3.

VARIABLE INTEREST ENTITIES

GED. The Company’s investment in unconsolidated joint venture is comprised of a 50% ownership interest in GED, a joint venture between the Company and Harrington Raceway Inc. (“HRI”). GED has a management agreement with Harrington Raceway and Casino (“Harrington”) (formerly known as Midway Slots and Simulcast), which is located in Harrington, Delaware. Under the terms of the joint venture agreement, as restructured in 2007, the Company receives the greater of 50% of GED’s member distribution as currently prescribed under the joint venture agreement, or a 5% growth rate in its 50% share of GED’s prior year member distribution through the expiration of the GED management contract in August 2011. GED is a variable interest entity due to the fact that the Company has limited exposure to risk of loss. Therefore, the Company does not consolidate, but accounts for, its investment using the equity method. The Company believes the maximum exposure to loss is the account receivable and investment in GED as GED carries no loans.

As of the balance sheet dates presented, the Company’s assets and liabilities related to its investment in GED consisted of an amount due from HRI included in receivables of $22,663 as of June 30, 2011, and an accounts receivable of $0.7 million as of December 31, 2010 as part of the Management Reorganization Agreement’s guaranteed payments for the three months ending June 30, 2011 and December 31, 2010, respectively. The investment in GED was $0.2 million as of June 30, 2011, and December 31, 2010, included in other assets.

GED has no non-operating income or expenses, is treated as a partnership for income tax reporting purposes and consequently recognizes no federal or state income tax provision. As a result, income from operations for GED is equal to its net income for each period presented, and there are no material differences between GED’s income for financial and tax reporting purposes. An unaudited summary for GED’s operations follows:

GED CONDENSED BALANCE SHEET INFORMATION

		June 30,				December 31,
		2011				2010
Total assets		$	500,451			$	426,449
Total liabilities			49,406				41,487
Members’ capital			451,046				384,962

GED CONDENSED STATEMENT OF INCOME INFORMATION

		Three Months Ended:								Six Months Ended:
		June 30,				June 30,				June 30,				June 30,
		2011				2010				2011				2010
Revenues		$	1,471,184			$	1,867,461			$	3,032,728			$	3,612,351
Net income			1,332,095				1,724,966				2,754,524				3,335,072

GEM. The Company directs the day to day operational activities of GEM that significantly impact GEM’s economic performance and therefore considers itself to be the primary beneficiary. As such, the joint venture is a variable interest entity that is consolidated in our financial statements.

Management believes the maximum exposure to loss from the Company’s investment in GEM is $8.7 million (before tax impact), which is composed of contract rights and the Company’s equity investment that is eliminated in consolidation. GEM has no debt or long-term liabilities. GEM’s current assets include the FireKeepers management fee receivable for both dates presented. Long-term assets include $8.8 million and $9.6 million in contract rights as of June 30, 2011 and December 31, 2010, respectively.

An unaudited summary of GEM’s operations follows:

GEM CONDENSED BALANCE SHEET INFORMATION

		June 30,				December 31,
		2011				2010
Current assets		$	2,059,209			$	1,985,419
Long-term assets			8,764,168				9,626,458
Current liabilities			62,725				446,825

GEM CONDENSED STATEMENT OF INCOME INFORMATION

		Three Months Ended:								Six Months Ended:
		June 30,				June 30,				June 30,				June 30,
		2011				2010				2011				2010
Revenues		$	5,912,434			$	6,018,598			$	12,276,676			$	12,180,704
Net income			5,412,841				4,994,831				10,627,000				10,168,464