The Company’sTable ability to service its contractual obligations and commitments, other than the nonrecourse debt, will be dependent on the future performance of the Pioneer, which will be affected by, among other things, prevailing economic conditions and financial, business and other factors, including competitive pressure from the expansion of Native American gaming facilities in the southwest United States, certain of which factors are beyond the Company’s control. In addition, the Company will be dependent on the continued ability of the tenants in the rental property in the Dorchester Section of Boston, Massachusetts, and the property held for sale in Gaithersburg, Maryland, to make payments pursuant to the leases with the Company. The payments under the leases are contractually committed to be used to make payments on the Company’s nonrecourse debt obligations related to the Dorchester Property and Gaithersburg Property, respectively. Contents

CertainTable statements in this Quarterly Report on Form 10-Q which are not historical facts are forward-looking statements, such as statements relating to future operating results, existing and expected competition, financing and refinancing sources and availability and plans for future development or expansion activities, capital expenditures and expansion of business operations into new areas. Such forward-looking statements involve a number of risks and uncertainties that may significantly affect the Company’s liquidity and results in the future and, accordingly, actual results may differ materially from those expressed in any forward-looking statements. Such risks and uncertainties include, but are not limited to, those related to effects of competition, leverage and debt service, general economic conditions, changes in gaming laws or regulations (including the legalization of gaming in various jurisdictions) and risks related to development activities and the startup of non-gaming operations. Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: ~~June~~December 3031, 2010

¨	TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 1-9481

ARCHON CORPORATION

(Exact name of registrant as specified in its charter)

Nevada

88-0304348

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

2200 Casino Drive, Laughlin, Nevada 89029

(Address of principal executive office and zip code)

(702) 732-9120

(Registrant’s telephone number, including area code)

4336 Losee Road, Suite 5, North Las Vegas, Nevada 89030

(Former name, former address and former fiscal year, if changed since last report)

Indicate by a check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by a check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer ~~or a smaller reporting company~~. See definition of “~~large~~ accelerated filer, ~~accelerated filer”~~ and ~~“small~~large ~~reporting~~accelerated ~~company~~filer” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ¨ No ¨

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

65,~~017~~792,944 as of ~~August~~February 1318, ~~2010~~2011

ARCHON CORPORATION

INDEX

		~~Page~~	Page
PART I	FINANCIAL INFORMATION
Item 1	Unaudited Condensed Consolidated Financial Statements:
	Consolidated Balance Sheets as of June 30, 2010 (Unaudited) and September 30, 2009 (Audited)	1
		Consolidated Balance Sheets as of December 31, 2010 (Unaudited) and September 30, 2010 (Audited)		1
	Consolidated Statements of Operations for the Three and Nine Months Ended June 30, 2010 and 2009 (Unaudited)	3
		Consolidated Statements of Operations for the Three Months Ended December 31, 2010 and 2009 (Unaudited)		3
	Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended June 30, 2010 and 2009 (Unaudited)	5
		Consolidated Statements of Comprehensive Income for the Three Months Ended December 31, 2010 and 2009 (Unaudited)		5
	Consolidated Statement of Stockholders’ Equity for the Nine Months Ended June 30, 2010 (Unaudited)	6
		Consolidated Statement of Stockholders’ Equity for the Three Months Ended December 31, 2010 (Unaudited)		6
	Consolidated Statements of Cash Flows for the Nine Months Ended June 30, 2010 and 2009 (Unaudited)	7
		Consolidated Statements of Cash Flows for the Three Months Ended December 31, 2010 and 2009 (Unaudited)		7
	~~Notes to Unaudited Consolidated Financial Statements~~	8Notes to Unaudited Consolidated Financial Statements		8
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21		21
Item 3	Quantitative and Qualitative Disclosures About Market Risk	34		31
Item 4	Controls and Procedures	35		32
PART II	OTHER INFORMATION
Item 1	Legal Proceedings	36		35
Item 2	Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities	37		37
Item 3	Defaults Upon Senior Securities	37		37
Item 4	Submission of Matters to a Vote of Security Holders	37		37
Item 5	Other Information	38		37
Item 6	Exhibits	38		38

-i -

PART I – FINANCIAL INFORMATION

Item 1. Unaudited Consolidated Financial Statements

Archon Corporation and Subsidiaries

Consolidated Balance Sheets

	June 30,2010(Unaudited)			September 30,2009Audited
	December 31,2010(Unaudited)			September 30,2010(Audited)
ASSETS
Current assets:
Cash and cash equivalents	$	149,~~173~~575,~~633~~570		$	319,~~646~~578,~~498~~555
Investment in marketable securities		1518,~~399~~744,~~847~~649			517,~~995~~773,~~289~~265
Accounts receivable, net		~~404~~183,~~124~~763			~~170~~189,~~935~~895
Inventories		~~154~~156,~~805~~141			~~231~~152,~~689~~437
Prepaid expenses and other		~~606~~939,~~042~~942			~~945~~901,~~167~~451
Deferred tax assets		761,367			512,695
Assets held for sale, current		506,889			469,061
Total current assets		31,499,818			39,502,273
Deferred tax assets		166,555			472,916
Property held for sale		54,984,625			55,357,905
Total current assets		30,273,509			29,537,580
Assets held for sale		54,171,475			54,362,434
Property and equipment:
Rental property held for investment, net		88,248,498			89,511,868
Rental property, net		87,405,768			87,827,133
Land used in operations		3,960,589			3,~~925~~960,589
Buildings and improvements		25,704,561			25,~~751~~704,~~045~~561
Machinery and equipment		8,~~255~~389,~~038~~044			8,~~264~~331,~~373~~826
Accumulated depreciation		(28,~~490~~778,~~288~~212	)		(28,~~103~~621,~~429~~442	)
Property and equipment, net		9796,~~678~~681,~~398~~750			9997,~~349~~202,~~446~~667
Other assets		3,~~056~~042,~~978~~078			23,~~774~~020,~~685~~626
Total assets	$	~~187~~184,~~219~~168,~~819~~812		$	~~196~~184,~~984~~123,~~309~~307

The accompanying notes are an integral part of these consolidated financial statements.

-1 -

Archon Corporation and Subsidiaries

Consolidated Balance Sheets (continued)

	June 30,2010(Unaudited)			September 30,2009Audited
	December 31,2010(Unaudited)			September 30,2010(Audited)
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Line of credit	$	79,~~971~~812,~~114~~500		$	75,~~866~~000,~~659~~000
Accounts payable		~~857~~933,~~760~~241			21,~~099~~277,~~581~~560
Accrued and other liabilities		2,~~255~~272,~~104~~360			2,~~722~~222,~~690~~201
Exchangeable redeemable preferred stock - unredeemed		~~814~~798,~~897~~021			~~821~~813,~~259~~665
Current liabilities – property held for sale		3,620,736			3,342,837
Current liabilities – assets held for sale		3,821,027			3,718,020
Total current liabilities		15,519,611			16,853,026
Current liabilities – deferred rent income		3,426,648			3,426,648
Long term liabilities – property held for sale		34,475,787			37,114,921
Total current liabilities		21,063,797			16,458,094
Non-recourse debt – less current portion		31,199,288			31,199,288
Long-term liabilities – assets held for sale		32,583,853			33,541,444
Deferred tax liabilities		21,505,682			21,828,674
Nonrecourse debt		31,199,288			31,199,288
Deferred rent income		34,266,480			36,836,466
Deferred tax liabilities		21,228,274			21,513,085
Total liabilities		136,966,848			143,832,375
Deferred rent income		29,126,508			29,983,170
Total liabilities		135,201,720			132,695,081
Commitments and contingencies (Note 6)
Stockholders’ equity:
Preferred stock, exchangeable, redeemable 16.0% cumulative $2.14 per share liquidation value, authorized - 10,000,000 shares; none issued and outstanding		0			0
Preferred stock, exchangeable, redeemable 16.0% cumulative $2.14 per share liquidation value, authorized - 10, 000, 000 shares; none issued and outstanding		0			0
Common stock, $0.01 par value; authorized - 100,000,000 shares; issued and outstanding – 6,316,576, and 6,316,576 shares		63,166			63,166
Common stock, $.01 par value; authorized - 100,000,000 shares; issued and outstanding – 6,316,576, and 6,316,576 shares		63,166			63,166
Additional paid-in capital		63,247,158			6263,~~982~~247,~~941~~158
Accumulated deficit		(7,~~849~~395,~~194~~085	)		(87,~~737~~506,~~568~~070	)
Accumulated other comprehensive loss		(146,~~064,905~~274	)		(1286,~~044,883~~655	)
Sub-total		54,396,225			53,263,656
		55,868,965			55,517,599
Less: Notes receivable from stockholders		(111,722	)		(111,722	)
Less: notes receivable from principal stockholders		(57,841	)		(57,841	)
Treasury stock – 298,632 and 0 common shares, at cost		(4,031,532	)		0
Less: treasury common stock – 523,632 and 298,632 shares, at cost		(6,844,032	)		(4,031,532	)
Total stockholders’ equity		5048,~~252~~967,~~971~~092			5351,~~151~~428,~~934~~226
Total liabilities and stockholders’ equity	$	~~187~~184,~~219~~168,~~819~~812		$	~~196~~184,~~984~~123,~~309~~307

The accompanying notes are an integral part of these consolidated financial statements.

-2 -

Archon Corporation and Subsidiaries

Consolidated Statements of Operations

(Unaudited)

Three Months EndedJune 30,

Nine Months EndedJune 30,

Three Months EndedDecember 31,

2010

2009

~~2010~~

~~2009~~

Revenues:

Casino

2,~~815~~715,~~874~~426

3,~~814~~226,~~896~~752

~~9,583,746~~

~~12,759,506~~

Hotel

~~381~~283,~~899~~294

~~487~~320,~~810~~807

~~1,096,106~~

~~1,285,349~~

Food and beverage

1876,~~027,374~~144

1,~~515~~214,~~505~~213

~~3,425,678~~

~~4,472,409~~

Investment properties

1,910,180

2,413,481

5,703,040

7,954,243

Rental properties

1,835,680

1,882,680

Other

~~133~~73,~~972~~770

~~443~~640,~~812~~613

~~1,132,746~~

~~1,360,969~~

Gross revenues

65,~~269~~784,~~299~~314

87,~~675~~285,~~504~~065

~~20,941,316~~

~~27,832,476~~

Less casino promotional allowances

(~~660~~661,~~608~~156

)

(~~951~~909,~~046~~358

)

~~(2,438,645~~

)

~~(3,018,179~~

)

Net operating revenues

5,~~608~~123,~~691~~158

76,~~724~~375,~~458~~707

~~18,502,671~~

~~24,814,297~~

Operating expenses:

Casino

1,~~778~~602,~~237~~680

2,~~402~~227,~~022~~266

~~6,025,902~~

~~7,447,874~~

Hotel

~~187~~149,~~359~~930

~~224~~135,~~083~~655

~~466,551~~

~~586,833~~

Food and beverage

~~729~~450,~~364~~492

1744,~~062,455~~468

~~2,188,573~~

~~3,023,293~~

Other

8070,~~317~~962

~~136~~80,~~830~~625

~~244,641~~

~~520,329~~

Selling, general and administrative:

Corporate expenses

786,719

760,175

2,456,464

2,539,009

Corporate

745,640

832,644

Other

~~684~~681,~~475~~105

~~789~~765,~~660~~848

~~2,105,386~~

~~2,322,500~~

Utilities and property expenses

~~936~~941,~~635~~690

1971,~~024,250~~352

~~2,861,190~~

~~2,986,598~~

Depreciation and amortization

592,646

621,631

1,780,408

1,936,765

Depreciation

578,135

594,300

Total operating expenses

5,~~775~~220,~~752~~634

76,~~021~~352,~~106~~158

~~18,129,115~~

~~21,363,201~~

Operating income (loss)

(~~167~~97,~~061~~476

)

~~703~~23,~~352~~549

~~373,556~~

~~3,451,096~~

Other income and (expense):

Interest expense

(1,~~182~~025,~~095~~837

)

(1,~~228~~104,~~071~~209

)

~~(3,361,903~~

)

~~(3,578,569~~

)

Gain (loss) on sale of marketable securities

3699,~~070~~865

(1664,~~520~~278

)

~~(31,537~~

)

~~(111,509~~

)

Interest and other income

~~103~~293,~~515~~349

~~149~~306,~~953~~092

~~871,848~~

~~547,053~~

Income (loss) before income tax expense

(1,209,571

)

(391,286

)

(2,148,036

)

308,071

Loss before income tax benefit

(730,099

)

(838,846

)

Federal income tax (expense) benefit from continuing operations

1,019,477

136,969

1,372,913

(93,231

)

Federal income tax benefit, continuing operations

364,506

318,570

Income (loss) from continuing operations

(190,094

)

(254,317

)

(775,123

)

214,840

Loss from continuing operations

(365,593

)

(520,276

)

Discontinued operations gain, net of tax expense of $178,856 and $137,611 QTD and $895,730 and $402,945 YTD, respectively

332,160

255,563

1,663,497

748,327

Discontinued operations gain, net of tax expense of $256,619 and $480,778, respectively

476,578

892,872

Net income

~~142~~110,~~066~~985

1372,~~246~~596

~~888,374~~

~~963,167~~

The accompanying notes are an integral part of these consolidated financial statements.

-3 -

Archon Corporation and Subsidiaries

Consolidated Statements of Operations

(Unaudited) (continued)

	Three Months EndedJune 30,						Nine Months EndedJune 30,
	Three Months EndedDecember 31,
	2010			2009			~~2010~~			~~2009~~
Average common shares outstanding		65,~~316~~792,~~576~~944			6,~~370~~316,~~176~~576			~~6,316,576~~			~~6,356,510~~
Average common and common equivalent shares outstanding		65,~~316~~792,~~576~~944			6,~~370~~316,~~176~~576			~~6,316,576~~			~~6,356,510~~
Income (loss) from continuing operations per common share
Loss from continuing operations per common share
Net basic income (loss) per common share	$	(0.03	)	$	(0.04	)	$	(0.12	)	$	0.03
Net basic loss per common share	$	(0.06	)	$	(0.08	)
Diluted income (loss) per common share	$	(0.03	)	$	(0.04	)	$	(0.12	)	$	0.03
Diluted loss per common share	$	(0.06	)	$	(0.08	)
Discontinued operations per share
Discontinued operations gain, net of tax per common share
Net basic income per common share	$	0.0508		$	0.0414		$	~~0.26~~			~~0.12~~
Diluted income per common share	$	0.0508		$	0.0414		$	~~0.26~~			~~0.12~~
Income per common share
Net basic income per common share	$	0.02		$	0.0006		$	~~0.14~~		$	~~0.15~~
Diluted income per common share	$	0.02		$	0.0006		$	~~0.14~~		$	~~0.15~~

The accompanying notes are an integral part of these consolidated financial statements.

-4 -

Archon Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income ~~(Loss)~~

(Unaudited)

	Three Months EndedJune 30,						Nine Months EndedJune 30,
	Three Months EndedDecember
	2010			2009			~~2010~~			~~2009~~
Net income	$	~~142~~110,~~066~~985		$	1372,~~246~~596		$	~~888,374~~		$	~~963,167~~
Unrealized gain (loss) on marketable securities, net of income taxes		~~(270~~240,~~964~~381	)		~~480~~(65,~~477~~741	)		~~(20,022~~	)		~~(1,276,728~~	)
Comprehensive income (loss)	$	(128,898	)	$	481,723		$	868,352		$	(313,561	)
Comprehensive income	$	351,366		$	306,855

The accompanying notes are an integral part of these consolidated financial statements.

-5 -

Archon Corporation and Subsidiaries

Consolidated Statement of Stockholders’ Equity

For the ~~Nine~~Three Months Ended ~~June~~December 3031, 2010

(Unaudited)

	PreferredStock $		~~CommonStock~~	CommonStock	~~CommonStock $~~		~~AdditionalPaid-In~~CommonStock ~~Capital~~$		~~AccumulatedDeficit~~	AdditionalPaid-InCapital		~~AccumulatedOther Comprehen-siveIncome(Loss)~~	AccumulatedDeficit			~~NotesReceivable FromStockholders~~	AccumulatedOtherComprehensiveIncome (Loss)			~~TreasuryStock~~	NotesReceivableFromStockholders			~~Total~~	TreasuryStock			Total
Balances, October 1, 2009	$	0	6,316,576		$	63,166	$	62,982,941	$	(8,737,568	)	$	(1,044,883	)		$	(111,722	)		$	0			$	53,151,934
Balances, October 1, 2010	$	0			6,316,576		$	63,166		$	63,247,158		$	(7,506,070	)		$	(286,655	)		$	(57,841	)		$	(4,031,532	)	$	51,428,226
Net income										~~888,374~~				110,985											~~888,374~~				110,985
Additional Paid-In Capital								264,217																	264,217
Purchase of treasury stock																										(2,812,500	)		(2,812,500	)
Purchase of treasury stock																					(4,031,532	)			(4,031,532	)
Unrealized gain on marketable securities																		240,381											240,381
Unrealized gain on marketable securities													(20,022	)											(20,022	)
Balances, December 31, 2010	$	0			6,316,576		$	63,166		$	63,247,158		$	(7,395,085	)		$	(46,274	)		$	(57,841	)		$	(6,844,032	)	$	48,967,092
Balances, June 30, 2010	$	0	6,316,576		$	63,166	$	63,247,158	$	(7,849,194	)	$	(1,064,905	)		$	(111,722	)		$	(4,031,532	)		$	50,252,971

The accompanying notes are an integral part of these consolidated financial statements.

-6 -

Archon Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

	Nine Months EndedJune 30,
	Three Months EndedDecember 31,
	2010			2009
Cash flows from operating activities:
Net income	$	~~888~~110,~~374~~985		$	~~963~~372,~~167~~596
Discontinued operations, net of tax effect		(1,663,497	)		(748,327	)
Less: discontinued operations gain, net of tax effect		(476,578	)		(892,872	)
Net income (loss) from continuing operations -		(775,123	)		214,840
Net loss from continuing operations		(365,593	)		(520,276	)
Adjustments to reconcile net income to net cash provided by operating activities:
Adjustments to reconcile net loss from continuing operations to net cash used in operating activities:
Depreciation and amortization		1,780,408			1,936,765
Income tax benefit		(364,506	)		(318,569	)
Interest expense from amortization of debt issuance costs		275,524			355,679
Depreciation		578,135			594,300
Loss on sale of marketable securities		31,537			111,509
Interest expense from amortization of debt issuance costs		(18,886	)		57,023
Change in assets and liabilities:
(Gain) loss on sale of marketable securities		(99,865	)		64,278
Accounts receivable		(233,189	)		(404,110	)
Change in operating assets and liabilities:
Inventories		76,884			93,794
Accounts receivable		6,132			(7,333	)
Prepaid expenses and other		339,125			471,588
Inventories		(3,704	)		18,110
Deferred income taxes		(1,456,613	)		496,176
Prepaid expenses and other		(38,491	)		(149,196	)
Other assets		(~~557~~2,~~817~~566	)		85(87,~~617~~596	)
Accounts payable		(1344,~~241,821~~319	)		(1403,~~002,782~~311	)
Interest payable		0			(8,539	)
Accrued and other liabilities		50,159			(7,650	)
Accrued expenses and other current liabilities		(203,369	)		(1,152,382	)
Deferred rent		(856,662	)		(856,662	)
Other liabilities		(2,569,986	)		(2,227,088	)
Net cash used in operating activities		(1,460,166	)		(1,616,882	)
Net cash used in operating activities		(4,534,440	)		(1,028,933	)
Cash flows from investing activities:
Capital expenditures		(109,360	)		(1,232,312	)
Proceeds from sale or disposal of assets		0			28,885
Marketable securities purchased		(12,215,169	)		(2,779,199	)
Capital expenditures		(57,218	)		(30,722	)
Marketable securities sold or redeemed		2,748,271			1,949,641
Marketable securities purchased		(2,365,523	)		(2,190,324	)
Net cash used in investing activities		(9,576,258	)		(2,061,870	)
Marketable securities sold or redeemed		1,863,822			1,032,333
Net cash used in investing activities		(558,919	)		(1,159,828	)
Cash flows from financing activities:
Proceeds from line of credit		~~104~~5,~~455~~812,500			0
Payments on debt and obligation under capital lease		0			(946,127	)
Payment on line of credit		(1,000,000	)		0
Common stock purchased and retired		(42,~~031~~812,~~532~~500	)		~~(230,259~~0	)
Preferred stock redeemed and retired		(615,~~362~~644	)		~~(13,086~~0	)
Net cash used in financing activities		(3,933,439	)		(1,189,472	)
Net cash provided by financing activities		1,984,356			0
Cash flows from discontinued operations		571,272			5,420
Cash flows from Discontinued Operations:
Decrease in cash and cash equivalents		(17,472,865	)		(4,274,855	)
Cash flows from operating activities		887,701			1,492,040
Cash and cash equivalents, beginning of period		31,646,498			37,973,564
Cash flows from financing activities		(855,957	)		(845,954	)
Cash and cash equivalents, end of period	$	14,173,633		$	33,698,709
Net cash provided by discontinued operations		31,744			646,086
Decrease in cash and cash equivalents		(2,985	)		(2,130,624	)
Cash and cash equivalents, beginning of period		9,578,555			31,646,498
Cash and cash equivalents, end of period	$	9,575,570		$	29,515,874

The accompanying notes are an integral part of these consolidated financial statements.

