1296785--12/23/2009--Seneca_Gaming

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{debt, indebtedness, cash}

{regulation, change, law}

{investment, property, distribution}

{cost, contract, operation}

{cost, regulation, environmental}

{competitive, industry, competition}

{loss, insurance, financial}

{personnel, key, retain}

{cost, operation, labor}

{condition, economic, financial}

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Risks Relating to Our Indebtedness We have substantial indebtedness and other financial obligations which could adversely affect our financial condition and prevent us from fulfilling our obligations, including our senior notes. Despite current indebtedness levels and restrictive covenants, we may incur additional indebtedness in the future, which would intensify our leverage risks. Our failure to generate sufficient cash flow from our operations could adversely affect our ability to make payments on our senior notes and fulfill our other financial obligations. Our obligations under the Indenture governing the senior notes are not secured, and the senior note holders rights to receive payments on the senior notes are effectively subordinated to SGC s and the restricted subsidiary guarantors secured indebtedness. SGC conducts substantially all of its operations through its restricted subsidiaries and may be limited in its ability to access funds from its restricted subsidiaries to meet its financial obligations, including the senior notes. The senior notes are not the obligation of the Nation and the senior note holders rights as creditors are limited to the assets of SGC and the restricted subsidiary guarantors. The senior note holders ability to enforce their rights or have an adequate remedy against the Nation and us may be limited by the sovereign immunity of the Nation and us. If senior note holders are unable to enforce their rights, they may lose their entire investment in the senior notes. Uncertainty exists as to whether a federal or state court would have jurisdiction in an action related to the senior notes. Senior note holders may be required to dispose of their senior notes, or their senior notes may be redeemed, if their ownership of the senior notes jeopardizes our gaming operations or violates the Compact. It is uncertain whether we or the Nation may be subject to the U.S. Bankruptcy Code, which could impair the senior note holders ability to be repaid from the sale of our assets if we are unable to meet our financial obligations. If the guarantees of the senior notes are deemed fraudulent conveyances or preferential transfers, a court may subordinate or void them. SGC and the restricted subsidiary guarantors may not be able to repurchase senior notes upon a change of control. The Indenture governing the senior notes and the Amended Senior Secured Revolving Loan Agreement contain various covenants and provisions that limit our management s discretion in the operation of our business. Risks Relating to our Relationship to the Nation We are controlled by the Nation and the interests of the Nation may conflict with the interests of senior note holders. The Nation has a limited body of laws and has not adopted a corporate code. As a result, legal terms used in this Annual Report, the Indenture governing the senior notes and other relevant documents may have different meanings under the laws of the Nation than under laws with which you are familiar. We are governmentally owned and will not necessarily be operated in the same way as if we were a privately owned for-profit business, which may materially adversely affect our ability to meet our financial obligations. A change in the Nation s current tax-exempt status could have a material adverse effect on our ability to repay our financial obligations, including the senior notes. Changes in the membership of the Council, its policies or the Nation s constitution could adversely affect our operations. Risks Relating to our Business Our business is particularly sensitive to reductions in discretionary consumer spending as a result of downturns in the economy. We are subject to greater risks than a geographically diverse company due to our location in Western New York, and are particularly susceptible to conditions affecting this region. We compete with casinos, other forms of gaming and entertainment and other resort properties. If we are unable to compete successfully, we may not be able to generate sufficient cash flow to fund our operations or fulfill our financial obligations as they become due, including the senior notes. If we are unable to retain our key personnel, or to fill current vacancies at the positions of Chief Executive Officer, General Manager of the Seneca Niagara Casino and Hotel, and General Counsel, our ability to execute our business strategy could be impaired. We could face difficulties in attracting and retaining qualified employees. We have limited experience operating casinos and hotels in Western New York. We may not be successful in opening our golf course in Lewiston, New York in 2010, due to our lack of experience in this business and a variety of other factors, many of which are beyond our control. Our business could be affected by weather-related factors and seasonality. Terrorism and war may directly or indirectly harm our business. Risks Relating to Litigation and Regulation Although litigation challenging the validity of our Compact and our right to conduct Class III gaming in New York State has been unsuccessful to date, the validity of the Compact and our right to conduct Class III gaming in New York State could still be challenged in court or otherwise adversely affected by legislation, regulation, or judicial action relating to gaming generally, or our right to conduct Class III gaming, in particular. If our ability to operate Class III gaming facilities on land held in restricted fee by the Nation were successfully challenged, it would have a material adverse effect on our ability to conduct gaming operations in Niagara Falls and Erie County pursuant to the Compact. Citizens Against Casino Gambling in Erie County v. Kempthorne (1:06-cv-00001-WMS (WDNY)) (formerly Citizens Against Casino Gambling v. Norton) Citizens Against Casino Gambling in Erie County v. Hogen (1:07-cv-00451-WMS (WDNY)) Citizens Against Casino Gambling in Erie County v. Hogen (1:2009-cv-00291 (WDNY)) CACGEC III Scott v. Pataki (NYS Supreme Court, Erie County, Index No. 001189/06) Warren v. United States (1:06-c-00226-JTE (WDNY)) The current review by the NIGC of the Nation s use of gaming revenues could materially adversely affect our operations. SNFGC may be subject to material liabilities arising out of the condemnation process through which it is acquiring lands in the 50-acre footprint in the City of Niagara Falls, New York. We may be subject to material environmental liability as a result of unknown environmental hazards. We rely in part on federal and in part on common law trade name protection to protect certain of our trademarks. Any adverse changes in the laws regulating our gaming operations or our failure to maintain licenses required under gaming laws and regulations and other permits and approvals required under applicable laws and regulations could have a material adverse effect on our ability to conduct gaming operations and to fulfill our financial obligations, including the senior notes. Regulatory actions by the Seneca Gaming Authority could affect our operations adversely.

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1296785--12/23/2009--Seneca_Gaming_Corp