UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 18, 2010

Lakes Entertainment, Inc.

(Exact name of registrant as specified in its charter)

Minnesota		0-24993		41-1913991
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

130 Cheshire Lane, Suite 101, Minnetonka, Minnesota		55305
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (952) 449-9092

Not Applicable

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Item 1.01. Entry into a Material Definitive Agreement.

          On May 12, 2010, Lakes Iowa Consulting, LLC and Lakes Iowa Management, LLC (“Lakes”), indirect wholly owned subsidiaries of Lakes Entertainment, Inc. entered into a Business Termination Agreement (“Agreement”) with the Iowa Tribe of Oklahoma (“Iowa Tribe”) whereby, in consideration of the parties terminating all contracts and agreements between them (including the Management Agreement under which Lakes was managing the Cimarron Casino, the Consulting Agreement for the Ioway Casino Resort, and the Amended and Restated Ioway Note under which approximately $5.0 million was advanced) effective May 1, 2010, the Iowa Tribe agreed to pay to Lakes a total of $4.5 million in the following manner: $1 million to be paid within two days of execution of the Termination Agreement and the sum of $3.5 million to be paid in 15 equal monthly installments commencing on June 15, 2010 and on the 15^th day of each of the next 14 months. The Iowa Tribe is permitted to make prepayments on the outstanding amount at a 6% discount during the first twelve months after the execution of the agreement. Also, under the agreement, because the relationship is being terminated, no further licensing of Lakes and its employees will be required.

          A copy of the agreement is attached as Exhibit 10.1 to this Current Report on Form 8-K.

          A copy of the press release issued by Lakes on May 13, 2010 pertaining to the Agreement is being furnished to the Securities and Exchange Commission and is attached as Exhibit 99.1 to this Form 8-K.

Item 1.02 Termination of a Material Definitive Agreement

          The following agreements were terminated effective as of May 1, 2010 as a result of entering into the Business Termination Agreement described in Item 1.01 above:

	•		Gaming Development Consulting Agreement (Cimarron Casino) by and among the Iowa Tribe of Oklahoma, a federally-chartered corporation, the Iowa Tribe of Oklahoma, a federally-recognized Indian tribe, and Lakes Iowa Consulting, LLC, a Minnesota limited liability company, dated January 27, 2005.
	•		Iowa Corp Note (Cimarron Casino) by the Iowa Tribe of Oklahoma, a federally-chartered corporation, and Lakes Iowa Consulting, LLC, a Minnesota limited liability company, dated January 27, 2005.
	•		Dominion Account Agreement (Cimarron Casino) by and between the Iowa Tribe of Oklahoma, a federally-chartered corporation, and Lakes Iowa Consulting, LLC, a Minnesota limited liability company, dated January 27, 2005.
	•		Security Agreement (Cimarron Casino) by and among the Iowa Tribe of Oklahoma, a federally-chartered corporation, the Iowa Tribe of Oklahoma, a federally-recognized Indian tribe, and Lakes Iowa Consulting, LLC, a Minnesota limited liability company, dated January 27, 2005.
	•		Tribal Agreement (Cimarron Casino) by and between the Iowa Tribe of Oklahoma, a federally-recognized Indian tribe, and Lakes Iowa Consulting, LLC, a Minnesota limited liability company, dated January 27, 2005.
	•		Management Agreement for a Gaming Facility and Related Ancillary Facilities (Cimarron Casino) by and among the Iowa Tribe of Oklahoma, a federally-chartered corporation, the Iowa Tribe of Oklahoma, a federally-recognized Indian tribe, and Lakes Iowa Management, LLC, a Minnesota limited liability company, dated January 27, 2005.
	•		Operating Note (Cimarron Casino) by the Iowa Tribe of Oklahoma, a federally-chartered corporation, in favor of Lakes Iowa Management, LLC, a Minnesota limited liability company, dated January 27, 2005.
	•		Dominion Account Agreement (Cimarron Casino) by and between the Iowa Tribe of Oklahoma, a federally-chartered corporation, and Lakes Iowa Management, LLC, a Minnesota limited liability company, dated January 27, 2005.
	•		Security Agreement (Cimarron Casino) by and among the Iowa Tribe of Oklahoma, a federally-chartered corporation, the Iowa Tribe of Oklahoma, a federally-recognized Indian tribe, and Lakes Iowa

