UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-KSB

(Mark one)

SOUTHWEST CASINO CORPORATION

(Name of small business issuer in its charter)

(952) 853-9990

(Issuer’s telephone number, including area code)

Securities registered under Section 12(b) of the Exchange Act:

None.

Securities registered under Section 12(g) of the Exchange Act:

Common Stock, par value $0.001 per share

Check 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  ý  NO  o

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained herein, and no disclosure will be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. ý

The Registrant’s revenues for the fiscal year ended December 31, 2004 were $20,208,617.

As of March 24, 2005, 19,388,656 shares of common stock of the Registrant were outstanding, and the aggregate market value of the common stock of the Registrant as of that date (based upon the $2.10 per share closing price of the common stock at that date as reported on the Over-The-Counter Bulletin Board), excluding 4,737,500 outstanding shares beneficially owned by directors and executive officers, was $30,767,427.

Transitional Small Business Disclosure Format (check one):  YES  o  NO  ý

PART I

As used in this report, references to “Southwest”, “the company”, “we”, “our”, or “us”, unless the context indicates otherwise, refer to Southwest Casino Corporation and its subsidiaries and do not refer to the predecessor corporation, Lone Moose Adventures, Inc.  References in this report to “Lone Moose” refer to Lone Moose Adventures, Inc. before our reorganization on July 22, 2004.

ITEM 1.  DESCRIPTION OF BUSINESS.

This Annual Report on Form 10-KSB contains or incorporates by reference not only historical information, but also forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  In addition, Southwest or others on Southwest’s behalf may make forward-looking statements from time to time in oral presentations, including telephone conferences, in press releases or reports, or elsewhere.  Statements that are not historical are forward-looking and reflect expectations and assumptions.  We try to identify forward-looking statements in this report and elsewhere by using words such as “may,” “will,” “should,” “expects,” “anticipates,” “contemplates,” “estimates,” “believes,” “plans,” “projected,” “predicts,” “potential” or “continue” or the negative of these or similar terms.

Forward-looking statements involve risks and uncertainties.  These uncertainties include factors that affect all businesses as well as matters specific to Southwest.  We caution readers not to place undue reliance on any forward-looking statement that speaks only as of the date made and to recognize that forward-looking statements are predictions of future results, which may not occur as anticipated.  Actual results could differ materially from those anticipated in the forward-looking statements and from historical results, due to the risks and uncertainties described below under the heading “Risk Factors,” as well as others that we may consider immaterial or do not anticipate at this time.  The following risks and uncertainties identified in this report are not exclusive and further information concerning our business, including factors that potentially could materially affect our financial results or condition, may emerge from time to time.  We assume no obligation to update forward-looking statements to reflect actual results or changes in factors or assumptions affecting the forward-looking statements.  We advise you, however, to consult any further disclosures we may make on related subjects in our quarterly reports on Form 10-QSB and current reports on Form 8-K we file with or furnish to the Securities and Exchange Commission.

(a)                                  Business Development.

Corporate Reorganization

On July 22, 2004, Lone Moose Adventures, Inc. (now Southwest Casino Corporation), a Nevada corporation, Lone Moose Acquisition Corporation, a Minnesota corporation and wholly-owned subsidiary of Lone Moose, and Southwest Casino and Hotel Corp., a Minnesota corporation, consummated a reorganization under the Agreement and Plan of Reorganization dated July 14, 2004 among Lone Moose, Lone Moose Acquisition Corporation, Southwest Casino and Hotel Corp. and certain shareholders of Lone Moose.  Under the reorganization agreement, Lone Moose Acquisition merged with and into Southwest Casino and Hotel Corp.  Southwest Casino and Hotel Corp. was the surviving corporation in that merger and became a wholly owned subsidiary of Lone Moose, which changed its name to Southwest Casino Corporation. Southwest Casino and Hotel Corp. is now a wholly-owned operating subsidiary of Southwest Casino Corporation.

Under the terms of the reorganization agreement, Lone Moose (now Southwest) acquired 100% of the issued and outstanding shares of common stock and series C convertible preferred stock of Southwest Casino and Hotel Corp. in consideration for the issuance of 16,161,343 shares of Lone Moose common stock to shareholders of Southwest Casino and Hotel Corp.  In accordance with the reorganization agreement, each share of Southwest Casino and Hotel Corp. common stock and series C convertible preferred stock issued and outstanding immediately before the effective time was cancelled and converted automatically into the right to receive 0.5 shares of Lone Moose common stock.  Including 1,500,000

2

shares of Lone Moose common stock acquired by principal shareholders of Southwest Casino and Hotel Corp. before the reorganization under restricted stock purchase agreements, the former Southwest Casino and Hotel Corp. equity security holders held approximately 91.7% of the outstanding securities of Southwest upon closing the reorganization.

