Pawnee Trading Post Casino agreement not renewed

MINNEAPOLIS, Minnesota -- (PRESS RELEASE) -- Lakes Entertainment, Inc. (NASDAQ:LACO) announced today that the Pawnee Nation of Oklahoma Business Council ("Business Council") declined to approve a proposed updated tribal agreement with a Lakes subsidiary relating to the Pawnee Trading Post Casino. In January 2005, the Business Council, the tribal governmental leadership of the Tribe, approved a tribal agreement ratifying consulting agreements and management contracts between the Lakes' subsidiary and the Pawnee Tribal Development Corporation ("TDC") and the TDC's gaming subsidiaries relating to the Trading Post Casino and two other proposed gaming facilities, the Travel Plaza Casino and the Chilocco Casino. Since that time, several new members have been appointed to the Business Council which has resulted in a substantial change in the Business Council's membership. Lakes, the TDC and its gaming subsidiaries (the tribal entities that own and operate the tribal casinos), which support approving the updated tribal agreement and Lakes' involvement in the projects, are now evaluating how they wish to proceed with their current project agreements given this action, including perhaps terminating the project agreements.

For its consulting services, Lakes is receiving monthly fees of $5,000 related to the Trading Post Casino project and is to receive monthly fees of $25,000 and $250,000 from the Travel Plaza Casino and Chilocco Casino projects, respectively, upon their completion. Lakes had also planned to manage each of these facilities under management contracts, subject to regulatory approvals.

Lakes has advanced approximately $5.1 million to the TDC related to these projects under the existing agreements. Lakes intends to work with the TDC to resolve all of the financial terms of the contracts including repayment of the advances if the project agreements are in fact terminated as a result of the Business Council's decision. However, if the agreements are terminated, there can be no assurance that Lakes will receive any future fees related to these projects or that it will be repaid in full for its advances.

"We are disappointed by the decision of the Business Council," noted Tim Cope, President of Lakes. "We continue to work with the TDC and the Business Council to reach a resolution to this issue."