			Management, LLC, a Minnesota limited liability company, dated January 27, 2005.
	•		Indemnity Agreement (Cimarron Casino) by and among the Iowa Tribe of Oklahoma, a federally-chartered corporation, the Iowa Tribe of Oklahoma, a federally-recognized Indian tribe, and Lakes Iowa Management, LLC, a Minnesota limited liability company, dated January 27, 2005.
	•		Tribal Agreement (Cimarron Casino) by and between the Iowa Tribe of Oklahoma, a federally-recognized Indian tribe, and Lakes Iowa Management, LLC, a Minnesota limited liability company, dated January 27, 2005.
	•		Gaming Development Consulting Agreement (New Project) by and among the Iowa Tribe of Oklahoma, a federally-chartered corporation, the Iowa Tribe of Oklahoma, a federally-recognized Indian tribe, and Lakes Iowa Consulting, LLC, a Minnesota limited liability company, dated January 27, 2005.
	•		Iowa Corp Note (New Project) by the Iowa Tribe of Oklahoma, a federally-chartered corporation, in favor of Lakes Iowa Consulting, LLC, a Minnesota limited liability company, dated January 27, 2005.
	•		Dominion Account Agreement (New Project) by and between the Iowa Tribe of Oklahoma, a federally-chartered corporation, and Lakes Iowa Consulting, LLC, a Minnesota limited liability company, dated January 27, 2005.
	•		Security Agreement (New Project) by and among the Iowa Tribe of Oklahoma, a federally-chartered corporation, the Iowa Tribe of Oklahoma, a federally-recognized Indian tribe, and Lakes Iowa Consulting, LLC, a Minnesota limited liability company, dated January 27, 2005.
	•		Tribal Agreement (New Project) by and between the Iowa Tribe of Oklahoma, a federally-recognized Indian tribe, and Lakes Iowa Consulting, LLC, a Minnesota limited liability company, dated January 27, 2005.
	•		Management Agreement for a Gaming Facility and Related Ancillary Facilities (New Project) by and among the Iowa Tribe of Oklahoma, a federally-chartered corporation, the Iowa Tribe of Oklahoma, a federally-recognized Indian tribe, and Lakes Iowa Management, LLC, a Minnesota limited liability company, dated January 27, 2005.
	•		Operating Note (New Project) by the Iowa Tribe of Oklahoma, a federally-chartered corporation, in favor of Lakes Iowa Management, LLC, a Minnesota limited liability company, dated January 27, 2005.
	•		Dominion Account Agreement (New Project) by and between the Iowa Tribe of Oklahoma, a federally-chartered corporation, and Lakes Iowa Management, LLC, a Minnesota limited liability company, dated January 27, 2005.
	•		Security Agreement (New Project) by and among the Iowa Tribe of Oklahoma, a federally-chartered corporation, the Iowa Tribe of Oklahoma, a federally-recognized Indian tribe, and Lakes Iowa Management, LLC, a Minnesota limited liability company, dated January 27, 2005.
	•		Indemnity Agreement (New Project) by and among the Iowa Tribe of Oklahoma, a federally-chartered corporation, the Iowa Tribe of Oklahoma, a federally-recognized Indian tribe, and Lakes Iowa Management, LLC, a Minnesota limited liability company, dated January 27, 2005.
	•		Tribal Agreement (New Project) by and between the Iowa Tribe of Oklahoma, a federally-recognized Indian tribe, and Lakes Iowa Management, LLC, a Minnesota limited liability company, dated January 27, 2005.
	•		Consulting Agreement (Iowa Project) by and between Kevin M. Kean and Lakes Iowa Consulting, LLC, a Minnesota limited liability company, and Lakes Iowa Management, LLC, a Minnesota limited liability company, dated June 2, 2005.

Item 9.01. Financial Statements and Exhibits.

     (a) Not Applicable

     (b) Not Applicable

     (c) Not Applicable

     (d) Exhibit

	10.1		Business Termination Agreement by and between the Iowa Tribe of Oklahoma, Lakes Iowa Consulting, LLC and Lakes Iowa Management, LLC, effective May 12, 2010.
	99.1		Lakes Entertainment, Inc. Press Release dated May 13, 2010.