Excluding the 1,500,000 shares of Lone Moose common stock held by Southwest Casino and Hotel Corp. shareholders, Lone Moose had approximately 1,589,000 shares of common stock outstanding before the reorganization, which represented approximately 8.3% of the outstanding securities of Lone Moose (now Southwest Casino Corporation) after the reorganization and after taking into account (i) a reverse split of its outstanding common stock on the basis of 0.6667 shares for every share outstanding on June 7, 2004; (ii) a forward split by dividend declared on July 2, 2004 and effective July 13, 2004 on the basis of 7.4672 shares for every one share of Lone Moose common stock outstanding; (iii) the cancellation of 333,500 shares of common stock of Lone Moose (which became approximately 2,489,192 shares after the forward split) held by Christopher B. Glover and Michael C. Brown, founding shareholders of Lone Moose; (iv) the issuance of an aggregate of 150,000 shares of “restricted” Lone Moose common stock to David C. Merrell under his indemnification agreement dated June 29, 2004; and (v) the issuance of 719,685 shares of “restricted” Lone Moose common stock to Jenson Services, Inc., a Utah corporation, under an introduction agreement dated June 29, 2004, by and between Jenson Services, Inc. and Lone Moose.

Lone Moose Adventures, Inc.

Lone Moose Adventures, Inc. was formed on January 2, 2002 and, before closing the reorganization described above, conducted only minimal operations and received only minimal revenue.  Lone Moose was organized to take clients on adventure tours in the Wasatch mountain range of Utah.  Lone Moose conducted fewer than two dozen adventure tours before closing the reorganization.  Upon closing the reorganization, we sold substantially all of the assets and liabilities of Lone Moose’s adventure tour business to Lone Moose’s founding shareholders. Since closing the reorganization and sale of assets, we have not engaged in any aspect of the business Lone Moose conducted before the reorganization.

Southwest Casino and Hotel Corp.

Southwest Casino and Hotel Corp., our parent company before the July 2004 reorganization, is now a wholly owned operating subsidiary of Southwest Casino Corporation.  Southwest Casino and Hotel Corp. was organized under the laws of the State of Minnesota in 1992 under the original name “Southwest Casino and Hotel Ventures, Inc.”

Casino Management

Initially, we pursued management contracts for gaming facilities with Native American tribes. In 1993, Southwest Casino and Hotel Corp. was the first company approved by the National Indian Gaming Commission (NIGC) as a management contractor in connection with our management contract with the Cheyenne and Arapaho Tribes of Oklahoma for a gaming facility in Concho, Oklahoma.

The original term of our agreement with the Cheyenne and Arapaho Tribes was seven years. In 1999, we extended the agreement for an additional three years. In 2001, we amended the agreement to add a second gaming facility in Clinton, Oklahoma. We amended the management agreement again in 2003 to extend our relationship until 2007.  In December 2004, the NIGC notified the Tribes that the NIGC is concerned the Tribes are not distributing properly the net revenue they receive from gaming operations.  The NIGC’s concerns relate to the use of gaming revenue after we have distributed it to the Tribes and are not related to our management of the Tribes’ casinos.  However, if the NIGC determines that the Tribes have

3

committed a substantial violation it could bring an enforcement action with potential penalties that include, in extreme cases, closing the Tribes’ gaming facilities.

After the close of our 2004 fiscal year, we announced that Southwest Casino and Hotel Corp. had entered into two additional amendments to the management agreement with the Cheyenne and Arapaho Tribes of Oklahoma.  The Tribes approved the amendments on January 22, 2005. Also on that day, the Tribes approved entering into a gaming compact with the State of Oklahoma that will permit the Tribes to offer an expanded scope of gaming, including permitted card games, at their casinos.

Under these amendments, Southwest would develop and assist the Tribes in financing up to $15 million for expansions of their casinos at Concho and Clinton, Oklahoma, development of a new gaming facility and resort at Canton, Oklahoma, and construction of an Indian health care building and Bureau of Indian Affairs offices on tribal lands. Southwest would then manage the expanded gaming operations permitted under the compact with Oklahoma at all three casinos. In connection with Southwest’s role in financing, expanding and managing the Tribes’ casinos, our management agreement would have been extended until May 19, 2011 and Southwest’s management fee would have increased.

