MINNEAPOLIS–(EMWNews)–Lakes Entertainment, Inc. (NASDAQ: LACO) today announced results for the

three and six-month periods ended June 29, 2008.

The consolidating summary results for the second quarter of 2008

compared to the consolidating summary results for the second quarter

ended July 1, 2007, for Lakes Entertainment, Inc. and WPT Enterprises,

Inc. (“WPTE”),

Lakes’ majority-owned subsidiary, are as follows:

		Quarter ended												Quarter ended
		June 29, 2008												July 1, 2007
($ in thousands, except per share)		Lakes				WPTE				Consoli- dated				Lakes			WPTE				Consoli- dated
Total revenues		$	5,885			$	5,074			$	10,959			$	409		$	7,720			$	8,129
Selling, general & admin expense			7,650				6,293				13,943				4,113			5,853				9,966
Net unrealized gains on notes rec.			1,125				–				1,125				8,939			–				8,939
Earnings (loss) from operations			(2,404	)			(4,130	)			(6,534	)			5,141			(3,587	)			1,554
Net earnings (loss) – common		$	(1,304	)		$	(3,882	)		$	(5,186	)		$	9,913		$	(3,339	)		$	6,574
Earnings (loss) per common share – diluted										$	(0.21	)									$	0.25

Consolidating summary results for the six months ended June 29, 2008

compared to consolidating summary results for the six months ended July

1, 2007 for Lakes and WPTE are as follows:

		Six months ended												Six months ended
		June 29, 2008												July 1, 2007
($ in thousands, except per share)		Lakes				WPTE				Consoli- dated				Lakes			WPTE				Consoli -dated
Total revenues		$	10,486			$	10,034			$	20,520			$	887		$	12,212			$	13,099
Selling, general & admin expense			13,159				11,676				24,835				8,682			11,039				19,721
Net unrealized gain (loss) on notes rec.			(858	)			–				(858	)			9,104			–				9,104
Earnings (loss) from operations			(7,064	)			(7,323	)			(14,387	)			786			(6,530	)			(5,744	)
Net earnings (loss) – common		$	(5,380	)		$	(6,711	)		$	(12,091	)		$	2,371		$	(5,619	)		$	(3,248	)
Loss per common share – diluted										$	(0.49	)									$	(0.14	)

Lyle Berman, Chief Executive Officer of Lakes, stated, “We are pleased

with results from the Four Winds Casino Resort in the face of a very

difficult macroeconomic environment. In another positive for the

Company, we are excited that California Governor Schwarzenegger and the

Shingle Springs Band of Miwok Indians were able to amend their gaming

compact, which will allow for expanded Class III gaming at the Red Hawk

Casino once the amendment is ratified by the State of California’s

legislature and approved by the Bureau of Indian Affairs. Approval is

expected prior to the planned opening of the Red Hawk Casino which is

still on schedule for late fourth quarter of this year. Further,

yesterday we delivered petitions containing over 750,000 signatures to

the Ohio Secretary of State and we anticipate enough signatures will be

verified in the requisite number of counties in order to place the

MyOhioNow casino resort initiative on the Ohio ballot in November.”

Further commenting on second quarter results, Tim Cope, President and

Chief Financial Officer of Lakes, stated, “Following

the improved performance in March of this year, the Four Winds Casino

Resort continued to perform well and exceeded our expectations in the

second quarter. In Oklahoma, the Cimarron Casino reported strong results

with an improvement in year-over-year performance and in California, the

construction of the Red Hawk Casino for the Shingle Springs Tribe in

California remains on schedule and within budget for its expected grand

opening.”

Second Quarter Results

Lakes Entertainment reported consolidated second quarter 2008 revenues

of $11.0 million, a 34.8% increase from the prior-year period. Lakes’

revenue increased $5.5 million, primarily due to a full quarter

contribution of management fees from the Four Winds Casino Resort, which

is owned by the Pokagon Band of Potawatomi Indians (“Pokagon

Band”), compared to no contribution from that

property in the second quarter of 2007. Revenue related to WPTE

decreased to $5.1 million for the second quarter of 2008, compared to

$7.7 million in the prior-year period. The decrease was due to a decline

in domestic television license fee income from the World Poker Tour®

television program, which was due to lower per episode license fees

under the Game Show Network agreement in effect during the 2008 period,

as compared to the Travel Channel agreement which was in effect during

the 2007 period.