SIGNATURES

     Pursuant to the requirements 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.

Exhibit 10.1

Execution Copy 05-12-10

BUSINESS TERMINATION AGREEMENT
between
the Iowa Tribe of Oklahoma and its Affiliates
and
Lakes Iowa Management, LLC and its Affiliates

THIS BUSINESS TERMINATION AGREEMENT (“Agreement”) is made this 12th day of May, 2010, by and among the Iowa Tribe of Oklahoma (“Iowa Tribe”), its governmental components and instrumentalities, including Cimarron Casino Enterprise and Ioway Casino Enterprise (collectively, “Iowa”) and Lakes Iowa Consulting, LLC and Lakes Iowa Management, LLC (collectively, “Lakes”), on behalf of themselves and Affiliates of each as listed on Schedule A hereto (collectively, the “Parties” and each, a “Party”).

I. Purpose of Agreement

          Each of the Parties enter into this Agreement for the purpose of severing the business relationship between and among the Parties, terminating, rescinding and revoking all prior understandings, contracts and agreements between and among the Parties and their officers, employees, contractors and affiliates, except as provided for herein, and settling and resolving for all time and all purposes all known or unknown, direct or indirect, claims, causes of action, business disputes and other disagreements of, between or among the Parties arising from any dealings or relationships of, between or among the Parties existing as relating to or resulting from the contracts, resolutions and decisions set forth on Schedule B (the “Claims”).

II. Terms of Business Termination

          In consideration of the mutual promises set forth herein, and to accomplish the purposes stated above, the Parties agree as follows:

	1.		Fees due and payable from Iowa to Lakes through April 30, 2010 in connection with Iowa’s Cimarron Casino shall be paid by Iowa to Lakes in the normal course of business.
	2.		Iowa agrees to pay Lakes a total of four million five hundred thousand dollars ($4,500,000) (the “Termination Amount”) in accordance with the following schedule:

	a.		One million dollars ($1,000,000.00) to be paid within two business days of the date of execution of this Agreement; and
	b.		The sum of three million five hundred thousand dollars ($3,500,000), to be paid on June 15, 2010 and on the 15th day of each month thereafter in 14 monthly installments of two hundred and thirty three thousand dollars and thirty-three cents ($233,333.33) and a final payment in the amount of two hundred and thirty three thousand dollars and thirty-eight cents ($233,333.38) (collectively, “Installment Payments”).

Execution Copy 05-12-10

	3.		The Parties acknowledge the existence of a depository account into which all revenues of the Cimarron Casino are deposited and which is governed by a dominion account agreement executed by and among certain of the Parties. The Parties agree to cooperate in the modification, and to seek consent of any third parties required to approve any modification, of the dominion account agreement to provide that the Installment Payments be paid directly from such depository account to Lakes. The Parties agree to cooperate to provide Lakes with the same level of security and collateral as it currently has under the dominion account agreement in the event that (a) any required consent is not obtained or (b) the Parties otherwise mutually determine an alternative arrangement is necessary to provide Lakes with such level of security and collateral. Should Iowa fail for any reason to pay timely the amounts due under this Agreement, then in that event, Lakes may notice the Business Committee of the Iowa Tribe in writing addressed to the published address of the headquarter offices of the Iowa Tribe of such failure and default. If such failure and default remains uncured for a period of thirty (30) days, Lakes may rely on collection remedies available under Article 10 of the Management Agreement for the Cimarron Gaming Facility between Cimarron Casino Enterprise, the Iowa Tribe of Oklahoma and Lakes Iowa Management, LLC, as approved by the Chairman of the National Indian Gaming Commission on April 28, 2006 (“Management Agreement”), for collection of such noticed amount due. In addition, such failure or default under this Agreement shall be resolved pursuant to the dispute resolution procedures and other provisions set forth in Article 10 of the Management Agreement. Article 10 of the Management Agreement shall remain in full force and effect until the final Installment Payment is received by Lakes pursuant to this Agreement.
	4.		Iowa may prepay the Installment Payments at any time and from time to time. Any such prepayment will be applied to the Installment Payments in inverse order of maturity. So long as all Installment Payments that are or have become due have been paid, any such prepayment made during the first twelve months after the date of this Agreement will be entitled to a six percent (6%) discount on the Installment Payment amount so prepaid. No discount will be applied to any prepayment of Installment Payments made from and after the first anniversary date of this Agreement.
	5.		In exchange for these payments and the undertakings set forth in this Agreement, the Parties agree to mutually release one another from all prior obligations, responsibilities, and duties unless otherwise specified herein effective May 1, 2010.
	6.		The Business Committee of the Iowa Tribe agrees it will join Lakes’ motion for entry of an order by the Iowa Gaming Commission (a) granting dismissal with prejudice of all matters relating to the licensing of Lakes and any of its Affiliates and associated individuals, and (b) ordering placement of the applications and licenses of Lakes, and any of its Affiliates and associated individuals on permanent inactive status because such applications and licenses shall be rendered moot as a result of this Agreement.
	7.		The effectiveness of this Agreement is contingent upon the entry of an order by the Iowa Gaming Commission (a) granting dismissal with prejudice of all matters relating to the licensing of Lakes and any of its Affiliates and associated individuals, and (b) ordering placement of the applications and licenses of Lakes, and any of its Affiliates and

