Lakes Entertainment enters into credit deal with UBS Financial Services

MINNEAPOLIS, Minnesota -- (PRESS RELEASE) -- Lakes Entertainment, Inc. (NASDAQ: LACO - News) announced today that effective April 11, 2008, it entered into a client agreement with UBS Financial Services, Inc. ("UBS") dated April 4, 2008 for the purpose of borrowing and/or obtaining credit in a principal amount not to exceed $11.0 million ("Margin Account Agreement"). The Margin Account Agreement is secured by Lakes' auction rate securities ("ARS") held at UBS. On April 11, Lakes made an initial draw under the Margin Account Agreement in the principal amount of $3.0 million to be used for working capital purposes.

As previously announced, the types of ARS investments that the Company owns are backed by student loans, the majority of which are guaranteed by the U.S. government and all of which have credit ratings of AAA or Aaa. Historically, these ARS investments have been highly liquid, using an auction process that resets the applicable interest rate at predetermined intervals, typically every 28 days, to provide liquidity at par. However, as a result of the recent liquidity issues experienced in the global credit and capital markets, the auctions for all of the Company's ARS investments failed beginning in February 2008 when sell orders exceeded buy orders.

The ARS investments continue to pay interest in accordance with the terms of the underlying security; however, liquidity in the Company's ARS has not been available to Lakes since the auctions began to fail. Therefore, as a result of upcoming liquidity needs, Lakes entered into this Margin Account Agreement with UBS. Lakes currently expects to be able to fulfill its potential future liquidity needs through this Margin Account Agreement if it is unable to liquidate its ARS investments as needed.