813762--3/6/2007--AMERICAN_REAL_ESTATE_PARTNERS_L

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Risks Relating to Our Structure Our general partner and its control person could exercise their influence over us to your detriment. We have engaged, and in the future may engage, in transactions with our affiliates. Certain of our management are committed to the management of other businesses. To service our indebtedness and pay distributions with respect to our units, we will require a significant amount of cash. Our ability to maintain our current cash position or generate cash depends on many factors beyond our control. We are a holding company and will depend on the businesses of our subsidiaries to satisfy our obligations. We or our subsidiaries may be able to incur substantially more debt. Our failure to comply with the covenants contained under any of our debt instruments, including the indentures governing our outstanding notes, including our failure as a result of events beyond our control, could result in an event of default which would materially and adversely affect our financial condition. The market for our securities may be volatile. We have only recently made cash distributions to our unitholders, and future distributions, if any, can be affected by numerous factors. Holders of our depositary units have limited voting rights, rights to participate in our management and control of us. Holders of depositary units may not have limited liability in certain circumstances and may be liable for the return of distributions that cause our liabilities to exceed our assets. We may be subject to the pension liabilities of our affiliates. We are subject to the risk of possibly becoming an investment company. We may become taxable as a corporation. Holders of units may be required to pay tax on their share of our income even if they did not receive cash distributions from us. If we discover significant deficiencies in our internal controls over financial reporting or at any recently acquired entity, it may adversely affect our ability to provide timely and reliable financial information and satisfy our reporting obligations under federal securities laws, which also could affect the market price of our depositary units or our ability to remain listed with the New York Stock Exchange. Since we are a limited partnership, you may not be able to pursue legal claims against us in U.S. federal courts. Our failure to comply with the covenants contained under one of our debt instruments or the indenture governing the notes, including our failure as a result of events beyond our control, could result in an event of default which would materially and adversely affect our financial condition. To service our indebtedness, we will require a significant amount of cash. Our ability to maintain our current cash position or generate cash depends on many factors beyond our control. Risks Related to our Businesses Our acquisition of Lear Corporation will require a significant investment or may not be successfully completed. The gaming industry is highly regulated. The gaming authorities and state and municipal licensing authorities have significant control over our operations. Rising operating costs for our gaming properties could have a negative impact on our profitability. We face substantial competition in the gaming industry. We cannot guarantee that we will be able to recover our investment made in connection with the acquisition of the Aquarius. Operating results for our Gaming segment have been adversely affected by a number of factors that have affected and may continue to affect results. Our investment in property development may be more costly than anticipated. We may be subject to environmental liability as an owner or operator of development and rental real estate. Pending bankruptcy proceedings may result in our ownership of WPI s common stock being reduced to less than 50%. A legal action in Delaware challenges our ownership of the preferred stock of WPI. Uncertainties arising from these proceedings may adversely affect WPI s operations and prospects and the value of our investment in it. WPI acquired its business from the former owners through bankruptcy proceedings. We cannot assure you that it will be able to operate profitably. The loss of any of WPI s large customers could have an adverse effect on WPI s business. A portion of WPI s sales are derived from licensed designer brands. The loss of a significant license could have an adverse effect on WPI s business. A shortage of the principal raw materials WPI uses to manufacture its products could force WPI to pay more for those materials and, possibly, cause WPI to increase its prices, which could have an adverse effect on WPI s operations. The home fashion industry is highly competitive and WPI s success depends on WPI s ability to compete effectively in the market. WPI intends to increase the percentage of its products that are made overseas. There is no assurance that WPI will be successful in obtaining goods of sufficient quality on a timely basis and on advantageous terms. WPI will be subject to additional risks relating to doing business overseas. There has been consolidation of retailers of WPI s products that may reduce its profitability. WPI is subject to various federal, state and local environmental and health and safety laws and regulations. If it does not comply with these regulations, it may incur significant costs in the future to become compliant. We may not be able to identify suitable investments, and our investments may not result in favorable returns or may Our investments may be subject to significant uncertainties.

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813762--3/6/2007--AMERICAN_REAL_ESTATE_PARTNERS_L_P