Lease including, without limitation, all of such terms, covenants and conditions respecting the permitted use and payment of Rent, and such assignee shall provide Landlord with assurances satisfactory to Landlord that it has the experience in operating gaming enterprises similar to that to be conducted by Tenant hereunder, sufficient to enable it to so comply with all of the terms, covenants and conditions of this Lease and successfully operate the Demised Premises for such use; and

(d) if such assignee makes any payment to Tenant, or for Tenant’s account, for the right to assume this Lease (including, without limitation, any lump sum payment, installment payment or payment in the nature of rent over and above the Rent payable under this Lease), Tenant shall pay over to Landlord one-quarter (1/4) of any such payment.

Section 18.05. CONTINUED OBLIGATION .

A. No expiration or termination of this Lease or relief sought or obtained by Landlord or Tenant hereunder shall relieve Tenant or Landlord, as the case may be, of its liability and obligations under this Lease, and such liability and obligations shall survive any such expiration or termination or enforcement or attempted enforcement of relief hereunder.

B. In the event that the Demised Premises or any part thereof shall be re-let by Landlord for the unexpired term of this Lease, or any part thereof, before presentation of proof of such, liquidated damages to any court, then the amount of rent reserved upon such re-letting shall, prima facie , be the fair and reasonable rental value for the part or the whole of the Demised Premises so

re-let during the term of the re-letting. Nothing herein contained shall limit or prejudice the right of Landlord to prove for and obtain, as liquidated damages by reason of such termination, an amount equal to the maximum allowed by any statute or rule of law in effect at the time when, and governing the proceedings in which, such damages are to be proved, whether or not such amount be greater, equal to, or less than the amount of the difference referred to above.

Section 18.06. WAIVER BY TENANT . Tenant hereby expressly waives, so far as permitted by law, the service of any notice of intention to re-enter provided for in any statute and, except as is herein otherwise provided, Tenant, for and on behalf of itself and all persons and entities claiming through or under Tenant (including any leasehold mortgagee or other creditor), also waives any and all right of redemption or re-entry or re-possession in case Tenant shall be dispossessed by a judgment or by warrant of any court or judge or in case of re-entry or re-possession by Landlord or in case of any expiration or termination of this Lease. The terms “enter”, “re-enter”, “entry” or “re-entry” as used in this Lease are not restricted to their technical legal meanings.

Section 18.07. NO WAIVER BY LANDLORD OR TENANT . No failure by Landlord or Tenant to insist upon the strict performance of any agreement, term, covenant or condition hereof or to exercise any right or remedy upon a breach of any agreement, term, covenant or condition hereof, and no acceptance of full or partial Rent during the continuance of any such breach, shall constitute a waiver of any such breach or of such agreement, term, covenant or condition. No agreement, term, covenant or condition hereof to be performed or complied with by Tenant or Landlord, and no breach thereof, shall be waived, altered or modified except by a written instrument executed by the non-breaching party. No waiver of any breach shall affect or alter this Lease, but each and every agreement, term, covenant and condition hereof shall continue in full force and effect with respect to any other then existing or subsequent breach thereof.

Section 18.08. INJUNCTION . In the event of any breach or threatened breach by Tenant or Landlord of any of the agreements, terms, covenants or conditions contained in this Lease, Tenant or Landlord, as the case may be, shall be entitled to enjoin such breach or threatened breach and shall have the right to invoke any right and remedy allowed at law or in equity or by statute or otherwise as though other remedies were not provided for in this Lease.

Section 18.09. CUMULATIVE RIGHTS . Each right and remedy provided to Landlord or Tenant in this Lease shall be cumulative and shall be in addition to every other right or remedy provided for in this Lease or now or hereafter existing at law or in equity or by statute or otherwise.

Section 18.10. MITIGATION . While Landlord shall be entitled to pursue each and every remedy hereunder as provided above,

Landlord shall have the obligation to use reasonable best efforts to mitigate its damages hereunder by seeking a new tenant after Landlord has terminated this Lease.

Section 18.11. DEFAULT BY LANDLORD; TENANT REMEDIES . Should Landlord materially default in the performance or observance of any covenant or agreement of this Lease, or any obligation of Landlord under the Development Agreement or any Exhibit thereto, which default is not cured within ten (10) days after the giving of notice thereof by Tenant, unless such default is of such a nature that it cannot reasonably be cured within such ten (10) day period, in which case no default by Landlord shall occur so long as Landlord shall commence the curing of the default within such ten (10) day period and shall thereafter diligently prosecute the curing of same; provided, however, if Landlord shall default in performance of any such covenant or agreement of this Lease, the Development Agreement or any Exhibit thereto two (2) or more times in any twelve (12) month period, then notwithstanding that each of such defaults shall have been cured by Landlord, any further default of such covenant or agreement within such twelve (12) month period shall be deemed a default without cure thereof. If Landlord does not timely cure such a default, Tenant shall have such legal and equitable remedies as are provided by law for such a default.

All costs and expenses incurred by Tenant (including without limitation reasonable attorneys’ fees) in enforcing any of its rights or remedies under this Lease shall be paid to Tenant by Landlord upon demand.

ARTICLE XIX

Renewal Privileges

Section 19.01. EIGHT RENEWAL TERMS . If this Lease shall be in force and effect on the date for the expiration of the initial term hereof, Tenant shall automatically be deemed to have elected a renewal of the term hereby granted for a period of five (5) years beginning with the date of such expiration of such initial term, provided, however, that Tenant shall not have given Landlord at least twelve (12) months prior written notice negating such election. If this Lease shall be in force and effect on the date for the expiration of the first renewal term hereof, Tenant shall automatically be deemed to have elected a second renewal of the term hereby granted for a period of five (5) years beginning with the date of such expiration of the first renewal term, provided, however, that Tenant shall not have given Landlord at least twelve (12) months prior written notice negating such election. If this Lease shall be in force and effect on the date for the expiration of the second renewal term thereof, Tenant shall automatically be deemed to have elected a third renewal of the term hereby granted for a period of five (5) years beginning with the date of such expiration of the second renewal term, provided, however, that Tenant shall not have given Landlord at least twelve (12) months prior written notice negating such election. If this Lease shall be in force and effect on the date for the expiration of the third renewal term thereof, Tenant shall automatically be deemed to have

elected a fourth renewal of the term hereby granted for a period of five (5) years beginning with the date of such expiration of the third renewal term, provided, however, that Tenant shall not have given Landlord at least twelve (12) months prior written notice negating such election. If this Lease shall be in force and effect on the date for the expiration of the fourth renewal term thereof, Tenant shall automatically be deemed to have elected a fifth renewal of the term hereby granted for a period of five (5) years beginning with the date of such expiration of the fourth renewal term, provided, however, that Tenant shall not have given Landlord at least twelve (12) months prior written notice negating such election. If this Lease shall be in force and effect on the date for the expiration of the fifth renewal term hereof, Tenant shall automatically be deemed to have elected a sixth renewal of the term hereby granted for a period of five (5) years beginning with the date of such expiration of the fifth renewal term, provided, however, that Tenant shall not have given Landlord at least twelve (12) months prior written notice negating such election. If this Lease shall be in force and effect on the date for the expiration of the sixth renewal term hereof, Tenant shall automatically be deemed to have elected a seventh renewal of the term hereby granted for a period of five (5) years beginning with the date of such expiration of the sixth renewal term, provided, however, that Tenant shall not have given Landlord at least twelve (12) months prior written notice negating such election. If this Lease shall be in force and effect on the date for the expiration of the seventh renewal term hereof, Tenant shall automatically be deemed to have elected an eighth renewal of the term hereby granted for a period of five (5) years beginning with the date of such expiration of the seventh renewal term, provided, however, that Tenant shall not have given Landlord at least twelve (12) months prior written notice negating such election. Tenant acknowledges that a provision of the Charter of the City may impose a fifty (50) year limit on the term of the City Lease, which limit may affect the length of the eighth renewal of the term of this Lease. Tenant acknowledges and agrees that any resulting limitation on the length of the eighth renewal only of the term of this Lease shall not give rise to any claim of default under or invalidity of this Lease or any extension hereof. This Lease shall not be deemed to be or have been in force and effect on any date on which Tenant shall be in default hereunder. Each such renewal term shall be upon the same terms and conditions as contained herein for the initial term (and applicable renewal term (s)) except for the diminishing of the number of renewal terms remaining as each such renewal term expires and except that as to each such renewal term, the Minimum Net Rent payable during same (in equal annual installments as to the Minimum Net Rent) shall be increased from the Minimum Net Rent payable during the initial term hereof by the percentage of change in the Consumer Price Index as of the Opening Date to the Consumer Price Index as of the first day of any such renewal term. For the purposes of this Section 19.01, the “Consumer Price Index” means the Consumer Price Index for all urban consumers published by the Bureau of Labor Statistics of the United States Department of Labor, United States City Average, all items (1982 equals 100). If no such Index is then being published, as of the first day of any

such renewal term, then Landlord shall designate a successor or replacement index of substantially equivalent reliability and objectivity. The Consumer Price Index in effect for any given date shall be deemed to refer to the Consumer Price Index last established before such date.

Section 19.02. NO WAIVER OR RELEASE . No renewal term hereunder shall be evidence of a waiver or release of any default or claim of either party hereto against the other. Any unsatisfied claim of either party hereto against the other under the terms of this Lease during the initial Term or any renewal term shall survive and be deemed to be a similar default or claim under any subsequent renewal term.

ARTICLE XX

Representations and Warranties

Section 20.01. REPRESENTATIONS AND WARRANTIES OF LANDLORD . The following representations and warranties are hereby made by Landlord:

A. POWER AND AUTHORITY . Landlord is a body politic created and formed by the City of Kansas City, Missouri by virtue of the power granted to said City by the laws of the State of Missouri and has the full authority and power to enter into this Lease and to execute and deliver this Lease and to perform and observe all of the terms, conditions and provisions of this Lease to be so observed and performed by it and its said execution and delivery of this Lease has been duly authorized by all necessary action required of it; and

B. NO CONFLICTS . Nothing herein agreed to by Landlord will conflict with or result in a breach of the terms and provisions or any existing law, rule, regulation, contract, agreement, order of any court or governmental body; and

C. NO CONTRACT DEFAULTS . Landlord is not in default under any contract or agreement to which it is a party and which materially and adversely affects its ability to enter into and perform its obligations hereunder; and

D. NO LITIGATION . There are no claims, suits or other proceedings threatened or pending against Landlord which would materially and adversely affect its ability to enter into and perform its obligations hereunder.

Section 20.02. REPRESENTATIONS AND WARRANTIES OF TENANT . The following representations and warranties are hereby made by Tenant:

A. POWER AND AUTHORITY . Tenant is a corporation duly organized and validly existing and in good standing under the laws of the State of Delaware and is qualified to do business in the State of Missouri and has the full

authority and power to enter into this Lease and to execute and deliver this Lease and to perform and observe all the terms, conditions and provisions hereof to be so observed and performed by it and its execution and delivery of this Lease has been duly authorized by all necessary corporate action on its part. (A copy of the Resolution of its Board of Directors so authorizing the same is attached hereto identified as Exhibit C.); and

B. NO CONFLICTS . Nothing herein agreed to by Tenant will conflict with or result in a breach of the terms and provisions of any existing law, rule, regulation, contract, agreement, order of any court or governmental body; and

C. FINANCIAL CONDITION . Tenant is solvent and is not a party to any assignment for the benefit of its creditors or any bankruptcy proceedings, and the transaction contemplated herein shall not cause it to become insolvent or not be able to pay its debts as the same become due; and

D. NO CONTRACT DEFAULTS . Tenant is not in default under the terms of any contract or agreement to which it is a party and which materially and adversely affects its ability to perform its obligations hereunder; and

E. NO LITIGATION . There are no claims, suits or other proceedings threatened or pending against Tenant which materially and adversely affect its ability to perform its obligations hereunder.

ARTICLE XXI

Invalidity of Particular Provisions

If any term or provision of this Lease or the application thereof to any person or entity or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Lease, or the application of such term or provision to persons, entities or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each term and provision of this Lease shall be valid and enforceable to the fullest extent permitted by law.