Consolidated selling, general and administrative expenses were up $4.0

million from the prior-year period to $13.9 million due to development

costs associated with the proposed Ohio casino resort project. For the

second quarter of 2008, Lakes’ selling,

general and administrative expenses were $7.7 million and consisted

primarily of payroll and related expenses of $2.1 million (including

share-based compensation), the development costs associated with the

Ohio casino resort initiative of $4.0 million, travel expenses of $0.7

million and professional fees of $0.5 million.

Other costs and expenses incurred in the second quarter of 2008 included

amortization of intangible assets of approximately $1.7 million

associated with the casino project with the Pokagon Band which commenced

upon the opening of the Four Winds Casino Resort in August 2007.

Net unrealized gains on notes receivable relate to the Company’s

notes receivable from Indian tribes, which are adjusted to estimated

fair value, based upon the current status of the related tribal casino

projects and evolving market conditions. In the second quarter of 2008,

net unrealized gains on notes receivable were $1.1 million, compared to

net unrealized gains of $8.9 million in the prior-year period. The

difference in unrealized gains on a quarter-over-quarter basis was

primarily due to the recognition of a $7.7 million unrealized gain in

the second quarter of 2007 due to closing on a $450 million senior note

financing to fund the Red Hawk Casino project in Shingle Springs,

California, which increased the probability of the opening of the casino.

The loss from operations for the second quarter of 2008 was $6.5

million, compared to earnings from operations of $1.6 million in the

second quarter of 2007, while net loss applicable to common shareholders

for the second quarter of 2008 was $5.2 million, compared to net

earnings applicable to common shareholders of $6.6 million in the second

quarter of 2007. The difference resulted primarily from the items

discussed above, in addition to the net effect of items occurring in the

prior-year period, including $4.9 million of interest income resulting

from the repayment for land Lakes had previously purchased on the

Shingle Springs Tribe’s behalf, partially

offset by a loss on abandonment of online gaming assets by WPTE of $2.3

million and a stock warrant inducement discount of $1.4 million. Loss

applicable to common shareholders per fully diluted share was $0.21 in

the second quarter of 2008, compared to earnings applicable to common

shareholders per fully diluted share of $0.25 for the second quarter of

2007.

Six Month 2008 Results

Lakes Entertainment reported consolidated revenues for the six-month

period ended June 29, 2008 of $20.5 million, up 56.7% from the

prior-year period. Lakes’ revenue increased

$9.6 million over the six-month period ended June 29, 2008, primarily

due to a full six months contribution of management fees from the Four

Winds Casino Resort, compared to no contribution from that property for

the six months ended July 1, 2007. Revenue related to WPTE declined to

$10.0 million for the six months ended June 29, 2008, compared to $12.2

million in the prior-year period. The decrease was due to a decline in

domestic television license fee income from the World Poker Tour®

television program, which was due to lower per episode license fees

under the Game Show Network agreement in effect during the 2008 period,

as compared to the Travel Channel agreement which was in effect during

the 2007 period.

Consolidated selling, general and administrative expenses for the six

months ended June 29, 2008 were up $5.1 million from the prior-year

period to $24.8 million due primarily to $5.7 million in development

costs associated with the proposed Ohio casino resort project. For the

six months ended June 29, 2008, Lakes’

selling, general and administrative expenses were $13.2 million and

consisted primarily of payroll and related expenses of $4.3 million

(including share-based compensation), the development costs associated

with the Ohio casino resort initiative of $5.7 million, travel expenses

of $1.3 million and professional fees of $1.1 million.

Other costs and expenses for the six months ended June 29, 2008 included

amortization of intangible assets of approximately $3.4 million

associated with the casino project with the Pokagon Band which commenced

upon the opening of the Four Winds Casino Resort in August 2007.

For the six months ended June 29, 2008, net unrealized losses on notes

receivable were $0.9 million, compared to net realized and unrealized

gains of $9.1 million in the prior-year period. Net unrealized losses in

the six-month period ended June 29, 2008 were due primarily to a

decrease in projected interest rates, due to current market conditions,

for the notes receivable related to the Red Hawk Casino project with the

Shingle Springs Tribe and the notes receivable related to the casino

project with the Jamul Indian Village. The difference in the

year-over-year basis was primarily due to the recognition of a $7.7

million unrealized gain in the six months ended July 1, 2007 due to

closing on a $450 million senior note financing to fund the Red Hawk

Casino project in Shingle Springs, California, which increased the

probability of the opening of the casino.

