1173284--3/27/2007--JACOBS_ENTERTAINMENT

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{debt, indebtedness, cash}

{investment, property, distribution}

{regulation, change, law}

{capital, credit, financial}

{cost, contract, operation}

{stock, price, operating}

{cost, operation, labor}

{condition, economic, financial}

{loan, real, estate}

{competitive, industry, competition}

{cost, regulation, environmental}

{gas, price, oil}

Risks Related to Our Indebtedness Our substantial indebtedness could adversely affect our financial health and prevent us from fulfilling our obligations under our debt agreements. Our debt agreements impose many restrictive covenants on us. Despite current indebtedness levels, we may still be able to incur substantially more debt, which could exacerbate the risks described above. To service our indebtedness, we will require a significant amount of cash, the availability of which depends on many factors beyond our control. Our senior notes are not secured by any of our assets and senior noteholders rights to enforce remedies will be limited to the rights of holders of unsecured debt. We are a holding company and will depend on the business of our subsidiaries to satisfy our obligations under our indebtedness. We may not have the ability to raise the funds necessary to finance the change of control offer required by our indebtedness. Federal and state statutes allow courts, under specific circumstances, to void guarantees, subordinate claims in respect of indebtedness and require debt holders to return payments received from guarantors. Holders of our senior unsecured notes may be required to comply with registration, licensing, qualification or other requirements under gaming laws or dispose of their securities. Risks Related to Our Business We face extensive regulation from gaming authorities. We depend on our key personnel, particularly Jeffrey P. Jacobs Members of the Jacobs family own a controlling beneficial interest in our capital stock and may significantly influence our affairs or may pursue other activities that compete with us. We need to increase capital expenditures to compete effectively. Economic conditions, seasonality and weather conditions could affect our operations We depend on agreements with Colonial s horsemen to operate our racing and wagering business. Energy price increases may adversely affect our costs and our revenues. Our business, financial condition, and results of operations may be harmed by union efforts to organize our employees. Failure to complete any future construction or development projects on budget and on time could adversely affect our financial condition. If we are unable to finance our expansion and renovation projects as well as capital expenditures through cash flow, borrowings under our senior credit facility and additional financings, our expansion and renovation efforts will be jeopardized. The concentration and evolution of the slot machine manufacturing industry could impose additional costs on us. Our operations could be adversely affected due to the adoption of certain anti-smoking regulations.

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1173284--3/27/2007--JACOBS_ENTERTAINMENT_INC