ARTICLE XXII

Notices

Any and all notices, demands, requests, submissions, approvals, consents, disapprovals, objections, offers or other communications or documents required to be given, delivered or served or which may be given, delivered or served under or by the terms and provisions of this Lease or pursuant to law or otherwise, shall be in writing and shall be deemed to have been duly given, delivered or served; (i) if and when personally delivered or sent

by verifiable facsimile, on the date so delivered or sent, or (ii) three (3) days after being mailed by registered or certified mail, postage prepaid, or (iii) one (1) day after the giving of same to an overnight courier delivery service if sent by a recognized overnight courier delivery service, costs prepaid, addressed if to the Tenant, at:

Hilton Hotels Corporation

3930 Howard Hughes Parkway, Fifth Floor

Las Vegas, NV 89109

Attention: President

Phone: (702) 699-5000

Fax: (702) 699-5179

With copies to:

Hilton Hotels Corporation

9936 Civic Center Drive

Beverly Hills, California 90209-5567

Attention: General Counsel

Phone: (310) 278-4321

Fax: (310) 205-4613

and

Jerome D. Riffel

Lathrop & Norquist

2345 Grand Avenue, Suite 2500

Kansas City, Missouri 64108

Phone: (816) 842-0820

Fax: (816) 421-0500

or to such other address as Tenant may from time to time designate by written notice to Landlord, or if to Landlord at:

Port Authority of Kansas City, Missouri

10 Petticoat Lane, Suite 250

Kansas City, Missouri 64106

Attention: Executive Director

Phone: (816) 221-0636

Fax: (816) 221-0189

With a copy to:

Phillip A. Kusnetzky

McDowell, Rice & Smith, a Professional Corporation

120 West 12th Street

Suite 1300

Kansas City, Missouri 64105

Phone: (816) 221-5400

Fax: (816) 474-7304

or to such other address as Landlord may from time to time designate by written notice to Tenant.

ARTICLE XXIII

Rent Abatement/Claim for Damages

Except as in this Lease otherwise expressly prohibited Tenant shall have such rights as are provided by Missouri law for abatement, diminution or reduction of Rent or charges or other claim for damages based on any material inconvenience, discomfort, interruption of business, loss or damage to improvements to the Demised Premises or personal property thereon, or otherwise.

ARTICLE XXIV

Estoppel Certificates

Section 24.01. TENANT’S CERTIFICATE . Tenant shall, without charge, at any time and from time to time, within ten days after request by Landlord, certify by written instrument, duly executed, acknowledged and delivered to Landlord or any other person, firm, entity or corporation specified by Landlord:

(a) that this Lease is unmodified and in full force and effect, or, if there have been any modifications, that the same is in full force and effect as modified and stating the modifications;

(b) whether or not there are then existing any set-offs or defenses against the enforcement of any of the agreements, terms, covenants or conditions hereof and any modifications hereof upon the part of Tenant to be performed or complied with, and, if so, specifying the same;

(c) the dates, if any, to which the Minimum Net Rent, Percentage Rent and Additional Rent and other charges hereunder have been paid in advance; and

(d) the date of expiration of the then current term;

(e) the Rent then payable under this Lease; and

(f) such other matters as Landlord shall reasonably request.

Section 24.02. LANDLORD’S CERTIFICATE . Landlord shall, without charge, at any time and from time to time, within ten days after request by Tenant, certify by written instrument, duly executed, acknowledged and delivered to Tenant, to the effect that this Lease is unmodified and in full force and effect (of if there shall have been modifications, that the same is in full force and effect as modified and stating the modifications) and the dates to which the Rent has been paid, the date of expiration of the current term, the Rent then payable under this Lease, and stating whether or not, to the best knowledge of the officer executing such certificate on behalf of Landlord, Tenant is in default in performance of any covenant, agreement or condition contained in

this Lease and, if so, specifying each such default of which the person executing such certificate may have actual knowledge and such other matters as Tenant shall reasonably request.

ARTICLE XXV

Miscellaneous

Section 25.01. GOVERNING LAW/VENUE . This Lease shall be governed by and construed in accordance with the internal laws of the State of Missouri. Venue of any action brought pursuant to this Lease or any Exhibit hereto or arising on, out of, under or by reason of or in any way relating to this Lease or the landlord/tenant relationship created hereunder or the obligations arising out of, under, or by reason of the Development Agreement or resulting from any other transaction hereunder or thereunder or concerning the validity, interpretation or enforcement hereof or thereof shall only be brought in (or, if filed in a different venue, shall be transferred to) a State or Federal Court of appropriate jurisdiction located in or having jurisdiction over Jackson County, Missouri. Tenant waives any objection to the jurisdiction of or venue in any such court, consents to transfer of venue to such court and to the service of process issued by such court and agrees that each may be served by any method of process described in the Missouri or Federal Rules of Civil Procedure. Tenant waives any right to claim that any such court is an inconvenient forum or any similar defense.

Section 25.02. CONFLICT AMONG PROVISIONS . In the event of a conflict between or among the terms, covenants, conditions or provisions of this Lease and the Development Agreement or any Exhibit to either of the same, if such conflict relates to performance or payment prior to the Commencement Date (except as to payment of Interim Rent), the provisions of the Development Agreement shall prevail, but if such conflict relates to performance or payment after the Commencement Date (except as to initial construction of improvements), the provisions of this Lease shall prevail. Notwithstanding any statement in the Development Agreement, the Proposal, the Exhibits to the Development Agreement or the Lease, Tenant’s total obligations liability with respect to the payment of Minimum Rent and the Riverfront Park Grant shall be a total of Thirty Million Dollars ($30,000,000.00) during the initial ten (10) year term hereof and includes all grants of monies and Minimum Rent for which Tenant is liable to Landlord or any other party and which payments include all liability of Tenant for the construction of or payment for infrastructure and improvements excluding the Site Improvements as now defined in the Development Agreement and which are fully stated and limited to those Site Improvements listed in Exhibits C and D to the Development Agreement.

Section 25.03. INTEREST RATE . All sums due hereunder as Rent or otherwise and whether due from Tenant to Landlord, or vice-versa, shall bear interest from the date due until paid at a rate equal to 400 basis points (4%) over the rate of one year United

States Treasury obligations existing on the first day of the month during which such sums become due, adjusted upward to reflect any increase in such rate during the time any such sum remains unpaid (the “Interest Rate”).

Section 25.04. SPECIAL REPORTS . Tenant agrees to provide to Landlord, or to such parties as Landlord shall as required in connection with and under the terms of the Bond Issuance described in Section 2.14 of this Lease direct, such information as is necessary to allow Landlord to satisfy the requirements of Rule 15c2-12, as amended, of the Securities and Exchange Commission.

ARTICLE XXVI

Consent of Landlord and Tenant

Section 26.01. STANDARD . Where any provision of this Lease requires the consent or approval of Landlord or Tenant, each agrees that such consent or approval will not be unreasonably withheld unless otherwise specifically provided for herein.

Section 26.02. OTHER ACTS . Each party agrees to perform any further acts and deliver any additional documents that may be reasonably requested by the other and are necessary to carry out the provisions of this Lease.

ARTICLE XXVII

Payments Under Protest

In case of any dispute between Landlord and Tenant with respect to the amount of money payable by Tenant to Landlord under the provisions of this Lease, Tenant shall be privileged to make payment under protest and, in such event, shall be privileged to assert and prosecute a claim or claims for the recovery of the sum, or any part thereof, that shall have been so paid by Tenant under protest.

ARTICLE XXVIII

No Oral Modification

All prior understandings and agreements between the parties are merged with this Lease , which together with the Development Agreement and Exhibits to the same, fully and completely set forth the understanding of the parties hereto; and this Lease may not be changed or terminated orally or in any manner other than by an agreement in writing and signed by the party against whom enforcement of the change or termination is sought.

ARTICLE XXIX

Covenants to Bind and Benefit Respective Parties

The covenants and agreements herein contained shall bind and inure to the benefit of Landlord, its successors and assigns, and Tenant, and its permitted successors and assigns.

ARTICLE XXX

Captions, Table of Contents and Exhibits

Section 30.01. CAPTIONS . The captions, titles and headings of this Lease are for convenience and reference only and in no way define, limit or describe the scope or intent of this Lease or any part thereof or in any way affect this Lease.

Section 30.02. TABLE OF CONTENTS . The table of contents preceding this Lease but under the same cover is for the purpose of convenience and reference only and is not to be deemed or construed in any way as part of this Lease, nor as supplemental thereto or amendatory thereof.

Section 30.03. EXHIBITS . Each of the Exhibits hereto are by this reference made a part hereof as though fully set out herein.

IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be executed by their duly authorized officers and their respective corporate seals to be hereunto affixed.

LANDLORD:	THE PORT AUTHORITY OF KANSAS CITY, MISSOURI

	By:	/s/ Elbert Anderson
		Name:	Elbert Anderson
		Title:	Chairman

TENANT:	HILTON HOTELS CORPORATION, a Delaware Corporation

	By:	/s/ F.M. O’Brien
		Name:	F.M. O’Brien
		Title:	Executive Vice President

ACKNOWLEDGMENTS

STATE OF MISSOURI	)
	)	SS
COUNTY OF JACKSON	)

On this 21 day of August , 1995, before me appeared Elbert Anderson, to me personally known, who being by me duly sworn, did say that he is the Chairman of The Port Authority of Kansas City, Missouri, a public Corporation, and said Elbert Anderson acknowledged execution of the foregoing instrument to be the free act and deed of said port Authority.

IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my official seal the day and year last above written.

			/s/ Sarah L Bradley
			Notary Public
My Commission Expires:
			SARAH L BRADLEY
4/28/96			NOTARY PUBLIC STATE OF MISSOURI
			PLATTE COUNTY
			MY COMMISSION EXP. APR. 28,1996

STATE OF NEVADA	)
	)	SS
COUNTY OF CLARK	)

On this 16 th day of August, 1995, before me appeared F.M. O’Brien , to me personally known, who being by me duly sworn, did say that he/she is the Executive Vice President of Hilton Hotels Corporation, a Delaware Corporation, and said F.M. O’Brien acknowledged execution of the foregoing instrument to be the free act and deed of said corporation.

IN WITNESS WHEREOF, I have hereunto subscribed my name affixed my official seal the day and year last above written.

	/s/ Theresa A. Hoff
	Notary Public
My Commission Expires:

6/7/97
		NOTARY PUBLIC STATE OF NEVADA County of Clark THERESA A. HOFF
	My Appointment Expires June 7, 1997

Exhibit 10.45

FIRST AMENDMENT

AMENDED AND RESTATED LEASE AGREEMENT

THIS FIRST AMENDMENT (“First Amendment”) to Amended and Restated Lease Agreement is made and entered into by and between The Port Authority of Kansas City, Missouri (the “Landlord”) and Hilton Hotels Corporation, a Delaware Corporation (the “Tenant”) as of the 31st day of October, 1995.

RECITALS

The following recitals are a material part of this First Amendment:

a. On or about the 21st day of August, 1995, Landlord and Tenant entered into that certain Amended and Restated Lease Agreement (the “Lease”), a copy of the recorded memorandum of which is attached hereto and by this reference made a part hereof, as though fully set out herein.

b. The parties hereto have determined that the Lease should be amended in part.

NOW, THEREFORE, for and in consideration of the sum of Ten and No/100 Dollars ($10.00), to each of them paid by the other, and other good and valuable consideration, the receipt, adequacy and sufficiency of which is hereby acknowledged by each of them, the parties hereto do hereby covenant and agree as follows:

1. In Section 1.02.(b), the initial word and number, “Twelve (12)” shall be stricken and in lieu thereof are hereby substituted, “Ten (10)”.

2. In Section 2.11, after the initial word, “Rent” the words, “and grant payments”, are hereby added.

3. In Section 2.14, at the end of the existing text thereof, a new sentence stating, “Landlord further acknowledges and understands that Tenant’s debt to Landlord hereunder is unsecured.”, is hereby added.

4. In Section 4.01, the word, “Tenant” in the fourth line thereof, shall be stricken and in lieu thereof, the word, “Landlord” is hereby substituted.

5. In Section 16.03, beginning in the tenth line of the indented paragraph thereof, the words, “on the earliest redemption date to occur after termination of this Lease” shall be stricken and in lieu thereof, the following is hereby substituted, “provided further, such minimum Landlord’s share shall not exceed an amount of monies sufficient to establish an escrow of United States Treasury obligations, which on the date of deposit thereof into the escrow,

would produce, with interest earnings thereon, an amount sufficient to pay, as the same become due, the total principal and interest thereafter payable on the then outstanding Bonds.”

6. In Section 16.04, in the third line thereof, after the words, “such event” the words, “all payment of rent, Riverfront Park Grant and additional rent shall continue in the same amount as before the taking, and” are hereby added.

7. Except as changed, modified or amended hereinabove, all provisions, terms and conditions of the Lease shall remain unchanged modified or amended and in full force and effect.

IN WITNESS WHEREOF, Landlord and Tenant have caused this First Amendment to be executed by their duly authorized officers and their respective corporate seals to be hereunto affixed.

LANDLORD:	THE PORT AUTHORITY OF KANSAS CITY, MISSOURI


	By:	/s/ Elbert Anderson
		Name:	Elbert Anderson
		Title:	Chairman


TENANT:	HILTON HOTELS CORPORATION, a Delaware Corporation


	By:	/s/ F. Michael O’Brien
		Name:	F. Michael O’Brien
		Title:	Executive Vice President

ACKNOWLEDGMENTS

STATE OF MISSOURI	)
	)	SS
COUNTY OF JACKSON	)

On this 30 day of November, 1995, before me appeared Elbert Anderson , to me personally known, who being by me duly sworn, did say that he is the Chairman of The Port Authority of Kansas City, Missouri, a public Corporation, and said Elbert Anderson acknowledged execution of the foregoing instrument to be the free act and deed of said Port Authority.

IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my official seal the day and year last above written.

	/s/ Jacqueline M Bullard
	Notary Public

My Commission Expires:

		JACQUELINE M BULLARD
		NOTARY PUBLIC STATE OF MISSOURI
June 22 1998		CASS COUNTY
		MY COMMISSION EXP. JUNE 22,1998


STATE OF NEVADA	)
	)	SS
COUNTY OF CLARK	)

On this 20 day of November, 1995, before me appeared F.Michael O’Brien, to me personally known, who being by me duly sworn, did say that he/she is the Executive Vice President of Hilton Hotels Corporation, a Delaware Corporation, and said E.Michael O’Brien acknowledged execution of the foregoing instrument to be the free act and deed of said corporation.

IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my official seal the day and year last above written.

	/s/ Danielle I. Love-Metz
	Notary Public

My Commission Expires:

May 25, 1999

Notary Public-State of Nevada

COUNTY OF CLARK

DANIELLE I. LOVE-METZ

My Commission Expires

May 25, 1999

Exhibit 10.46

SECOND AMENDMENT TO AMENDED AND RESTATED LEASE AGREEMENT

This Second Amendment (“Second Amendment”) to Amended and Restated Lease Agreement is made and entered into by and between The Port Authority of Kansas City, Missouri (the “Landlord”) and Hilton Hotels Corporation, a Delaware corporation (the “Tenant”), as of the 10 day of June, 1996.

RECITALS:

A. Landlord and Tenant are parties to that certain Amended and Restated Lease Agreement dated as of August 21, 1995, as amended by that First Amendment to Amended and Restated Lease Agreement dated as of October 31, 1995 (collectively, the “Lease”), a copy of the recorded memorandum of which is attached hereto and by this reference made a part hereof, as though fully set out herein.

B. In order to comply with certain regulatory requirements relating to the licensing of the gaming facilities to be operated by Tenant as provided in the Lease, the parties mutually desire to amend the Lease in part.

NOW, THEREFORE, for and in consideration of the sum of Ten Dollars ($10.00) and other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the parties hereby covenant and agree as follows:

1. Modifications to Lease . The Lease is hereby amended and modified to provide that (i) the “Riverboat Gaming Facility”, as such term is defined in the Lease, together with its contents and including trade fixtures and personalty and (ii) the Site Improvements, as such term is defined in the Lease, shall, until termination of the Lease, be the absolute property of Tenant. Without limiting the generality of the foregoing, the Lease is hereby specifically amended and modified as follows:

(a) The first paragraph of Section 1.01 of the Lease is hereby amended and modified in its entirety as follows:

Section 1.01. DEMISE . Landlord hereby subleases to Tenant and Tenant hereby leases from Landlord, the real property described in Exhibit B attached hereto (the “Demised Premises”), specifically excluding, however, all buildings and improvements to be constructed in accordance with the Development Agreement (“Site Improvements”). and the Riverboat Gaming Facility, which shall be

the absolute property of the Tenant until termination of this Agreement, and specifically including the following easements and appurtenances:

(b) The first sentence of Section 4.01 is amended and modified in its entirety as follows:

The Riverboat Gaming Facility, together with its contents and including trade fixtures and personalty shall, until the termination of this Agreement, be the absolute property of Tenant.

Section 9.02. TITLE TO TENANT’S PERSONALTY AND FIXTURES . Title to Tenant’s Personalty and Fixtures, including, without limitation, the Riverboat Gaming Facility, shall until the termination of this Lease be that of Tenant.

(d) Section 9.01 is amended and modified to add the following sentence at the end of such section:

Title to the Site Improvements, any equipment and/or appurtenances thereto and all changes, additions and alterations therein and all renewals and replacements thereof, when made, erected, constructed, installed or placed upon the Demised Premises or the Easements by Tenant, shall, until the termination of this Lease, be that of the Tenant.

2. No Other Modifications . Except as expressly set forth herein, or as necessary to incorporation the modifications herein, all of the terms, conditions, covenants and provisions of this Lease shall remain unmodified and in full force and effect in accordance with their original terms.

3. General . This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

IN WITNESS WHEREOF, Landlord and Tenant have caused this Second Amendment to be executed by their duly authorized officers as of the day and year first above written.

	LANDLORD:

	THE PORT AUTHORITY OF KANSAS CITY, MISSOURI


	By:	/s/ Elbert Anderson
	Name:	Elbert Anderson
	Title:	Chairman


	TENANT:

	HILTON HOTELS CORPORATION, a Delaware corporation


	By:	/s/ Gerald W. Ricker
	Name:	Gerald W. Ricker
	Title:	Vice President – Development

STATE OF MISSOURI	)
	) ss.
COUNTY OF JACKSON	)

On this 10 day of June, 1996, before me appeared Elbert Anderson, to me personally known, who being by me duly sworn did say that he is the Chairman of The Port Authority of Kansas City, Missouri, a public corporation, and said Elbert Anderson acknowledged execution of the foregoing instrument to be the free act and deed of said Port Authority.

IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my official seal the day and year last above written.

	/s/ Jacqueline M Bullard
	Notary Public

My Commission Expires:

June 22 1998

JACQUELINE M BULLARD
NOTARY PUBLIC STATE OF MISSOURI
CASS COUNTY
MY COMMISSION EXP. JUNE 22, 1998

STATE OF MISSOURI	)
	) ss.
COUNTY OF JACKSON	)

On this 7th day of June, 1996, before me appeared Gerald W. Ricker, to me personally known, who being by me duly sworn did say that he/she is the Vice Pres. - Develop. of Hilton Hotels Corporation, a Delaware corporation, and said Gerald W. Ricker acknowledged execution of the foregoing instrument to be the free act and deed of said corporation.

IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my official seal the day and year last above written.

	/s/ [ILLEGIBLE]
	Notary Public

My Commission Expires:


03/11/99

QuickLinks -- Click here to rapidly navigate through this document

Exhibit 21.1

SIGNIFICANT SUBSIDIARIES OF ISLE OF CAPRI CASINOS, INC.

WHOLLY-OWNED SUBSIDIARIES		STATE OF INCORPORATION

Black Hawk Holdings, L.L.C.		Colorado
Capri Air, Inc.		Mississippi
Capri Insurance Corporation		Hawaii
Casino America of Colorado, Inc.		Colorado
CCSC Blackhawk, Inc.		Colorado
Grand Palais Riverboat, Inc.		Louisiana
IC Holdings Colorado, Inc.		Colorado
IOC-Boonville, Inc.		Nevada
IOC-Davenport, Inc.		Iowa
IOC-Kansas City, Inc.		Missouri
IOC-Lula, Inc.		Mississippi
IOC-Natchez		Mississippi
IOC Black Hawk County, Inc.		Iowa
IOC Holdings, L.L.C.		Louisiana
IOC Pittsburgh, Inc.		Pennsylvania
IOC Services, L.L.C.		Delaware
Isle of Capri Bettendorf, L.C.		Iowa
Isle of Capri Black Hawk, L.L.C.		Colorado
Isle of Capri Marquette, Inc.		Iowa
PPI. Inc		Florida
Riverboat Corporation of Mississippi		Mississippi
St. Charles Gaming Company, Inc.		Louisiana
The Isle Casinos Limited		United Kingdom
IOC Caruthersville, L.L.C.		Missouri
IOC Blackhawk Distribution Company, L.L.C.		Colorado
Isle of Capri Bahamas Holdings, Inc.		Mississippi
PARTIALLY-OWNED SUBSIDIARIES
Blue Chip Casinos, Ltd.		United Kingdom

QuickLinks

Exhibit 21.1

QuickLinks -- Click here to rapidly navigate through this document

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statements on Form S-8 (File Nos. 33-61752, 33-80918, 33-86940, 33-93088, 333-50774, 333-50776, 333-77233, 333-111498, 333-123233, 333-123234 and 333-153337), on Form S-4 (File No. 333-115419), and on Form S-3 (File No. 333-115810) of Isle of Capri Casinos, Inc. of our reports dated June 22, 2009, with respect to the consolidated financial statements and schedule of Isle of Capri Casinos, Inc., and the effectiveness of internal control over financial reporting, of Isle of Capri Casinos, Inc. included in this Annual Report (Form 10-K) for the fiscal year ended April 26, 2009.

/s/ Ernst & Young LLP
St. Louis, Missouri
June 22, 2009

QuickLinks

Exhibit 23.1

QuickLinks -- Click here to rapidly navigate through this document

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13A-14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934

I, James B. Perry, Chief Executive Officer of Isle of Capri Casinos, Inc., certify that:

1.

I have reviewed this annual report on Form 10-K of Isle of Capri Casinos, Inc.;

2.

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

3.

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

4.

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

(a): Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b): Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c): Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d): Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's first fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

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

(a): All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b): Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


Date: June 24, 2009		/s/ JAMES B. PERRY James B. Perry Chief Executive Officer

QuickLinks

Exhibit 31.1

QuickLinks -- Click here to rapidly navigate through this document

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13A-14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934

I, Dale R. Black, Chief Financial Officer of Isle of Capri Casinos, Inc., certify that:

1.

I have reviewed this annual report on Form 10-K of Isle of Capri Casinos, Inc.;

2.

3.

4.

(a): Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b): Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c): Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d): Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's first fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

(a): All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b): Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


Date: June 24, 2009		/s/ DALE R. BLACK Dale R. Black Chief Financial Officer

QuickLinks

Exhibit 31.2

QuickLinks -- Click here to rapidly navigate through this document

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. SECTION 1350)

In connection with the Annual Report of Isle of Capri Casinos, Inc. (the "Company") on Form 10-K for the period ended April 26, 2009, as filed with the Securities and Exchange Commission on the date hereof (the "Annual Report"), I, James B. Perry, Chief Executive Officer of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), that:

(1): The Annual Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and
(2): The information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operation of the Company.


Date: June 24, 2009		/s/ JAMES B. PERRY James B. Perry Chief Executive Officer

QuickLinks

Exhibit 32.1

QuickLinks -- Click here to rapidly navigate through this document

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. SECTION 1350)

In connection with the Annual Report of Isle of Capri Casinos, Inc. (the "Company") on Form 10-K for the period ended April 26, 2009 as filed with the Securities and Exchange Commission on the date hereof (the "Annual Report"), I, Dale R. Black, Chief Financial Officer of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), that:

(1): The Annual Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and
(2): The information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operation of the Company.


Date: June 24, 2009		/s/ DALE R. BLACK Dale R. Black Chief Financial Officer

QuickLinks

Exhibit 32.2

Exhibit 99.1

DESCRIPTION OF GOVERNMENT REGULATIONS

The ownership and operation of casino gaming facilities are subject to extensive state and local regulations. We are required to obtain and maintain gaming licenses in each of the jurisdictions in which we conduct gaming. The limitation, conditioning or suspension of gaming licenses could (and the revocation or non-renewal of gaming licenses, or the failure to reauthorize gaming in certain jurisdictions, would) materially adversely affect our operation in that jurisdiction. In addition, changes in law that restrict or prohibit our gaming operations in any jurisdiction could have a material adverse effect on us.

Louisiana

In July 1991, Louisiana enacted legislation permitting certain types of gaming activity on certain rivers and waterways in Louisiana. The legislation granted authority to supervise riverboat gaming activities to the Louisiana Riverboat Gaming Commission and the Riverboat Gaming Enforcement Division of the Louisiana State Police. The Louisiana Riverboat Gaming Commission was authorized to hear and determine all appeals relative to the granting, suspension, revocation, condition or renewal of all licenses, permits and applications. In addition, the Louisiana Riverboat Gaming Commission established regulations concerning authorized routes, duration of excursions, minimum levels of insurance, construction of riverboats and periodic inspections. The Riverboat Gaming Enforcement Division of the Louisiana State Police was authorized to investigate applicants and issue licenses, investigate violations of the statute and conduct continuing reviews of gaming activities.

In May 1996, regulatory oversight of riverboat gaming was transferred to the Louisiana Gaming Control Board, which is comprised of nine voting members appointed by the governor. The Louisiana Gaming Control Board now oversees all licensing matters for riverboat casinos, land-based casinos, racinos, video poker and certain aspects of Native American gaming other than those responsibilities reserved to the Louisiana State Police.

The Louisiana Gaming Control Board is empowered to issue up to 15 licenses to conduct gaming activities on a riverboat in accordance with applicable law. However, no more than six licenses may be granted to riverboats operating from any one designated waterway.

The Louisiana State Police continues to be involved broadly in gaming enforcement and reports to the Louisiana Gaming Control Board. Louisiana law permits the Louisiana State Police, among other things, to continue to (1) conduct suitability investigations, (2) audit, investigate and enforce compliance with standing regulations, (3) initiate enforcement and administrative actions and (4) perform “all other duties and functions necessary for the efficient, efficacious, and thorough regulation and control of gaming activities and operations” under the Louisiana Gaming Control Board’s jurisdiction.