Page 2 of 10

Execution Copy 05-12-10

associated individuals on permanent inactive status because such applications and licenses shall be rendered moot as a result of this Agreement. In the event that the Iowa Gaming Commission does not issue the order referenced above by the close of business on May 13, 2010, this Agreement shall be null and void.

III. No Admission of Liability

     The payments and undertakings made or to be made by the Parties pursuant to this Agreement are being made to resolve disputed claims. Each Party specifically denies any wrongdoing toward another Party, and specifically denies that they have any liability to another Party.

IV. Mutual Release

     Each Party hereby releases and discharges each and every other Party, and agrees to cause their affiliates and their affiliates’ members, officers, directors, stockholders, heirs, agents, assigns, affiliates, predecessors and successors, to release and discharge each and every other Party, from all known or unknown, direct or indirect, claims, liabilities, demands, causes of action, and damages, of whatever kind or nature, which a Party had, has, or claims to have or had, either individually or jointly, against another Party in connection with the Claims. This release extends and applies to all other unknown, unforeseen, unanticipated, and unsuspected injuries, damages, losses, and liabilities, and the consequences thereof, as well as those now disclosed and known to exist, relating to the Claims. For purposes of this Section IV, the term “Party” includes the Party, its members, officers, directors, heirs, agents, affiliates, assigns, predecessors and successors, as well as a Party’s affiliates’ members, officers, directors, heirs, agents, affiliates, assigns, predecessors and successors.

V. Binding Effect of Agreement

     The Parties agree that this Agreement is binding on and shall inure to the benefit of the Parties hereto and their respective legal representatives, successors, heirs and assigns.

     Each Party warrants that he, she or it has the authority to enter into this Agreement and the representatives executing this Agreement have authority to bind the entity on whose behalf they sign. Each Party also warrants that, upon execution, this Agreement will be binding upon and enforceable against such Party. Each Party further acknowledges that it has been represented by counsel in the negotiation and execution of this Agreement and its executing representatives have read and fully understand this Agreement’s terms.

VI. Confidentiality

     The Parties and their attorneys acknowledge that confidentiality is of the essence and, except as set forth below, they agree to keep confidential and secret the terms of this Agreement and to make no statement or take any other action, direct or indirect whatsoever, which might result in the disclosure or any publicity to any third party concerning the terms of this Agreement. The Parties shall only be entitled to disclose the terms of this Agreement in the event they are required to do so by order of a court of competent jurisdiction, to the extent disclosure is required by rule or regulation of a governmental authority (including securities laws

Page 3 of 10

Execution Copy 05-12-10

requirements), to the extent agreed to by a majority in number of all Parties hereto, or to their accountants and attorneys to the extent necessary to receive professional advice.

VII. Other

     The Parties hereto shall bear all attorney’s fees and costs arising from the actions of their own attorneys in connection with the negotiation and preparation of this Agreement, and the matters and documents referred to herein.

     This Agreement, with the attachments, contains the entire agreement of the Parties and may not be amended in any way except in a writing signed by all of the Parties.

     The Parties do further declare that no promises have been made which are not expressed herein. The terms of the Agreement are contractual and not merely recital. The Parties hereto further expressly state that it is their intention to completely and forever resolve the differences between them relating to the claims asserted or which could be asserted.