A Cheyenne and Arapaho Tribes of Oklahoma Tribal Court ruled the Tribal Council meeting at which the amendments were approved invalid.  Southwest cannot predict at this time whether that ruling may be challenged.  If not, we will again seek approval of the amendments from the appropriate tribal authority. In addition, the amendments were submitted to the NIGC for approval and cannot become effective until that approval is received. However, the NIGC is unlikely to approve the amendments until issues regarding the legitimacy of the Tribal Council meeting at which the amendments were approved are resolved or the amendments are again approved by the appropriate tribal authority.

Casino Operations

During 1998 and 1999, our subsidiaries — Southwest Casino and Hotel Corp. and Gold Rush I, LLC, a Colorado limited liability company — secured three gaming licenses to operate the Gold Rush, Gold Digger’s and Uncle Sam’s casinos in Cripple Creek, Colorado. Cripple Creek is one of three historic mining towns in Colorado permitted to engage in limited stakes ($5.00 limit) gaming. All three properties were either closed or near closing when we acquired them.

In 2002 and 2003, we identified two additional business opportunities. We entered into a development contract with the city of Rockaway Beach, Missouri to assist them in the development of a downtown redevelopment and riverboat casino. Rockaway Beach is located on the White River. We launched an initiative to amend the Missouri Constitution to enable riverboat gaming on the White River at Rockaway Beach. That initiative went to popular vote in the state on August 3, 2004 and was unsuccessful.  It is unlikely, but still possible that this initiative will be revived if the project gains greater support from the surrounding communities, including Branson, Missouri.

In December 2003, North Metro Harness Initiative, LLC, then a wholly owned subsidiary of Southwest Casino and Hotel Corp., filed an application with the Minnesota Racing Commission to develop a harness racetrack in Columbus Township, Anoka County, Minnesota, approximately 30 miles north of downtown Minneapolis. In June 2004, we sold a 50 percent membership interest in North Metro to MTR-Harness, Inc., a subsidiary of MTR Gaming Group, Inc.  On January 19, 2005, the Minnesota Racing Commission voted to grant the licenses required for development and operation of this facility.  Minnesota law permits licensed racetracks to operate card rooms with up to 50 tables after approval of a card club plan of operation and completion of the first 50-day live race meet at the track.  North Metro anticipates that it will derive revenues from charges for hosting the “unbanked” or “player pool” games at the card room,

4

generally as a percentage of accumulated wagers or a “rake” from certain wagers.  North Metro will not have a stake in the outcome of any card game.

North Metro will construct its harness track and entertainment facility on 180-acres located just north of the confluence of Interstates 35W and 35E north of the Minneapolis-St. Paul metropolitan area.  The facility will include a harness track and approximately 110,000 square feet of associated grandstand, card club, horse barns and maintenance buildings.  It will also include construction of internal roadways, surface parking, wetland mitigation and storm water treatment, as well as improvements to access roads.  An organization opposed to gambling has filed two lawsuits and an organization representing the owners of thoroughbred horses that race at the state’s other Class A licensed racetrack has filed an appeal in attempts to block development of this facility and overturn the licenses granted to North Metro.

Consulting

In addition to managing Native American gaming facilities and owning and operating our own casinos, we also provide consulting services for gaming operations. In May 2001, we entered into a consulting agreement with the Alabama-Coushatta Tribe of Texas to assist them in opening a Tribal casino in Livingston, Texas. The operation was profitable for eight months. However, when the facility opened there was a dispute between the Tribe and the State of Texas regarding the Tribe’s authority to operate a casino and the types of gaming that were permitted there. The Tribe commenced a Declaratory Judgment Action against the State of Texas seeking to clarify the scope of gaming issues.  The Federal District Court for the State of Texas permitted the Tribe to open and operate the enterprise in November 2001 pending resolution of this litigation. In June 2002, the Court ruled that the Tribe was not entitled to engage in casino gaming and directed them to close the facility. The facility closed in accordance with the Court’s order in July 2002. The Tribe continues to seek legislation or other authorization to permit them to reopen. If the Tribe receives legislative authoritzation to reopen, we anticipate that the Tribe will engage in a competitive process to select a manager for its operations.  We do not know whether we will be included in the Tribe’s selection process, if one occurs, or whether we would be selected at the conclusion of that process.