-7 -

ARCHON CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

For the ~~Nine~~quarters ~~Months~~ended ~~Ended June~~December 3031, 2010, and 2009

1.	BASIS OF PRESENTATION AND GENERAL INFORMATION

The primary business operations of Archon Corporation (the “Company” or “Archon”) are conducted through a wholly-owned subsidiary corporation, Pioneer Hotel Inc. (“PHI”), which operates the Pioneer Hotel & Gambling Hall (the “Pioneer”) in Laughlin, Nevada. In addition, the Company owns real estate on Las Vegas Boulevard South (the “Strip”) in Las Vegas, Nevada, currently rented through its wholly-owned subsidiary, Sahara Las Vegas Corp. (“SLVC”). It also owns rental properties in the Dorchester section of Boston, Massachusetts and in Gaithersburg, Maryland which are both currently rented through its wholly-owned subsidiary, SFHI, Inc.

The consolidated financial statements included herein have been prepared by management of the Company pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations under Regulation S-X of the SEC;, although management believes that the disclosures are adequate to make the information presented not misleading. In the opinion of management, all adjustments necessary for a fair presentation of results for the interim periods have been made. The results for the current unaudited three ~~and nine~~ month ~~periods~~period ended ~~June~~December 3031, 2010, are not necessarily indicative of results to be expected for the full fiscal year ended September 30, ~~2010~~2011. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended September 30, ~~2009~~2010, from which the balance sheet information as of that date is derived.

Use of Estimates. The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on historical information, information that is currently available to the Company and on various other assumptions that the Company believes to be reasonable under the circumstances. Actual results ~~may~~could ~~differ~~vary from estimates.

Income ~~(Loss)~~ Per Common Share. The Company computes net income (loss) per share in accordance with FASB ASC 260-10, Earnings per Share. FASB ASC 260-10 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all potentially dilutive common shares outstanding during the period. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all potentially dilutive shares if their effect is anti-dilutive. Dilutive stock options of approximately 741,~~000~~500 were not included in calculations of diluted income per common share for the ~~three~~fiscal ~~months~~quarters ~~and nine months~~ ended ~~June~~December 3031, 2010, and 2009 as the options were out of the money and, therefore, would be anti-dilutive. The calculation would be anti-dilutive.

~~Uninsured Deposits. At various times during the period and subsequently, the Company maintained~~-8- account balances that exceeded federally insured limits, and the risk of losses related to such concentrations of bank deposits may be increasing as a result of economic developments affecting financial institutions.

Investment in Marketable Securities. Debt securities available-for-sale are stated at fair market value with unrealized gains or losses determined by the specific identification method and reported as a component of accumulated other comprehensive income. Debt securities available-for-sale at June 30, 2010 includes investments in corporate bonds.

~~ARCHON~~As ~~CORPORATION~~of ~~AND~~August 31, ~~SUBSIDIARIES~~2007, the Company called for the redemption of all outstanding shares of its Exchangeable Redeemable Preferred Stock at a redemption price of $5.241 per share, which sum included earned and unpaid dividends to the date of redemption. From and after August 31, 2007, all shares of the Exchangeable Redeemable Preferred Stock ceased to be outstanding and to earn dividends. As of the date of the preparation of these financial statements, the holders of 4,264,312 shares of the Exchangeable Redeemable Preferred Stock have surrendered their shares and received payment of the redemption price. See Note 6

~~NOTES~~Uninsured TODeposits. ~~UNAUDITED~~At various ~~CONSOLIDATED~~times ~~FINANCIAL~~during ~~STATEMENTS—(Continued)~~the period and subsequently, the Company maintained account balances that exceeded federally insured limits, and the risk of losses related to such concentrations may be increasing as a result of economic developments affecting financial institutions.

~~For~~Investment in Marketable Securities. Debt securities available-for-sale are stated at fair market value with unrealized gains or losses determined by the ~~Nine~~specific ~~Months~~identification ~~Ended~~method ~~June~~and 30reported as a component of accumulated other comprehensive income. Debt securities available-for-sale at December 31, 2010, ~~and~~includes ~~2009~~investments in corporate bonds.

~~Equity~~Marketable securities held by Merrill Lynch, MorganStanley SmithBarney, Contango Capital Advisors, UBS Financial Services, and Interactive Brokers LLC are held for an indefinite period of time and thus are classified as available-for-sale securities. Realized investment gains and losses are ~~reported~~included atin ~~fair~~the consolidated statement of operations, as are provisions for other than temporary declines in the market value ~~with~~of ~~unrealized~~available-for-sale securities. Unrealized gains or and unrealized losses ~~reported~~deemed to be temporary are excluded from earnings (losses), net of applicable taxes, as a component of ~~accumulated~~ other comprehensive income (loss). ~~Realized~~Factors considered in judging whether an impairment is other than temporary include the financial condition, business prospects and ~~unrealized~~creditworthiness ~~gains~~of the issuer, the length of time that fair value has been less than cost, the relative amount of decline, and ~~losses~~the ~~are~~Company’s ~~determined~~ability byand intent to hold the ~~specific~~investment ~~identification~~until ~~method~~the fair value recovers. During fiscal 2011, the Company did not record an impairment charge regarding its investment in marketable securities because, based on management’s evaluation of the circumstances, management believed that the decline in fair value below the cost of certain of the Company’s marketable securities was temporary. At ~~June~~December 3031, 2010 and 2009, investments in equity securities available-for-sale included ~~shares of~~ common and preferred stocks.

Included in “Gain (loss) on sale of marketable securities” onin the consolidated statements of operations are approximately $3699,~~070~~865 ~~of realized gains~~ and $1664,~~520~~278 of realized ~~losses~~gain for the ~~three~~quarter ~~months~~ ended ~~June~~ December 3031, 2010 and realized loss for the quarter ended December 31, 2009, respectively. The Company recorded approximately $(0.3)1 million and $~~0.5 million and $~~(0.~~02) million and $(~~1.3) million of other comprehensive ~~gain~~income (loss), ~~net of tax effect,~~ associated with unrealized ~~losses~~gains and losses on these investments during the ~~three~~quarter ~~and nine months~~ ended ~~June~~December 3031, 2010 and 2009, respectively. ~~Through June 30, 2010, the Company experienced a year-to-date $30,802 further decline in the value of these investments.~~

The following is a summary of available-for-sale marketable securities as of ~~June~~December 3031, 2010 and September 30, ~~2009~~2010 (amounts into ~~thousands~~the nearest thousand):

	6/30/2010
	12/31/10
	Cost		~~UnrealizedGain~~	UnrealizedGain		~~UnrealizedLosses~~		Unrealized(Losses)		~~Market orFair Value~~		Market orFair Value
Debt securities	$	8,~~994~~259	$	~~217~~$	64	$	~~(28~~	)$	(39	$)	~~9,183~~	$	8,284
Equity securities		810,~~044~~557		~~288~~	819		~~(2,115~~	)	(915	)	~~6,217~~		10,461
Total	$	1718,~~038~~816	$	~~505~~$	883	$	~~(2,143~~	)$	(954	$)	~~15,400~~	$	18,745
	9/30/2009
	09/30/10
	Cost		~~UnrealizedGain~~	UnrealizedGain		~~Unrealized(Losses)~~		Unrealized(Losses)		~~Market orFair Value~~		Market orFair Value
Debt securities	$	39,~~261~~807	$	~~231~~$	429	$	~~(20~~	)$	(27	$)	~~3,472~~	$	10,209
Equity securities		48,~~342~~407		~~228~~	616		~~(2,047~~	)	(1,459	)	~~2,523~~		7,564
Total	$	718,~~603~~214	$	~~459~~$	1,045	$	~~(2,067~~	)$	(1,486	$)	~~5,995~~	$	17,773

~~The following is a summary of the net unrealized gains~~-9- ~~and losses as presented in accumulated Other Comprehensive Income as of June 30, 2010 and September 30, 2009, respectively (amounts in thousands):~~

	6/30/2010
Description	UnrealizedGains		Unrealized(Losses) Short Term			(UnrealizedLosses) Long Term			DeferredTaxes (Benefit)			AccruedOther ComprehensiveIncome (Loss)
Debt Securities	$	217	$	(23	)	$	(6	)	$	66		$	122
Equity Securities		288		(447	)		(1,667	)		(639	)		(1,187	)
Total	$	505	$	(470	)	$	(1,673	)	$	(573	)	$	(1,065	)

~~ARCHON~~The ~~CORPORATION~~following ~~AND~~is ~~SUBSIDIARIES~~a summary of the net unrealized gains and losses as presented in Accumulated Other Comprehensive Income as of December 31, 2010 and September 30, 2010 (amounts to the nearest thousand):

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)


	12/31/10
Description	Unrealized Gains		Unrealized (Losses) Short-Term			Unrealized (Losses) Long-Term			Deferred Taxes (Benefit)			Acc. Other Comprehensive Income (Loss)
Debt Securities	$	64	$	0		$	(39	)	$	9		$	16
Equity Securities		819		0			(915	)		(34	)		(62	)

Total	$	883	$	0		$	(954	)	$	(25	)	$	(46	)


	09/30/10
Description	Unrealized Gains		Unrealized (Losses) Short -Term			Unrealized (Losses) Long-Term			Deferred Taxes (Benefit)			Acc. Other Comprehensive Income (Loss)
Debt Securities	$	429	$	(24	)	$	(3	)	$	141		$	261
Equity Securities		616		(7	)		(1,452	)		(295	)		(548	)

Total	$	1,045	$	(31	)	$	(1,455	)	$	(154	)	$	(287	)

~~For~~The Company recorded the ~~Nine~~combined ~~Months~~total ~~Ended~~of ~~June~~unrealized 30gains and (losses) disclosed in the above tables, ~~2010~~on the balance sheet with 65% as retained earnings – other comprehensive income, and ~~2009~~35% as deferred income taxes, in the amounts shown in the above tables.

	9/30/2009
Description	UnrealizedGains		Unrealized(Losses) Short Term			(UnrealizedLosses) Long Term			DeferredTaxes (Benefit)			AccruedOther ComprehensiveIncome (Loss)
Debt Securities	$	231	$	(1	)	$	(19	)	$	74		$	137
Equity Securities		228		(464	)		(1,583	)		(637	)		(1,182	)
Total	$	459	$	(465	)	$	(1,602	)	$	(563	)	$	(1,045	)

The following is a summary of the proceeds from the sale of marketable securities and the gains or losses reclassified (realized) from Other Comprehensive Income (OCI) as of December 31, 2010 and 2009 (amounts to the nearest thousand):

The Company recorded the combined total of unrealized gains and (losses) shown in the above table, on the balance sheet as $1.1 million or 65% as retained earnings – other comprehensive loss, and $0.6 million or 35% as deferred income taxes.


	2010
Description	Proceeds From Sales		Gross Realized Gains		Gross Realized (Losses)			Gain or (Loss) Reclassified From OCI
Debt securities	$	0	$	0	$	0		$	0
Equity securities		994		102		(2	)		100

Total	$	994	$	102	$	(2	)	$	100


	2009
Description	Proceeds From Sales		Gross Realized Gains		Gross Realized (Losses)			Gain or (Loss) Reclassified From OCI
Debt securities	$	0	$	0	$	0		$	0
Equity securities		1,032		0		(64	)		(64	)

Total	$	1,032	$	0	$	(64	)	$	(64	)

~~The following is a summary of the proceeds from the sale of marketable securities and the gains or losses reclassified from Other~~-10- ~~Comprehensive Income (“OCI”) as of June 30, 2010 and 2009 (amounts in thousands):~~

	6/30/2010
Description	ProceedsFrom Sales		GrossRealized Gains		GrossRealized (Losses)			Gain or (LossReclassified From OCI
Debt securities	$	0	$	0	$	0		$	0
Equity securities		2,748		53		(17	)		36
Total	$	2,748	$	53	$	(17	)	$	36
	06/30/2009
Description	ProceedsFrom Sales		GrossRealized Gains		GrossRealized (Losses)			Gain or (LossReclassified From OCI
Debt securities	$	0	$	0	$	0		$	0
Equity securities		1,950		10		(27	)		(17	)
Total	$	1,950	$	10	$	(27	)	$	(17	)

Revenue Recognition. Casino revenue is recorded as gaming wins less losses. Hotel, food and beverage, entertainment and other operating revenues are recognized as the services are performed. Casino revenues are recognized net of certain sales incentives in accordance with FASB ASC 605-50, Revenue Recognition, Customer Payments and Incentives. Accordingly, cash incentives to customers for gambling, and the cash value of points and coupons earned by the slot club members totaling $0.1 million for the three months ended June 30, 2010 and 2009, have been recognized as a direct reduction of casino revenue.

~~ARCHON~~Revenue ~~CORPORATION~~Recognition. ~~AND~~Casino ~~SUBSIDIARIES~~revenue is recorded as the aggregate of gaming wins and losses. Hotel, food and beverage, entertainment and other operating revenues are recognized as services are performed. Casino revenues are recognized net of certain sales incentives in accordance with FASB ASC 605-50, Revenue Recognition, Customer Payments and Incentives. Accordingly, cash incentives to customers for gambling, and the cash value of points and coupons earned by the slot club members totaling $0.1 million and $0.1 million for the quarter ended December 31, 2010 and 2009, respectively, have been recognized as a direct reduction of casino revenue. Advance deposits on rooms, if any, are recorded as deferred revenue until services are provided to the customer.

~~NOTES~~In TOaccordance ~~UNAUDITED~~with ~~CONSOLIDATED~~industry ~~FINANCIAL~~practice, ~~STATEMENTS—~~the retail value of room, food, beverage and other services furnished to the Company’s guests without charge is included in gross revenue and then deducted as promotional allowances. The estimated retail value of such promotional allowances is included in revenues for the quarter ended December 31, 2010 and 2009 as follows (~~Continued~~amounts to the nearest thousand):

For the Nine Months Ended June 30, 2010, and 2009


	2010		2009
Food and beverage	$	551	$	757
Hotel		109		150
Other		1		2

Total	$	661	$	909

~~Advance~~Rental ~~deposits~~revenue onfrom ~~rooms,~~rental ifproperties ~~any,~~is ~~are~~recognized ~~recorded~~ as ~~deferred~~earned ~~revenue~~on ~~until~~a ~~services~~straight-line ~~are provided~~basis toover the ~~customer.~~term ~~Revenues include the retail amount~~ of ~~room, food, beverage and other services provided gratuitously to customers totaling $2~~the lease.4 ~~million~~When ~~and~~rental ~~$3.0~~payments ~~million~~received ~~for~~exceed ~~the~~rents ~~nine~~earned ~~months ended June 30, 2010~~ and ~~2009~~recognized, ~~respectively. The~~the ~~estimated~~difference ~~cost~~is ofrecorded ~~providing~~as ~~these~~deferred ~~promotional~~rental ~~services~~income ~~has been reported~~ in the ~~accompanying~~liabilities ~~consolidated~~section ~~statements~~ of ~~operations~~the asbalance ansheet, ~~expense~~and ofconversely, ~~each~~when ~~department~~rents ~~granting~~earned ~~complimentary~~and ~~services.~~recognized ~~The~~exceed ~~table~~rental ~~below~~payments received, ~~summarizes~~ the ~~departments’ costs~~difference ofis ~~such~~recorded ~~services~~as ~~(amounts~~other inassets. ~~thousands):~~

	6/30/2010		6/30/2009
Food and beverage	$	2,145	$	2,774
Hotel		301		383
Other		4		10
Total	$	2,450	$	3,167

Rental revenue from the Dorchester rental property held for investment is recognized as earned on a straight-line basis over the term of the lease. When rental payments received exceed rents earned and recognized, the difference is recorded as deferred rental income in the current liabilities section of the balance sheet, and conversely, when rents earned and recognized exceed rental payments received, the difference is recorded as other assets. Rental revenue from the Las Vegas Strip property is recognized as earned.

Concentrations. The Company’s primary operations are concentrated in the geographic area of Laughlin, Nevada and in the hotel and casino industry. As a result, the Company is at risk of unfavorable changes in general economic conditions including recession, economic slowdown, or higher fuel or other transportation costs. These factors may reduce disposable income of casino patrons or result in fewer patrons visiting casinos.

The Company owns real estate on the Las Vegas Strip in Las Vegas, Nevada and on the East Coast of the United States. Although the Company is presently not dependent on cash flows from these properties, a significant decline in real estate values in these markets could have an impact on the Company’s ability to readily generate cash flow from the real estate.

~~Concentrations of revenue by segment as of~~-11- ~~June 30, 2010 and 2009 follows (dollars in thousands)~~

	6/30/2010
Pioneer	$	12,189	66	%
Rental properties held for investment	$	5,704	31	%
Other and eliminations	$	610	3	%
	6/30/2009
Pioneer	$	16,110	65	%
Rental properties held for investment	$	7,954	32	%
Other and eliminations	$	750	3	%

Reclassifications. Certain reclassifications have been made in prior year’s consolidated financial statements to conform to the classifications used in fiscal 2010.

Consolidated Statements of Operations. A new line item was added allowing the separation of the gain or (loss) on sale of marketable securities from interest and other income. These changes did not change the net income or earnings per share. The property reclassified from rental property held for investment to property held for sale is reflected as discontinued operations net of tax in both years for comparison purposes.

Other minor reclassifications were made throughout the remaining schedules, all without any change to the overall total numbers

~~ARCHON~~Concentrations ~~CORPORATION~~of ~~AND~~revenue ~~SUBSIDIARIES~~by segment for the quarter ended December 31, 2010 and 2009 follows (amounts to the nearest thousand):

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)


	2010
Pioneer	$	3,287	64	%

Rental properties held for investment	$	1,836	36	%

Other and eliminations	$	0	0	%


	2009
Pioneer	$	3,959	62	%

Rental properties held for investment	$	1,883	30	%

Other and eliminations	$	534	8	%

~~For~~Recent ~~the~~Accounting ~~Nine~~Pronouncements. ~~Months~~FASB ~~Ended~~ASC ~~June~~820-10: 30In January 2010, the FASB issued Accounting Standards Update 2010-06 (ASU 2010-06), Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements. This amendment to Topic 820 has improved disclosures about fair value measurements on the basis of input received from the users of financial statements. This is effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. Early adoption is permitted. The Company does not expect the provisions of ASU 2010-06 to have a material effect on the financial position, results of operations or cash flows of the Company.

2.	FEDERAL INCOME TAX

Deferred income taxes are reported for timing differences between items of income or expense reported in the financial statements and those reported for income tax purposes in accordance with FASB ASC 740-10, Income Taxes, which requires the use of the asset/liability method of accounting for income taxes. Deferred income taxes and tax benefits are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and for tax loss and credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company provides for deferred taxes for the estimated future tax effects attributable to temporary differences and carryforwards when realization is more likely than not.

3.	RELATED PARTIES

The Company’s Chairman of the Board and CEO has personally guaranteed certain loans for which the Company has accrued a loan guarantee fee equal to 0.5% of the guaranteed loan balance per calendar quarter. ~~These~~There ~~loan~~was ~~fees~~no ~~were~~significant ~~disclosed~~change induring the ~~annual~~current ~~report~~quarter ~~for~~from ~~fiscal year ended September 30, 2009. Mr. Lowden has agreed to forgo payment of~~ the ~~loan fees which were accrued prior to the fiscal year ended September 30, 2009. Accordingly, loan guarantee fees accrued prior to the fiscal year ended September 30, 2009, in the amount of~~ $0.31 million, ~~has~~balance ~~been transferred to additional paid in capital, with a corresponding reduction in the remaining amount accrued. The accrual increased slightly~~ during the quarter ended ~~March~~December 31, 2010 ~~with no significant change from the remaining $0.1 million in the quarter ended September 30~~and, 2009.

The Company is subject to a Patent Rights and Royalty Agreement with the brother of the Company’s Chairman of the Board and CEO with respect to certain gaming technology for which he had been issued a patent. The Company agreed to pay certain royalty payments with respect to the technology incorporated into gaming devices placed in operation, as well as costs related to maintain the patent. The patentholder granted the Company an exclusive five-year ~~royalty~~ license that expired in January 2007 in the United States with respect to the technology, but which automatically renewed until 2011 and will renew for an additional two-year term unless the Company terminates the agreement. The Company also has an understanding with the related party patentholder that it will pay for the costs of commercial development of the technology. Through September 30, 2009, the Company had expended approximately $0.4 million for commercial development of the technology, and no additional costs were expended during the nine-month periods ended June 30, 2010. No royalties were paid to the patentholder during the periods referenced above.

-12-

United States with respect to the technology, but which automatically renews for an additional two-year terms unless the Company terminates the agreement. The Company also has an understanding with the related party patentholder that it will pay for the costs of commercial development of the technology. Through December 31, 2010, the Company had expended approximately $0.4 million for commercial development of the technology, and no additional costs have been expended. There were no expenditures incurred during the three month periods ended December 31, 2010 and 2009. No royalties were paid to the patentholder during the periods presented.

