Net unrealized gains and (losses) on notes receivable were ($0.6) million and $5.8 million for the third quarters of 2007 and 2006, respectively. The net unrealized losses in the third quarter of 2007 related to unrealized gains on Lakes’ notes receivable from the Shingle Springs Band of Miwok Indians (Shingle Springs Tribe) in the amount of $1.2 million and unrealized losses of $1.8 million on the Lakes’ notes receivable from the Jamul Indian Village (Jamul Tribe). These notes receivable are adjusted to estimated fair value based upon the current status of the related tribal casino projects. The increase in fair value of the notes receivable from the Shingle Springs Tribe relates primarily to continued progress on the construction of this project, which is currently within budget and on schedule. The decrease in fair value of the notes receivable from the Jamul Tribe relates primarily to an increase in the discount rate which resulted from a decrease in current estimated win per unit for this project.
Net unrealized gains of $5.8 million during the third quarter of 2006 included $2.6 million related to the adjustment to fair value of notes receivable from the Shingle Springs Tribe due to favorable events occurring during the third quarter of 2006. The remainder of the net unrealized gains during the three months ended October 1, 2006, related primarily to increases in fair value of notes receivable from the Jamul Tribe and the Pokagon Band.
Summarized in English: the casino project isn't going to be as profitable as they originally thought. Here's hoping that trend continues, to the point where everybody just loses interest...
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