     It is further agreed and the Parties hereby covenant unto each other Party that they have not, as of the date of this Agreement, transferred, assigned, or sold any claim or cause of action which they may have or have had against any other Party to this Agreement.

Execution Copy 05-12-10

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the above written date.

Cimarron Casino Enterprise, a governmental component and instrumentality of the Iowa Tribe				Lakes Iowa Management, LLC
By:		/s/ Janice Rowe-Kurak		By:		/s/ Timothy J. Cope
		Janice Rowe-Kurak				Timothy J. Cope
		Its: Chairwoman				Its: President and Chief Financial Officer
				Lakes Iowa Consulting, LLC
By:		/s/ Renee Prince
		Renee Prince
		Its: Secretary Pro Tem		By:		/s/ Timothy J. Cope
						Timothy J. Cope
						Its: President and Chief Financial Officer
Iowa Tribe of Oklahoma, a federally-recognized Indian tribe
By:		/s/ Janice Rowe-Kurak
		Janice Rowe-Kurak
		Its: Chairwoman
By:		/s/ Renee Prince
		Renee Prince
		Its: Secretary Pro Tem
Cimarron Casino Enterprise, a governmental component and instrumentality of the Iowa Tribe
By:		/s/ Janice Rowe-Kurak
		Janice Rowe-Kurak
		Its: Chairwoman
By:		/s/ Renee Prince
		Renee Prince
		Its: Secretary Pro Tem

Execution Copy 05-12-10

Schedule A

The Parties

	1.		Any party to this Agreement or any other agreement, contract and instrument described on Schedule B.
	2.		Any Affiliate of any party to this Agreement or any other agreement, contract and instrument described on Schedule B.
	3.		Any officers, directors, employees, contractors, agents and Affiliates of any Party, or its Affiliates, to this Agreement or any other agreement, contract and instrument described on Schedule B.
	4.		Any Lakes Iowa associated individuals.

“Affiliates” herein shall mean with respect to any specified Person, any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with the specified Person. For the purposes of this definition, “control” (including the terms controlling, controlled by, or under common control with) means the possession, direct or indirect, or the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, partnership or member interests, by contract or otherwise.

“Person” herein shall mean any entity, whether an individual, trustee, corporation, general partnership, limited partnership, limited liability company, limited liability partnership, joint stock company, trust, estate, unincorporated organization, business association, Indian tribe, commission, instrumentality, firm, joint venture, Governmental Authority, or otherwise.

“Lakes Iowa associated individuals” herein shall mean Lakes Iowa Management, LLC (“Lakes Iowa”) and its associated individuals who have been issued a Notice of Suitability Hearing dated April 29, 2010 by the Iowa Gaming Commission, including the following: Lakes Iowa’s parent company, Lakes Entertainment, Inc. and Affiliates, Lyle Berman, Tim Cope, Will Jones, Beth Spindler, Rick Walters, Diane Stone, Lisa Hjortaas, Brad Colbert, Fred Doyle, Eric Strand, Leon Brown, Blake Lyon, Jeff Easton, Scott Just, Mike Montross, Nigel Nightingale, Roger Roden, Larry Barenbaum, Rick White, Scott Schwinghammer, Ray Moberg, Neil Sell, and any other individual employed by or acting on behalf of Lakes Iowa in connection with its management services for the Iowa Cimarron Casino.

Execution Copy 05-12-10

Schedule B

The Contracts

1. Cimarron Casino Project

     a. Management Contract dated March 23, 2006

9 Exhibit A — Legal Description of Gaming Site

9 Exhibit B — Cimarron Casino Resolution of Approval and Grant of Limited Waiver of Immunity from Suit

9 Exhibit C — Iowa Tribe Resolution of Approval and Grant of Limited Waiver of Immunity from Suit

     b. Transaction Documents dated March 23, 2006 related to Management Contract

9 Scope of Project Description Sheet for Iowa Cimarron Casino Project Facilities

9 Operating Note

9 Dominion Account Agreement

9 Security Agreement with 9 UCC-1 Financing Statement forms (and 9 Exhibit A and 9 Schedule I thereto)

9 Indemnity Agreement

     c. Cimarron Casino related documents including:

o Gaming Operations Consulting Agreement dated January 27, 2005 between Iowa Corp, the Iowa Tribe and Lakes Iowa Consulting, LLC

o Iowa Corp Resolution IC-05-01 regarding Limited Waiver of Sovereign Immunity (Consulting Agreement)

o Iowa Tribe Resolution I-05-08 regarding Limited Waiver of Sovereign Immunity (Consulting Agreement)

o Assignment and Assumption Agreement (Consulting) dated December 1, 2005, and o Iowa Corp Resolution IC-05-07 regarding approval of the assignment and assumption

o Iowa Tribe Resolution I-05-98 regarding approval of the assignment and assumption

o Cimarron Casino Resolution I-CCE-05-04 regarding approval of the assignment and assumption

o March 23, 2006 Amendment to Gaming Operations Consulting Agreement

o Iowa Tribe Resolution I-06-30 regarding approval of and waiving sovereign immunity in connection with the March 23, 2006 Amendment

Execution Copy 05-12-10

o Cimarron Casino Resolution I-CCE-06-05 regarding approval of and waiving sovereign immunity in connection with the March 23, 2006 Amendment

o Cimarron Casino Note dated March 23, 2006

o Tribal Agreement (Lakes Iowa Consulting — Cimarron Casino) dated January 27, 2005 between the Iowa Tribe and Lakes Iowa Consulting, LLC

9 Assignment and Assumption Agreement (Management) dated December 1,2005

9 Iowa Corp Resolution IC-05-08 regarding approval of the assignment and assumption

9 Iowa Tribe Resolution I-05-99 regarding approval of the assignment and assumption

9 Cimarron Casino Resolution I-CCE-05-05 regarding approval of the assignment and assumption

9 Tribal Agreement (Lakes Management — Cimarron Casino) dated March 23, 2006 between the Iowa Tribe and Lakes Iowa Management, LLC

9 Iowa Tribe Resolution I-06-29 approving and waiving sovereign immunity in connection with the Tribal Agreement (Lakes Management — Cimarron Casino) dated March 23, 2006

     a. Management Contract dated May 23, 2007

9 Exhibit A — Legal Description of Gaming Site

9 Exhibit B — Ioway Resolution of Approval and Grant of Limited Waiver of Immunity from Suit

9 Exhibit C — Iowa Tribe Resolution of Approval and Grant of Limited Waiver of Immunity from Suit

     b. Transaction Documents dated May 23, 2007 related to Management contract

9 Scope of Project Description Sheet

9 Operating Note

9 Dominion Account Agreement

9 Security Agreement with 9 UCC-1 Financing Statement form (and 9 Exhibit A and 9 Exhibit B thereto)

9 Indemnity Agreement

     c. Ioway Casino related documents including:

9 Gaming Development Consulting Agreement dated January 27, 2005 between Iowa Corp, the Iowa Tribe and Lakes Iowa Consulting, LLC

9 Iowa Corp Resolution IC-05-03 regarding Limited Waiver of Sovereign

Execution Copy 05-12-10

Immunity (Consulting Agreement)

9 Iowa Tribe Resolution I-05-10 regarding Limited Waiver of Sovereign Immunity (Consulting Agreement)

9 Assignment and Assumption Agreement (Consulting) dated May 23, 2007

9 Iowa Corp Resolution FC-07-03 regarding approval of the assignment and assumption

9 Iowa Tribe Resolution I-07-39 regarding approval of the assignment and assumption

9 Ioway Resolution ICE-07-07 regarding approval of the assignment and assumption

9 May 23, 2007 Amendment to Gaming Operations Consulting Agreement

9 Iowa Tribe Resolution I-07-38 regarding approval of and waiving sovereign immunity in connection with the May 23, 2007 Amendment

9 Ioway Resolution ICE-07-06 regarding approval of and waiving sovereign immunity in connection with the May 23, 2007 Amendment

9 Amended and Restated Ioway Note dated May 23, 2007 with 9 Schedule A (Schedule of Advances)

9 Ioway Consulting Fees Note dated May 23, 2007

9 Tribal Agreement (Lakes Iowa Consulting — Cimarron Casino) dated January 27, 2005 between the Iowa Tribe and Lakes Iowa Consulting, LLC