On January 14, 2008, nonqualified stock options were exercised by both the brother and son of the Company’s Chairman of the Board and CEO, which were granted under the Company’s 1993 Stock Option Plan. The date of the grants was January 21, 1998 and the exercise price was $1.00 per share. 58,425 shares were exercised by the brother and 54,425 shares were exercised by the son. Both the brother and son paid the par value of $0.01 for each share of stock exercised, and signed a promissory note for the remaining balance. The son paid his promissory note in full, in July 2010, and the remaining balance of $57,841, shown as Notes receivable from stockholders, in the Company’s December 31, 2010 balance sheet, is from the brother.

On October 13, 2007 the Company sold a 2005 Ford F-150 SuperCrew Short Bed vehicle owned by the Company and transferred under a promissory installment note to the son of the Company’s Chairman of the Board and CEO. The promissory installment note was amended on April 12, 2010 to have a payment period of twelve months with a payoff on or before April 15, 2011. The remaining balance of $19,575 is included in Accounts receivable, net, in the Company’s December 31, 2010 balance sheet.

4.	PURCHASE AND SALE AGREEMENT OF GAITHERSBURG PROPERTY

On May 28, 2009, the Company, through its wholly owned subsidiary SFHI, LLC (“SFHI”), entered into a Purchase and Sale Agreement (the “Agreement”) with Montgomery County, Maryland (the “County”) whereby the County will purchase SFHI’s 51.57 acre parcel of land together with an approximately 341,693 square feet office building erected thereon (the “Gaithersburg Property”), located at 100 Edison Park Drive in Gaithersburg, Maryland. The purchase price for the Property will be ~~seventy-six million three hundred forty thousand dollars (~~$76~~,340,000)~~.3 million. The Agreement provided the County with a 90-day feasibility period during which the County determined that the Property is suitable for its intended use, and the County will now proceed to close escrow by notifying the Company of the closing date, which closing date may be no ~~sooner than 90 days from the date of notice and no~~ later than April 30, 2014.

12Simultaneously with the execution of the Purchase and Sale Agreement, the County entered into a sublease with the existing tenant of SFHI at this location, GXS, Inc., whereby the County, as of October 1, 2009, leased and occupied the entire Gaithersburg Property until the earlier of (i) completion of its purchase of the Gaithersburg Property or (ii) April 30, 2014. Pursuant to the applicable provisions of the existing lease with GXS, Inc., SFHI consented to the sublease. In addition, GXS, Inc. agreed to pay SFHI the sum of $2.1 million, $1.7 million of which was paid on October 1, 2009, with the balance of $0.4 million paid on July 1, 2010. Due to the pending sale of this property, the related results of operations have been reported as discontinued operations.

-13-

~~ARCHON~~Assets ~~CORPORATION~~Held ~~AND~~For ~~SUBSIDIARIES~~Sale. The Company reviewed the guidance provided by FASB ASC 360-10-45-11, and thus has classified the assets associated with the Gaithersburg property as held for sale. The following table summarizes the components classified as held for sale as of December 31, 2010 and September 30, 2010 (amounts to the nearest thousand):

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)


	12/31/10			09/30/10
Current portion of deferred rent	$	507		$	469

Long-term assets held for sale:
Loan Issue Cost		671			723
Deferred Rent		1,754			1,893
Property and equipment
Land		23,000			23,000
Buildings & Improvements		36,600			36,600
Machinery & Equipment		3,000			3,000
Allowance for depreciation		(10,854	)		(10,854	)

Assets held for sale		54,171			54,362

Total	$	54,678		$	54,831

Liabilities On Assets Held For Sale. The Company issued approximately $55.4 million of first mortgage debt with a 7.01% interest rate per annum in connection with its acquisition of a commercial office building located in Gaithersburg, Maryland. The building is under lease through April 2014. The monthly lease payments are applied against the ~~Nine~~outstanding ~~Months~~indebtedness. ~~Ended~~Monthly ~~June~~principal 30and interest payments amortize the debt to approximately $22.3 million by the end of the lease in April 2014. The Company anticipates that the future tenant payments related to the net lease will be sufficient to fund required payments under the first mortgage notes and Internal Revenue Code of 1986 Section 467 debt. The principle balance as of December 31, 2010 and September 30, 2010 was $36.4 million and ~~2009~~$37.3 million, respectively. The following debt table is related to assets held for sale (amounts to the nearest thousand):

Simultaneous with the execution of the Purchase and Sale Agreement, the County entered into a sublease with the existing tenant of SFHI at this location, GXS, Inc., whereby the County, as of October 1, 2009, leased and occupied the entire Property until the earlier of (i) completion of its purchase of the Property or (ii) April 30, 2014. Pursuant to the applicable provisions of the existing lease with GXS, Inc., SFHI consented to the sublease. In addition, GXS, Inc. agreed to pay SFHI the sum of $2,125,000, $1,725,000 of which was paid on October 1, 2009, with the balance of $400,000 being paid on July 1, 2010. Due to the pending sale of this property, the related results of operations have been reported as discontinued operations.


	12/31/10		9/30/10
Interest payable	$	146	$	145
Current portion of debt		3,675		3,573

Total current liability		3,821		3,718
Long-term debt less current portion		32,584		33,541

Total	$	36,405	$	37,259

~~Assets~~The ~~Held~~monthly ~~For~~lease ~~Sale~~payments are applied against the outstanding indebtedness. ~~The~~Monthly ~~Company~~principal ~~reviewed~~and interest payments amortize the ~~guidance~~debt ~~provided~~to approximately $22.3 million by ~~FASB~~the ~~ASC~~end ~~360-10-45-11,~~of ~~and~~the ~~thus~~lease ~~has~~in ~~classified~~ April 2014. The Company anticipates that the ~~assets~~future ~~associated~~tenant payments related to the ~~Gaithersburg~~net ~~Property~~leases aswill ~~held~~be ~~for~~sufficient ~~sale~~to fund required payments under the first mortgage notes and Section 467 debt. The following table ~~summarizes~~shows the ~~asset~~debt ~~components~~related ~~classified~~to asthe ~~held~~Gaithersburg ~~for~~Property ~~sale~~to asbe ofpaid ~~June 30,~~by ~~2010~~year ~~and~~until ~~September 30,~~the ~~2009~~property is sold (amounts into ~~thousands~~the nearest thousand):

	6/30/2010			9/30/2009
2011	$	2,718
Gaithersburg - Warehouse:
2012		3,987
Loan Issue Costs	$	774		$	929
2013		4,448
Deferred Rent		2,464			2,683
2014		25,107
Land		23,000			23,000
Total	$	36,260
Buildings & Improvements		36,600			36,600
Machinery & Equipment		3,000			3,000
Allowance for depreciation		(10,854	)		(10,854	)
Total	$	54,984		$	55,358

~~Liabilities On Assets Held For Sale. The Company issued~~-14- approximately $55.4 million of first mortgage debt with a 7.01% interest rate per annum in connection with its acquisition of a commercial office building located in Gaithersburg, Maryland. The building is under lease through April 2014. The monthly lease payments are applied against the outstanding indebtedness. Monthly principal and interest payments amortize the debt to approximately $22.3 million by the end of the lease in April 2014 and the building is subject to acquisition by the County before that date. The Company anticipates that the future tenant payments related to the net leases will be sufficient to fund required payments under the first mortgage notes and IRC Section 467 debt. The principal balance due as of June 30, 2010 and September 30, 2009 was $38.0 million and $40.0 million, respectively. The following debt table is related to assets held for sale (amounts in thousands):

	6/30/2010		9/30/2009
Interest payable	$	148	$	157
Current portion of debt		3,473		3,186
Total current liability		3,621		3,343
Long-term debt less current portion		34,476		37,115
Total	$	38,097	$	40,458

Discontinued Operations. As a result of the pending sale of the Gaithersburg Property, the result of operations related to the Gaithersburg Property has been reflected as discontinued operations. The prior year result of operations of this Property has also been reclassified and discontinued for comparative purposes.

The Gaithersburg Property in Gaithersburg, Maryland, is a building used for commercial office space. The Gaithersburg Property is under a net lease through 2014 with a single tenant. Under the lease, the tenant is responsible for substantially all obligations related to the Property. The Gaithersburg Property

~~ARCHON~~Discontinued ~~CORPORATION~~Operations. ~~AND~~As ~~SUBSIDIARIES~~a result of the pending sale of the Gaithersburg Property, the result of operations related to the Gaithersburg Property has been reflected as discontinued operations.

~~NOTES~~The TOGaithersburg ~~UNAUDITED~~Property ~~CONSOLIDATED~~is ~~FINANCIAL~~a ~~STATEMENTS—(Continued)~~building used for commercial office space. The property is under a net lease through 2014 with a single tenant. Under the lease, the tenant is responsible for substantially all obligations related to the property. The property was acquired for $62.6 million, plus debt issuance costs of $2.7 million. The Company paid $9.9 million in cash and issued $55.4 million in nonrecourse first mortgage indebtedness. The Company allocated approximately $23.0 million of the purchase price to land, $3.0 million to machinery and equipment and the balance to building and improvements.

~~For~~The following table shows the ~~Nine~~schedule ~~Months~~of ~~Ended~~rent ~~June~~proceeds ~~30,~~that ~~2010,~~will ~~and~~be ~~2009~~used to meet future debt obligations related to the Gaithersburg Property until it is sold (amounts to the nearest thousand):

was acquired for $62.6 million, plus debt issuance costs of $2.7 million. The Company paid $9.9 million in cash and issued $55.4 million in nonrecourse first mortgage indebtedness. The Company allocated approximately $23.0 million of the purchase price to land, $3.0 million to machinery and equipment and the balance to building and improvements. The expenses incurred to acquire the Property (approximately $2.7 million) are recorded in other assets in the accompanying Consolidated Balance Sheets and are being amortized over the remaining loan period.


	2011		2012		2013		2014		Total
Gaithersburg Property	$	4,602	$	6,268	$	6,425	$	4,257	$	21,552

5.	OPEN MARKET PURCHASES OF COMPANY COMMON STOCK

~~During~~In December 2008 and June 2010, the ~~fiscal~~Board ~~years~~of Directors of the Company approved the Company’s adoption of plans, effective January 5, 2009 and June 30, 2010, for the Company ~~determined~~to ~~that~~make asperiodic and aongoing ~~result~~open market purchases of ~~the current~~up ~~difficult~~to ~~economic~~5.0% ~~conditions~~of its own common stock (up to 0.3 million shares of common stock) and 0.2 million shares, respectively, in ~~light~~accordance with Rule 10b-18 (the “Rule”) of ~~low~~the ~~interest~~Rules ~~rates~~and ~~being~~Regulations Promulgated ~~paid~~Under onThe ~~its~~Securities ~~deposit~~Exchange ofAct ~~surplus~~Of ~~funds~~1934 (the “Act”), ~~that~~and, ~~open~~more ~~market~~specifically, ~~purchase~~in accordance with SEC Release No. 33-8335 (sthe “Release”). ofActing in compliance with the ~~Company’s~~Release ~~own~~is ~~shares,~~a up‘safe harbor’ and approved method to ~~5.0%~~make open market purchases of ~~its~~a ~~outstanding~~company’s own common stock ~~and~~in ~~225,000~~compliance ~~shares, respectively,~~with ~~represented~~the aRule ~~desirable~~without ~~use~~those ofpurchases ~~its~~being ~~available~~deemed ~~and~~manipulative ~~surplus~~under ~~cash~~the Act.

In December 2008 and June 2010, the Board of Directors of the Company approved the Company’s adoption of plans, effective January 5, 2009 and June 30, 2010, for the Company to make periodic and ongoing open market purchases of up to 5.0% of its own common stock (up to 319,539 shares of common stock) and 225,000 shares, respectively, in accordance with Rule 10b-18 (the “Rule”) of the Rules and Regulations Promulgated Under The Securities Exchange Act Of 1934 (the “Act”), and, more specifically, in accordance with SEC Release No. 33-8335 (the “Release”). The Release is a ‘safe harbor’ and approved method to make open market purchases of a company’s own common stock in compliance with the Rule without those purchases being deemed manipulative under the Act.

The Rule and Release impose certain specific restrictions on the Company as to purchases of its own common shares. These include specific restrictions as to timing of open market purchases, manner of purchases, pricing of purchases and when purchases will (and will not) be allowed.

The Rule and Release also mandate certain additional and periodic disclosures that the Company must make concerning the open market purchases in its Series 10 filings (Report on Forms 10-K and 10-Q).

On January 8, 2010, the Company purchased a grouping of shares of common stock of the Company sufficient to cause it to effectively reach the maximum shares allotted to be purchased pursuant to the Rule and Release referenced above (when combined with prior program purchases since December 2008). As a result, the Company, on January 13, 2010, announced the close of the common stock purchase program with an effective date of January 58, 2010.

~~The~~Since ~~open~~the ~~market~~announcement ~~purchase(s)~~of ~~are~~the ~~intended~~June 23, to2010 beprogram, ~~voluntary~~no ~~and~~purchases ~~there~~of ~~are~~its nocommon ~~assurances~~stock ~~that~~had been made by the Company, ~~will~~until ~~actually~~November 3, 2010, at which time the Company became legally obligated to purchase ~~all~~a orgrouping ~~any~~ of 0.2 million shares of its common stock, causing the Company to reach the maximum shares ~~noted~~allotted to be purchased pursuant to the Rule and Release referenced in the first paragraph above. As a result, on November 3, 2010, the Company announced the close of the common stock purchase program referenced above.

The Company is in possession of sufficient and available liquid funds to undertake any open market purchase(s) of its own shares without the need for additional borrowing. The Company will be utilizing licensed securities broker-~~dealers to effect any open market purchases.~~ 15-

~~ARCHON~~The ~~CORPORATION~~table ~~AND~~below ~~SUBSIDIARIES~~summarizes the Company’s buy back of its common stock for the last 12-month period ended December 31, 2010 (amounts to the nearest thousand except for amounts reported per share):

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)


Period	(a) Total Number of Shares (or Units) Purchased		(b) Average Price Paid per Share (or Unit)		(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs		(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
Beginning balance		16	$	19.56		16		301
January 2010		298		13.50		314		2
February 2010		0		0		314		2
March 2010		0		0		314		2
April 2010		0		0		314		2
May 2010		0		0		314		2
June 2010		0		0		314		2
July 2010		0		0		314		225
August 2010		0		0		314		225
September 2010		0		0		314		225
October 2010		0		0		314		225
November 2010		0		0		314		225
December 2010		225		12.50		539		225
January 2011		0		0		583		0
Ending balance		539	$	13.26		539		0

~~For~~As ~~the~~of December 31, ~~Nine~~2010, ~~Months~~the ~~Ended~~Company ~~June~~is ~~30,~~holding ~~2010,~~0.5 million ~~and~~shares ~~2009~~in treasury.

~~The~~6. ~~table~~COMMITMENTS ~~below~~AND ~~summarizes the Company’s buy back of its common stock for the last 12-month period ended June 30, 2010:~~ CONTINGENCIES

Period	(a) TotalNumber ofShares (or Units)Purchased	(b) AveragePrice Paid perShare (orUnit)		(c) Total Number ofShares (or Units)Purchased as Partof PubliclyAnnounced Plans orPrograms	(d) Maximum Number(or Approximate DollarValue) of Shares (orUnits) that May Yet BePurchased Under thePlans or Programs
Beginning balance					316,215
January 2009	3,996	$	27.83	3,996	312,219
February 2009	4,590		16.96	8,586	307,629
March 2009	7,150		16.60	15,736	300,479
April 2009	0		0	15,736	300,479
May 2009	0		0	15,736	300,479
June 2009	0		0	15,736	300,479
July 2009	0		0	15,736	300,479
August 2009	0		0	15,736	300,479
September 2009	0		0	15,736	300,479
October 2009	0		0	15,736	300,479
November 2009	0		0	15,736	300,479
December 2009	0		0	15,736	300,479
January 2010	298,632		13.50	314,368	1,847
February 2010	0		0	314,368	1,847
March 2010	0		0	314,368	1,847
April 2010	0		0	314,368	1,847
May 2010	0		0	314,368	1,847
June 2010	0		0	314,368	225,000
Ending balance	314,368	$	13.80	314,368	225,000

Redemption Of The Company’s Preferred Stock And Redemption Price Disputes. The Company called all outstanding shares of its Exchangeable Redeemable Preferred Stock for redemption on and as of August 31, 2007, at a redemption price of $5.241 per share, which sum included accrued and unpaid dividends to the date of redemption. From and after August 31, 2007, all shares of the Exchangeable Redeemable Preferred Stock ceased to be outstanding and to accrue dividends. As of February 11, 2011, the holders of 4.3 million shares of the Exchangeable Redeemable Preferred Stock have surrendered their shares and received payment of the redemption price; while 0.2 million shares have yet to be surrendered and still have the right to receive their payment due without interest. As of December 31, 2010 and September 30, 2010, exchangeable redeemable preferred stock – unredeemed was $0.8 million and $0.8 million, respectively.

6On August 27, 2007, a group of institutional investors filed an action against the Company in the United States District Court, entitled DE Shaw Laminar Portfolios et al. ~~REDEMPTION~~v. OFArchon ~~THE~~Corporation, District of Nevada, Case No. 2:07-cv-1146. The Complaint was subsequently amended to add an additional party plaintiff ~~COMPANY~~(collectively, the “Plaintiffs”). The Amended Complaint: (i) seeks a finding by the Court that the Company has breached its obligations under the Company’Ss ~~PREFERRED~~Certificate ~~STOCK~~of ~~AND~~Designation ~~REDEMPTION~~of ~~PRICE~~the ~~DISPUTES~~Preferred Stock, dated September 30, 1993 (the “Certificate”), and awarding the Plaintiffs full compensation of any and all available damages suffered by the Plaintiffs as a result of the Company’s breach of the Certificate; (ii) seeks a finding by the Court that the Company’s issuance of its redemption notice with an improper redemption price is an anticipatory breach of a material term of the Certificate and awarding the Plaintiffs full compensation of any and all available damages suffered as a result of the Company’s anticipatory breach of the Certificate; (iii) seeks a declaration by the Court that the dividends be properly calculated and compounded per the terms of the Certificate in an amount not less than $7.2 million up through and including the date of final judgment; (iv) seeks an order from the Court calling for the Company to reimburse the Plaintiffs’ attorneys’ fees, expenses and costs incurred in enforcing their rights; and (v) seeks such other and further relief as the Court may deem appropriate.

~~The Company called all outstanding shares of its Exchangeable~~-16- Redeemable Preferred Stock for redemption on and as of August 31, 2007, at a redemption price of $5.241 per share, which sum included accrued and unpaid dividends to the date of redemption. From and after August 31, 2007, all shares of the Exchangeable Redeemable Preferred Stock ceased to be outstanding and to accrue dividends. As of August 13, 2010, the holders of 4,261,092 shares of the Exchangeable Redeemable Preferred Stock have surrendered their shares and received payment of the redemption price; while 155,485 shares have yet to be surrendered and still have the right to receive their payment due without interest. As of June 30, 2010 and September 30, 2009, exchangeable redeemable preferred stock –unredeemed was $814,897 and $821,259, respectively.

On August 27, 2007, a group of institutional investors filed an action, in Nevada, against the Company. The Complaint was subsequently amended to add an additional party plaintiff (collectively, the “Plaintiffs”). The Amended Complaint: (i) seeks a finding by the Court that the Company has breached its obligations under the Company’s Certificate of Designation of the Preferred Stock, dated September 30, 1993 (the “Certificate”), and awarding the Plaintiffs full compensation of any and all available damages suffered by the Plaintiffs as a result of the Company’s breach of the Certificate; (ii) seeks a finding by the Court that the Company’s issuance of its redemption notice with an improper redemption price is an anticipatory breach of a material term of the Certificate and awarding the Plaintiffs full compensation of any and all available damages suffered as a result of the Company’s anticipatory breach of the Certificate; (iii) seeks a declaration by the Court that the dividends be properly calculated and

~~ARCHON~~The ~~CORPORATION~~Plaintiffs, ~~AND~~thereafter, ~~SUBSIDIARIES~~filed a motion for partial summary judgment, seeking a ruling from the court that the Company breached its obligations under the Certificate by calculating the redemption price as it did. The Court granted that motion on August 8, 2008, finding the language of the Certificate to be unambiguous and that the redemption price should have been calculated differently. Subsequent to the Court’s ruling on the motion for partial summary judgment, Plaintiffs filed a motion for entry of final judgment, seeking entry of judgment that the redemption price for the preferred shares should have been $8.69 per share. On December 22, 2010, the District Court granted that motion and entered judgment against the Company in the amount of $9,5 million. The District Court based its decision primarily on its order from August of 2008. The Company has filed a motion for reconsideration of the District Court’s December 22, 2010 order. That motion has been fully briefed and is pending before the District Court. In the event the motion for reconsideration is denied, the Company intends to appeal the District Court’s decision to the Ninth Circuit Court of Appeals.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Nine Months Ended June 30, 2010, and 2009

compounded per the terms of the Certificate in an amount not less than $7,235,351 up through and including the date of final judgment; (iv) seeks an order from the Court calling for the Company to reimburse the Plaintiffs’ attorneys’ fees, expenses and costs incurred in enforcing their rights; and (v) seeks such other and further relief as the Court may deem appropriate.