Louisiana gaming law specifies certain restrictions relating to the operation of riverboat gaming, including the following:

· agents of the Louisiana State Police are permitted on board at any time during gaming operations;

· gaming devices, equipment and supplies may only be purchased or leased from permitted suppliers and, with respect to gaming equipment, from permitted manufacturers;

· gaming may only take place in the designated gaming area while the riverboat is docked on a designated river or waterway;

· gaming equipment may not be possessed, maintained or exhibited by any person on a riverboat except in the specifically designated gaming area or in a secure area used for inspection, repair or storage of such equipment;

· wagers may be received only from a person present on a licensed riverboat;

· persons under 21 are not permitted in designated gaming areas;

· except for slot machine play, wagers may be made only with tokens, chips or electronic cards purchased from the licensee aboard a riverboat;

· licensees may only use docking facilities and routes for which they are licensed and may only board and discharge passengers at the riverboat’s licensed berth;

· licensees must have adequate protection and indemnity insurance;

· licensees must have all necessary federal and state licenses, certificates and other regulatory approvals prior to operating a riverboat; and

· gaming may only be conducted in accordance with the terms of the license and Louisiana law.

To receive a gaming license in Louisiana, an applicant must be found to be a person of good character, honesty and integrity and a person whose prior activities, criminal record, if any, reputation, habits and associations do not (1) pose a threat to the public interest of the State of Louisiana or to the effective regulation and control of gaming or (2) create or enhance the dangers of unsuitable, unfair or illegal practices, methods and activities in the conduct of gaming or the carrying on of business and financial arrangements of gaming activities. In addition, the Louisiana Gaming Control Board will not grant a license unless it finds that, among other things:

· the applicant can demonstrate the capability, either through training, education, business experience or a combination of the preceding, to operate a gaming operation;

· the proposed financing of the riverboat and the gaming operations is adequate for the nature of the proposed operation and is from a suitable and acceptable source;

· the applicant demonstrates a proven ability to operate a vessel of comparable size, capacity and complexity to a riverboat so as to ensure the safety of its passengers;

· the applicant submits with its application for a license a detailed plan of design of the riverboat;

· the applicant designates the docking facilities to be used by the riverboat;

· the applicant shows adequate financial ability to construct and maintain a riverboat; and

· the applicant has a good faith plan to recruit, train and upgrade minorities in all employment classifications.

An initial license to conduct riverboat gaming operations is valid for a term of five years and legislation passed in the 1999 legislative session provides for renewals every five years thereafter. Louisiana gaming law provides that a renewal application for the period succeeding the initial five-year term of an operator’s license must be made to the Louisiana Gaming Control Board and must include a statement under oath of any and all changes in information, including financial information, provided in the previous application. The transfer of a license or an interest in a license is prohibited. A gaming license is deemed to be a privilege under Louisiana law and, as such, may be denied, revoked, suspended, conditioned or limited at any time by the Louisiana Gaming Control Board. The Isle-Lake Charles received its first five-year renewal of its licenses on July 20, 1999 and received its second five-year renewal of its two licenses on March 29, 2005.

On March 24, 2009, the Isle-Lake Charles filed an application for a third five-year renewal of its two licenses. The two five-year renewal applications are presently pending approval.

Certain persons affiliated with a riverboat gaming licensee, including directors and officers of the licensee, directors and officers of any holding company of the licensee involved in gaming operations, persons holding 5% or greater interests in the licensee and persons exercising influence over a licensee, are subject to the application and suitability requirements of Louisiana gaming law.

The sale, purchase, assignment, transfer, pledge or other hypothecation, lease, disposition or acquisition by any person of securities that represent 5% or more of the total outstanding shares issued by a licensee is subject to the approval of the Louisiana Gaming Control Board. A security issued by a licensee must generally disclose these restrictions. Prior approval from the Louisiana Gaming Control Board is required for the sale, purchase, assignment, transfer, pledge or other hypothecation, lease, disposition or acquisition of any ownership interest of 5% or more of any non-corporate licensee or for the transfer of any “economic interest” of 5% or more of any licensee or affiliated gaming person. An “economic interest” is defined as any interest whereby a person receives or is entitled to receive, by agreement or otherwise, a profit, gain, thing of value, loan, credit, security interest, ownership interest or other benefit.

Fees payable to the state for conducting gaming activities on a riverboat include (1) $50,000 per riverboat for the first year of operation and $100,000 per year per riverboat thereafter, plus (2) 18.5% of net gaming proceeds. Legislation was passed during the 2001 legislative session that allowed those riverboats that had been required to conduct cruises, including the riverboats at the Isle-Lake Charles, to remain permanently dockside beginning April 1, 2001. The legislation also increased the gaming tax for operators from 18.5% to 21.5%. A statute also authorizes local governing authorities to levy boarding fees. We currently have development agreements in Lake Charles with certain local governing authorities in the jurisdictions in which we operate pursuant to which we make payments in lieu of boarding fees.

A licensee must notify and/or seek approval from the Louisiana Gaming Control Board in connection with any withdrawals of capital, loans, advances or distributions in excess of 5% of retained earnings for a corporate licensee, or of capital accounts for a partnership or limited liability company licensee, upon completion of any such transaction. The Louisiana Gaming Control Board may issue an emergency order for not more than ten days prohibiting payment of profits, income or accruals by, or investments in, a licensee. Unless excepted or waived by the Louisiana Gaming Control Board, riverboat gaming licensees and their affiliated gaming persons must notify the Louisiana Gaming Control Board 60 days prior to the receipt by any such persons of any loans or extensions of credit or modifications thereof. The Louisiana Gaming Control Board is required to investigate the reported loan, extension of credit or modification thereof and to determine whether an exemption exists on the requirement of prior written approval and, if such exemption is not applicable, to either approve or disapprove the transaction. If the Louisiana Gaming Control Board disapproves of a transaction, the transaction cannot be entered into by the licensee or affiliated gaming person. We are an affiliated gaming person of our subsidiaries that hold the licenses to conduct riverboat gaming at the Isle-Lake Charles.

The failure of a licensee to comply with the requirements set forth above may result in the suspension or revocation of that licensee’s gaming license. Additionally, if the Louisiana Gaming Control Board finds that the individual owner or holder of a security of a corporate license or intermediary company or any person with an economic interest in a licensee is not qualified under Louisiana law, the Louisiana Gaming Control Board may require, under penalty of suspension or revocation of the license, that the person not:

· receive dividends or interest on securities of the corporation;

· exercise directly or indirectly a right conferred by securities of the corporation;

· receive remuneration or economic benefit from the licensee;

· exercise significant influence over activities of the licensee; or

· continue its ownership or economic interest in the licensee.

A licensee must periodically report the following information to the Louisiana Gaming Control Board, which is not confidential and is available for public inspection: (1) the licensee’s net gaming proceeds from all authorized games, (2) the amount of net gaming proceeds tax paid and (3) all quarterly and annual financial statements presenting historical data, including annual financial statements that have been audited by an independent certified public auditor.

During the 1996 special session of the Louisiana legislature, legislation was enacted placing on the ballot for a statewide election a constitutional amendment limiting the expansion of gaming, which was

subsequently passed by the voters. As a result, local option elections are required before new or additional forms of gaming can be brought into a parish.

Proposals to amend or supplement Louisiana’s riverboat gaming statute are frequently introduced in the Louisiana State Legislature. There is no assurance that changes in Louisiana gaming law will not occur or that such changes will not have a material adverse effect on our business in Louisiana.

In July 2006, the subsidiary that held the Company’s license to operate a riverboat in Bossier City transferred its license to an unrelated third party.

Mississippi

In June 1990, Mississippi enacted legislation legalizing dockside casino gaming for counties along the Mississippi River, which is the western border for most of the state, and the Gulf Coast, which is the southern border for most of the state. The legislation gave each of those counties the opportunity to hold a referendum on whether to allow dockside casino gaming within its boundaries.

In its 2005 regular session, the legislature amended Mississippi law to allow gaming to be conducted on vessels or cruise vessels placed upon permanent structures located on, in or above the Mississippi River, on, in or above navigable waters in eligible counties along the Mississippi River or on, in or above the waters lying south of the counties along the Mississippi Gulf Coast. Later, after Hurricane Katrina, the Mississippi legislature again amended the law to allow land-based gaming along the Gulf Coast in very limited circumstances. Mississippi law permits unlimited stakes gaming, on a 24-hour basis and does not restrict the percentage of space that may be utilized for gaming. There are no limitations on the number of gaming licenses that may be issued in Mississippi.

The ownership and operation of gaming facilities in Mississippi are subject to extensive state and local regulation intended to:

· prevent unsavory or unsuitable persons from having any direct or indirect involvement with gaming at any time or in any capacity;

· establish and maintain responsible accounting practices and procedures for gaming operations;

· maintain effective control over the financial practices of licensees, including establishing minimum procedures for internal fiscal affairs and safeguarding of assets and revenues, providing reliable record keeping and making periodic reports;

· provide a source of state and local revenues through taxation and licensing fees;

· prevent cheating and fraudulent practices; and

· ensure that gaming licensees, to the extent practicable, employ Mississippi residents.

State gaming regulations are subject to amendment and interpretation by the Mississippi Gaming Commission. Changes in Mississippi laws or regulations may limit or otherwise materially affect the types of gaming that may be conducted in Mississippi and such changes, if enacted, could have an adverse effect on us and our Mississippi gaming operations.

We are registered as a publicly traded corporation under the Mississippi Gaming Control Act. Our gaming operations in Mississippi are subject to regulatory control by the Mississippi Gaming Commission, the State Tax Commission and various other local, city and county regulatory agencies (collectively referred to as the “Mississippi Gaming Authorities”). Our subsidiaries have obtained gaming licenses from the Mississippi Gaming Authorities. We must obtain a waiver from the Mississippi Gaming Commission before beginning certain proposed gaming operations outside of Mississippi, and we must notify the Mississippi Gaming Commission in writing within 30 days after commencing certain gaming operations outside the state. The licenses held by our Mississippi gaming operations have terms of three years and are not transferable. The Isle-Biloxi, the Isle-Natchez and the Isle-Lula hold licenses effective from May 23,

2009, through May 22, 2012. In addition, our wholly-owned subsidiary, IOC Manufacturing, Inc. holds a manufacturer and distributor’s license, so that we may perform certain upgrades to our Mississippi player tracking system. This license has a term of three years, is effective from June 16, 2008 through June 15, 2011, and is not transferable. There is no assurance that new licenses can be obtained at the end of each three-year period of a license. Moreover, the Mississippi Gaming Commission may, at any time, and for any cause it deems reasonable, revoke, suspend, condition, limit or restrict a license or approval to own shares of stock in our subsidiaries that operate in Mississippi.

Substantial fines for each violation of Mississippi’s gaming laws or regulations may be levied against us, our subsidiaries and the persons involved. Disciplinary action against us or one of our subsidiary gaming licensees in any jurisdiction may lead to disciplinary action against us or any of our subsidiary licensees in Mississippi, including, but not limited to, the revocation or suspension of any such subsidiary gaming license.

We, along with each of our Mississippi gaming subsidiaries, must periodically submit detailed financial, operating and other reports to the Mississippi Gaming Commission and/or the State Tax Commission. Numerous transactions, including but not limited to substantially all loans, leases, sales of securities and similar financing transactions entered into by any of our Mississippi gaming subsidiaries must be reported to or approved by the Mississippi Gaming Commission. In addition, the Mississippi Gaming Commission may, at its discretion, require additional information about our operations.

Certain of our officers and employees and the officers, directors and certain key employees of our Mississippi gaming subsidiaries must be found suitable or be licensed by the Mississippi Gaming Commission. We believe that all required findings of suitability and key employee licenses related to all of our Mississippi properties have been applied for or obtained, although the Mississippi Gaming Commission at its discretion may require additional persons to file applications for findings of suitability or key employee licenses. In addition, any person having a material relationship or involvement with us may be required to be found suitable or licensed, in which case those persons must pay the costs and fees associated with such investigation. The Mississippi Gaming Commission may deny an application for a finding of suitability for any cause that it deems reasonable. Changes in certain licensed positions must be reported to the Mississippi Gaming Commission. In addition to its authority to deny an application for a finding of suitability, the Mississippi Gaming Commission has jurisdiction to disapprove a change in a licensed position. The Mississippi Gaming Commission has the power to require us and any of our Mississippi gaming subsidiaries to suspend or dismiss officers, directors and other key employees or to sever relationships with other persons who refuse to file appropriate applications or who the authorities find unsuitable to act in such capacities.

Employees associated with gaming must obtain work permits that are subject to immediate suspension under certain circumstances. The Mississippi Gaming Commission will refuse to issue a work permit to a person who has been convicted of a felony, committed certain misdemeanors or knowingly violated the Mississippi Gaming Control Act, and it may refuse to issue a work permit to a gaming employee for any other reasonable cause.

