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Lakes Entertainment, Inc. Announces Change in Audit Firms; Re-Audit of Prior Year Financial Statements Required
MINNEAPOLIS, Aug 8, 2002 (BUSINESS WIRE) -- Lakes Entertainment, Inc. (Nasdaq:LACO) announced today that on July 31, 2002, upon the recommendation and approval of its Board of Directors and its Audit Committee, Lakes Entertainment, Inc. dismissed Arthur Andersen LLP as the Company's independent auditors. On the same date, the Company engaged Deloitte & Touche LLP to serve as the Company's independent auditors.

In connection with Deloitte & Touche's completion of its new client acceptance procedures in July 2002, and prior to Deloitte & Touche's engagement as the Company's auditors, the Company consulted with Deloitte & Touche regarding the application of accounting principles to the Company's sale of land held for development in Las Vegas, Nevada. This transaction was accounted for as a sale in the Company's financial statements for the year ended December 30, 2001. At the time the Audit Committee approved the Company's 2001 audited financial statements in February 2002, Arthur Andersen confirmed to the Audit Committee and management that it concurred with the treatment of the transaction as a sale for accounting purposes. The Company's management has subsequently determined that the transaction did not qualify for treatment as a sale under applicable accounting principles and that the transaction should have been accounted for under the deposit method of accounting. Deloitte & Touche has orally advised the Company that, based on the facts, circumstances, and assumptions presented to Deloitte & Touche by the Company, it concurs with the Company's determination on this matter.

As a result of this determination, the Company is in the process of restating its financial statements for the year ended December 30, 2001. The restatement will not have any effect on total assets, stockholders' equity, cash, net income or earnings per share. The restatement will result in an aggregate decrease in current and non-current notes receivable of $30,826,000, and an increase in land held under contract for sale of $30,826,000. It will also result in the recharacterization of the loss on the transaction in the amount of $25,781,000 from a loss on sale of land held for development to an impairment of long-lived assets.

As a result of the restatement of the 2001 financial statements and Arthur Andersen's inability to provide a current audit opinion, the Company has engaged Deloitte & Touche to re-audit the Company's 2001 financial statements. Deloitte & Touche has advised the Company that it will not be in a position to complete its review of the Company's financial statements for the three and six month periods ended June 30, 2002 until it has completed the re-audit of the financial statements for the year ended December 30, 2001. Upon completion of the re-audit of the Company's 2001 financial statements, the Company will file an amendment to its 2001 Form 10-K to correct the treatment of the aforementioned transaction in the Company's financial statements and to correct any other matters which may come to the Company's attention that affect the Company's previously issued financial statements. Due to the anticipated time involved in conducting the re-audit, the Company believes that it is unlikely that it will be able to file its Quarterly Report on Form 10-Q for the quarter ended June 30, 2002 on a timely basis.

Lakes Entertainment, Inc. currently has development and management agreements with four separate Tribes for four new casino operations, one in Michigan, two in California and one with the Nipmuc Nation on the East Coast. Lakes Entertainment also has agreements for the development of one additional casino on Indian-owned land in California through a joint venture with MRD Gaming. Additionally, the Company owns approximately 80% of World Poker Tour, LLC, a joint venture formed to film and produce poker tournaments for television broadcast.

Lakes Entertainment, Inc. common shares are traded on the Nasdaq National Market under the trading symbol "LACO".

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. Certain information included in this press release (as well as information included in oral statements or other written statements made or to be made by Lakes Entertainment, Inc.) contains statements that are forward-looking, such as statements relating to plan for future expansion and other business development activities as well as other capital spending, financing sources and the effects of regulation (including gaming and tax regulation) and competition. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results may differ from those expressed in any forward-looking statements made by or on behalf of the Company. These risks and uncertainties include, but are not limited to, possible delays in completion of Lakes' casino projects, including various regulatory approvals and numerous other conditions which must be satisfied before completion of these projects; possible termination or adverse modification of management contracts; continued indemnification obligations to Grand Casinos; highly competitive industry; possible changes in regulations; reliance on continued positive relationships with Indian tribes and repayment of amounts owned to Lakes by Indian tribes; possible need for future financing to meet Lakes' expansion goals; risks of entry into new businesses; and reliance on Lakes' management. For more information, review the Company's filings with the Securities and Exchange Commission.

CONTACT:          Lakes Entertainment, Inc., Minneapolis
                  Timothy J. Cope, 952/449-7030

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