9 Iowa Tribe Resolution I-05-10 approving and waiving sovereign immunity in connection with the Tribal Agreement (Lakes Iowa Consulting) dated January 27, 2005

9 Dominion Account Agreement (Consulting) dated January 27, 2005

9 Security Agreement (Consulting) dated January 27, 2005 with 9 UCC-1 Financing Statement form (and 9 Exhibit A and 9 Exhibit B thereto)

9 Construction Contract [none executed as of July 12, 2007]

9 Design Agreement [none executed as of July 12, 2007]

9 Assignment and Assumption Agreement (Management) dated May 23, 2007

9 Iowa Corp Resolution FC-07-04 regarding approval of the assignment and assumption

9 Iowa Tribe Resolution I-07-41 regarding approval of the assignment and assumption

9 Ioway Resolution ICE-07-08 regarding approval of the assignment and assumption

9 Tribal Agreement (Lakes Management — Cimarron Casino) dated May 23, 2007 between the Iowa Tribe and Lakes Iowa Management, LL

9 Iowa Tribe Resolution I-07-40 approving and waiving sovereign immunity in connection with the Tribal Agreement (Lakes Management — Cimarron Casino) dated May 23, 2007

Execution Copy 05-12-10

3. Any and all amendments to or replacements for the contracts or documents listed in Items 1-2 above.

4. Any and all decisions made by the Development Committee established under the Gaming Development Consulting Agreement relating to the proposed Ioway Casino project.

Exhibit 99.1

		NEWS RELEASE
		Lakes Entertainment, Inc.
		130 Cheshire Lane, Suite 101
		Minnetonka, MN 55305
		952-449-9092
		952-449-9353 (fax)
		www.lakesentertainment.com
		(NASDAQ: LACO)

INVESTOR RELATIONS CONTACT:
Timothy Cope – (952) 449-7030

     

FOR IMMEDIATE RELEASE:
May 13, 2010

LAKES ENTERTAINMENT, INC. ANNOUNCES TERMINATION AGREEMENT WITH IOWA TRIBE OF OKLAHOMA

MINNEAPOLIS, May 13, 2010 — Lakes Entertainment, Inc. (NASDAQ: LACO) announced today that it entered into a termination agreement (“Termination Agreement”) with the Iowa Tribe of Oklahoma, its governmental components and instrumentalities (“Tribe”) terminating all agreements with the Tribe, including a note under which approximately $5.0 million was advanced to the Tribe, effective May 1, 2010. Lakes previously announced that the Tribe had decided not to pursue the proposed Ioway Casino with a subsidiary of Lakes Entertainment.

The Termination Agreement provides for the Iowa Tribe to pay to Lakes a total of $4.5 million in the following manner: $1 million to be paid within two days of execution of the Termination Agreement, and the sum of $3.5 million to be paid in 15 equal monthly installments commencing on June 15, 2010 and on the 15^th day of each of the next 14 months. The Iowa Tribe is permitted to make prepayments on the outstanding amount at a 6% discount during the first twelve months after the execution of the Termination Agreement.

Lakes was operating under a Gaming Development Consulting Agreement (“Consulting Agreement”) with the Tribe to provide development consulting services related to the proposed Ioway Casino development. Lakes was not receiving any compensation for its consulting services under the Consulting Agreement.

Lakes was also managing the Cimarron Casino for the Tribe under a management agreement approved by the National Indian Gaming Commission (“Management Agreement”). The Cimarron casino consists of approximately 375 slot machines and a snack bar. Lakes was receiving an annual management fee for its services in an amount equal to 30% of the net total revenues (as defined in the Management Contract) of the Cimarron Casino in excess of $4 million.

About Lakes Entertainment

Lakes Entertainment, Inc. currently has development and management or financing agreements with three separate Tribes for casino operations in Michigan and California, for a total of three separate casino sites. Lakes is currently managing the Four Winds Casino Resort for the Pokagon Band of Potawatomi Indians and the Red Hawk Casino for the Shingle Springs Band of Miwok Indians. Lakes is also involved in other business activities, including the licensing of table games to Tribal and non-Tribal casinos.

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, need for potential future financing to meet Lakes’ development needs; 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; and reliance on Lakes’ management. For more information, review the company’s filings with the Securities and Exchange Commission.

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