Recently, Plaintiffs have filed a second motion for entry of final judgment, again seeking entry of judgment that the redemption price for the preferred shares should have been $8.69 per share. The Company has substantively opposed that motion and has urged the Court to reconsider its August 8, 2008 order. Briefing on Plaintiffs’ second motion for entry of final judgment has been completed and a hearing was held before the Court and the parties are awaiting a ruling.

The Company has initiated proceedings against a third-party law firm concerning that firm’s potential liability related to the drafting of the Certificate of Designation. This third-party action has subsequently been removed by the defendant law firm to Federal Court in April, 2009 and is at an early stage of resolution. The defendant law firm has moved to compel arbitration of the dispute. The Magistrate Judge issued an order that the matter be referred to arbitration and the District Court confirmed that order. The Company intends to pursue its claims against the defendant law firm in arbitration. The Company is also considering rights and remedies it may have with regard to other parties who participated in the issuance of the Preferred Stock in the event that the Company does not prevail on its interpretation of the Certificate.

Also, two other holders of the Exchangeable Redeemable Preferred Stock filed Complaints, both alleging essentially the same claim as the first complaint related to the case set forth immediately above. The two other lawsuits brought by former holders of the Exchangeable Redeemable Preferred Stock are entitled Rainero v. Archon Corporation, District of Nevada, Case No. 2:07-cv-01553, and Leeward Capital, L.P. v. Archon Corporation, District of Nevada Case No. 2:08-cv-00007. If the plaintiffs in these two additional actions are correct, the redemption price as of August 31, 2007 should have been $8.69 per share and not $5.241 per share as calculated by the Company. If applied to all the then outstanding shares of Exchangeable Redeemable Preferred Stock, including the shares held by the Company’s officers and directors, valuation of the redemption price at $8.69 per share would increase the redemption price in excess of $15.2 million.

~~Management~~In isthe ~~unable~~Leeward toCapital ~~estimate~~matter, both the ~~minimum~~Leeward ~~liability~~Plaintiffs ~~that~~and ~~may~~the Company behave ~~incurred~~filed motions for summary judgment. The Leeward Plaintiffs made arguments similar to the Laminar Plaintiffs in their motion. On December 22, ~~if any~~2010, the District Court issued an order granting the Leeward Plaintiffs’ motion for summary judgment on the same grounds as athe ~~result~~Laminar oforder and denying Archon’s motion without analysis. Contemporaneous with the ~~outcome~~filing of ~~each~~the December 22, 2010 order, the District Court entered judgment in favor of ~~these~~the ~~lawsuits~~Leeward Plaintiffs and, ~~therefore~~against the Company in the amount of $0.3 million. The Company has filed a motion for reconsideration of the District Court’s December 22, 2010 order. That motion has ~~made~~been nofully ~~provision~~briefed inand is pending before the ~~financial~~District ~~statements~~Court. In the event the motion for ~~liability~~reconsideration ~~related~~is denied, the Company intends to ~~these~~appeal ~~cases~~the District Court’s decision to the Ninth Circuit Court of Appeals.

The Rainero action is purported to be brought on behalf of David Rainero individually as well as a class of all former preferred shareholders, although a class has not yet been certified by the District Court. Plaintiff Rainero filed a motion for class certification in December of 2010 which the Company intends to oppose. The Company’s opposition brief to the motion for class certification is due February 15, 2011. Mr. Rainero was deposed in early January of 2011.

-17-

The Company plans to appeal the District Court’s decisions to the Ninth Circuit Court of Appeals. The Company believes that it has valid bases in law and fact to overturn or appeal these verdicts. As a result, the Company believes that affirmation of the judgments is possible but not probable, and, accordingly, that the amount of any loss cannot be reasonably estimated at this time. Because the Company believes that this potential loss is not probable or estimable, it has not recorded any reserves or contingencies related to this legal matter. In the event that the Company’s assumptions used to evaluate this matter as neither probable nor estimable change in future periods, it will be required to record a liability for an adverse outcome, which may include post-judgment interest.

7.	STOCK-BASED COMPENSATION

The Company’s Stock Option Plan ~~(“Plan”)~~ provides for the grant of up to approximately 1.43 million (net of options previously exercised) shares of its common stock to key employees. Currently there are approximately 0.5 million stock options available for grant. The Stock Option Plan provides for both incentive stock options and non-qualified stock options. Stock option grants generally vest over a three-year period from the employee’s hire date. ~~During~~No ~~the~~options ~~nine-month~~were ~~period~~granted during the quarter ended ~~June~~December 3031, 2010 and ~~2009,~~ ~~zero options were granted~~2009. As of ~~June~~December 3031, 2010 and 2009, there were approximately ~~741,500~~0.7 million options, outstanding and exercisable under the Stock Option Plan. During the quarter ~~third quarters~~ ended ~~June~~December 3031, 2010 and 2009, no options were exercised or granted.

16The outstanding options have expiration dates through 2018 and have an average remaining life of approximately 6.0 years. The average exercise price of the outstanding options at December 31, 2010 was approximately $28.09.

SFHI Inc., SLVC and PHI (collectively, the “Subsidiaries”), have adopted subsidiary stock option plans (the “Subsidiary Plans”). The Subsidiary Plans provide for the grant of options by each of the Subsidiaries with respect to an aggregate of up to 10% of the outstanding shares of such Subsidiary’s Common Stock to employees, non-employee directors, consultants or affiliates of the Company or the Subsidiaries. The purpose of the Subsidiary Plans is to enable the Subsidiaries and the Company to attract, retain and motivate their employees, non-employee directors, consultants and affiliates by providing for or increasing the proprietary interest of such persons in the Subsidiaries. As of December 31, 2010, no options had been granted under any of the Subsidiary Plans.

The following table summarizes stock option activity during the first fiscal quarter 2011 under all plans (amounts to the nearest thousand except for per share amounts):


	Number of Shares		Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value
Options outstanding at September 30, 2010:		742	$	28.09		6.3 yrs	$	(10,447	)
Granted		0		N/A		N/A		N/A
Exercised		0		N/A		N/A		N/A
Canceled		0		N/A		N/A		N/A
Options outstanding at December 31, 2010		742	$	28.09		6.0 yrs	$	(11,857	)
Options exercisable at December 31, 2010		742	$	28.09		6.0 yrs	$	(11,857	)

As of December 31, 2010, there was no unrecognized compensation cost related to unvested stock options.

-18-

~~ARCHON~~8. ~~CORPORATION~~SUPPLEMENTAL ~~AND~~DISCLOSURE ~~SUBSIDIARIES~~OF CASH FLOW INFORMATION

~~NOTES~~Supplemental TOdisclosure ~~UNAUDITED~~of ~~CONSOLIDATED~~cash ~~FINANCIAL~~flow ~~STATEMENTS—~~information for the quarter ended December 31, 2010 and 2009 is presented below (~~Continued~~amounts to the nearest thousand):

For the Nine Months Ended June 30, 2010, and 2009


	12/31/10		12/31/09
Operating activities:
Cash paid during the period for interest – continuing operations	$	1,044	$	1,097

Cash paid during the period for interest – discontinued operations	$	653	$	710

Non–cash investing and financing activities:
Unrealized gains (losses) on securities	$	364	$	(101	)

The outstanding options have expiration dates through 2018 and have an average remaining life of approximately 7.5 years. The average exercise price of the outstanding options at June 30, 2010 is approximately $28.09.

In December 2008, the Company’s Board of Directors authorized and the shareholders approved at the June 15, 2009 annual meeting, an increase of 250,000 shares in the number of shares available for grant under the Plan.

SFHI Inc., SLVC and PHI (collectively, the “Subsidiaries”), have adopted subsidiary stock option plans (the “Subsidiary Plans”). The Subsidiary Plans provide for the grant of options by each of the Subsidiaries with respect to an aggregate of up to 10% of the outstanding shares of such Subsidiary’s Common Stock to employees, non-employee directors, consultants or affiliates of the Company or the Subsidiaries. The purpose of the Subsidiary Plans is to enable the Subsidiaries and the Company to attract, retain and motivate their employees, non-employee directors, consultants and affiliates by providing for or increasing the proprietary interest of such persons in the Subsidiaries. As of June 30, 2010, no options have been granted under any of the Subsidiary Plans.

The following table summarizes stock option activity during the nine months ended June 30, 2010 under all plans:

	Numberof Shares(000’s)	Weighted-Average Exercise PricePer Share		Weighted-Average RemainingContractualTerm	AggregateIntrinsic Value($000’s)
Options outstanding at September 30, 2009:	742	$	28.09	8.3 yrs.	$	(12,457	)
Granted	0		N/A	N/A		N/A
Exercised	0		N/A	N/A		N/A
Canceled	0		N/A	N/A		N/A
Options outstanding at June 30, 2010	742	$	28.09	6.5 yrs.	$	11,901
Exercisable at June 30, 2010	742	$	28.09	6.5 yrs.	$	11,901

As of June 30, 2010, there was no unrecognized compensation cost related to unvested stock options.

8. SUPPLEMENTAL STATEMENT OF CASH FLOWS INFORMATION

Supplemental statement of cash flows information for the nine-month periods ended June 30, 2010 and 2009, respectively, is presented below (amounts in thousands).

	6/30/2010			6/30/2009
Operating activities:
Cash paid during the period for interest	$	5,320		$	5,978
Non cash:
Unrealized losses on securities	$	(31	)		(1,964	)
Adjustment to redeemable preferred	$	0		$	139

ARCHON CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Nine Months Ended June 30, 2010, and 2009

9.	SEGMENT INFORMATION

The Company’s operations are in the hotel/casino industry and the rental of commercial real estate properties. The Company’s hotel/casino operations are conducted at the Pioneer in Laughlin, Nevada. As discussed above, the Company owns rental properties held for investment in the Dorchester section of Boston, Massachusetts and Las Vegas Strip, Nevada. “~~Property~~Assets Held for Sale” below includes a rental property in Gaithersburg, Maryland. “Other and Eliminations” below includes financial information for the Company’s corporate operations, adjusted to reflect eliminations upon consolidation.

~~Set forth below is the unaudited financial information for the segments in which the Company operates for the three~~-~~month and nine~~19-~~month periods ended June 30, 2010 and 2009 (amounts in thousands).~~

	Three Months EndedJune 30,
	2010			2009
Pioneer Hotel / Casino:
Net operating revenues	$	3,671		$	5,021
Operating loss		(615	)		(813	)
Depreciation and amortization		135			163
Interest expense		104			336
Interest and other income		0			1
Loss before income taxes		(719	)		(1,148	)
Capital expenditures / transfers		20			45
Rental Properties Held for Investment:
Net operating revenues	$	1,910		$	2,413
Operating income		1,279			1,795
Depreciation and amortization		421			421
Interest expense		1,078			955
Interest and other income		0			2
Income before income taxes		201			842
Capital expenditures / transfers		0			0
Property Held for Sale:
Net operating revenues	$	0		$	0
Operating income		0			0
Depreciation and amortization		0			0
Interest expense		0			0
Interest and other income		0			0
Discontinued operations, net of tax		332			256
Capital expenditures / transfers		0			0
Other and Eliminations:
Net operating revenues	$	28		$	290
Operating loss		(831	)		(278	)
Depreciation and amortization		37			38
Interest expense		0			(63	)
Interest and other income		104			147
Loss before income taxes		(692	)		(85	)
Capital expenditures / transfers		0			0
Total:
Net operating revenues	$	5,609		$	7,724
Operating income (loss)		(167	)		703
Depreciation and amortization		593			622
Interest expense		1,182			1,228
Interest and other income		104			150
Loss before income taxes		(1,210	)		(391	)
Discontinued operations, net of tax		332			256
Capital expenditures / transfers		20			45

~~ARCHON~~Set ~~CORPORATION~~forth ~~AND~~below ~~SUBSIDIARIES~~is the unaudited financial information for the segments, which the Company operates, as of and for the quarter ended December 31, 2010 and 2009 (amounts to nearest thousand).

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)


	2010			2009
*Pioneer Hotel*
Net operating revenues	$	3,287		$	3,959
Operating loss		(496	)		(872	)
Depreciation		134			137
Interest expense		0			0
Interest and other income		0			0
Loss before income taxes		(496	)		(872	)
Capital expenditures / transfers		54			31
Identifiable assets ⁽¹⁾		11,158			11,896

*Rental Properties:*
Net operating revenues	$	1,836		$	1,883
Operating income		1,173			1,250
Depreciation		421			421
Interest expense		1,026			1,102
Interest and other income		0			4
Income before income taxes		148			152
Capital expenditures / transfers		0			0
Identifiable assets ⁽¹⁾		87,890			90,244

*Assets Held for Sale:*
Net operating revenues	$	0		$	0
Operating income		0			0
Depreciation		0			0
Interest expense		0			0
Interest and other income		0			0
Discontinued operations, net of tax		477			893
Capital expenditures / transfers		0			0
Identifiable assets ⁽¹⁾		54,171			55, 242

*Other and Eliminations:*
Net operating revenues	$	0		$	534
Operating income		(774	)		(354	)
Depreciation		23			36
Interest expense		0			2
Interest and other income		293			302
Loss before income taxes		(382	)		(119	)
Capital expenditures / transfers		3			0
Identifiable assets ⁽¹⁾		30,950			41,718

*Total:*
Net operating revenues	$	5,123		$	6,376
Operating income (loss)		(97	)		24
Depreciation		578			594
Interest expense		1,026			1,104
Interest and other income		293			306
Income before income taxes		(730	)		(839	)
Discontinued operations, net of tax		477			893
Capital expenditures / transfers		57			31
Identifiable assets ⁽¹⁾		184,169			199,100

~~For~~(1) ~~the~~Identifiable ~~Nine~~assets ~~Months~~represent ~~Ended~~total ~~June~~assets ~~30,~~less ~~2010,~~elimination ~~and~~for ~~2009~~intercompany items

	Nine Months EndedJune 30,
	2010			2009
Pioneer Hotel / Casino:
Net operating revenues	$	12,189		$	16,110
Operating loss		(1,378	)		(1,404	)
Depreciation and amortization		407			561
Interest expense		104			854
Interest and other income		53			5
Loss before income taxes		(1,430	)		(2,253	)
Capital expenditures / transfers		79			1,218
Identifiable assets (1)		11,777			16,491
Rental Properties Held for Investment:
Net operating revenues	$	5,704		$	7,954
Operating income		3,798			6,106
Depreciation and amortization		1,264			1,264
Interest expense		3,255			2,866
Interest and other income		5			34
Income before income taxes		547			3,274
Capital expenditures / transfers		0			0
Identifiable assets (1)		88,762			91,046
Property Held for Sale:
Net operating revenues	$	0		$	0
Operating income		0			0
Depreciation and amortization		0			0
Interest expense		0			0
Interest and other income		0			0
Discontinued operations, net of tax		1,663			748
Capital expenditures / transfers		0			0
Identifiable assets (1)		55,149			55,926
Other and Eliminations:
Net operating revenues	$	610		$	750
Operating loss		(2,046	)		(1,251	)
Depreciation and amortization		109			112
Interest expense		3			(141	)
Interest and other income		814			508
Loss before income taxes		(1,265	)		(713	)
Capital expenditures / transfers		0			15
Identifiable assets (1)		31,532			39,220
Total:
Net operating revenues	$	18,503		$	24,814
Operating income		374			3,451
Depreciation and amortization		1,780			1,937
Interest expense		3,362			3,579
Interest and other income		872			547
Income (loss) before income taxes		(2,148	)		308
Discontinued operations, net of tax		1,663			748
Capital expenditures / transfers		79			1,233
Identifiable assets (1)		187,220			202,683

-20-

(1) Identifiable assets represent total assets less elimination for intercompany items.

ARCHON CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the Nine Months Ended June 30, 2010, and 2009

10. SUBSEQUENT EVENTS

On July 1, 2010, the Company paid $3.0 million including interest due on its line of credit to bring the outstanding balance to $5.0 million.

On July 1, 2010, the Company received $0.4 million which was due on that day from GXS related to the sale agreement for the Gaithersburg Property.

On July 23, 2010, Mr. Christopher Lowden, the son of Mr. Paul W. Lowden, CEO, paid off his portion of the note receivable from stockholders in the amount of $53,881 including interest due.

ARCHON CORPORATION

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

This discussion is intended to further the reader’s understanding of the consolidated financial condition and results of operations of Archon Corporation (the “Company” or “Archon”). It should be read in conjunction with, and is qualified in its entirety by, the financial statements and notes thereto and other information included in this quarterly report on Form 10-Q and the Company’s annual report on Form 10-K for the year ended September 30, ~~2009~~2010. These historical financial statements may not be indicative of the Company’s future performance.

General

Overview of Business Operations and Trends: Historically, the Company, has owned, managed and operated hotel/casino properties through a number of acquisitions or developments, and it has divested itself of certain of these properties. Presently, the Company operates the Pioneer in Laughlin, Nevada.

~~The~~Historically, ~~Pioneer has experienced a decline of its revenues over~~ the ~~last~~Company, ~~few~~has ~~years~~owned, ~~after~~managed ~~experiencing strong revenue~~ and ~~profit~~operated ~~growth~~hotel/casino ~~in the~~properties ~~early~~through ~~1990’s.~~a ~~Management believes the increase in the~~ number of ~~casino~~acquisitions ~~properties~~or ondevelopments, ~~Native American lands in such nearby locations as California~~ and ~~Arizona~~it ~~within~~has ~~the~~divested ~~last~~itself ~~decade~~of ~~has~~certain ~~caused~~of ~~revenue~~these ~~declines~~properties. ~~In response~~Presently, the Company ~~has focused~~operates ~~on market definition and development in~~ the ~~local~~Pioneer Laughlin area to maintain profitability. Unexpectedly difficult economic conditions impacting customers, including relatively high fuel costs, has significantly reduced disposable income, and limited customer travel and gaming activity. Management believes Laughlin is a mature market with marginal growth forecasted for the next few years based on its current development plans. Management believes the recent revenue and expense trends in ~~its~~ Laughlin ~~hotel/casino property may not change significantly over the next few years~~, ~~or until the current economic conditions and trends begin to materially improve~~Nevada.

The Pioneer has experienced a decline of its revenues over the last few years after experiencing strong revenue and profit growth in the early 1990’s. Management believes the increase in the number of casino properties on Native American lands in such nearby locations as California and Arizona within the last decade has caused revenue declines. In response, the Company focused on market definition and development in the local Laughlin area to maintain profitability. Unexpectedly difficult economic conditions impacting customers, including relatively high fuel costs, has significantly reduced disposable income, and limited customer travel and gaming activity. Management believes Laughlin is a mature market with marginal growth forecasted for the next few years based on its current development plans. Management believes the recent revenue and expense trends in its Laughlin hotel/casino property may not change significantly over the next few years, or until the current economic conditions and trends begin to materially improve.

The Company also owns rental properties on the East Coast and on the Las Vegas Strip, but revenues from these rental properties are used to meet their related mortgages and thus do not contribute significant net cash flow to the Company.

~~Property~~Assets Held for Sale

During fiscal year 2001, the Company acquired certain properties as part of an IRS Section 1031 exchange. The property held for sale is located in Gaithersburg, Maryland (the “Gaithersburg Property”). The Company acquired the Gaithersburg Property and nonrecourse debt associated with the Gaithersburg Property which is subject to a long-term lease. A tenant remits payment to the bank according to the terms of the lease and note. The payments are used to liquidate the nonrecourse debt obligations. Rental income is recorded by the Company on a straight-line basis and totals approximately $5.6 million annually and will remain at this level until approximately 2014 or until the asset is sold, otherwise disposed of or becomes impaired. The buildings on the Gaithersburg Property are no longer being depreciated subsequent to the classification being changed from a rental property held for investment to aassets ~~property~~ held for sale. Interest expense is also recorded based on the outstanding nonrecourse debt remaining to be paid and based on unamortized loan issue costs and remaining debt amortization timetables. At any time during the term of the lease and debt amortization, the fair market value of the Gaithersburg Property may be different from its book values. Interest is presently being expensed at approximately $2.5 million annually and will decrease in relation to debt principal reductions through 2014 or until the asset is sold, otherwise disposed of or becomes impaired.