At any time, the Mississippi Gaming Commission has the power to investigate and require the finding of suitability of any record or beneficial stockholder of ours. The Mississippi Gaming Control Act requires any person who individually or in association with others acquires, directly or indirectly, beneficial ownership of more than 5% of our common stock to report the acquisition to the Mississippi Gaming Commission, and such person may be required to be found suitable. In addition, the Mississippi Gaming Control Act requires any person who, individually or in association with others, becomes, directly or indirectly, a beneficial owner of more than 10% of our common stock, as reported to the U.S. Securities and Exchange Commission, to apply for a finding of suitability by the Mississippi Gaming Commission and pay the costs and fees that the Mississippi Gaming Commission incurs in conducting the investigation.

The Mississippi Gaming Commission has generally exercised its discretion to require a finding of suitability of any beneficial owner of more than 5% of a registered publicly traded corporation’s stock. However, the Mississippi Gaming Commission has adopted a regulation that may permit certain

“institutional” investors to obtain waivers that allow them to beneficially own, directly or indirectly, up to 15% (19% in certain specific instances) of the voting securities of a registered publicly traded corporation without a finding of suitability. If a stockholder who must be found suitable is a corporation, partnership or trust, it must submit detailed business and financial information, including a list of beneficial owners.

Any 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 Mississippi Gaming Commission may be found unsuitable. We believe that compliance by us with the licensing procedures and regulatory requirements of the Mississippi Gaming Commission will not affect the marketability of our securities. Any person found unsuitable who holds, directly or indirectly, any beneficial ownership of our securities beyond such time as the Mississippi Gaming Commission prescribes may be guilty of a misdemeanor. We are subject to disciplinary action if, after receiving notice that a person is unsuitable to be a stockholder or to have any other relationship with us or our subsidiaries operating casinos in Mississippi, we:

· pay the unsuitable person any dividend or other distribution upon its voting securities;

· recognize the exercise, directly or indirectly, of any voting rights conferred by its securities;

· 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 itself of the securities, including, if necessary, our immediate purchase of the securities for cash at a fair market value.

We may be required to disclose to the Mississippi Gaming Commission upon request the identities of the holders of any of our debt securities. In addition, under the Mississippi Gaming Control Act, the Mississippi Gaming Commission may, in its discretion, (1) require holders of our securities, including our notes, to file applications, (2) investigate such holders and (3) require such holders to be found suitable to own such securities. Although the Mississippi Gaming Commission generally does not require the individual holders of obligations such as the notes to be investigated and found suitable, the Mississippi Gaming Commission retains the discretion to do so for any reason, including but not limited to a default, or where the holder of the debt instrument exercises a material influence over the gaming operations of the entity in question. Any holder of debt securities required to apply for a finding of suitability must pay all investigative fees and costs of the Mississippi Gaming Commission in connection with such an investigation.

The Mississippi regulations provide that a change in control of us may not occur without the prior approval of the Mississippi Gaming Commission. Mississippi law prohibits us from making a public offering of our securities without the approval of the Mississippi Gaming Commission if any part of the proceeds of the offering is to be used to finance the construction, acquisition or operation of gaming facilities in Mississippi, or to retire or extend obligations incurred for one or more such purposes. The Mississippi Gaming Commission has the authority to grant a continuous approval of securities offerings and has granted such approval to us, subject to renewal every three years.

Regulations of the Mississippi Gaming Commission prohibit certain repurchases of securities of publicly traded corporations registered with the Mississippi Gaming Commission, including holding companies such as ours, without prior approval of the Mississippi Gaming Commission. Transactions covered by these regulations are generally aimed at discouraging repurchases of securities at a premium over market price from certain holders of greater than 3% of the outstanding securities of the registered publicly traded corporation. The regulations of the Mississippi Gaming Commission also require prior approval for a “plan of recapitalization” as defined in such regulations.

We must maintain in the State of Mississippi current stock ledgers, which may be examined by the Mississippi Gaming Authorities at any time. If any securities are held in trust by an agent or by a nominee, the record holder may be required to disclose the identity of the beneficial owner to the Mississippi Gaming Authorities. A failure to make such disclosure may be grounds for finding the record holder unsuitable. We must render maximum assistance in determining the identity of the beneficial owner.

Mississippi law requires that certificates representing shares of our common stock bear a legend to the general effect that the securities are subject to the Mississippi Gaming Control Act and regulations of the Mississippi Gaming Commission. The Mississippi Gaming Commission has the authority to grant a waiver from the legend requirement, which we have obtained. The Mississippi Gaming Commission, through the power to regulate licenses, has the power to impose additional restrictions on the holders of our securities at any time.

The Mississippi Gaming Commission enacted a regulation in 1994 requiring that, as a condition to licensure, an applicant must provide a plan to develop infrastructure facilities amounting to 25% of the cost of the casino and a parking facility capable of accommodating 500 cars. In 1999, the Mississippi Gaming Commission approved amendments to this regulation that increased the infrastructure development requirement from 25% to 100% for new casinos (or upon acquisition of a closed casino), but grandfathered existing licensees and development plans approved prior to the effective date of the new regulation. “Infrastructure facilities” include any of the following:

· a 250-room or larger hotel of at least a two-star rating as defined by the current edition of the Mobil Travel Guide;

· theme parks;

· golf courses;

· marinas;

· entertainment facilities;

· tennis complexes; or

· any other facilities approved by the Mississippi Gaming Commission.

Parking facilities, roads, sewage and water systems or civic facilities are not considered “infrastructure facilities.” The Mississippi Gaming Commission may reduce the number of rooms required in a hotel if it is satisfied that sufficient rooms are available to accommodate the anticipated number of visitors. In 2003 and in 2006, the Mississippi Gaming Commission again amended its regulation regarding development plan approval but left the 100% infrastructure requirement intact. In 2007, the Mississippi Gaming Commission further amended this regulation. Among other things, the 2007 amendment retained the 100% infrastructure requirement and added a requirement that the qualified infrastructure be owned or leased by certain specified persons.

License fees and taxes are payable to the State of Mississippi and to the counties and cities in which a Mississippi gaming subsidiary’s respective operations will be conducted. The license fee payable to the state of Mississippi is based upon gross revenue of the licensee (generally defined as gaming receipts less payout to customers as winnings) and equals 4% of gross revenue of $50,000 or less per month, 6% of gross revenue in excess of $50,000 but less than $134,000 per calendar month, and 8% of gross revenue in excess of $134,000 per calendar month. The foregoing license fees are allowed as a credit against the licensee’s Mississippi income tax liability for the year paid. Additionally, a licensee must pay a $5,000 annual license fee and an annual fee based upon the number of games it operates. The gross revenue tax imposed by the Mississippi communities and counties in which our casino operations are located equals 0.4% of gross revenue of $50,000 or less per calendar month, 0.6% of gross revenue over $50,000 and less than $134,000 per calendar month and 0.8% of gross revenue greater than $134,000 per calendar month. These fees have been imposed in, among other cities and counties, Biloxi and Coahoma County. Certain local and private laws of the state of Mississippi may impose fees or taxes on the Mississippi gaming subsidiaries in addition to the fees described above.

The Mississippi Gaming Commission requires, as a condition of licensure or license renewal, that casino vessels on the Mississippi Gulf Coast that are not self-propelled must be moored to withstand a Category 4 hurricane with 155 mile-per-hour winds and 15-foot tidal surge. However, after Hurricane Katrina, Isle - Biloxi reopened its casino on shore rather than on a vessel. A 1996 Mississippi Gaming Commission regulation prescribes the hurricane emergency procedure to be used by the Mississippi Gulf Coast casinos.

The sale of food or alcoholic beverages at our Mississippi gaming locations is subject to licensing, control and regulation by the applicable state and local authorities. The agencies involved have full power to limit, condition, suspend or revoke any such license, and any such disciplinary action could (and revocation would) have a material adverse effect upon the operations of the affected casino or casinos. Certain of our officers and managers and our Mississippi gaming subsidiaries must be investigated by the Alcoholic Beverage Control Division of the State Tax Commission in connection with liquor permits that have been issued. The Alcoholic Beverage Control Division of the State Tax Commission must approve all changes in licensed positions.

On three separate occasions since 1998, certain anti-gaming groups have proposed referenda that, if adopted, would have banned gaming in Mississippi and required that gaming entities cease operations within two years after the ban. All three referenda were declared invalid by Mississippi courts because each lacked a required government revenue impact statement.

Missouri

Conducting gambling activities and operating an excursion gambling boat in Missouri are subject to extensive regulation under Missouri’s Riverboat Gambling Act and the rules and regulations promulgated thereunder. The Missouri Gaming Commission was created by the Missouri Riverboat Gambling Act and is charged with regulatory authority over riverboat gaming operations in Missouri, including the issuance of riverboat gaming licenses to owners, operators, suppliers and certain affiliates of riverboat gaming facilities. In June 2000, IOC-Kansas City, Inc., a subsidiary of ours, was issued a riverboat gaming license in connection with our Kansas City operation. In December 2001, IOC-Boonville, Inc., a subsidiary of ours, was issued a riverboat gaming license for our Boonville operation. Additionally, in June of 2007, IOC-Caruthersville, LLC f/k/a Aztar Missouri Riverboat Gaming Company, LLC was acquired by us and operates as a subsidiary of ours under a Missouri riverboat gaming license.

In order to obtain a license to operate a riverboat gaming facility, the proposed operating business entity must complete a Riverboat Gaming Application, Form requesting a Class B License. In order to obtain a license to own and/or control a riverboat gaming facility as its ultimate holding company, the proposed parent company must complete a Riverboat Gaming Application Form requesting a Class A License. The Riverboat Gaming Application Form is comprised of comprehensive application forms, including corroborating attachments. Applicants who submit the Riverboat Gaming Application Form requesting either a Class A or Class B license undergo an extensive background investigation by the Missouri Gaming Commission. In addition, each key person associated with the applicant (including directors, officers, managers and owners of a significant direct or indirect interest in the Class A or Class B applicant) must complete a Key Person and Level I Application Form I and undergo a substantial background investigation. Certain key business entities closely related to the applicant or “key person business entities” must undergo a similar application process and background check. An applicant for a Class A or Class B license will not receive a license if the applicant and its key persons, including key person business entities, have not established good repute and moral character and no licensee shall either employ or contract with any person who has pled guilty to, or been convicted of, a felony, to perform any duties directly connected with the licensee’s privileges under a license granted by the Missouri Gaming Commission.

Each Class B license granted entitles a licensee to conduct gambling activities on an excursion gambling boat or to operate an excursion gambling boat and the equipment thereon from a specific location. Each Class A license granted entitles the licensee to develop and operate a Class B licensee or, if authorized, multiple Class B licensees. The duration of both the Class A and Class B license initially runs for two one-year terms; thereafter, two-year terms. In conjunction with the renewal of each license, the Missouri Gaming Commission requires an updated Riverboat Gaming Application Form and renewal fees. In conjunction with each renewal, the Commission may conduct an additional investigation of the licensee with specific emphasis on new information provided in the updated Riverboat Gaming Application Form. Each sixth year from the date of the original license a comprehensive investigation for the period since the last comprehensive investigation is conducted on the Class A, Class B, supplier and key person licensees in the same manner as the initial investigation. The Commission also licenses the serving of alcoholic beverages on riverboats and related facilities.

In determining whether to grant a license, the Commission considers the following factors, among others: (i) the integrity of the applicants; (ii) the types and variety of games the applicant may offer; (iii) the quality of the physical facility, together with improvements and equipment, and how soon the project will be completed; (iv) the financial ability of the applicant to develop and operate the facility successfully; (v) the status of governmental actions required by the facility; (vi) management ability of the applicant; (vii) compliance with applicable statutes, rules, charters and ordinances; (viii) the economic, ecological and social impact of the facility as well as the cost of public improvements; (ix) the extent of public support or opposition; (x) the plan adopted by the home dock city or county; and (xi) effects on competition.

A licensee is subject to the imposition of penalties, suspension or revocation of its license for any act that is injurious to the public health, safety, morals, good order, and general welfare of the people of the State of Missouri, or that would discredit or tend to discredit the Missouri gaming industry or the State of Missouri, including without limitation: (i) failing to comply with or make provision for compliance with the legislation, the rules promulgated thereunder or any federal, state or local law or regulation; (ii) failing to comply with any rules, order or ruling of the Missouri Gaming Commission or its agents pertaining to gaming; (iii) receiving goods or services from a person or business entity who does not hold a supplier’s license but who is required to hold such license by the legislation or the rules; (iv) being suspended or ruled ineligible or having a license revoked or suspended in any state or gaming jurisdiction; (v) associating with, either socially or in business affairs, or employing persons of notorious or unsavory reputation or who have extensive police records, or who have failed to cooperate with any officially constituted investigatory or administrative body and would adversely affect public confidence and trust in gaming; (vi) employing in any Missouri gaming operation any person known to have been found guilty of cheating or using any improper device in connection with any gambling game; (vii) use of fraud, deception, misrepresentation or bribery in securing any license or permit issued pursuant to the legislation; (viii) obtaining any fee, charge, or other compensation by fraud, deception or misrepresentation; and (ix) incompetence, misconduct, gross negligence, fraud, misrepresentation or dishonesty in the performance of the functions or duties regulated by the Missouri Riverboat Gambling Act.