The operating loss for the six months ended June 29, 2008 was $14.4

million, compared to an operating loss of $5.7 million in the prior-year

period, while net loss applicable to common shareholders for the six

months ended June 29, 2008 was $12.1 million, compared to a loss of $3.2

million in the comparable prior-year period. Loss applicable to common

shareholders per fully diluted share was $0.49 in the six months ended

June 29, 2008, compared to a loss per fully diluted share of $0.14 for

the prior-year period.

Liquidity and Balance Sheet

As of June 29, 2008, the Company had $9.9 million in cash and cash

equivalents, $6.4 million in short-term investments in marketable

securities, and $37.5 million in long-term investments in marketable

securities. Of these amounts, $4.5 million in cash and cash equivalents

related to Lakes and $25.0 million in long-term investments related to

Lakes. All other amounts related to WPTE. All of Lakes’

long-term investments in marketable securities and $11.4 million of WPTE’s

long-term investments in marketable securities are comprised of auction

rate securities (“ARS”).

As a result of liquidity issues surrounding the ARS discussed below, the

ARS are classified as long-term investments in marketable securities as

of June 29, 2008. The types of ARS that both Lakes and WPTE own are

backed by student loans, the majority of which are guaranteed under the

Federal Family Education Loan Program (“FFELP”).

Neither Lakes nor WPTE own any other type of ARS. None of our ARS

qualify, or have ever been classified in our consolidated financial

statements, as cash or cash equivalents.

Historically, these types of ARS have been highly liquid using an

auction process that resets the applicable interest rate at

predetermined intervals, typically every 7 to 35 days, to provide

liquidity at par. However, as a result of the liquidity issues

experienced in the global credit and capital markets, the auctions for

all of the Company’s ARS began failing in

February 2008. The failures of these auctions do not affect the value of

the collateral underlying the ARS, and both Lakes and WPTE continue to

earn and receive interest on the ARS at contractually set rates.

However, it will not be possible to liquidate the ARS until the issuer

calls the security, a successful auction occurs, a buyer is found

outside of the auction process or the security matures. During July

2008, Lakes and WPTE received account statements for June 2008 from the

firms managing the ARS which estimated the fair value of the ARS. Lakes

and WPTE analyzed these statements and have concluded that a temporary

decline in estimated fair value of $2.8 million related to the ARS has

occurred as a result of the current lack of liquidity. This consolidated

decline in estimated fair value includes $1.8 million related to Lakes

and $1.0 million related to WPTE. Since we consider the decline in the

estimated fair value of ARS to be temporary, the related unrealized loss

is included in accumulated other comprehensive loss in the shareholders’

equity section of the Company’s balance sheet

as of June 29, 2008. If the Company were required to liquidate the ARS

over the coming months as a source of financing, it is likely that the

proceeds would be substantially less than the carrying value of the ARS.

Lakes entered into a client agreement with UBS Financial Services, Inc

effective April 11, 2008 for the purpose of borrowing and/or obtaining

credit in a principal amount not to exceed $11.0 million (the “Margin

Account Agreement”). During June 2008, the

Margin Account Agreement limit was increased to $12.5 million. Lakes

made an initial draw under the Margin Account Agreement in the principal

amount of $3.0 million for working capital purposes. Lakes is currently

seeking additional sources of financing to fund additional costs that

are planned to be incurred between September and December of this year

associated with the previously announced Ohio casino resort initiative.

These additional costs, which are currently expected to approximate

between $10 million and $20 million, will only be incurred if this

initiative is successfully placed on the Ohio ballot and are dependent

on various factors including polling numbers, market studies and media

efforts. Lakes expects to be able to obtain funding as necessary. WPTE

does not believe that any lack of liquidity during the next 12 months

relating to its ARS will have an impact on its ability to fund its

operations.

Lakes also had notes receivable from Indian tribes which are recorded at

their estimated fair value of $79.6 million as of June 29, 2008. The

corresponding face value of these notes, including accrued interest, was

$122.7 million. As of June 29, 2008, the Company’s

obligation related to its Margin Account Agreement was $2.8 million, and

long-term contract acquisition costs payable were $6.1 million.