-21 -

~~amortization~~On ~~timetables.~~May 28, At2009, ~~any~~the ~~time~~Company, ~~during~~through ~~the~~its ~~term~~wholly ofowned ~~the~~subsidiary ~~lease~~SFHI, LLC (“SFHI”), entered into a Purchase and ~~debt~~Sale ~~amortization~~Agreement (the “Agreement”) with Montgomery County, Maryland (the ~~fair~~“County”) ~~market~~whereby ~~value~~the County will purchase SFHI’s 51.57 acre parcel of land together with an approximately 341,693 square feet office building erected thereon comprising the Gaithersburg Property, ~~may~~located beat ~~different~~100 ~~from~~Edison ~~its~~Park ~~book~~Drive ~~values~~in Gaithersburg, Maryland. ~~Interest~~The ~~is presently~~purchase ~~being~~price ~~expensed~~for atthe ~~approximately~~Gaithersburg Property will be $276.93 million. ~~annually~~The ~~and~~Agreement provided ~~will~~the ~~decrease~~County inwith ~~relation~~a to90-day ~~debt~~feasibility ~~principal~~period ~~reductions~~during ~~through~~which ~~2014~~the orCounty ~~until~~determined that the ~~asset~~Gaithersburg Property is ~~sold~~suitable for its intended use, ~~otherwise~~and ~~disposed~~the County will now proceed to close escrow by notifying the Company of orthe ~~becomes~~closing ~~impaired~~date, which date may be no later than April 30, 2014.

OnSimultaneous ~~May 28,~~with ~~2009,~~ the ~~Company,~~execution ~~through~~of ~~its~~the ~~wholly~~Purchase ~~owned~~and ~~subsidiary~~Sale ~~SFHI~~Agreement, ~~LLC~~the County ~~(“SFHI”),~~ entered into a ~~Purchase~~sublease ~~and~~with ~~Sale Agreement (~~the ~~“Agreement”)~~existing ~~with~~tenant ~~Montgomery~~of ~~County,~~SFHI ~~Maryland~~at ~~(the~~this ~~“County”)~~location, GXS, Inc., whereby the County, ~~will~~as ~~purchase~~of ~~SFHI’s~~October 1, ~~51.57~~2009, ~~acre~~leased ~~parcel~~and ofoccupied ~~land~~the ~~together~~entire ~~with~~Gaithersburg anProperty ~~approximately~~until ~~341,693~~the ~~square~~earlier ~~feet~~of ~~office~~(i) completion ~~building~~of ~~erected thereon~~its ~~comprising~~purchase of the Gaithersburg Property, ~~located~~or ~~at 100 Edison Park Drive in Gaithersburg~~(ii) April 30, ~~Maryland~~2014. ~~The~~Pursuant ~~purchase~~to ~~price~~the ~~for~~applicable provisions of the ~~Gaithersburg~~existing ~~Property~~lease ~~will~~with beGXS, ~~seventy-six~~Inc., ~~million~~SFHI ~~three~~consented ~~hundred~~to ~~forty~~the ~~thousand~~sublease. ~~dollars~~In ~~($76~~addition,~~340~~ GXS,~~000)~~ Inc. ~~The~~agreed ~~Agreement~~to ~~provided the~~pay ~~County~~SFHI ~~with~~the asum ~~90-day~~of ~~feasibility~~$2.1 ~~period~~million, $1.7 ~~during~~million of which ~~the~~was ~~County~~paid ~~determined~~on ~~that~~October 1, ~~the~~2009, ~~Gaithersburg~~with ~~Property~~the isbalance ~~suitable~~of ~~for~~$0.4 ~~its~~million ~~intended~~paid ~~use~~on July 1, ~~and~~2010. ~~the~~Due ~~County~~to ~~will~~the ~~now~~pending ~~proceed~~sale toof ~~close~~the ~~escrow~~Gaithersburg byProperty, ~~notifying~~ the ~~Company~~related results of ~~the~~operations ~~closing~~have ~~date,~~been ~~which~~reported ~~date~~as discontinued ~~may~~operations. beSee noNotes ~~sooner~~to ~~than~~Consolidated 90Financial ~~days~~Statements, ~~from~~Note ~~the~~4, ~~date~~Purchase ~~of notice~~ and noSale ~~later~~Agreement ~~than~~of ~~April 30,~~Gaithersburg ~~2014.~~Property

~~Simultaneous~~Rental ~~with~~Properties the execution of the Purchase and Sale Agreement, the County entered into a sublease with the existing tenant of SFHI at this location, GXS, Inc., whereby the County, as of October 1, 2009, leased and occupied the entire Gaithersburg Property until the earlier of (i) completion of its purchase of the Gaithersburg Property or (ii) April 30, 2014. Pursuant to the applicable provisions of the existing lease with GXS, Inc., SFHI consented to the sublease. In addition, GXS, Inc. agreed to pay SFHI the sum of $2,125,000, $1,725,000 of which was paid on October 1, 2009, with the balance of $400,000 being paid on July 1, 2010. Due to the pending sale of the Gaithersburg Property, the related results of operations have been reported as discontinued operations. See Notes to Consolidated Financial Statements, Note 4, Sale of Gaithersburg Property

During fiscal year 2001, the Company acquired certain rental property as part of an IRS Section 1031 exchange. The rental property is located in the Dorchester section of Boston, Massachusetts (the “Dorchester Property”). The Company acquired the Dorchester Property with improvements and nonrecourse debt associated with the Dorchester Property which is subject to a long-term lease. A tenant remits payments to a bank according to the terms of the lease and note. The payments are used to liquidate the nonrecourse debt obligations. Rental ~~Properties~~income ~~Held~~is ~~for~~recorded ~~Investment~~by the Company on a straight-line basis and totals approximately $6.7 million annually and will remain at this level until approximately 2020 or until the asset is sold, otherwise disposed of or becomes impaired. The buildings on the Dorchester Property are being depreciated on a straight-line basis and the depreciation expense is approximately $1.7 million annually and will remain at this level until approximately 2041 or until the asset is sold, otherwise disposed of or becomes impaired. Interest expense is recorded based on the outstanding nonrecourse debt remaining to be paid based on unamortized loan issue costs and remaining debt amortization timetables. At any time during the term of the lease and debt amortization, the fair market values of the Dorchester Property may be different from its book value. Interest is presently being expensed at approximately $3.8 million annually on a straight-line basis through 2020 or until the asset is sold, otherwise disposed of or becomes impaired.

~~During~~The ~~fiscal~~Company ~~year 2001~~owns, ~~the~~through ~~Company~~its ~~acquired~~wholly ~~certain~~owned ~~rental~~subsidiary, ~~property~~Sahara asLas ~~part~~Vegas ~~of an IRS Section 1031 exchange~~Corp. ~~The~~(“SLVC”), ~~rental~~an ~~property~~approximately ~~is located~~27-acre inparcel ~~the Dorchester section~~ of ~~Boston,~~land ~~Massachusetts~~ (the “~~Dorchester~~Strip Property”). ~~The~~located ~~Company~~on ~~acquired~~ the ~~Dorchester~~east ~~Property~~side ~~with~~of ~~improvements and nonrecourse debt associated with the Dorchester Property which is subject to a~~Las ~~long-term~~Vegas ~~lease.~~Boulevard ASouth, ~~tenant remits payments~~ to ~~a bank according to~~ the ~~terms~~south of ~~the~~Sahara ~~lease and note~~Avenue. The ~~payments~~Company ~~are~~presently ~~used~~leases toportions ~~liquidate~~of the ~~nonrecourse~~Strip ~~debt~~Property ~~obligations.~~to ~~Rental~~two ~~income~~different islessees ~~recorded~~for byan ~~the~~aggregate ~~Company~~amount onof a$9,500 ~~straight-line~~per ~~basis and totals approximately $6~~month.7 ~~million~~The ~~annually~~leases ~~and~~may ~~will~~be ~~remain~~terminated atin ~~this~~the ~~level~~event ~~until approximately 2020 or until~~ the ~~asset~~property is sold, ~~otherwise disposed of~~ or ~~becomes impaired. The buildings on the Dorchester Property are also being depreciated on a straight-line~~ ~~basis~~developed ~~and~~by the ~~depreciation expense is approximately $1~~Company.7 ~~million~~In ~~annually~~addition, ~~and~~the ~~will~~Company ~~remain~~leased ~~at this level until approximately 2041 or until~~ the ~~asset~~balance ~~is sold, otherwise disposed~~ of ~~or becomes impaired. Interest expense is also recorded based on~~ the ~~outstanding~~ ~~nonrecourse~~property ~~debt remaining to be paid based~~ on ~~unamortized~~a ~~loan issue costs and remaining debt amortization timetables. At any time during the~~ short-term ofbasis ~~the~~for ~~lease and debt amortization~~$25,000 ~~the~~per ~~fair~~month ~~market~~for ~~values of~~ the ~~Dorchester~~four ~~Property~~month ~~may be~~period ~~different~~commencing ~~from~~December 1, ~~its~~2010 ~~book value. Interest is presently being expensed at approximately $4.5 million annually~~ and ~~will~~ending ~~decrease in relation to debt principal reductions through 2020 or until the asset is sold~~March 31, ~~otherwise disposed of or becomes impaired~~2011.

~~The Company owns, through its wholly owned subsidiary, Sahara Las Vegas Corp. (“SLVC”), an approximately 27~~-acre parcel of land (the “Strip Property”) located on the east side of Las Vegas Boulevard South, to the south of Sahara Avenue. The Company presently leases the Strip Property to three different lessees for an aggregate amount of22- ~~$35,000 per month. The leases may be terminated in the event the Strip Property is sold or developed by the Company.~~

On December 22, 2008, SLVC, entered into an Option Agreement with Las Vegas Towers, LLC (“LVT”), a Delaware limited liability company, in which SLVC granted LVT an option to purchase SLVC’s approximately 27-acre parcel of land located at 2600 Las Vegas Boulevard South, Las Vegas, Nevada.

The Option Agreement designated the purchase price to acquire the land at $618.0 million.

Simultaneous with the execution of the Option Agreement, SLVC executed a Contingent Warrant (the “Warrant”) to Purchase Series A Preferred Stock (the “Preferred Stock”), entitling LVT to purchase 60,000 shares of Series A Preferred Stock of SLVC upon terms and conditions set forth in the Warrant. The designation and amount of the Preferred Stock as well as the powers, preferences and relative, participating, optional and other special rights of the shares of the series of this Preferred Stock and the qualifications, limitations or restrictions thereof are set forth in the Certificate of Designation, Preferences and Rights of the Series A Preferred Stock also dated December 22, 2008. Had LVT exercised the Warrant prior to its expiration on April 1, 2009, the Option Agreement would have remained valid until March 31, 2010. LVT failed to exercise the Warrant before its expiration, and the Option Agreement terminated on March 31, 2009.

Critical Accounting Policies and Estimates

The preparation of these condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and ~~assumptions~~judgments that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates its estimates and judgments, including those related to customer incentives, bad debts, inventories, investments, estimated useful lives for depreciable and amortizable assets, valuation reserves and estimated cash flows in assessing the recoverability of long-lived assets, estimated liabilities for slot club bonus point programs, income taxes, contingencies and litigation. Management bases its estimates and judgments on historical ~~experience~~information that is currently available to the Company and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different ~~assumptions~~judgments or conditions.

Management believes the following critical accounting policies, among others, affects its more significant judgments and estimates used in the preparation of its consolidated financial statements:

Allowance for Doubtful Accounts:. The Company allows for an estimated amount of receivables that may not be collected. The Company estimates its allowance for doubtful accounts using a specific formula applied to aged receivables as well as a specific review of large balances. Historical experience is considered, as are customer relationships, in determining specific reserves.

~~Long-Lived~~Property ~~Assets:~~and ~~The~~Equipment. At ~~Company~~December 31, ~~has~~2010, athe ~~significant~~Company ~~investment~~had innet ~~long-lived~~ property and equipment. ~~Management~~of ~~reviews~~$96.7 ~~useful~~million, ~~lives~~representing ~~and~~52.6% ~~obsolescence and assesses commercial viability~~ of ~~these~~total assets. ~~periodically,~~Management atdepreciates ~~least~~property ~~annually.~~and ~~Based~~equipment on ~~these~~a ~~reviews,~~straight-line ~~management~~basis ~~estimates~~over ~~that~~their ~~the~~estimated ~~undiscounted~~useful ~~future~~lives. ~~cash flows expected~~The toestimated ~~result~~useful ~~from~~lives ~~the~~are ~~use~~based ofon ~~these assets exceeds~~ the ~~current~~nature ~~carrying value~~ of ~~these~~the assets. ~~Any~~as ~~adverse~~well ~~change~~as incurrent ~~the~~operating ~~estimate~~strategy ofand ~~these~~legal ~~undiscounted~~considerations ~~future~~such ~~cash~~as ~~flows~~contractual ~~could necessitate an impairment charge that would adversely affect operating results~~life. ~~Management~~Future ~~also~~events, ~~estimates~~such ~~useful~~as ~~lives~~property ~~for~~improvements, ~~its~~technological ~~assets~~obsolescence, ~~based~~new oncompetition, ~~historical~~or ~~experience~~new regulations, ~~estimates~~could ofresult ~~assets’~~in ~~commercial~~a ~~lives,~~change ~~and~~in the ~~likelihood~~manner ofin ~~technological~~which ~~obsolescence. Should~~ the ~~actual~~Company ~~useful~~uses ~~life~~certain ofassets requiring a ~~class~~change ofin ~~assets differ from~~ the estimated useful ~~life, the Company would record an impairment charge. We review useful~~ lives ~~and obsolescence and we assess commercial viability~~ of ~~these~~such assets ~~periodically~~.

23For assets to be held and used, fixed assets are reviewed for impairment whenever indicators of impairment exist. If an indicator of impairment exists, the Company first groups its assets with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities (the “asset group”). Secondly, management estimates the undiscounted future cash flows that are directly associated with and expected to arise from the use of and eventual disposition of such asset group. Management then estimates the undiscounted cash flows over the remaining useful life of the primary asset within the asset group. If the undiscounted cash flows exceed the carrying value, no impairment is indicated. If the undiscounted cash flows do not exceed the carrying value, then an impairment is measured based on fair value compared to carrying value, with fair value typically based on a discounted cash flow model. If an asset is still under development, future cash flows include remaining construction costs.

For assets to be held for sale, the fixed assets (the “property held for sale”) are measured at the lower of their carrying amount or fair value less cost to sell. Losses are recognized for any initial or subsequent write-down to fair value less cost to sell, while gains are recognized for any subsequent increase in fair value less cost to sell, but not in excess of the cumulative loss previously recognized. Any gains or losses not previously recognized that result from the sale of the disposal group shall be recognized at the date of sale. Fixed assets are not depreciated while classified as held for sale.

Income Taxes. The Company has recorded deferred tax assets related to net operating losses as the Company is able to offset these assets with deferred tax liabilities. Realization of the net deferred tax assets is dependent on the Company’s ability to generate profits from operations or from the sale of long-lived assets that would reverse the temporary differences which established the deferred tax liabilities. There can be no assurance that the Company will generate profits from operations or sell those assets or

-23-

~~Income Taxes: The Company has recorded deferred tax assets related to~~ net operating losses as the Company is able to offset these assets with deferred tax liabilities. Realization of the net deferred tax assets is dependent on the Company’s ability to generate profits from operations or from the sale of long-lived assets that would reverse the temporary differences which established the deferred tax liabilities. There can be no assurance that the Company will generate profits from ~~operations or sell those assets or will generate profits from~~ sales if they were to occur in the future. In the event the Company does generate profits from sales of long-lived assets in the future a valuation allowance may need to be recorded, which would impact the Company’s future results of operations. Annualized effective income tax rates for calculating interim period provisions and benefits have been estimated to be not significantly different ~~from~~than the estimated annual effective rate and the statutory rate. Although Financial Accounting Standards Board, Accounting Standard Codification (FASB ASC) 740-10, Income Taxes, became effective for the year ending September 30, 2008, based on its evaluation, management determined that FASB ASC 740-10 did not have a material effect on the financial statements or the net operating loss carryovers or the related deferred tax assets or valuation allowance.

Revenue Recognition:. Casino revenue is recorded as the aggregate of gaming wins ~~minus~~and losses. Hotel, food and beverage, entertainment and other operating revenues are recognized as ~~the~~ services are performed. Casino revenues are recognized net of certain sales incentives in accordance with FASB ASC 605-50 Revenue Recognition, Customer Payments and Incentives. Accordingly, cash incentives to customers for gambling, and the cash value of points and coupons earned by the slot club members totaling approximately $0.1 million and $0.21 million for the quarters ended ~~March~~December 31, 2010 and 2009, respectively, have been recognized as a direct reduction of casino revenue.

Advance deposits on ~~hotel~~ rooms, if any, are recorded as deferred revenue until services are provided to the customer. Hotel, food and beverage revenues are recognized as ~~the~~ services are performed.

Rental revenue from rental properties is recognized as earned on a straight-line basis over the term of the lease. When rental payments received exceed rents earned and recognized, the difference is recorded as deferred rental income in the ~~current~~ liabilities section of the balance sheet, and conversely, when rents earned and recognized exceed rental payments received, the difference is recorded as other assets.

~~Recently~~Recent ~~Issued~~ Accounting ~~Standards~~Pronouncements

~~FASB~~See ~~ASC~~related ~~810-10:~~disclosure Inat ~~June 2009, the FASB issued FASB ASC 810-10, Consolidation. The amendments include: (1)~~Item ~~the~~1 ~~elimination~~– ofFinancial ~~the~~Statements ~~exemption~~– ~~for~~Notes ~~qualifying special purpose entities, (2) a new approach for determining who should consolidate a variable-interest entity, and (3) changes~~ to ~~when~~Unaudited itConsolidated isFinancial ~~necessary~~Statements ~~to reassess who should~~– ~~consolidate~~Note a1 ~~variable-interest~~Basis ~~entity.~~of ~~FASB~~Presentation ~~ASC 810-10 is effective for the first annual reporting period beginning after November 15, 2009~~ and ~~for~~General ~~interim~~Information ~~periods~~– ~~within~~Recent ~~that~~Accounting ~~first annual reporting period~~Pronouncements. ~~The Company will adopt FASB ASC 810-10 during fiscal year 2010. The Company does not expect that the adoption of FASB ASC 810-10 will have a material impact on the consolidated financial statements.~~

~~FASB~~Results ~~ASC 860-10: In June 2009, the FASB issued FASB ASC 860-10, Transfers and Servicing. FASB ASC 860-10 eliminates the concept~~ of aOperations ~~“qualifying~~– ~~special-purpose entity,” changes the requirements for derecognizing financial assets, and requires additional disclosures in order to enhance information reported to users of~~Three ~~financial~~Months ~~statements~~Ended ~~by providing greater transparency about transfers of financial assets~~December 31, ~~including~~2010 ~~securitization transactions,~~ and ~~an entity’s continuing involvement in and exposure to the risks related to transferred financial assets. FASB ASC 860-10 is effective for fiscal years beginning after November 15,~~ 2009~~. The~~ ~~Company will adopt FASB ASC 860-10 during fiscal year 2010. The Company does not expect that the adoption of FASB ASC 860-10 will have a material impact on the consolidated financial statements.~~

FASB ASC 815-10: In March 2008, the FASB issued FASB ASC 815-10, Derivative Instruments and Hedging. FASB ASC 815-10, which will require enhanced disclosures regarding the impact on financial position, financial performance, and cash flows, is effective for the Company beginning on October 1, 2009. However, since the Company does not now have, nor does it contemplate issuing or obtaining any derivative instruments, or engaging in any hedging activities, in the foreseeable future, we do not currently expect any effect on our future financial statements by adopting FASB ASC 815-10.

FASB ASC 810-10: In December 2007, the FASB issued FASB ASC 810-10, Consolidation. It requires that a noncontrolling (minority) interest in a subsidiary, including a consolidatable variable interest entity should be reported as equity in the consolidated financial statements. FASB ASC 810-10 will not likely have any effect on the Company’s consolidated financial statements since we do not presently have and are not contemplating investing in, establishing or acquiring a subsidiary with a noncontrolling interest. FASB ASC 810-10 is effective, if applicable, for the Company’s fiscal year beginning October 1, 2009.

FASB ASC 820-10 and 825-10: In September 2006, the FASB issued FASB ASC 810-10, Fair Value Measurements. FASB ASC 810-10 defines fair value, establishes a framework for measuring fair value in accounting principles generally accepted in the United States, and expands disclosure about fair value measurements. In February 2007, the FASB issued FASB ASC 810-10, Financial Instruments, which will permit the option of choosing to measure certain eligible items at fair value at specified election dates and report unrealized gains and losses in earnings. We have no present intention of opting to adopt FASB ASC 810-10. FASB ASC 810-10 is effective for the Company for financial assets and liabilities carried at fair value for fiscal year ended September 30, 2009 but will not become effective for nonfinancial assets until fiscal year ended September 30, 2010 (including interim periods within those years). We do not now expect any other effects of FASB ASC 810-10 since it is unlikely that we will choose to value assets or liabilities at fair value.

Results of Operations – Nine Months Ended June 30, 2010 and 2009

General

During the ~~nine~~quarter ~~months~~ ended ~~June~~December 3031, 2010, the Company’s net operating revenues decreased $61.3 million and operating expenses decreased $31.2 million, resulting in a decrease in operating income of $30.1 million from the ~~nine~~quarter ~~months~~ ended ~~June~~December 3031, 2009. The ~~change~~decline in operating results was primarily due to aunfavorable ~~decrease~~changes in general economic conditions including recession and economic slowdown. Net operating revenues at the ~~investment~~rental properties decreased $0.1 million from the quarter ended December 31, 2009. The ~~operating~~ ~~results~~decline atin the ~~Pioneer~~revenue ~~and~~of the rental properties ~~were~~is ~~unchanged~~substantially due to the decrease in rental revenue associated with the Strip Property.