Any transfer or issuance of ownership interest in a publicly held gaming licensee or its holding company that results in an entity owning, directly or indirectly, an aggregate ownership interest of 5% or more in the gaming licensee must be reported to the Missouri Gaming Commission within seven days. Further, any pledge or hypothecation of 5% or more of the ownership interest in a publicly held gaming licensee or its holding company must be reported to the Missouri Gaming Commission within seven days. The Missouri Gaming Commission will impose certain licensing requirements upon a holder of an aggregate ownership interest of 5% or more in a Missouri Class A or Class B licensee, unless such holder applies for and obtains an institutional investor exemption in accordance with the Missouri gaming regulations.

Every employee participating in a riverboat gaming operation must hold an occupational license. In addition, the Missouri Gaming Commission issues supplier’s licenses, which authorize the supplier licensee to sell or lease gaming equipment and supplies to any licensee involved in the operation of gaming activities. Class A and Class B licensees may not be licensed as suppliers.

Riverboat gaming activities may only be conducted on, or within 1,000 feet of the main channel of, the Missouri River or Mississippi River. Although, all of the excursion gambling facilities in Missouri are permanently moored boats or impounded barges, a two hour simulated cruise is imposed in order to ensure the enforcement of loss limit restrictions. Missouri law imposes a maximum loss per person per cruise of $500. Minimum and maximum wagers on games are set by the licensee and wagering may be conducted only with a cashless wagering system, whereby money is converted to tokens, electronic cards or chips that can only be used for wagering. No person under the age of 21 is permitted to wager, and wagers may only be taken from a person present on a licensed excursion gambling boat.

The Missouri Riverboat Gambling Act imposes a 20% wagering tax on adjusted gross receipts (generally defined as gross receipts less winnings paid to wagerers) from gambling games. The tax imposed is to be paid by the licensee to the Commission on the day after the day when the wagers were made. Of the

proceeds of that tax, 10% goes to the local government where the home dock is located, and the remainder goes to the State of Missouri.

The Missouri Riverboat Gambling Act also requires that licensees pay a $2.00 admission tax to the Missouri Gaming Commission for each person admitted to a gaming cruise. One dollar of the admission fee goes to the state and one dollar goes to the home dock city in which the licensee operates. The licensee is required to maintain public books and records clearly showing amounts received from admission fees, the total amount of gross receipts and the total amount of adjusted gross receipts. In addition, all local income, earnings, use, property and sales taxes are applicable to licensees. There have been from time to time pending before the Missouri General Assembly several proposed bills which individually or in combination would, if adopted, (1) remove the loss limit restriction, (2) adjust the amount of wagering tax imposed on adjusted gross receipts of licensees and/or (3) adjust the amount of admission tax paid by the licensee for each person admitted for a gaming cruise.

Iowa

In 1989, the State of Iowa legalized riverboat gaming on the Mississippi River and other waterways located in Iowa. The legislation authorized the granting of licenses to non-profit corporations that, in turn, are permitted to enter into operating agreements with qualified persons who also actually conduct riverboat gaming operations. Such operators must likewise be approved and licensed by the Iowa Racing and Gaming Commission (the “Iowa Gaming Commission”).

The Isle-Bettendorf has the right to renew its operator’s contract with the Scott County Regional Authority, a non-profit corporation organized for the purpose of facilitating riverboat gaming in Bettendorf, Iowa, for succeeding three-year periods as long as Scott County voters approve gaming in the jurisdiction. Under the operator’s contract, the Isle-Bettendorf pays the Scott County Regional Authority a fee equal to 4.1% of the adjusted gross receipts. Further, the Isle-Bettendorf pays a fee to the City of Bettendorf equal to 1.65% of adjusted gross receipts.

In June 1994, Upper Mississippi Gaming Corporation, a non-profit corporation organized for the purpose of facilitating riverboat gaming in Marquette, Iowa, entered into an operator’s agreement for the Isle-Marquette for a period of twenty-five years. Under the management agreement, the non-profit organization is to be paid a fee of $0.50 per passenger. Further, pursuant to a dock site agreement (which also has a term of twenty-five years), the Isle-Marquette is required to pay a fee to the City of Marquette in the amount of $1.00 per passenger, plus a fixed amount of $15,000 per month and 2.5% of gaming revenues (less state wagering taxes) in excess of $20.0 million but less than $40.0 million; 5% of gaming revenues (less state wagering taxes) in excess of $40.0 million but less than $60.0 million; and 7.5% of gaming revenues (less state wagering taxes) in excess of $60.0 million.

In October 2000, the Riverboat Development Authority, a non-profit corporation entered into an operator’s agreement with the Isle-Davenport to conduct riverboat gaming in Davenport, Iowa. The operating agreement was amended in June 2009 pending approval of the Iowa Racing and Gaming Commission. The operating agreement requires the Isle-Davenport to make weekly payments to the qualified sponsoring organization equal to 4.1% of each week’s adjusted gross receipts (as defined in the enabling legislation). Further, the Isle-Davenport has agreed that the Riverboat Development Authority will be paid at least the minimum amount of $2,000,000, which minimum is subject to certain termination events (i.e. increase in the number of area casinos or suspension of Isle-Davenport’s right under its leases with the City of Davenport or any city permits for more than 30 days) and an appropriate negotiated reduction should the casino’s gaming floor lose its current smoking ban exemption. Subject to Iowa Gaming Commission approval, this agreement will remain in effect through March 31, 2019, provided that as long as Isle-Davenport has substantially complied with the agreement, gaming laws and regulations and the parties’ gaming license is renewed and in effect, the agreement will automatically renew on an annual basis for successive one-year terms. In addition, the Isle-Davenport pays a docking fee, admission fee, gaming tax and a payment in lieu of taxes to the City of Davenport. Pursuant to a development agreement with the City, the Isle-Davenport has exclusive docking privileges in the City of Davenport until March 31, 2017 in consideration for this docking fee. The docking fee has both a fixed base and a per passenger increment. The fixed fee commenced April 1, 1994 at $111,759 and increases annually by 4%. The incremental component is a $0.10 charge for each passenger in excess of 1,117,579 passengers (which charge also increases by 4% per year). The City is also guaranteed an annual gaming tax of $558,789.50 per year

(based on a minimum passenger floor count of 1,117,579 passengers at $0.50 per passenger). In lieu of the foregoing the Isle-Davenport is currently paying the City of Davenport a fee of 1.65% of adjusted gross receipts. Finally, the Isle-Davenport is obligated to pay a payment in lieu of taxes to support the downtown development district. This annual lump sum payment is in the amount of $123,516 plus $0.20 per passenger in excess of 1,117,579 passengers. This payment in lieu of taxes is further subject to a minimum $226,179 per year payment.

In November 2004, the Black Hawk County Gaming Association, a non-profit corporation organized for the purpose of facilitating riverboat gaming in Waterloo, Iowa entered into an operator’s agreement with the Isle-Waterloo to conduct riverboat gaming in Waterloo, Iowa. The operating agreement requires that upon commencement of operations the Isle-Waterloo is to make weekly payments to the qualified sponsoring organization equal to 4.1% of each week’s adjusted gross receipts and an additional fee of 1.65% of each week’s adjusted gross receipts in lieu of any admission or docking fee which might otherwise be charged by the county or any city (as defined in Section 99F.1(1) of the Iowa Code). This agreement will remain in effect through March 31, 2015 and may be extended by the Isle-Waterloo so long as it holds a license to conduct gaming. In addition, the Isle-Waterloo has agreed to pay a development fee to the City. Pursuant to an admission fee administration and development agreement with the City and Black Hawk County Gaming Association the Isle-Waterloo shall pay a development fee equal to 1% of each week’s adjusted gross receipts.

Iowa law permits gaming licensees to offer unlimited stakes gaming on games approved by the Iowa Gaming Commission on a 24-hour basis. Land-based casino gaming was authorized on July 1, 2007 and the Iowa Gaming Commission now permits licensees the option to operate on permanently moored vessels or approved gambling structures. The legal age for gaming is 21.

All Iowa licenses were approved for renewal at the March 5, 2009 Iowa Gaming Commission meeting. These licenses are not transferable and will need to be renewed in March 2010 and prior to the commencement of each subsequent annual renewal period.

The ownership and operation of gaming facilities in Iowa are subject to extensive state laws, regulations of the Iowa Gaming Commission and various county and municipal ordinances (collectively, the “Iowa Gaming Laws”), concerning the responsibility, financial stability and character of gaming operators and persons financially interested or involved in gaming operations. Iowa Gaming Laws seek to: (1) prevent unsavory or unsuitable persons from having direct or indirect involvement with gaming at any time or in any capacity; (2) establish and maintain responsible accounting practices and procedures; (3) maintain effective control over the financial practices of licensees (including the establishment of minimum procedures for internal fiscal affairs, the safeguarding of assets and revenues, the provision of reliable record keeping and the filing of periodic reports with the Iowa Gaming Commission); (4) prevent cheating and fraudulent practices; and (5) provide a source of state and local revenues through taxation and licensing fees. Changes in Iowa Gaming Laws could have a material adverse effect on the Iowa gaming operations.

Gaming licenses granted to individuals must be renewed every year, and licensing authorities have broad discretion with regard to such renewals. Licenses are not transferable. The Iowa gaming operations must submit detailed financial and operating reports to the Iowa Gaming Commission. Certain contracts of licensees in excess of $100,000 must be submitted to and approved by the Iowa Gaming Commission.

Certain officers, directors, managers and key employees of the Iowa gaming operations are required to be licensed by the Iowa Gaming Commission. Employees associated with gaming must obtain work permits that are subject to immediate suspension under specific circumstances. In addition, anyone having a material relationship or involvement with the Iowa gaming operations may be required to be found suitable or to be licensed, in which case those persons would be required to pay the costs and fees of the Iowa Gaming Commission in connection with the investigation. The Iowa Gaming Commission may deny an application for a license for any cause deemed reasonable. In addition to its authority to deny an application for license, the Iowa Gaming Commission has jurisdiction to disapprove a change in position by officers or key employees and the power to require the Iowa gaming operations to suspend or dismiss officers, directors or other key employees or sever relationships with other persons who refuse to file appropriate applications or whom the Iowa Gaming Commission finds unsuitable to act in such capacities.

The Iowa Gaming Commission may revoke a gaming license if the licensee:

· has been suspended from operating a gaming operation in another jurisdiction by a board or commission of that jurisdiction;

· has failed to demonstrate financial responsibility sufficient to meet adequately the requirements of the gaming enterprise;

· is not the true owner of the enterprise;

· has failed to disclose ownership of other persons in the enterprise;

· is a corporation 10% of the stock of which is subject to a contract or option to purchase at any time during the period for which the license was issued, unless the contract or option was disclosed to the Iowa Gaming Commission and the Iowa Gaming Commission approved the sale or transfer during the period of the license;

· knowingly makes a false statement of a material fact to the Iowa Gaming Commission;

· fails to meet a monetary obligation in connection with an excursion gaming boat;

· pleads guilty to, or is convicted of a felony;

· loans to any person, money or other thing of value for the purpose of permitting that person to wager on any game of chance;

· is delinquent in the payment of property taxes or other taxes or fees or a payment of any other contractual obligation or debt due or owed to a city or county; or

· assigns, grants or turns over to another person the operation of a licensed excursion boat (this provision does not prohibit assignment of a management contract approved by the Iowa Gaming Commission) or permits another person to have a share of the money received for admission to the excursion boat.

If it were determined that the Iowa Gaming Laws were violated by a licensee, the gaming licenses held by a licensee could be limited, made conditional, suspended or revoked. In addition, the licensee and the persons involved could be subject to substantial fines for each separate violation of the Iowa Gaming Laws in the discretion of the Iowa Gaming Commission. Limitations, conditioning or suspension of any gaming license could (and revocation of any gaming license would) have a material adverse effect on operations.

The Iowa Gaming Commission may also require any individual who has a material relationship with the Iowa gaming operations to be investigated and licensed or found suitable. The Iowa Gaming Commission, prior to the acquisition, must approve any person who acquires 5% or more of a licensee’s equity securities. The applicant stockholder is required to pay all costs of this investigation.

Gaming taxes approximating 22% of the adjusted gross receipts will be payable by each licensee on its operations to the State of Iowa. In addition, reimbursable assessments have been in an amount equal to 2.152% of each licensee’s adjusted gross receipts for fiscal year 2004. These assessments will be offset by future state gaming taxes paid by each licensee with a credit for 20% of the assessments paid allowed each year beginning July 1, 2010 for five consecutive years. The state of Iowa is also reimbursed by the licensees for all costs associated with monitoring and enforcement by the Iowa Gaming Commission and the Iowa Department of Criminal Investigation.