Prior Bankruptcy

Gold Rush I, LLC, a wholly-owned subsidiary of Southwest Casino and Hotel Corp., filed a voluntary petition for Chapter 11 protection under the United States Bankruptcy Act as a result of a dispute over rent with the landlord of the Gold Rush and Gold Digger’s Casinos in Cripple Creek, Colorado. Gold Rush I was successful in its litigation against the landlord regarding the rent dispute and emerged from bankruptcy when the Bankruptcy Court confirmed its reorganization plan, which provided for full payment to all creditors with interest, on January 10, 2003.

(b)           Business of Company.

Principal Products or Services and Markets and Status of Publicly-Announced New Products or Services

Since its inception, Lone Moose engaged in limited operations primarily related to the provision of adventure tours in the State of Utah. Immediately after closing the reorganization in which Southwest Casino and Hotel Corp. became a wholly-owned subsidiary of Lone Moose, Lone Moose sold substantially all of the assets and liabilities of Lone Moose’s adventure tour business to the founding shareholders of Lone Moose. Since closing the reorganization and sale of assets, Southwest has not engaged in any aspect of the business Lone Moose conducted before the reorganization.

5

Southwest develops, owns, operates and manages casinos, gaming facilities and related amenities in various markets across the United States. Based in Minneapolis, Minnesota, Southwest currently has gaming operations in Oklahoma and Colorado with approximately 194 full and part-time employees.  We also manage 312 employees of the tribal enterprises of the Cheyenne and Arapaho Tribes under our management contract for those facilities. Our growth plans include the diversification and expansion of existing operations, project development and the pursuit of new gaming opportunities.

Casino Management

Southwest Casino provides management services in connection with two Lucky Star casino facilities, one located in Concho, Oklahoma and the other located in Clinton, Oklahoma, under the terms of a management agreement with the Cheyenne and Arapaho Tribes of Oklahoma.  We anticipate that a third gaming facility will be developed at Canton, Oklahoma, if and when the requisite approvals and financing are secured.

Casino Operations

Southwest Casino owns and operates three gaming facilities in Cripple Creek, Colorado. Cripple Creek is a small, historic mining town near Colorado Springs that is permitted to engage in limited stakes ($5.00 limit) gaming. Eighteen casinos operate currently in Cripple Creek. The combined Gold Rush and Gold Digger’s facilities offer approximately 408 slot machines and a 4-table game area while Uncle Sam’s Casino features approximately 67 slot machines.  We also own and operate the Palladium, an outdoor amphitheater adjacent to the Gold Rush and Gold Digger’s facilities that offers live entertainment and other special events.

In the past, Southwest Casino leased and operated B.B. Cody’s Casino in Deadwood, South Dakota. We successfully negotiated a termination of that lease effective March 10, 2004.  We completed the withdrawal, storage and transfer of our South Dakota equipment, and the other tasks related to the wind down of our South Dakota operations, in April 2004.

Through North Metro Harness Initiative, LLC, Southwest and its 50 percent partner MTR-Harness, Inc., an affiliate of MTR Gaming Group, Inc. were granted Class A and Class B licenses from the Minnesota Racing Commission on January 19, 2005 to develop and operate a harness racing track on approximately 180 acres of land in Columbus Township, Anoka County, Minnesota.  An anti-gambling organization has filed two lawsuits and an organization representing the owners of thoroughbred horses that race at the state's other Class A licensed track has filed an appeal in attempts to overturn the license grants.  We cannot predict the ultimate outcome of this litigation.  In addition, we have significant additional capital commitments in connection with this project.  Failure to meet these commitments could lead to dilution of our ownership interest in North Metro and a reduction in the revenue we receive from this project.  Assuming the licenses survive these lawsuits, we meet our capital commitments, and North Metro receives all requisite approvals and project financing, we will share the ownership and operation of this project with our 50/50 partner, MTR-Harness, Inc.

If implemented successfully, this racing facility would offer pari-mutuel wagering on a 5/8-mile track with combined seating for over 2,000 track, restaurant and card room patrons.  In addition, the facility would accommodate simulcast wagering on live harness racing events broadcast into the facility.  As part of this harness initiative, we will seek authority from the Minnesota Racing Commission to operate a card room with approximately 50 gaming tables.  Under current law, before we can open this card room, we must conduct at least 50 days of live racing at the track and we are only permitted to simulcast harness races.  We intend to seek legislative authorization to begin card room operations before completing 50 days of racing and to simulcast races by all horse breeds.