Consolidated

Net Operating Revenues. Consolidated net operating revenues for the ~~nine~~quarter ~~months~~ ended ~~June~~December 3031, 2010 were $~~18.~~5.1 million, a $61.3 million, ~~decrease~~ or 2520%, asdecrease ~~compared~~from to $246.8 4 million for the ~~nine~~quarter ~~months~~ ended ~~June~~December 3031, 2009. ~~The~~Income ~~change~~from ~~in net operating revenues was primarily related to lower revenues at~~ the ~~Pioneer~~rental ~~and the investment~~ properties~~. Revenues~~ atin the ~~Pioneer~~quarter ~~for the nine months~~ ended ~~June~~December 3031, 2010 ~~were~~was $121.28 million, a $30.91 million, ~~decrease~~ or 245%, asdecrease from ~~compared to~~ $~~16.~~1 .9 million for the ~~nine~~quarter ~~months~~ ended ~~June~~December 3031, 2009. Revenues ~~from~~at the ~~investment~~Pioneer ~~properties~~of $3.3 million for the ~~nine~~ ~~months~~quarter ended ~~June~~December 3031, 2010, ~~were~~decreased $50.7 million, ~~a $2.3 million decrease~~ or 2918%, asfrom ~~compared to~~ $84.0 million for the ~~nine~~quarter ~~months~~ ended ~~June~~December 3031, 2009. ~~Revenues at corporate for the nine months ended June 30, 2010 decreased $0.1~~ ~~million as compared to the nine months ended June 30, 2009.~~

25 -24-

Operating Expenses. Total operating expenses ~~for~~decreased ~~the nine months ended June 30, 2010 were~~ $~~18.~~1 ~~million, a $3~~.2 million, ~~decrease~~ or 1519%, ~~as compared~~ to $215.32 million for the ~~nine~~quarter ~~months~~ ended ~~June~~December 3031, ~~2009.~~2010 ~~The change in operating expenses resulted~~ from ~~an increase in corporate expense of~~ $06.~~7 million,~~4 ~~combined with a $3.9~~ million ~~reduction~~for inthe ~~operating~~quarter ~~expenses~~ended atDecember 31, ~~the Pioneer~~2009. Total operating expenses as a percentage of net revenue increased to 98102% infor the ~~current~~2010 ~~year~~quarter ~~period~~ from 86100% infor the ~~prior year period, as a result of the revenues~~2009 ~~reducing more than the operating expenses~~quarter. Operating expenses at the Pioneer of $3.8 million for the ~~nine~~quarter ~~months~~ ended ~~June~~December 3031, 2010 ~~were~~decreased $131.60 million, ~~a $3.9 million decrease~~ or 2221%, asfrom ~~compared to~~ $174.58 million for the ~~nine~~quarter ~~months~~ ended ~~June~~December 3031, 2009.

Operating Income. Consolidated operating ~~income~~loss for the ~~nine~~quarter ~~months~~ ended ~~June~~December 3031, 2010 was ~~approximately~~ $0.4 1 million, a decrease of $30.1 million ~~decrease~~from ~~or 89%, as compared to approximately~~ $30.5 0 million for the ~~nine~~quarter ~~months~~ ended ~~June~~December 3031, 2009. This decrease was due to the aforementioned ~~change~~changes in ~~corporate~~net ~~and Pioneer~~ operating ~~income~~revenues and operating expenses. Operating income atattributable to the ~~Dorchester~~rental properties ~~Property~~of ~~and~~$1.2 ~~the~~million ~~Strip~~for ~~Property~~quarter ~~decreased~~ended byDecember 31, 2010 decreased $20.31 million toor 8%, from $31.83 million for the ~~nine~~quarter ~~months~~ ended ~~June~~December 3031, ~~2010~~2009. Operating loss at the Pioneer ~~remained~~of ~~unchanged at~~ $10.45 million for the ~~nine~~quarter ~~months~~ ended ~~June~~ December 3031, 2010. ~~The~~decreased ~~operating loss at corporate increased by~~ $0.84 million toor 44%, from $2.0.9 million for the ~~nine~~quarter ~~months~~ ended ~~June~~December 3031, ~~2010~~2009.

Interest Expense. Consolidated interest expense for the ~~nine~~quarter ~~months~~ ended ~~June~~December 3031, 2010 was $31.40 million, a $0.2 1 million, ~~decrease~~ or 69%, asdecrease ~~compared~~from to $31.6 1 million for the ~~nine~~quarter ~~months~~ ended ~~June~~December 3031, 2009. ~~The decrease was primarily due to the reduction of nonrecourse debt associated with the rental properties.~~

Interest and Other Income. Consolidated interest and other income for the ~~nine~~quarter ~~months~~ ended ~~June~~December 3031, 2010, was ~~$0.9 million,~~ a $0.4 3 million ~~increase or 80%~~, asunchanged ~~compared~~from ~~to $0.5 million for~~ the ~~nine~~quarter ~~months~~ ended ~~June~~December 3031, 2009. ~~The decrease was primarily due to the decrease in cash flows from operating and investing activities.~~

~~Federal~~Gain ~~Income~~(loss) ~~Tax.~~on ~~The~~Sale ~~Company~~of ~~recorded~~Marketable aSecurities. The ~~net~~gain ~~federal~~on ~~income~~the ~~tax~~sale ~~benefit~~of marketable securities for the ~~nine~~quarter ~~months~~ ended ~~June~~December 3031, 2010 of was $0.51 million, ~~based~~a ~~on estimated annual effective rates~~$0.2 ~~The~~million, ~~Company~~or ~~recorded~~200%, aincrease ~~net~~from ~~federal~~the ~~income~~loss ~~tax expense~~ of $0.51 million for the ~~nine~~quarter ~~months~~ ended ~~June~~December 3031, 2009. ~~These net taxes are a combination of the federal income tax on both continuing and discontinued operations.~~

~~Net~~Federal Income ~~(Loss) Applicable to Common Shares~~Tax. ~~Consolidated~~Federal ~~net~~ income ~~attributable~~ totax ~~common~~benefit ~~shares~~ for the ~~nine~~quarter ~~months~~ ended ~~June~~December 3031, 2010 was $0.9 4 million, ora less than $0.~~14 per~~1 ~~common~~million ~~share~~increase, asor ~~compared~~33%, tofrom ~~net~~the ~~income~~quarter ~~attributable~~ended ~~to common shares of $1.0~~December ~~million~~31, ~~or $0.15 per common share~~2009, ~~for~~based ~~the nine~~on ~~months~~federal ~~ended~~statutory ~~June 30, 2009~~rates.

Discontinued Operations, Net of Tax. The gain on discontinued operations associated with the property held for sale during the quarter ended December 31, 2010 was $0.5 million, a decrease of $0.4 million from $0.9 million for the quarter ended December 31, 2009.

Pioneer

Net Operating Revenues. Net operating revenues at the Pioneer were approximately $3.3 million for the ~~nine~~quarter ~~months~~ ended ~~June~~December 3031, 2010 ~~were $12.2 million~~, a decrease of $30.97 million, ~~decrease~~ or 2418%, as compared to $164.10 million ~~for~~in the ~~nine~~quarter ~~months~~ ended ~~June~~December 3031, 2009 ~~primarily due to the reasons set forth below~~.

Casino revenues for the ~~nine~~quarter ~~months~~ ended ~~June~~December 3031, 2010 were $92.67 million, a decrease of $30.25 million, ~~decrease~~ or 2516%, as compared to $123.82 million ~~for~~in the ~~nine~~quarter ~~months~~ ended ~~June~~December 3031, 2009. Slot and video poker revenues ~~for the nine months ended June 30, 2010~~ were $82.85 million, a decrease of $20.74 million, ~~decrease~~ or 2314%, as compared to $112.59 million ~~for the nine months ended June 30, 2009~~. Other gaming revenues, including table games ~~for the nine months ended June 30~~, ~~2010~~ were $0.82 million, a decrease of $0.51 million, ~~decrease~~ or 3833%, as compared to $10.3 million ~~for the nine months ended June 30, 2009~~. Casino promotional allowances were $20.47 million compared to $3.0.9 million, a decrease of approximately $0.62 million, or 22%.

26Hotel revenues for the quarter ended December 31, 2010 were $0.3 million, relatively unchanged from the quarter ended December 31, 2009. Hotel occupancy was 25% compared to 29%, a decrease of 4%, but was offset by an 8% increase in the average room rate. Competitive pressures continue in the Laughlin market. Food and beverage revenues decreased $0.3 million, or 25%, to $0.9 million from $1.2 million. Other revenues were $0.1 million, unchanged from the quarter ended December 31, 2009.

Operating Expenses. Operating expenses were $3.8 million for the quarter ended December 31, 2010, a decrease of $1.0 million, or 21%, from $4.8 million in the quarter ended December 31, 2009. Operating expenses as a percentage of net revenue decreased to 115% in the current quarter from 120% in the quarter ended December 31, 2009.

-25-

~~Hotel~~Casino ~~revenues~~expenses ~~for the nine months ended June 30, 2010~~ were $1.16 million, a decrease of $0.2 6 million, ~~decrease~~ or 1527%, ~~as compared to~~ from $12.32 million ~~for the nine months ended June 30~~, ~~2009.~~primarily Adue ~~decrease~~to inthe ~~rooms occupied was compounded by a~~ decrease in ~~the~~casino ~~average room rate. Food and beverage~~ revenues ~~for the nine months ended June 30, 2010 were $3~~.~~4 million,~~ aCasino ~~$1.1~~expenses ~~million decrease or 24%,~~ as ~~compared~~a topercentage ~~$4.5 million~~of ~~for~~casino ~~the nine months ended June 30, 2009. Other~~ revenues ~~for~~decreased ~~the~~to ~~nine months ended June 30, 2010 were $0.5 million, a $0.1 million decrease or 17~~59%, asfrom ~~compared to $0~~69%.6 ~~million for the nine months ended June 30, 2009.~~

~~Operating~~Hotel ~~Expenses~~expenses were $0. ~~Operating~~1 ~~expenses~~million, ~~for~~unchanged from the ~~nine~~quarter ~~months~~ ended ~~June~~December 3031, ~~2010~~2009. Food and beverage expenses were $130.6 5 million, a decrease of $30.92 million ~~decrease~~ or 2229%, from approximately $170.~~5 million~~7 ~~for the nine months ended June 30~~million, due ~~2009.~~to ~~The~~a decrease ~~was~~in ~~primarily~~the ~~associated~~number ~~with~~of ~~the~~food ~~reduction~~and ~~in the~~beverage ~~operating~~covers ~~revenues~~sold. ~~Operating~~Food and beverage expenses as a percentage of ~~revenue~~food ~~increased~~and beverage revenues decreased to ~~111~~56% infrom ~~the~~58%. ~~current~~Other ~~year~~expenses ~~period~~were ~~from~~$0.1 ~~109%~~million, inunchanged from the ~~prior~~quarter ~~year~~ended December 31, ~~period~~2009. Other expenses as a percentage of other revenues was also unchanged at 100%.

~~Casino~~Selling, ~~expenses~~general ~~for~~and administrative ~~the~~expenses ~~nine~~were ~~months~~$0.7 ~~ended June 30~~million, ~~2010~~a ~~were~~decrease of $6.0.1 million, aor 13%, compared to $10.48 million. ~~decrease~~Selling, orgeneral 19and administrative expenses as a percentage of revenues increased to 21% from 20%. Pioneer’s selling, asgeneral ~~compared~~and administrative expenses are greater than the consolidated total due to the elimination of intercompany transactions in consolidation. Utilities and property expenses were $70.4 7 million, ~~for~~unchanged from the ~~nine~~quarter ~~months~~ ended ~~June~~December 3031, 2009. Utilities ~~Casino~~and property expenses as a percentage of ~~casino~~operating ~~revenue~~revenues increased to 6321% infrom ~~the~~18%. ~~current~~Depreciation ~~year~~and ~~period~~amortization ~~from~~expenses ~~58%~~were in$0.1 million, unchanged from the ~~prior~~quarter ~~year~~ended ~~period~~December 31, 2009. Depreciation and amortization as a percentage of operating revenues remained at 3%.

Hotel expenses for the nine months ended June 30, 2009 were $0.5 million, a $0.1 million decrease or 17%, as compared to $0.6 million for the nine months ended June 30, 2009, due to the decrease in occupied rooms and associated expenses. Hotel expenses as a percentage of hotel revenue decreased to 45% in the current year period from 46% in the prior year period. Food and beverage expenses for the nine months ended June 30, 2010 were $2.2 million, a $0.8 million decrease or 27%, as compared to $3.0 million for the nine months ended June 30, 2009. Food and beverage expenses as a percentage of food and beverage revenue decreased to 65% in the current year period from 67% in the prior period. Other expenses for the nine months ended June 30, 2010 were $0.2 million, a $0.3 million decrease or 60%, as compared to $0.5 million for the nine months ended June 30, 2009. Other expenses as a percentage of other revenue decreased to 40% in the current year period from 83% in the prior year period.

Selling, general and administrative expenses for the nine months ended June 30, 2010 were $2.1 million, a $1.0 million decrease or 32%, as compared to $3.1 million for the nine months ended June 30, 2009. Selling, general and administrative expenses as a percentage of revenue decreased to 17% in the current year period from 19% in the prior year period. Pioneer’s selling, general and administrative expenses are greater than the consolidated total due to the elimination of intercompany transactions in consolidation. Utilities and property expenses for the nine months ended June 30, 2010 were $2.2 million, a $0.2 million decrease or 8%, as compared to $2.4 million for the nine months ended June 30, 2009. Utilities and property expenses as a percentage of revenue increased to 18% in the current year period from 15% in the prior year period. Depreciation and amortization expenses for the nine months ended June 30, 2010 were $0.4 million, a $0.1 million decrease or 20%, as compared to $0.5 million for the nine months ended June 30, 2009.

Results of Operations – Three Months Ended June 30, 2010 and 2009

General

During the quarter ended June 30, 2010, the Company’s net operating revenues decreased $2.1 million and operating expenses decreased $1.2 million, resulting in a decrease in operating income of $0.9 million as compared to the three months ended June 30, 2009. The change in operating results was primarily due to a greater decrease in revenues than the offsetting decreases in associated expenses.

Consolidated

Net Operating Revenues. Consolidated net operating revenues were $5.6 million for the quarter ended June 30, 2010, a $2.1 million or 27% decrease, from $7.7 million for the quarter ended June 30, 2009. Revenues at the Pioneer of $3.7 million for the three months ended June 30, 2010 decreased $1.3 million, or 26%, from $5.0 million for the three months ended June 30, 2009. Income from the rental properties was approximately $1.9 million for the three months ended June 30, 2010, a $0.5 million or 21% decrease, from $2.4 million for the three months ended June 30, 2009. Revenues at corporate decreased $0.3 million for the three months ended June 30, 2010 as compared to the three months ended June 30, 2009.

Operating Expenses. Total operating expenses for the three months ended June 30, 2010 were $5.8 million, a $1.2 million decrease or 17%, as compared to $7.0 million for the three months ended June 30, 2009. Total operating expenses as a percentage of revenue increased to 104% in the current period from 91% in the prior year period.

Operating Income. Consolidated operating loss for the three months ended June 30, 2010 was $0.2 million, a $0.9 million decrease, as compared to operating revenue of $0.7 million for the three months ended June 30, 2009. The decrease was due to the aforementioned decrease in operating revenues and expenses. Operating income at the rental properties for the three months ended June 30, 2010 was $1.3 million, a $0.5 million decrease, as compared to $1.8 million for the three months ended June 30, 2009. Operating loss at the Pioneer for the three months ended June 30, 2009 was $0.6 million, a $0.2 million decrease, or 25%, as compared to $0.8 million for the three months ended June 30, 2009. The operating loss at corporate increased by $0.5 million to $0.8 million. Operating income changes are a result of the aforementioned changes in operating revenues and expenses.

Interest Expense. Consolidated interest expense was unchanged from the prior year period at $1.2 million for the three months ended June 30, 2010.

Interest and Other Income. Consolidated interest and other income for the three months ended June 30, 2010 was $0.1 million, no change as compared to the three months ended June 30, 2009.

Income (Loss) Before Income Tax (Expense) Benefit and Discontinued Operations. Consolidated loss before income tax and discontinued operations for the three months ended June 30, 2010 was $1.2 million, a $0.8 million decrease, as compared to a $0.4 million for the three months ended June 30, 2009.

Federal Income Tax. The Company recorded a net federal income tax benefit for the three months ended June 30, 2010 of $0.8 million based on estimated annual effective rates. The Company recorded a minimal net federal income tax expense for the three months ended June 30, 2009. These net taxes are a combination of the federal income tax on both continuing and discontinued operations.

Net Income (Loss) Applicable to Common Shares. Consolidated net income attributable to common shares for the three months ended June 30, 2010 was $0.2 million, or $0.02 per common share, as compared to $0.0 million, or $0.00 per common share, for the three months ended June 30, 2009.

Pioneer

Net Operating Revenues. Net operating revenues at the Pioneer for the three months ended June 30, 2010 were $3.7 million, a $1.3 million decrease or 26%, as compared to $5.0 million for the three months ended June 30, 2009, primarily for the reasons set forth below.

Casino revenues for the three months ended June 30, 2010 were $2.8 million, a $1.0 million decrease or 26%, as compared to $3.8 million for the three months ended June 30, 2009. Slot and video poker revenues for the three months ended June 30, 2010 were $2.6 million, a $0.8 million decrease or 24%, as compared to $3.4 million for the three months ended June 30, 2009. Management believes the lower slot handle was a direct result of the weaker economic conditions impacting the Laughlin market. Other gaming revenues, including table games, for the three months ended June 30, 2010 were $0.2 million, a $0.2 million decrease or 50%, as compared to $0.4 million, for the three months ended June 30, 2009. Casino promotional allowances for the quarter ended June 30, 2010 were $0.7 million, a $0.3 million decrease or 30%, as compared to $1.0 million for the three months ended June 30, 2009.

Hotel revenues for the quarter ended June 30, 2010 were $0.4 million, a $0.1 million decrease or 20%, as compared to $0.5 million for the three months ended June 30, 2009. Food and beverage revenues for the quarter ended June 30, 2010 were $1.0 million, a $0.5 million decrease or 33%, as compared to $1.5 million for the three months ended June 30, 2009. Other revenues for the three months ended June 30, 2010 were $0.1 million, a $0.1 million decrease or 50%, as compared to $0.2 million for the three months ended June 30, 2009.

Operating Expenses. Operating expenses for the quarter ended June 30, 2010 were $4.3 million, a $1.5 million decrease or 26%, as compared to $5.8 million for the three months ended June 30, 2009. Operating expenses as a percentage of revenue remained unchanged from the prior year period at 116%.

Casino expenses for the three months ended June 30, 2010 were $1.8 million, a $0.6 million decrease or 25%, as compared to $2.4 million for the three months ended June 30, 2009. Casino expenses as a percentage of casino revenue increased to 64% from 63% resulting from the more rapid decline in revenues than expenses.

Hotel expenses for the three months ended June 30, 2010 were $0.2 million, unchanged from the prior year period. Hotel expenses as a percentage of hotel revenue increased to 50% for the three months ended June 30, 2010 from 40% for the three months ended June 30, 2009. Food and beverage expenses for the three months ended June 30, 2010 were $0.7 million, a $0.4 million decrease or 36%, as compared to $1.1 million in the three months ended June 30, 2009. Food and beverage expenses as a percentage of food and beverage revenue decreased to 70% for the three months ended June 30, 2010 from 73% for the three months ended June 30, 2009. Other expenses for the three months ended June 30, 2010 were $0.1 million, unchanged from the prior year period. Other expenses as a percentage of other revenue increased to 100% for the three months ended June 30, 2010 from 50% in the three months ended June 30, 2009.

Selling, general and administrative expenses for the three months ended June 30, 2009 were $0.7 million, a $0.3 million decrease or 30%, as compared to $1.0 million in the three months ended June 30, 2009. Selling, general and administrative expenses as a percentage of revenue decreased to 19% for the three months ended June 30, 2010 from 20% for the three months ended June 30, 2009. Pioneer’s selling, general and administrative expenses are greater than the consolidated total due to the elimination of intercompany transactions in consolidation. Utilities and property expenses for the three months ended June 30, 2010 were $0.7 million, a $0.1 million decrease or 13%, as compared to $0.8 million in the three months ended June 30, 2009. Utilities and property expenses as a percentage of revenue increased to 19% for the three months ended June 30, 2010 from 16% for the three months ended June 30, 2009. Depreciation and amortization expenses for the three months ended June 30, 2010 were $0.1 million, a $0.1 million decrease or 50%, as compared to $0.2 million for the three months ended June 30, 2009.

