Press Release: Lakes Entertainment, Inc.
August 22, 2002
MINNEAPOLIS, MN -- Lakes Entertainment, Inc. (Lakes) (Nasdaq:LACO) announced Tuesday that the United States Court
of Appeals for the Ninth Circuit has issued an opinion affirming the lower court's rejection of a claim brought
on behalf of a group of Stratosphere bondholders. This legal action was previously referred to as the Standby Equity
Commitment Litigation.
In September 1997, the trustee under the indenture for Stratosphere's first mortgage notes filed a complaint in
the U.S. District Court for the District of Nevada naming Grand Casinos, Inc. (Grand) as defendant. The complaint
alleged that Grand failed to perform under the standby equity commitment entered into between Stratosphere and
Grand in connection with Stratosphere's issuance of such first mortgage notes in March 1995.
As part of the transaction establishing Lakes as a separate public company on December 31, 1998, Lakes agreed to
indemnify Grand against all costs, expenses and liabilities incurred in connection with or arising out of certain
pending and threatened claims and legal proceedings to which Grand and certain of its subsidiaries were likely
to be parties.
In April 2001, Federal Judge David Hagen, following trial, ruled in favor of Grand Casinos, Inc. and against the
group of note-holders called Stratosphere Litigation LLC. On August 13, 2002, the Court of Appeals affirmed Judge
Hagen's decision. The plaintiffs have the right to request a Court of Appeals rehearing within 14 days of the Court's
decision or petition for review by the United States Supreme Court within 90 days.
Lyle Berman, Chairman of the Board and CEO of Lakes stated, "We are very pleased about the rejection of the
Stratosphere note-holders' arguments by the Court of Appeals. The opinion upholds the discharge of any funding
requirements in relation to the claim, for which Lakes would have been required to indemnify Grand. This is the
third time the note-holders' claims have been rejected. Subject to the possibility of further appeal or rehearing,
we believe this development effectively removes a major uncertainty which had previously been surrounding our company."
Lakes Entertainment, Inc. currently has development and management agreements with four separate Tribes for four
new casino operations, one in Michigan, two in California and one with the Nipmuc Nation on the East Coast. Lakes
Entertainment also has agreements for the development of one additional casino on Indian-owned land in California
through a joint venture with MRD Gaming. Additionally, the Company owns approximately 80% of World Poker Tour,
LLC, a joint venture formed to film and produce poker tournaments for television broadcast.
Lakes Entertainment, Inc. common shares are traded on the Nasdaq National Market under the trading symbol "LACO".
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 plan 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, 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
contracts; continued indemnification obligations to Grand Casinos; highly competitive industry; possible changes
in regulations; reliance on continued positive relationships with Indian tribes and repayment of amounts owned
to Lakes by Indian tribes; possible need for future financing to meet Lakes' expansion goals; risks of entry into
new businesses; and reliance on Lakes' management. For more information, review the Company's filings with the
Securities and Exchange Commission.
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Contact:
Lakes Entertainment, Inc., Minneapolis
Timothy J. Cope, 952/449-7030