Colorado

The State of Colorado created the Division of Gaming (“Colorado Division”) within the Department of Revenue to license, implement, regulate and supervise the conduct of limited gaming under the Colorado Limited Gaming Act. The Director of the Colorado Division (“Colorado Director”), pursuant to regulations promulgated by, and subject to the review of, a five-member Colorado Limited Gaming Control Commission (“Colorado Commission”), has been granted broad power to ensure compliance with the Colorado gaming laws and regulations (collectively, the “Colorado Regulations”). The Colorado Director may inspect without notice, impound or remove any gaming device. The Colorado Director may examine and copy any licensee’s records, may investigate the background and conduct of licensees and their employees, and may bring disciplinary actions against licensees and their employees. The Colorado Director may also conduct detailed background investigations of persons who loan money to, or otherwise provide financing to, a licensee.

The Colorado Commission is empowered to issue five types of gaming and gaming-related licenses, and has delegated authority to the Colorado Director to issue certain types of licenses and approve certain

changes in ownership. The licenses are revocable and non-transferable. The failure or inability of the Isle of Capri Black Hawk, LLC (“Isle-Black Hawk”) or CCSC/Blackhawk, Inc. (“Colorado Central Station-Black Hawk”) (each, a “Colorado Casino” or collectively, the “Colorado Casinos”), or the failure or inability of others associated with any of the Colorado Casinos, including us, to maintain necessary gaming licenses or approvals would have a material adverse effect on our operations. All persons employed by any of the Colorado Casinos, and involved, directly or indirectly, in gaming operations in Colorado also are required to obtain a Colorado gaming license. All licenses must be renewed every two years. As a general rule, under the Colorado Regulations, no person may have an “ownership interest” in more than three retail gaming licenses in Colorado. The Colorado Commission has ruled that a person does not have an ownership interest in a retail gaming licensee for purposes of the multiple license prohibition if:

· that person has less than a 5% ownership interest in an institutional investor that has an ownership interest in a publicly traded licensee or publicly traded company affiliated with a licensee;

· a person has a 5% or more ownership interest in an institutional investor, but the institutional investor has less than a 5% ownership interest in a publicly traded licensee or publicly traded company affiliated with a licensee;

· an institutional investor has less than a 5% ownership interest in a publicly traded licensee or publicly traded company affiliated with a licensee;

· an institutional investor possesses voting securities in a fiduciary capacity for another person, and does not exercise voting control over 5% or more of the outstanding voting securities of a publicly traded licensee or of a publicly traded company affiliated with a licensee;

· a registered broker or dealer retains possession of voting securities of a publicly traded licensee or of a publicly traded company affiliated with a licensee for its customers and not for its own account, and exercises voting rights for less than 5% of the outstanding voting securities of a publicly traded licensee or publicly traded company affiliated with a licensee;

· a registered broker or dealer acts as a market maker for the stock of a publicly traded licensee or of a publicly traded company affiliated with a licensee and exercises voting rights in less than 5% of the outstanding voting securities of the publicly traded licensee or publicly traded company affiliated with a licensee;

· an underwriter is holding securities of a publicly traded licensee or publicly traded company affiliated with a licensee as part of an underwriting for no more than 90 days after the beginning of such underwriting if it exercises voting rights of less than 5% of the outstanding voting securities of a publicly traded licensee or publicly traded company affiliated with a licensee;

· a book entry transfer facility holds voting securities for third parties, if it exercises voting rights with respect to less than 5% of the outstanding voting securities of a publicly traded licensee or publicly traded company affiliated with a licensee; or

· a person’s sole ownership interest is less than 5% of the outstanding voting securities of the publicly traded licensee or publicly traded company affiliated with a licensee.

Because we own the Colorado Casinos, our business opportunities, and those of persons with an “ownership interest” in us, or any of the Colorado Casinos, are limited to interests that comply with the Colorado Regulations and the Colorado Commission’s rule.

In addition, pursuant to the Colorado Regulations, no manufacturer or distributor of slot machines or associated equipment may, without notification being provided to the Colorado Division within ten days, knowingly have an interest in any casino operator, allow any of its officers or any other person with a substantial interest in such business to have such an interest, employ any person if that person is employed by a casino operator, or allow any casino operator or person with a substantial interest therein to have an interest in a manufacturer’s or distributor’s business. A “substantial interest” means the lesser of (i) as large an interest in an entity as any other person or (ii) any financial or equity interest equal to or greater than 5%. The Colorado Commission has ruled that a person does not have a “substantial interest” if such person’s sole ownership interest in such licensee is through the ownership of less than 5% of the

outstanding voting securities of a publicly traded licensee or publicly traded affiliated company of a licensee.

We are a “publicly traded corporation” under the Colorado Regulations.

Under the Colorado Regulations, any person or entity having any direct or indirect interest in a gaming licensee or an applicant for a gaming license, including, but not limited to, us, Casino America of Colorado, Inc., IC Holdings Colorado, Inc., IOC Black Hawk Distribution Company, LLC or either of the two Colorado Casinos and their security holders, may be required to supply the Colorado Commission with substantial information, including, but not limited to, background information, source of funding information, a sworn statement that such person or entity is not holding his or her interest for any other party, and fingerprints. Such information, investigation and licensing (or finding of suitability) as an “associated person” automatically will be required of all persons (other than certain institutional investors discussed below) which directly or indirectly beneficially own 10% or more of a direct or indirect beneficial ownership or interest in either of the two Colorado Casinos, through their beneficial ownership of any class of voting securities of us, Casino America of Colorado, Inc., IC Holdings Colorado, Inc., IOC Black Hawk Distribution Company, LLC or either of the two Colorado Casinos. Those persons must report their interest within 10 days (including institutional investors) and file appropriate applications within 45 days after acquiring that interest (other than certain institutional investors discussed below). Persons (including institutional investors) who directly or indirectly beneficially own 5% or more (but less than 10%) of a direct or indirect beneficial ownership or interest in either of the two Colorado Casinos, through their beneficial ownership of any class of voting securities of us, Casino America of Colorado, Inc., IC Holdings Colorado, Inc., IOC Black Hawk Distribution Company, LLC or either of the two Colorado Casinos, must report their interest to the Colorado Commission within 10 days after acquiring that interest and may be required to provide additional information and to be found suitable. (It is the current practice of the gaming regulators to require findings of suitability for persons beneficially owning 5% or more of a direct or indirect beneficial ownership or interest, other than certain institutional investors discussed below.) If certain institutional investors provide specified information to the Colorado Commission within 45 days after acquiring their interest (which, under the current practice of the gaming regulators is an interest of 5% or more, directly or indirectly) and are holding for investment purposes only, those investors, in the Colorado Commission’s discretion, may be permitted to own up to 14.99% of the Colorado Casinos through their beneficial ownership in any class of voting of securities of us, Casino America of Colorado, Inc., IC Holdings Colorado, Inc., IOC Black Hawk Distribution Company, LLC or either of the two Colorado Casinos, before being required to be found suitable. All licensing and investigation fees will have to be paid by the person in question.

The Colorado Regulations define a “voting security” to be a security the holder of which is entitled to vote generally for the election of a member or members of the board of directors or board of trustees of a corporation or a comparable person or persons of another form of business organization.

The Colorado Commission also has the right to request information from any person directly or indirectly interested in, or employed by, a licensee, and to investigate the moral character, honesty, integrity, prior activities, criminal record, reputation, habits and associations of: (1) all persons licensed pursuant to the Colorado Limited Gaming Act; (2) all officers, directors and stockholders of a licensed privately held corporation; (3) all officers, directors and stockholders holding either a 5% or greater interest or a controlling interest in a licensed publicly traded corporation; (4) all general partners and all limited partners of a licensed partnership; (5) all persons that have a relationship similar to that of an officer, director or stockholder of a corporation (such as members and managers of a limited liability company); (6) all persons supplying financing or loaning money to any licensee connected with the establishment or operation of limited gaming; (7) all persons having a contract, lease or ongoing financial or business arrangement with any licensee, where such contract, lease or arrangement relates to limited gaming operations, equipment devices or premises; and (8) all persons contracting with or supplying any goods and services to the gaming regulators.

Certain public officials and employees are prohibited from having any direct or indirect interest in a license or limited gaming.

In addition, under the Colorado Regulations, every person who is a party to a “gaming contract” (as defined below) or lease with an applicant for a license, or with a licensee, upon the request of the Colorado Commission or the Colorado Director, must promptly provide the Colorado Commission or Colorado Director all information that may be requested concerning financial history, financial holdings, real and personal property ownership, interests in other companies, criminal history, personal history and associations, character, reputation in the community and all other information that might be relevant to a determination of whether a person would be suitable to be licensed by the Colorado Commission. Failure to provide all information requested constitutes sufficient grounds for the Colorado Director or the Colorado Commission to require a licensee or applicant to terminate its “gaming contract” or lease with any person who failed to provide the information requested. In addition, the Colorado Director or the Colorado Commission may require changes in “gaming contracts” before an application is approved or participation in the contract is allowed. A “gaming contract” is defined as an agreement in which a person does business with or on the premises of a licensed entity.

The Colorado Commission and the Colorado Division have interpreted the Colorado Regulations to permit the Colorado Commission to investigate and find suitable persons or entities providing financing to or acquiring securities from us, Casino America of Colorado, Inc., IC Holdings Colorado, Inc., IOC Black Hawk Distribution Company, LLC or either of the two Colorado Casinos. As noted above, any person or entity required to file information, be licensed or found suitable would be required to pay the costs thereof and of any investigation. Although the Colorado Regulations do not require the prior approval for the execution of credit facilities or issuance of debt securities, the Colorado regulators reserve the right to approve, require changes to or require the termination of any financing, including if a person or entity is required to be found suitable and is not found suitable. In any event, lenders, note holders, and others providing financing will not be able to exercise certain rights and remedies without the prior approval of the Colorado gaming authorities. Information regarding lenders and holders of securities will be periodically reported to the Colorado gaming authorities.

Except under certain limited circumstances relating to slot machine manufacturers and distributors, every person supplying goods, equipment, devices or services to any licensee in return for payment of a percentage, or calculated upon a percentage, of limited gaming activity or income must obtain an operator license or be listed on the retailer’s license where such gaming will take place.

An application for licensure or suitability may be denied for any cause deemed reasonable by the Colorado Commission or the Colorado Director, as appropriate. Specifically, the Colorado Commission and the Colorado Director must deny a license to any applicant who, among other things: (1) fails to prove by clear and convincing evidence that the applicant is qualified; (2) fails to provide information and documentation requested; (3) fails to reveal any fact material to qualification, or supplies information which is untrue or misleading as to a material fact pertaining to qualification; (4) has been convicted of, or has a director, officer, general partner, stockholder, limited partner or other person who has a financial or equity interest in the applicant who has been convicted of, specified crimes, including the service of a sentence upon conviction of a felony in a correctional facility, city or county jail, or community correctional facility or under the state board of parole or any probation department within ten years prior to the date of the application, gambling-related offenses, theft by deception or crimes involving fraud or misrepresentation, is under current prosecution for such crimes (during the pendency of which license determination may be deferred), is a career offender or a member or associate of a career offender cartel, or is a professional gambler; or (5) has refused to cooperate with any state or federal body investigating organized crime, official corruption or gaming offenses. If the Colorado Commission determines that a person or entity is unsuitable to directly or indirectly own interests in us, Casino America of Colorado, Inc., IC Holdings Colorado, Inc., or either of the two Colorado Casinos, one or more of the Colorado Casinos may be sanctioned, which may include the loss of our approvals and licenses.

The Colorado Commission does not need to approve in advance a public offering of securities but rather requires the filing of notice and additional documents prior to a public offering of (i) voting securities, and (ii) non-voting securities if any of the proceeds will be used to pay for the construction of gaming facilities in Colorado, to directly or indirectly acquire an interest in a gaming facility in Colorado, to finance the

operation of a gaming facility in Colorado or to retire or extend obligations for any of the foregoing. The Colorado Commission may, in its discretion, require additional information and prior approval of such public offering.

In addition, the Colorado Regulations prohibit a licensee or affiliated company thereof, such as us, Casino America of Colorado, Inc., IC Holdings Colorado, Inc., IOC Black Hawk Distribution Company, LLC or either of the two Colorado Casinos, from paying any unsuitable person any dividends or interest upon any voting securities or any payments or distributions of any kind (except as set forth below), or paying any unsuitable person any remuneration for services or recognizing the exercise of any voting rights by any unsuitable person. Further, under the Colorado Regulations, each of the Colorado Casinos and IOC Black Hawk Distribution Company, LLC may repurchase its voting securities from anyone found unsuitable at the lesser of the cash equivalent to the original investment in the applicable Colorado Casino or IOC Black Hawk Distribution Company, LLC or the current market price as of the date of the finding of unsuitability unless such voting securities are transferred to a suitable person (as determined by the Colorado Commission) within sixty (60) days after the finding of unsuitability. A licensee or affiliated company must pursue all lawful efforts to require an unsuitable person to relinquish all voting securities, including purchasing such voting securities. The staff of Colorado Division has taken the position that a licensee or affiliated company may not pay any unsuitable person any interest, dividends or other payments with respect to non-voting securities, other than with respect to pursuing all lawful efforts to require an unsuitable person to relinquish non-voting securities, including by purchasing or redeeming such securities. Further, the regulations require anyone with a material involvement with a licensee, including a director or officer of a holding company, such as us, Casino America of Colorado, Inc., IC Holdings Colorado, Inc., IOC Black Hawk Distribution Company, LLC or either of the two Colorado Casinos, to file for a finding of suitability if required by the Colorado Commission.