Liquidity and Capital Resources; Trends and Factors Relevant to Future Operations

Contractual Obligations and Commitments: The following table summarizes the Company’s September 30 th fiscal year contractual obligations and commitments as of June 30, 2010 (for the nine-month period ending September 30, 2010) and for the fiscal years ending September 30, 2011, 2012, 2013, 2014, 2015 and thereafter (amounts in thousands).

	Payments Due By Period
	2010		2011		2012		2013		2014		2015 andThereafter		Total
Continuing Operations
Nonrecourse debt:
Dorchester	$	0	$	0	$	0	$	0	$	0	$	31,199	$	31,199
Long-term debt:
Mortgage obligation		7,971		0		0		0		0		0		7,971
Operating leases:
Ground lease		98		392		392		392		392		25,090		26,756
Corporate offices		6		24		25		19		0		0		74
Total Continuing Operations	$	8,075	$	416	$	417	$	411	$	392	$	56,289	$	66,000
Discontinued Operations
Gaithersburg	$	834	$	3,573	$	3,987	$	4,448	$	25,107	$	0	$	37,949

The following tables summarize the Company’s fiscal year contractual obligations and commitments and cash interest payments, respectively, as of December 31, 2010 (for the nine-month period ending September 30, 2011 and for the fiscal years ending September 30, 2012, 2013, 2014, 2015, 2016 and thereafter) (amounts to nearest thousand):

The Company is required to make the following cash interest payments related to the foregoing debt obligations: (i) Non-recourse debt – $1.0 million (2010), $3.8 million (2011), $3.8 million (2012), $3.8 million (2013), $3.8 million (2014) and $21.9 million (2015 and thereafter); and (ii) Long-term debt – $0.1 million (2010), $0 million (2011), $0 million (2012), $0 million (2013), $0 million (2014) and $0 million (2015 and thereafter); and (iii) Discontinued Operations debt – $0.7 million (2010), $2.5 million (2011), $2.3 million (2012), $2.0 million (2013), $1.1 million (2014) and $0 million (2015 and thereafter).


	Payments Due by Period
	2011		2012		2013		2014		2015		2016 and Thereafter		Total
*Continuing Operations*
Nonrecourse debt:
Dorchester	$	0	$	0	$	0	$	0	$	0	$	31,199	$	31,199

Long-term debt:
Line of credit		6,813		0		0		0		0		0		6,813
Stock margin loan		0		0		0		3,000		0		0		3,000

Operating leases:
Ground lease		294		392		392		392		392		24,698		26,560
Corporate warehouse		18		25		19		0		0		0		62

Total Continuing Operations	$	7,125	$	417	$	411	$	3,392	$	392	$	55,897	$	67,634

*Discontinued Operations*
Gaithersburg	$	2,718	$	3,987	$	4,448	$	25,107	$	0	$	0	$	36,260


	Cash Interest Payments by Period
	2011		2012		2013		2014		2015		2016 and Thereafter		Total
*Continuing Operations*
Nonrecourse debt:
Dorchester	$	2,850	$	3,800	$	3,800	$	3,800	$	3,800	$	21,850	$	39,900

Long-term debt:
Line of credit		307		0		0		0		0		0		307
Stock margin loan		68		68		68		68		0		0		272

Operating leases:
Ground lease		0		0		0		0		0		0		0
Corporate warehouse		0		0		0		0		0		0		0

Total Continuing Operations	$	3,225	$	3,868	$	3,868	$	3,868	$	3,800	$	21,850	$	40,479

*Discontinued Operations*
Gaithersburg	$	1,871	$	2,263	$	1,958	$	1,122	$	0	$	0	$	7,214

~~The~~-26- ~~Company has no significant purchase commitments or obligations other than those included in the above table.~~

The Company has no significant purchase commitments or obligations other than those included in the above schedule.

The Company’s ability to service its contractual obligations and commitments, other than the nonrecourse debt, will be dependent on the future performance of the Pioneer, which will be affected by, among other things, prevailing economic conditions and financial, business and other factors, including competitive pressure from the expansion of Native American gaming facilities in the Southwest United States, certain of which factors are beyond the Company’s control. In addition, the Company will be dependent on the continued ability of the tenants in the rental properties in Gaithersburg, Maryland and in the Dorchester section of Boston, Massachusetts to make payments pursuant to the leases with the Company. The payments under the leases are contractually committed to be used to make payments on the Company’s nonrecourse debt obligations related to the properties

Liquidity and Capital Resources

~~Mortgage~~Line ~~Note~~of ~~Obligation~~Credit. The Company’s wholly owned subsidiary, SLVC, secured and maintains a $15.0 million line of credit loan granted by a Nevada bank. The loan and promissory note, are secured by deed of trust on SLVC’s approximate 27 acre parcel of land on Las Vegas Boulevard South (the “Strip Property”). The line of credit loan is revolving and is subject to additional lending requirements. The line of credit loan balance in the amount of $6.8 million at the end of the quarter ended December 31, 2010 is reported as a current liability, and any outstanding balance under the line of credit will become due in February 2011. The initial advance under the line of credit loan was used to pay in full the previous line of credit loan secured by the Strip Property. The SLVC line of credit loan is guaranteed by SLVC and the Company, as well as, personally guaranteed by Paul W. Lowden, President of SLVC, and by Suzanne Lowden, Secretary/Treasurer of SLVC.

30Stock Margin Loan Obligation. The Company’s wholly owned subsidiary, SFHI, secured and maintains a $3.0 million stock margin loan granted by Merrill Lynch. The stock margin loan is secured by marketable securities held by Merrill Lynch. The stock margin loan balance in the amount of $3.0 million at the end of the three months ended December 31, 2010 is reported as a current liability and included in the line of credit balance.

-27-

~~Property”),~~As ~~are for a period~~ of ~~one year commencing November~~December 1531, ~~2009~~2010, ~~and~~the ~~ending~~Company ~~November 14,~~held ~~2010.~~cash ~~The~~and ~~line~~cash equivalents of ~~credit~~$9.6 ~~loan~~million compared isto ~~revolving~~$9.6 ~~and~~million isat ~~subject~~September 30, ~~to additional lending requirements~~2010. The ~~line~~Company ofhad ~~credit~~$18.7 ~~loan~~million in ~~the~~investment ~~amount~~in ofmarketable ~~$7.9~~securities ~~million~~ at ~~the~~December 31, ~~end~~2010 ofcompared ~~the~~to ~~fiscal~~$17.8 ~~year~~million isat ~~reported~~September 30, ~~as a current liability~~2010. The ~~initial~~rental ~~advance~~properties ~~under~~are ~~the~~structured ~~line~~such ofthat future ~~credit~~tenants’ ~~loan~~payments ~~was~~cover ~~used~~future torequired ~~pay~~mortgage inpayments ~~full~~including ~~the~~any ~~previous~~balloon ~~line of credit loan secured by the Strip Property~~payments. ~~The~~Management ~~SLVC~~believes ~~line~~that ~~of credit loan is guaranteed by SLVC and~~ the Company, aswill ~~well~~have ~~as,~~sufficient ~~personally~~available ~~guaranteed~~cash byand ~~Paul~~cash W.resources ~~Lowden,~~to ~~President~~meet ofits ~~SLVC,~~cash ~~and~~requirements byfor ~~Suzanne~~a ~~Lowden,~~reasonable ~~Secretary/Treasurer~~ period of ~~SLVC~~time.

AsCash ofFlows ~~June 30,~~from ~~2010,~~Operating ~~the~~Activities. The Company’s ~~held~~ cash ~~and~~used ~~cash~~for ~~equivalents~~operating ofactivities ~~approximately~~ was $141.25 million ~~compared~~for tothe ~~$31.6~~quarter ~~million~~ended ~~at September~~December 3031, ~~2009.~~2010, ~~The~~as ~~Company~~compared ~~had~~to $151.46 million infor ~~investment~~the inquarter ~~marketable~~ended ~~securities at June~~December 3031, ~~2010 compared to $6.0 million at September 30,~~ 2009. The Dorchester Property and the Strip Property are structured such that future tenants’ payments cover future required mortgage payments including any balloon payments. Management believes that the Company will have sufficient available cash and cash resources to meet its cash requirements for a reasonable period of time.

Cash Flows from ~~Operating~~Investing Activities. ~~The~~Cash ~~Company’s cash~~ used for ~~operating~~investing activities was approximately $40.5 6 million for the ~~nine~~quarter ~~months~~ ended ~~June~~December 3031, 2010, as compared to $1.02 million for the ~~nine~~quarter ~~months~~ ended ~~June~~December 3031, 2009. In the current year period, the Company used $0.5 million for the purchase of marketable securities net of sales. In the prior year period, the Company used $1.2 million for the purchase of marketable securities net of purchases.

Cash ~~Flows~~Used ~~from~~in ~~Investing~~Financing Activities. Cash used in ~~investing~~financing activities was approximately $92.50 million for the ~~nine~~quarter ~~months~~ ended ~~June~~ December 3031, 2010, as compared to $20.10 ~~million~~ for the ~~nine~~quarter ~~months~~ ended ~~June~~December 3031, 2009. In the current year period, the ~~company~~Company ~~paid~~received $05.1 8 million ~~for~~as ~~capital~~proceeds ~~improvements~~from atlines ~~the~~of ~~Pioneer~~credit, ~~and~~used $121.2 0 million ~~for~~to ~~marketable~~pay ~~securities which~~down ~~were~~the ~~offset~~line byof ~~the~~credit, ~~sale~~and ofused $2.8 ~~million~~ infor ~~marketable~~the ~~securities~~purchase of treasury stock. In the prior year period, the ~~Company~~cash ~~paid~~used ~~$1.2~~was ~~million~~relatively ~~for capital improvements at the Pioneer, and $2~~insignificant.~~8 million~~ ~~for marketable securities which were offset by the sale of $1.9 million in marketable securities.~~

~~Cash~~The ~~Used~~Company’s inprimary ~~Financing~~source ~~Activities.~~of ~~Cash~~operating ~~used~~cash inis ~~financing activities~~from ~~was~~the ~~$3.9~~Pioneer ~~million~~operations, ~~for~~from ~~the~~interest ~~nine~~income ~~months~~on ~~ended~~available ~~June 30, 2010~~cash asand ~~compared~~cash toequivalents ~~$1.2~~and ~~million~~investments ~~for~~in ~~the~~marketable ~~nine~~securities ~~months~~and, ~~ended~~to ~~June 30~~a lesser extent, ~~2009.~~from Innet cash generated from the ~~current~~leasing ~~year~~of ~~period,~~certain ~~$0.1~~land ~~million~~owned ~~was~~on ~~provided~~the byLas ~~proceeds~~Vegas Strip. Rental income from ~~line~~the ofCompany’s ~~credit,~~rental property and ~~$4.0 million~~property ~~was~~held ~~used~~ for sale is contractually committed to reducing the ~~purchase~~nonrecourse ofindebtedness issued ~~common~~or ~~stock~~assumed ~~for~~in ~~retirement.~~connection Inwith the ~~prior~~acquisition ~~year~~of ~~period,~~the $0rental properties.~~9 million~~ ~~was~~Under ~~used~~the ~~for~~two ~~debt payments~~leases, ~~and~~the ~~approximately~~tenants ~~$0.3~~are ~~million~~responsible for ~~the~~substantially ~~purchase~~all ofobligations ~~common~~related ~~stock~~to ~~for~~the ~~retirement~~leased properties.

The Company’s ~~primary~~owns, ~~source~~through ofits ~~operating~~wholly ~~cash~~owned issubsidiary, ~~from~~Sahara ~~the~~Las ~~Pioneer~~Vegas ~~operations~~Corp. (“SLVC”), ~~from~~an ~~interest~~approximately ~~income~~27-acre onparcel ~~available~~of ~~cash and cash~~land ~~equivalents~~(the ~~and~~“Property”) ~~investments~~located inon ~~marketable~~the ~~securities~~east ~~and,~~side toof aLas ~~lesser~~Vegas ~~extent~~Boulevard South, ~~from~~just ~~net~~south ~~cash generated from the leasing~~ of ~~Strip~~Sahara ~~Property~~Avenue. ~~Rental~~The ~~income from the~~ Company’s ~~Dorchester~~presently ~~Property~~leases ~~and~~portions ~~Gaithersburg~~of the Property ~~is contractually committed~~ to ~~reducing~~two ~~the~~different ~~nonrecourse~~lessees ~~indebtedness~~for ~~issued~~an oraggregate ~~assumed~~amount ~~in connection with the acquisition~~ of ~~the~~$9,500 ~~rental~~per ~~properties~~month. ~~Under~~The ~~the two~~ leases, ~~the~~may be ~~tenants~~terminated ~~are~~in ~~responsible~~the ~~for~~event ~~substantially all obligations related to~~ the ~~respective~~ property. ~~SLVC,~~is ~~an indirect~~sold ~~wholly-owned~~or ~~subsidiary~~developed ofby the Company,. ~~owns~~In addition, the 27Company-~~acre~~short-term ~~Strip~~leased ~~Property~~the onbalance ~~Las~~of ~~Vegas~~the ~~Boulevard~~property ~~South~~for ~~which~~$25,000 isper ~~subject~~month tofor ~~a lease with~~ the ~~adjacent~~four ~~property~~month ~~owner~~period tocommencing ~~facilitate~~December 1, ~~development~~2010 ofand ~~the~~ending March 31, ~~adjacent property~~2011.

Pioneer

Pioneer’s principal uses of cash are for payments of slot machine debt obligations, ground lease rent and capital expenditures to maintain the facility. The Company has implemented changes in personnel and promotional programs and installed new slot equipment to address the decreases in revenues and operating income. One of management’s main focuses is to recapture market share in the Laughlin market. Management, however, can give no assurance that market share will be recaptured in ~~the~~its Laughlin market ~~since~~as its competition in the market typically has greater capital resources than does the Pioneer.

Payments of rent were approximately $0.1 million for each of the quarter ended December 31, 2010 and 2009. Capital expenditures to maintain the facility in fiscal 2011 are expected to be less than $1.0 million.

-28-

~~Payments~~Assets ofHeld ~~rent~~for ~~were~~Sale approximately $0.03 million in each of the nine months ended June 30, 2010 and 2009, respectively. Capital expenditures to maintain the facility in fiscal 2010 are expected to be approximately $0.3 million.

Property Held for Sale

The Gaithersburg Property in Gaithersburg, Maryland is located on 51.57 acres and includes one building with approximately 342,000 square feet of commercial office space. The Gaithersburg Property was acquired for $62.6 million, plus debt issuance costs of $2.7 million. The Company paid $9.9 million in cash and issued $55.4 million in nonrecourse first mortgage indebtedness. The Gaithersburg Property is under a net lease through 2014 with a single tenant with an investment grade credit rating. Under the lease, the tenant is responsible for substantially all obligations related to the Gaithersburg Property. The Gaithersburg Property is under contract to be sold. See Note 4, Purchase and Sale Agreement of Gaithersburg Property

Rental Properties ~~Held for Investment~~

The Company acquired commercial rental property in the Dorchester section of Boston, Massachusetts in March 2001. The Dorchester Property is located on 12 acres and includes several buildings with approximately 425,000 square feet of commercial office space. The Dorchester Property was acquired for approximately $82.4 million plus $0.5 million in debt issuance costs. The Company paid $5.6 million in cash and assumed $77.3 million in nonrecourse debt associated with the Dorchester Property. The Dorchester Property is under a net lease through 2020 with a single tenant with an investment grade credit rating. Under the lease, the tenant is responsible for substantially all obligations related to the Dorchester Property.

Termination of Option to Purchase Las Vegas Boulevard Land

On December 22, 2008, SLVC, a wholly owned subsidiary of Archon Corporation, entered into an Option Agreement with Las Vegas Towers, LLC (“LVT”), a Delaware limited liability company, in which SLVC granted LVT an option to purchase SLVC’s approximately 27-acre parcel of land located at 2600 Las Vegas Boulevard South, Las Vegas, Nevada, the Strip Property.

The Option Agreement designated the purchase price to acquire the Strip Property at $618.0 million.

Simultaneous with the execution of the Option Agreement, SLVC executed a Contingent Warrant (the “Warrant”) to Purchase Series A Preferred Stock (the “Preferred Stock”), entitling LVT to purchase 60,000 shares of Series A Preferred Stock of SLVC upon terms and conditions set forth in the Warrant. The designation and amount of the Preferred Stock as well as the powers, preferences and relative, participating, optional and other special rights of the shares of the series of this Preferred Stock and the qualifications, limitations or restrictions thereof are set forth in the Certificate of Designation, Preferences and Rights of the Series A Preferred Stock (the “Certificate”) also dated December 22, 2008. Had LVT exercised the Warrant prior to its expiration on April 1, 2009, the Option Agreement would have remained valid until March 31, 2010. LVT failed to exercise the Warrant before its expiration, thus the Option Agreement terminated on March 31, 2009.

Redemption of the Company’s Preferred Stock and Redemption Price Disputes

The Company called all outstanding shares of its Exchangeable Redeemable Preferred Stock for redemption on and as of August 31, 2007, at a redemption price of $5.241 per share, which sum included accrued and unpaid dividends to the date of redemption. From and after August 31, 2007, all shares of the Exchangeable Redeemable Preferred Stock ceased to be outstanding and to accrue dividends. As of ~~August~~February 711, ~~2010~~2011, the holders of 4~~,261,092~~.3 million shares of the Exchangeable Redeemable Preferred Stock have surrendered their shares and received payment of the redemption price; while ~~155,485~~0.2 million shares have yet to be surrendered and still have the right to receive their payment due without interest. As of ~~June~~December 3031, 2010 and September 30, ~~2009~~2010, exchangeable redeemable preferred stock – unredeemed was $~~814,897~~0.8 million and $~~821~~0.8 million,~~259,~~ respectively.

On August 27, 2007, a group of institutional investors filed an action, against the Company in ~~Nevada~~the United States District Court, ~~against~~entitled ~~the~~DE ~~Company~~Shaw Laminar Portfolios et al. v. Archon Corporation, District of Nevada, Case No. 2:07-cv-1146. The Complaint was subsequently amended to add an additional party plaintiff (collectively, the “Plaintiffs”). The Amended Complaint: (i) seeks a finding by the Court that the Company has breached its obligations under the Company’s Certificate of Designation of the Preferred Stock, dated September 30, 1993 (the “Certificate”), and awarding the Plaintiffs full compensation of any and all available damages suffered by the Plaintiffs as a result of the Company’s breach of the Certificate; (ii) seeks a finding by the Court that the Company’s issuance of its redemption notice with an improper redemption price is an anticipatory breach of a material term of the Certificate and awarding the Plaintiffs full compensation of any and all available damages suffered as a result of the Company’s anticipatory breach of the Certificate; (iii) seeks a declaration by the Court that the dividends be properly calculated and compounded per the terms of the Certificate in an amount not less than $7~~,235,351~~.2 million up through and including the date of final judgment; (iv) seeks an order from the Court calling for the Company to reimburse the Plaintiffs’ attorneys’ fees, expenses and costs incurred in enforcing their rights; and (v) seeks such other and further relief as the Court may deem appropriate.

~~Recently, Plaintiffs have filed a second motion for entry of final judgment, again seeking entry of judgment that the redemption price~~-29- for the preferred shares should have been $8.69 per share. The Company has substantively opposed that motion and has urged the Court to reconsider its August 8, 2008 order. Briefing on Plaintiffs’ second motion for entry of final judgment has been completed and a hearing was held before the Court and the parties are awaiting a ruling.

~~Also,~~ Court’s ~~two~~ruling ~~other~~on ~~holders~~the ofmotion ~~the~~for ~~Exchangeable~~partial ~~Redeemable~~summary ~~Preferred~~judgment, ~~Stock~~Plaintiffs filed ~~Complaints, both~~a ~~alleging~~motion ~~essentially~~for ~~the~~entry ~~same~~of ~~claim~~final asjudgment, ~~the~~seeking ~~first~~entry ~~complaint~~of ~~related~~judgment tothat the ~~case~~redemption ~~set~~price ~~forth~~for ~~immediately~~the ~~above.~~preferred Ifshares should ~~the~~have ~~plaintiffs~~been in$8.69 ~~these~~per ~~two~~share. ~~additional~~On ~~actions~~December 22, ~~are correct~~2010, the ~~redemption~~District ~~price~~Court asgranted ofthat ~~August 31,~~motion ~~2007~~and ~~should~~entered ~~have~~judgment ~~been~~against ~~$8.69 per~~the ~~share~~Company ~~and~~in ~~not~~the amount of $9.5 million.~~241~~ ~~per~~The ~~share~~District asCourt ~~calculated~~based byits ~~the~~decision ~~Company~~primarily on its order from August of 2008. IfThe ~~applied~~Company tohas ~~all~~filed ~~the~~a ~~then~~motion ~~outstanding~~for ~~shares~~reconsideration of ~~Exchangeable~~the ~~Redeemable~~District ~~Preferred~~Court’s ~~Stock~~December 22, ~~including~~2010 ~~the~~order. ~~shares~~That ~~held~~motion byhas ~~the~~been ~~Company’s~~fully ~~officers~~briefed and ~~directors,~~is ~~valuation~~pending ofbefore the ~~redemption~~ ~~price~~District ~~at $8~~Court.69 ~~per~~In ~~share~~the ~~would~~event ~~increase~~the motion for reconsideration is denied, the ~~redemption~~Company ~~price~~intends into ~~excess~~appeal the District Court’s decision to the Ninth Circuit Court of ~~$15~~Appeals.2 ~~million.~~

~~Management~~The isCompany ~~unable~~has initiated proceedings against a third-party law firm concerning that firm’s potential liability related to the drafting of the Certificate of Designation. This third-party action has subsequently been removed by the defendant law firm to ~~estimate~~Federal Court in April, 2009 and is at an early stage of resolution. The defendant law firm has moved to compel arbitration of the ~~minimum~~dispute. ~~liability~~The Magistrate Judge issued an order that ~~may~~the matter be ~~incurred,~~referred ifto ~~any,~~arbitration asand athe ~~result~~District ofCourt confirmed that order. The Company intends to pursue its claims against the ~~outcome~~defendant oflaw ~~each~~firm ofin ~~these~~arbitration. ~~lawsuits~~The Company is also considering rights and, ~~therefore,~~remedies ~~has~~it ~~made~~may nohave ~~provision~~with regard to other parties who participated in the ~~financial~~issuance ~~statements~~of ~~for~~the Preferred ~~liability~~Stock ~~related~~in tothe ~~these~~event ~~cases~~that the Company does not prevail on its interpretation of the Certificate.