About Lakes Entertainment

Lakes Entertainment, Inc. currently has development and management or

financing agreements with four separate Tribes for casino operations in

Michigan, California, and Oklahoma, for a total of five separate casino

sites. Lakes is currently managing the Cimarron Casino for the Iowa

Tribe of Oklahoma and the Four Winds Casino Resort for the Pokagon Band

of Potawatomi Indians. Lakes is also involved in other business

activities, including possible development of a Company owned casino

resort project in Vicksburg, Mississippi and the development of new

table games for licensing to Tribal and non-Tribal casinos. The Company

also owns approximately 61 percent of WPT Enterprises, Inc. (NASDAQ:

WPTE), a separate publicly held media and entertainment company engaged

in the creation of internationally branded entertainment and consumer

products driven by the development, production and marketing of

televised programming based on gaming themes, including the World Poker

Tour^® television

series, the operation of an online gaming website, the licensing and

sale of branded products and the sale of corporate sponsorships.

The Private Securities Litigation Reform Act of 1995 provides a safe

harbor for forward-looking statements. Certain information included in

this press release (as well as information included in oral statements

or other written statements made or to be made by Lakes Entertainment,

Inc.) contains statements that are forward-looking, such as statements

relating to plans for future expansion and other business development

activities as well as other capital spending, financing sources and the

effects of regulation (including gaming and tax regulation) and

competition. Such forward-looking information involves important risks

and uncertainties that could significantly affect anticipated results in

the future and, accordingly, such results may differ from those

expressed in any forward-looking statements made by or on behalf of the

company. These risks and uncertainties include, but are not limited to,

obtaining a sufficient number of signatures to place the Ohio casino

resort initiative on the November 4, 2008 Ohio statewide election ballot

or if the referendum is placed on that ballot, that the referendum will

pass or if the referendum passes, that it will not subsequently be

challenged or that other developments will not prevent or delay the

project; need for current financing to meet Lakes’

operational and development needs, including financing needs related to

the Ohio casino resort initiative; those relating to the inability to

complete or possible delays in completion of Lakes’ casino projects,

including various regulatory approvals and numerous other conditions

which must be satisfied before completion of these projects; possible

termination or adverse modification of management or development

contracts; Lakes operates in a highly competitive industry; possible

changes in regulations; reliance on continued positive relationships

with Indian tribes and repayment of amounts owed to Lakes by Indian

tribes; possible need for future financing to meet Lakes’ expansion

goals; risks of entry into new businesses; reliance on Lakes’

management; and the fact that the WPTE shares held by Lakes are

currently not liquid assets, and there is no assurance that Lakes will

be able to realize value from these holdings equal to the current or

future market value of WPTE common stock. There are also risks and

uncertainties relating to WPTE that may have a material effect on the

company’s consolidated results of operations or the market value of the

WPTE shares held by the company, including the risk that WPTE may not

obtain sufficient sponsorship revenues for Season Seven programming of

the WPT series; difficulty of predicting the growth of WPTE’s

online gaming business, which is a relatively new industry with an

increasing number of market entrants; reliance on the efforts of

CryptoLogic to develop and maintain the online gaming website in

compliance with WPTE’s business model and

applicable gaming laws; the potential that WPTE’s television programming

will fail to maintain a sufficient audience; the risk that WPTE may not

be able to protect its entertainment concepts, current and future brands

and other intellectual property rights; the risk that competitors with

greater financial resources or marketplace presence might develop

television programming that would directly compete with WPTE’s

television programming; risks associated with future expansion into new

or complementary businesses; the termination or impairment of WPTE’s

relationships with key licensing and strategic partners; and WPTE’s

dependence on its senior management team. For more information, review

the company’s filings with the Securities and Exchange Commission.

LAKES ENTERTAINMENT, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
		June 29, 2008				December 30, 2007
		(Unaudited)
Assets
Current assets:
Cash and cash equivalents (balances include $5.4 million and $3.9 million of WPT Enterprises, Inc.)		$	9,926			$	9,248
Investments in marketable securities (balances include $6.4 million and $23.0 million of WPT Enterprises, Inc.)			6,394				53,546
Accounts receivable			3,942				3,570
Other current assets	Investor Relations: Integrated Corporate Relations William Schmitt, 203-682-8200 [email protected] or Lakes Entertainment, Inc. Timothy Cope, 952-449-7030 Major Newsire & Press Release Distribution with Basic Starting at only $19 and Complete OTCBB / Financial Distribution only $89 Get Unlimited Organic Website Traffic to your Website  TheNFG.com now offers Organic Lead Generation & Traffic Solutions