Because of their authority to deny an application for a license or suitability, the Colorado Commission and the Colorado Director effectively can disapprove a change in corporate position of a licensee and with respect to any entity which is required to be found suitable, or indirectly can cause us, Casino America of Colorado, Inc., IC Holdings Colorado, Inc., IOC Black Hawk Distribution Company, LLC or the applicable Colorado Casino to suspend or dismiss managers, officers, directors and other key employees or sever relationships with other persons who refuse to file appropriate applications or who the authorities find unsuitable to act in such capacities.

Generally, a sale, lease, purchase, conveyance or acquisition of any interest in a licensee is prohibited without the Colorado Commission’s prior approval. However, because we are a publicly traded corporation, persons may acquire an interest in us (even, under current staff interpretations, a controlling interest) without the Colorado Commission’s prior approval, but such persons may be required to file notices with the Colorado Commission and applications for suitability (as discussed above) and the Colorado Commission may, after such acquisition, find such person unsuitable and require them to dispose of their interest. Under some circumstances, we may not sell any interest in our Colorado gaming businesses without the prior approval of the Colorado Commission.

Each Colorado Casino must meet specified architectural requirements, fire safety standards and standards for access for disabled persons. Each Colorado Casino also must not exceed specified gaming square footage limits as a total of each floor and the full building. Each Colorado Casino may permit only individuals 21 or older to gamble in the casino. No Colorado Casino may provide credit to its gaming patrons. Each Colorado Casino must comply with Colorado’s Gambling Payment Intercept Act, which governs the collection of unpaid child support costs on certain cash winnings from limited gaming.

As originally enacted by amendment to the Colorado Constitution, limited stakes gaming in Colorado was limited to slot machines, blackjack and poker, with a maximum single bet of $5.00, and casinos could operate only between 8 a.m. and 2 a.m.. On November 4, 2008, however, Colorado voters approved a subsequent amendment to the Colorado Constitution that allowed the towns of Cripple Creek, Black Hawk, and Central City to add table games of craps and roulette, increase the maximum single bet to $100.00, and increase the permitted hours of operation to 24 hours per day effective July 2, 2009.

A licensee is required to provide information and file periodic reports with the Colorado Division, including identifying those who have a 5% or greater ownership, financial or equity interest in the licensee, or who have the ability to control the licensee, or who have the ability to exercise significant influence over the licensee, or who loan money or other things of value to a licensee, or who have the right to share in revenues of limited gaming, or to whom any interest or share in profits of limited gaming has been pledged as security for a debt or performance of an act. A licensee, and any parent company or subsidiary of a licensee, who has applied to a foreign jurisdiction for licensure or permission to conduct gaming, or who possesses a license to conduct foreign gaming, is required to notify the Colorado Division. Any person licensed by the Colorado Commission and any associated person of a licensee must report criminal convictions and criminal charges to the Colorado Division.

The Colorado Commission has broad authority to sanction, fine, suspend and revoke a license for violations of the Colorado Regulations. Violations of many provisions of the Colorado Regulations also can result in criminal penalties.

The Colorado Constitution currently permits gaming only in a limited number of cities and certain commercial districts in such cities.

The Colorado Constitution permits a gaming tax of up to 40% on adjusted gross gaming proceeds, and authorizes the Colorado Commission to change the rate annually. The current gaming tax rate is 0.25% on adjusted gross gaming proceeds of up to and including $2.0 million, 2% over $2.0 million up to and including $5.0 million, 9% over $5.0 million up to and including $8.0 million, 11% over $8.0 million up to and including $10.0 million, 16% over $10.0 million up to and including $13.0 million and 20% on adjusted gross gaming proceeds in excess of $13.0 million. The City of Black Hawk has imposed an annual device fee of $750 per gaming device and may revise it from time to time. The City of Black Hawk also has imposed other fees, including a business improvement district fee and transportation fee, calculated based on the number of devices and may revise the same or impose additional such fees.

Colorado participates in multi-state lotteries.

The sale of alcoholic beverages is subject to licensing, control and regulation by the Colorado liquor agencies. All persons who directly or indirectly hold a 10% or more interest in, or 10% or more of the issued and outstanding capital stock of, any of the Colorado Casinos, through their ownership of us, Casino America of Colorado, Inc., IC Holdings Colorado, Inc., or either of the two Colorado Casinos, must file applications and possibly be investigated by the Colorado liquor agencies. The Colorado liquor agencies also may investigate those persons who, directly or indirectly, loan money to or have any financial interest in liquor licensees. In addition, there are restrictions on stockholders, directors and officers of liquor licensees preventing such persons from being a stockholder, director, officer or otherwise interested in some persons lending money to liquor licensees and from making loans to other liquor licensees. All licenses are revocable and transferable only in accordance with all applicable laws. The Colorado liquor agencies have the full power to limit, condition, suspend or revoke any liquor license and any disciplinary action could (and revocation would) have a material adverse effect upon the operations of us, Casino America of Colorado, Inc., IC Holdings Colorado, Inc., or the applicable Colorado Casino. Each Colorado Casino holds a retail gaming tavern liquor license for its casino, hotel and restaurant operations.

Persons directly or indirectly interested in either of the two Colorado Casinos may be limited in certain other types of liquor licenses in which they may have an interest, and specifically cannot have an interest in a retail liquor license (but may have an interest in a hotel and restaurant liquor license and several other types of liquor licenses). No person can hold more than three retail gaming tavern liquor licenses. The remedies of certain lenders may be limited by applicable liquor laws and regulations.

Bahamas

In 1969, the Government of The Bahamas enacted the Lotteries and Gaming Act. This legislation, together with its regulations, governs and regulates gaming. The Gaming Board is the body that regulates the operation of casinos. The gaming license is renewable annually. All casino workers must be approved by

the Board and are issued certificates, which are also renewable on an annual basis. There is a basic annual gaming tax of $200,000 payable in six equal shares. In addition a winnings tax is also imposed and is based on the following scale:

Winnings of:	$10,000,000	25	%
	$10,000,001 - $16,000,000	20	%

	$16,000,001 - $20,000,000	10	%

	Amounts exceeding $20,000,001	5	%

The Minister of Tourism has responsibility for gaming and acts in consultation with the Gaming Board. A license can be cancelled if a fraudulent or misleading representation has been supplied to the Board or if there is a breach of restrictions or conditions imposed by the Minister. There is however a right to be heard before cancellation is made final. Citizens, permanent residents and holders of work permits are prohibited from gambling. Those found doing so are guilty of an offense punishable by law. The operator may also be liable if it knowingly allows any such persons to gamble in its establishment.

Currently the Casino has an agreement to lease the premises housing its operations and a management agreement. The Casino holds a number of other licenses including one with the Port Authority of Grand Bahama, a business license and liquor and dining and dancing licenses.

On the 24 th April, 2007 the Isle entered into a Supplemental Heads of Agreement with the Government of the Bahamas and Hutchison Lucaya Ltd., wherein certain concessions were granted to the Isle with respect to marketing subsidy and a reduction in gaming taxes. Such taxes were reduced to 7.5% of gross win per annum. The basic tax of $200,000 remains payable per annum.

In May 2009, we also entered into an agreement to continue operating the Isle of Capri Casino in Freeport, Grand Bahama during a transition period, following which we intend to exit the operation. Under the agreement, we will also continue to assist the Government of the Bahamas and the owner of the Our Lucaya Resort, Hutchison Lucaya Ltd, in their efforts to identify and select a new operator for the casino. The term of the transition period ends on August 31, 2009, although under certain circumstances, it may be extended for up to two additional months in order to allow sufficient time for a new operator to receive necessary approvals.

United Kingdom

Gaming in the UK is subject to regulation under the Gambling Act (the “Act”) which received the Royal assent on April 7, 2005 and which came into force in its entirety on September 1, 2007, replacing the Gaming Act 1968. Under the Act, a new Gambling Commission (the “Commission”) has been created to oversee license applications and establish new regulations for gaming (including on-line gaming). It has taken over responsibilities from the Gaming Board and is working on the transition to meet this objective. The legislation will provide a significant change in regulation of the casino industry including:

· removing the requirement that gaming facilities operate as private members’ clubs, including the statutorily prescribed 24-hour interval between membership and play; this has now occurred;

· extending the gaming products available;

· abolishing the demand test and permitted area rules;

· allowing casinos specific numbers of gaming machines with a broader range of stakes and prizes;

· allowing casinos to offer live entertainment and to advertise; and

· allowing new categories of regional, large and small casinos.

The Act is accompanied by a significant body of detailed regulation, codes of practice, and guidance, which together with the Act will form the regulatory and compliance backdrop to gaming in the UK. The Act limited the number of regional casinos to 1 and large and small to 8 each. The Government appointed a Casino Advisory Panel to make recommendations to the Government as to location of the 17 proposed new casinos; however the initial secondary legislation designed to implement the panel’s recommendation did not pass. This has now been approved by Parliament in relation to 8 large and 8 small casinos. Currently there are no plans to proceed with a Regional Casino.

The Commission is primarily responsible for regulating casinos in the UK and is authorized to enforce strict codes of responsibility and is responsible for granting operating and personal licenses to commercial gambling operators and personnel working in the industry. The Commission will share, with local licensing authorities, responsibility for granting gaming and betting permissions.

Authority to provide facilities for gambling will be subject to varying degrees of regulation, depending on:

· Type of gambling

· Means by which it is conducted

· People by whom and to whom it is offered

The Act removes from licensing justices all responsibility for granting gaming and betting permissions (except for certain 1968 Act transitional applications). Instead, the Commission and licensing authorities will between them assume responsibility for all those matters previously regulated by licensing justices.

The Act establishes a minimum size limit for new casinos and a casino’s gaming machine entitlement will depend on its category, and power is provided for licensing authorities to pass resolutions not to license any new casino premises in their area.

The Act introduces a new regime for gaming machines. A new definition of gaming machine is provided, together with power to prescribe categories. The Act provides certain entitlements for commercial operators to use specified numbers and categories of machines in consequence of their licenses. It also establishes permit procedures for authorizing use of lower-stake gaming machines in specific locations.

The Act makes provision for the advertising of gambling, creating new offences relating to the advertising of unlawful gambling and providing reserve powers for the Secretary of State to make regulations controlling the content of gambling advertisements. A voluntary code is currently in force covering gambling advertisements.

The acquisition of a 10% equity stake, or the ability to exercise significant influence over the management of the operator where there is a lower stake, will trigger the Controller provisions under the Financial Services and Markets Act 2000. This will require notification and consent by the Commission or Regulator who will apply a number of tests to ensure that the relevant person is fit and proper, that the interests of the entity are not threatened and that compliance conditions are satisfied.

During the fiscal year ended April 2009, we operated casinos in Coventry, Dudley and Wolverhampton under the new Gambling Act.

Non-Gaming Regulation

We are subject to certain federal, state and local safety and health, employment and environmental laws, regulations and ordinances that apply to non-gaming businesses generally, such as the Clean Air Act, Clean Water Act, Occupational Safety and Health Act, Resource Conservation Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act and the Oil Pollution Act of 1990. We have not made, and do not anticipate making, material expenditures with respect to such environmental laws and regulations. However, the coverage and attendant compliance costs associated with such laws, regulations and ordinances may result in future additional costs to our operations. For example, the Department of Transportation has promulgated regulations under the Oil Pollution Act of 1990 requiring owners and

operators of certain vessels to establish through the Coast Guard evidence of financial responsibility for clean up of oil pollution. This requirement has been satisfied by proof of adequate insurance.

Our riverboats operated in Louisiana and Iowa must comply with U.S. Coast Guard requirements as to boat design, on-board facilities, equipment, personnel and safety and hold U.S. Coast Guard Certificates of Documentation and Inspection. The U.S. Coast Guard requirements also set limits on the operation of the riverboats and require licensing of certain personnel involved with the operation of the riverboats. Loss of a riverboat’s Certificate of Documentation and Inspection could preclude its use as a riverboat casino. Each of our riverboats is inspected annually and, every five years, is subject to dry-docking for inspection of its hull, which could result in a temporary loss of service.

The barges are inspected by third parties and certified with respect to stability and single compartment flooding integrity. Our casino barges must also meet local fire safety standards. We would incur additional costs if any of our gaming facilities were not in compliance with one or more of these regulations.

All of our shipboard employees, even those who have nothing to do with our operation as a vessel, such as dealers, waiters and security personnel, may be subject to the Jones Act which, among other things, exempts those employees from state limits on workers’ compensation awards.