In the Leeward Capital matter, both the Leeward Plaintiffs and the Company have filed motions for summary judgment. The Leeward Plaintiffs made arguments similar to the Laminar Plaintiffs in their motion. On December 22, 2010, the District Court issued an order granting the Leeward Plaintiffs’ motion for summary judgment on the same grounds as the Laminar order and denying Archon’s motion without analysis. Contemporaneous with the filing of the December 22, 2010 order, the District Court entered judgment in favor of the Leeward Plaintiffs and against the Company in the amount of $0.3 million. The Company has filed a motion for reconsideration of the District Court’s December 22, 2010 order. That motion has been fully briefed and is pending before the District Court. In the event the motion for reconsideration is denied, the Company intends to appeal the District Court’s decision to the Ninth Circuit Court of Appeals.

The Company plans to appeal the District Court’s decisions to the Ninth Circuit Court of Appeals. The Company believes that it has valid bases in law and fact to overturn or appeal these verdicts. As a result, the Company believes that the likelihood that affirmation of the judgments is possible but not probable, and, accordingly, that the amount of any loss cannot be reasonably estimated at this time. Because the Company believes that this potential loss is not probable or estimable, it has not recorded any reserves or contingencies related to this legal matter. In the event that the Company’s assumptions used to evaluate this matter as neither probable nor estimable change in future periods, it will be required to record a liability for an adverse outcome, which may include post-judgment interest.

Effects of Inflation

The Company has been generally successful in recovering costs associated with inflation through price adjustments in its hotel ~~operations~~room rates. Expenses of operating the Company’s rental properties are ~~Any~~generally borne by the tenants. Primarily due to competitive market and other economic pressures any such future increases in costs associated with casino operations and maintenance of properties may not be completely recovered by the Company.

~~Private Securities Litigation Reform Act~~ -30-

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

Certain statements in this Quarterly Report on Form 10-Q which are not historical facts may be considered forward-looking statements, including, without limitation, such as statements relating to future operating results, existing and expected competition, financing and refinancing sources and availability and plans for future development or expansion activities, capital expenditures and expansion of business operations into new areas. Such forward-looking statements are based upon a number of assumptions concerning future conditions that ultimately may prove to be inaccurate and that may involve a number of risks and uncertainties that may significantly affect the Company’s liquidity and results in the future and, accordingly, actual results may differ materially from those expressed in any forward-looking statements. Such risks and uncertainties include, without limitation, those related to effects of competition, leverage and debt service, general economic conditions, changes in gaming laws or regulations (including the legalization of gaming in various jurisdictions) and risks related to development activities and the startup of non-gaming operations.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Market risk is the risk of loss arising from changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity process. Excluding its nonrecourse debt, the Company has total interest-bearing debt at ~~June~~December 3031, 2010 of approximately $89.08 million, of which ~~approximately $8.0 million~~ bears interest at a variable rate (approximately 6.25% at ~~June~~ December 3031, 2010). Therefore, the Company maintains certain market rate risk related to this debt. A change in the interest rates of 1% per annum would cause an approximate $0.1 million change in the amount of interest the Company would incur based on the amount of variable-interest rate debt outstanding for any current or future year in which this debt is outstanding. Future borrowings related to this debt will be exposed to this same market rate risk.

The Company holds investments in various available-for-sale securities; however, management believes that exposure to price risk arising from the ownership of these investments is not material to the Company’s consolidated financial position, results of operations or cash flow as historically price fluctuations of these securities have not been material.

34 -31-

Item 4.

Controls and Procedures

~~Evaluation of~~ Disclosure Controls and Procedures:

Our management, iswith ~~responsible~~the ~~for~~participation ~~establishing~~of ~~and~~the ~~maintaining~~Company’s ~~adequate~~Principal ~~internal~~Executive ~~control~~Officer ~~over~~and ~~financial~~Principal ~~reporting~~Accounting Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in ~~Exchange~~Rules ~~Act~~13a-15(e) ~~Rule~~and ~~13a~~15d-15(fe) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. ~~The~~In ~~Company’s~~designing ~~internal~~and ~~control~~evaluating ~~over~~the ~~financial~~disclosure controls ~~reporting~~and isprocedures, amanagement ~~process~~recognized that any controls and procedures, no matter how well designed toand operated, can only provide reasonable assurance toof ~~our~~achieving ~~management~~the desired control objectives and ~~board~~management ofis ~~directors~~required ~~regarding~~to apply its judgment in evaluating the ~~reliability~~cost-benefit relationship of ~~financial~~possible ~~reporting~~controls and procedures. Based on such evaluation, the ~~preparation~~ Company’s Principal Executive Officer and Principal Accounting Officer have concluded that as of December 31, 2010, the Company’s ~~financial~~disclosure ~~statements~~controls ~~for~~and ~~external~~procedures ~~purposes~~were not effective, at the reasonable assurance level, in ~~accordance~~recording, ~~with~~processing, ~~accounting~~summarizing ~~principles~~and ~~generally~~reporting, ~~accepted~~on a timely basis, information required to be disclosed by the Company in the ~~United~~reports ~~States~~that it offiles ~~America~~or submits under the Exchange Act and in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including the Principal Executive Officer and Principal Accounting Officer, as appropriate to allow timely discussions regarding required disclosure; due to the material weaknesses described below.

~~Our~~In ~~internal~~light ~~controls~~of ~~over financial reporting includes those policies and procedures that (i) pertain to~~ the ~~maintenance~~material ofweaknesses ~~records that,~~described ~~in reasonable detail~~below, ~~accurately~~we ~~and~~performed ~~fairly~~additional ~~reflect~~analysis ~~the transactions~~ and ~~dispositions~~other ofpost-closing ~~the~~procedures ~~assets~~to ofensure ~~the Company; (ii) provide reasonable assurance~~ that our ~~transactions~~financial ~~are~~statements ~~recorded~~were asprepared ~~necessary to permit preparation of financial statements~~ in accordance with ~~accounting principles~~ generally accepted inaccounting ~~the~~principles. ~~United States of America~~Accordingly, ~~and~~we believe that ~~receipts~~the ~~and~~financial ~~expenditures~~statements ofincluded ~~the~~in ~~Company~~this ~~are~~report ~~being~~fairly ~~made~~present, ~~only~~ in ~~accordance~~all ~~with~~material ~~authorizations~~respects, ofour ~~management~~financial ~~and directors of the~~condition, ~~Company;~~results ~~and (iii) provide reasonable assurance regarding prevention or timely detection~~ of ~~unauthorized acquisition~~operations, ~~use,~~changes orin ~~disposition of the Company~~stockholders’s ~~assets~~equity ~~that~~and ~~could~~cash ~~have~~flows afor ~~material effect on~~ the ~~financial~~periods ~~statements~~presented.

AsManagement ofReport the end of the period covered by this report, under the supervision and with the participation of management, including our Chief Executive Officer and Principal Accounting Officer, an evaluation of the effectiveness of the Company’s internal controls over financial reporting was conducted based on ~~the framework in~~ Internal Control –Over ~~Integrated~~Financial ~~Framework issued~~Reporting by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on that evaluation, the Company’s management concluded that the Company’s control over financial reporting was effective.

~~Changes~~The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in ~~Internal~~Rule ~~Controls~~13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company’s internal control over financial reporting includes those policies and procedures that:

As1. ~~part~~Pertain ~~of our normal operations, we update our internal controls as necessary~~ to ~~accommodate~~the ~~any~~maintenance ~~modifications~~of torecords ~~our~~that, ~~business processes or accounting procedures. There have not been any significant changes~~ in ~~our~~reasonable ~~internal controls or in other factors that materially affected~~detail, oraccurately ~~are~~and ~~reasonably~~fairly ~~likely~~reflect tothe ~~materially~~transactions ~~affect~~and ~~these~~dispositions ~~internal controls as~~ of the ~~end~~assets of the ~~period covered by this report.~~ Company;

~~Limitations~~2. onProvide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the ~~Effectiveness~~United States of ~~Internal~~America, ~~Controls:~~and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

~~Because~~3. ofProvide ~~its~~reasonable ~~inherent~~assurance ~~limitations,~~regarding ~~internal~~prevention ~~controls over financial reporting may not prevent~~ or ~~detect~~timely ~~misstatements.~~detection ~~All internal control systems, no matter how well designed, have inherent limitations, including the possibility~~ of ~~human~~unauthorized ~~error and the circumvention of overriding controls. Accordingly~~acquisition, ~~even effective internal controls over financial reporting can provide only reasonable assurance with respect to financial statement preparation. Also~~use, ~~projections~~or ofdisposition ~~any evaluation~~ of ~~effectiveness to future periods are subject to~~ the ~~risk~~Company’s ~~that~~assets ~~controls may become inadequate because of changes in conditions, or~~ that ~~the degree~~could ofhave ~~compliance~~a ~~with~~material ~~the~~effect ~~policies~~on orour ~~procedures~~financial ~~may deteriorate~~ statements.

35All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and reporting. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

-32-

~~ARCHON~~A ~~CORPORATION~~material weakness is a control deficiency (within the meaning of Public Company Accounting Oversight Board (“PCAOB”) Auditing Standard No. 5) or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

Under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Accounting Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of the period covered by this report based on the framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on the results of management’s assessment and evaluation, our Principal Executive Officer and Principal Accounting Officer concluded that our internal control over financial reporting was not effective due to the material weaknesses described below.

Material Weaknesses

The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2010. In making this assessment, the Company’s management used the framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission in “Internal Control – Integrated Framework.” Based on this assessment, management concluded that, as of December 31, 2010, the Company’s internal control over financial reporting was not effective based on this framework.

Management evaluated the impact of ineffective control over financial reporting and concluded that the control deficiency represented a material weakness.

In connection with the audit of our consolidated financial statements for the year ended September 30, 2010, our independent registered accounting firm, DeJoya Griffith & Company, LLC, reported to the audit committee of the Company’s Board of Directors that they observed inadequate review and approval of certain aspects of the accounting process that they considered to be a material weakness in internal control.

After a review of the Company’s current review and approval of certain aspects of the accounting process, management concluded that the inadequate review and approval process represented a material weakness.

Remediation of Material Weaknesses

To remediate the material weaknesses identified above, we have done the following subsequent to September 30, 2010, which correspond to the two material weaknesses identified above.

In connection with the ineffective assessment of the Company’s internal control over financial reporting, management plans to hire an additional independent public accounting firm to perform our internal audit and assist with SEC compliance for purposes of all future reporting.

Management believes this remediation will remediate the corresponding material weakness described in Item 1, immediately above.

In connection with the reported inadequate review and approval of certain aspects of the accounting process, management has reiterated the Company’s current review and approval processes, to insure that all accounting reconciliations and journal entries are reviewed and approved on a timely basis.

Management believes this remediation has remediated the corresponding material weakness described in Item 2, immediately above.

-33-

Inherent Limitations on the Effectiveness of Controls

Management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control systems are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in a cost-effective control system, no evaluation of internal control over financial reporting can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been or will be detected.

These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of a simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

Changes in Internal Control over Financial Reporting

There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13-15(f) and 15d-15(f) under the Exchange Act) during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

-34-

PART II – OTHER INFORMATION

Item 1.

Legal Proceedings

Mercury Real Estate Securities Fund, LP and Mercury Real Estate Securities Offshore Limited v. Archon Corporation:

The Company called all outstanding shares of its Exchangeable Redeemable Preferred Stock for redemption on and as of August 31, 2007, at a redemption price of $5.241 per share, which sum included accrued and unpaid dividends to the date of redemption. From and after August 31, 2007, all shares of the Exchangeable Redeemable Preferred Stock ceased to be outstanding and to accrue dividends. As of ~~August~~February 79, ~~2010~~2011, the holders of 4~~,261,092~~.3 million shares of the Exchangeable Redeemable Preferred ~~Stock~~ Stock have surrendered their shares and received payment of the redemption price; while ~~155,485~~0.2 million shares have yet to be surrendered and still have the right to receive their payment due without interest. As of ~~June~~December 3031, 2010 and September 30, ~~2009~~2010, exchangeable redeemable preferred stock – unredeemed was $~~814,897~~0.8 million and $~~821~~0.8 million,~~259,~~ respectively.

The Plaintiffs, thereafter, filed a motion for partial summary judgment, seeking a ruling from the court that the Company breached its obligations under the Certificate by calculating the redemption price as it did. The Court granted that motion on August 8, 2008, finding the language of the Certificate to be unambiguous and that the redemption price should have been calculated differently. ~~The Court has not yet issued a monetary judgment against the Company.~~ Subsequent to the Court’s ruling on the motion for partial summary judgment, Plaintiffs filed a motion for entry of final judgment, seeking entry of judgment that the redemption price for the preferred shares should have been $8.69 per share. AtOn December 22, 2010, the ~~same~~District ~~time,~~Court granted that motion and entered judgment against the Company ~~filed~~in athe ~~request~~amount ~~for~~of ~~certification~~$9.5 ~~asking~~million. ~~the~~The District Court tobased ~~certify~~ its ~~partial~~decision ~~summary~~primarily ~~judgment~~on its order ~~for~~from ~~immediate~~August ~~interlocutory appeal~~of 2008. The Company ~~Court~~has ~~granted~~filed ~~the~~a ~~request~~motion for ~~certification~~reconsideration ~~and~~of ~~denied~~ the ~~request~~District ~~for~~Court’s ~~entry~~December 22, of2010 ~~final~~order. ~~judgment~~That ~~without~~motion ~~prejudice.~~has ~~The~~been ~~Company~~fully ~~filed~~briefed aand ~~Petition~~is ~~for~~pending ~~Permission~~before tothe ~~Appeal~~District ~~with~~Court. In the ~~Ninth~~event ~~Circuit~~the ~~Court~~motion offor ~~Appeals~~reconsideration ~~and~~is denied, the ~~Ninth Circuit~~Company ~~declined~~intends to ~~accept~~appeal the ~~matter~~District ~~for~~Court’s ~~interlocutory~~decision ~~review~~to the Ninth Circuit Court of Appeals.

~~Recently,~~The ~~Plaintiffs~~Company ~~have~~has ~~filed~~initiated proceedings against a ~~second~~third-party ~~motion~~law ~~for~~firm ~~entry~~concerning ofthat ~~final judgment,~~firm’s ~~again~~potential ~~seeking~~liability ~~entry~~related ofto ~~judgment~~the ~~that~~drafting of the ~~redemption~~Certificate ~~price~~of ~~for~~Designation. ~~the~~This ~~preferred~~third-party ~~shares~~action ~~should~~has ~~have~~subsequently been ~~$8.69~~removed ~~per~~by ~~share.~~the ~~The~~defendant ~~Company~~law ~~has~~firm ~~substantively~~to ~~opposed~~Federal ~~that~~Court ~~motion~~in April, 2009 and ~~has~~is ~~urged~~at ~~the~~an ~~Court~~early tostage ~~reconsider~~of ~~its~~resolution. ~~August 8,~~The ~~2008~~defendant ~~order. Briefing~~law onfirm ~~Plaintiffs’~~has ~~second~~moved ~~motion~~to ~~for~~compel ~~entry~~arbitration of ~~final~~the ~~judgment~~dispute. ~~has~~The ~~been~~Magistrate ~~completed~~Judge ~~and~~issued aan ~~hearing~~order ~~was~~that ~~held~~the ~~before~~matter ~~the~~be ~~Court~~referred to arbitration and the ~~parties~~District ~~are~~Court ~~awaiting~~confirmed athat ~~ruling~~order. The

36 -35-

~~The Company has initiated proceedings against a third-party law firm concerning that~~ firm’s potential liability related to the drafting of the Certificate of Designation. This third-party action has subsequently been removed by the defendant law firm to Federal Court in April, 2009 and is at an early stage of resolution. The defendant law firm has moved to compel arbitration of the dispute. The Magistrate Judge issued an order that the matter be referred to arbitration and the District Court confirmed that order. The Company intends to pursue its claims against the defendant law firm in arbitration. The Company is also considering rights and remedies it may have with regard to other parties who participated in the issuance of the Preferred Stock in the event that the Company does not prevail on its interpretation of the Certificate.

~~Management~~In isthe Leeward ~~unable~~Capital matter, both the Leeward Plaintiffs and the Company have filed motions for summary judgment. The Leeward Plaintiffs made arguments similar to the Laminar Plaintiffs in their motion. On December 22, 2010, the ~~estimate~~District Court issued an order granting the ~~minimum~~Leeward ~~liability~~Plaintiffs’ ~~that~~motion ~~may~~for besummary ~~incurred~~judgment on the same grounds as the Laminar order and denying Archon’s motion without analysis. Contemporaneous with the filing of the December 22, if2010 ~~any~~order, asthe aDistrict ~~result~~Court entered judgment in favor of the ~~outcome~~Leeward Plaintiffs and against the Company in the amount of ~~each~~$0.3 million. The Company has filed a motion for reconsideration of ~~these~~the ~~lawsuits~~District ~~and~~Court’s December 22, ~~therefore,~~2010 order. That motion has ~~made~~been nofully ~~provision~~briefed inand is pending before the ~~financial~~District ~~statements~~Court. In the event the motion for ~~liability~~reconsideration ~~related~~is denied, the Company intends to ~~these~~appeal ~~cases~~the District Court’s decision to the Ninth Circuit Court of Appeals.

-36-

Item 2.

Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities

None

Item 3.

Defaults Upon Senior Securities

None

Item 4.

Submission of Matters to a Vote of Security Holders

~~Stockholders~~None ~~and investors may obtain a free copy of the information statement (when available) and other related documents filed by the Company with the SEC at its website at www.sec.gov.~~

At the Annual Meeting of Stockholders held on June 14, 2010, common stockholders elected two directors, Suzanne Lowden and Richard H. Taggart and voted on a proposal to ratify the selection of De Joya Griffith & Company LLC (“De Joya”) as the Company’s independent registered public accounting firm for fiscal year ended September 30, 2010 and approval of the financial statements for fiscal year ended September 30, 2009.

The Directors whose terms in office continued after the meeting are as follows:

		TermExpires
Paul W. Lowden		2011
William J. Raggio		2011
John W. Delaney		2012
Howard E. Foster		2012
Suzanne Lowden		2013
Richard H. Taggart		2013

There were 6,017,944 shares of Common Stock entitled to vote at the 2010 Annual Meeting. A total of 6,136,377 stockholders votes (97.2%) were represented at the meeting.

The result of the vote taken on the election of Directors elected by the common stockholders to hold office until the 2013 Annual Meeting of Stockholders and until their successors are elected and have qualified are as follows:

	For	Withheld
Suzanne Lowden	5,487,191	266,707
Richard H. Taggart	5,189,955	563,943

The result of the vote taken for ratification of the selection of De Joya as the Company’s independent registered public accounting firm for fiscal year ended September 30, 2010 and approval of the financial statements for fiscal year ended September 30, 2009 are as follows:

For		Against		Abstain		Broker Non-Vote
6,083,724		52,437		216		0

Item 5.

Other Information

None

-37-

Item 6.

Exhibits

Exhibits.

ExhibitNumber		Description of Exhibit
Exhibit Number		Description of Exhibit
31.1		Certification of Chief Executive Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
31.2		Certification of Principal Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32		Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

-38 -

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

ARCHON CORPORATION, Registrant By: /Ss/ ~~PAUL~~Paul W. ~~LOWDEN~~Lowden Paul W. Lowden Chairman of the Board, President and ~~Chief~~Principal Executive Officer

Date: ~~August~~February 1318, ~~2010~~2011

-39 -

Large accelerated filer:

Accelerated filer:

Non-accelerated filer:

Small reporting company:

Filing Compare · ARCHON CORP