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Schwarzenegger, tribe signs amended compact

3 July 2008

MINNEAPOLIS, Minnesota -- (PRESS RELEASE) -- Lakes Entertainment, Inc. (NASDAQ: LACO) announced today that the Shingle Springs Band of Miwok Indians and California Governor Arnold Schwarzenegger have signed an amended compact which paves the way for Class III gaming to be offered at the future Red Hawk Casino located in Shingle Springs, California. The casino is currently under construction and will be managed by Lakes Entertainment.

The new compact runs through 2029 and allows for a maximum of 5,000 Class III electronic gaming devices (slot machines) at one gaming facility. In addition, the Shingle Springs Tribe will share revenues with the state based on a sliding scale percentage of net win – ranging from 20 percent to 25 percent – from the operation of the slot machines. The Tribe will also contribute $4.6 million per year to the Revenue Sharing Trust Fund, which pays up to $1.1 million each year to non-gaming tribes in California.

"We are pleased that Governor Schwarzenegger and the Tribe were able to structure an amended compact that is beneficial for both the Tribe and the State of California," said Lakes' President and Chief Financial Officer Tim Cope. "This is great news for the Tribe and is another step forward toward its economic independence. The amended compact now must be ratified by the state legislature and will then be submitted to the Bureau of Indian Affairs for its approval. We expect to receive these approvals prior to the opening of the Red Hawk Casino, which is on schedule for late fourth quarter of this year."

Subject to receiving all final approvals, upon its opening, the Red Hawk Casino plans to feature approximately 2,000 Class III slot machines, 75 table games, a high stakes gaming room, as well as 10 food and beverage outlets, enclosed parking and other facilities. The Tribe estimates that the casino will generate approximately 2,000 jobs.

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