6

On August 3, 2004, voters in the State of Missouri defeated a proposed amendment to the state constitution that would have permitted construction and operation of a riverboat gaming facility on the White River. Approval of this amendment was needed in order to continue development of a riverboat casino in Rockaway Beach, Missouri in which we own a 30 percent interest.  It is unlikely, but still possible that this initiative will be revived if the project gains greater support from the surrounding communities, including Branson, Missouri.

Competition.

The gaming industry, including the development, operation and management of casinos, racetracks and other types of gaming facilities, is highly competitive, especially given the rapid rate at which the industry is expanding.  For example, a number of management companies may make proposals to a particular tribe for the development and management of a single Indian gaming facility, and any gaming facilities developed or managed by us will compete with a rapidly expanding number of other gaming facilities of varying quality and size, including gaming facilities that are part of national or regional chains, along with other forms of gaming and entertainment.  Similarly, with respect to projects we are pursuing or may pursue in the future, new competitors could surface at any time and present alternative proposals for consideration. Many competitors have available to them substantially greater financial and personnel resources than us. Competition in the future may also be affected by overbuilding which can adversely affect patronage levels. Given the current regulatory climate and limited number of new gaming opportunities, it is likely that competition in our industry will intensify in the future.

The approval of a law permitting Oklahoma to enter into gaming compacts with Native American tribes in the state permits expansion of Native American gaming opportunities in Oklahoma.  Even before the Oklahoma voters approved this measure in November 2004, it caused an increase in competition in the Oklahoma gaming market. Now that the law is in place, we expect competition in this market, in which we currently manage two facilities and plan to develop a third for the Cheyenne and Arapaho Tribes of Oklahoma, to increase even further.

The Cripple Creek, Colorado market in which we operate the Gold Rush, Gold Digger’s and Uncle Sam’s casinos consists of eighteen gaming facilities with approximately 4,786 machines, of which we operate 475.  The Cripple Creek market generated total gaming revenues of approximately $148.6 million in calendar year 2004.  This is a very competitive market that has shown relatively slow revenue growth in recent years even as the number of gaming devices continues to grow.  For that reason, our ability to maintain and grow our Colorado operations is largely dependent on our ability to increase our market share in a highly competitive environment. Cripple Creek is 40 miles west of Colorado Springs, Colorado, which is 30 miles south of Denver, Colorado, a metropolitan area that has a population of approximately 2.6 million.  We believe that the Gold Rush and Gold Digger’s Casinos attract customers primarily from Colorado Springs, Fort Carson and smaller areas south of Denver while Uncle Sam’s Casino attracts customers primarily from the local Cripple Creek area.

Southwest owns a 50 percent membership interest in North Metro Harness Initiative, LLC, which was granted licenses from the Minnesota Racing Commission to build and operate a harness racing track north of the Twin Cities of Minneapolis and St. Paul, Minnesota on January 19, 2005.  This facility, if completed, will compete with an existing thoroughbred racetrack and card room on the south side of the Twin Cities metropolitan area as well as several Indian gaming facilities located outside of the Twin Cities areas.  In addition, Minnesota’s Governor is actively promoting a plan to construct a large casino in the Twin Cities area that would be run by three northern Minnesota Indian tribes and contribute a significant portion of its revenue to the state.  No location for this casino, if approved, has been announced and the Governor has stated that he intends for cities within the Twin Cities area to compete to host it.  This proposed casino must be approved by the Minnesota legislature.  We cannot predict whether

7

the plan is likely to receive legislative approval or, because the location of the proposed casino is not known, the extent to which it would compete with the North Metro facility if approved.

For more information regarding the competitive environment in which we operate, please see the “Risk Factors” below under Item 1. Description of Business of this report.

Dependence on One or a Few Major Customers.

Our current gaming activities are concentrated in our Oklahoma and Colorado operations. The loss of any of these opportunities or constriction in the scope or types of gaming permitted in these facilities would have a material adverse effect on our business.

We generate a significant portion of our revenue through our management agreement with the Cheyenne and Arapaho Tribes of Oklahoma for the Lucky Star casinos in Concho, Oklahoma and Clinton, Oklahoma. Our current management agreement runs through May 20, 2007.  The loss of this contract and the management fees we receive under it would have a material adverse effect on our financial condition. A copy of the management agreement, as amended, is attached to the Current Report on Form 8-K we filed on October 5, 2004. See Exhibits 10.5 to 10.9 of that report.

Patents, Trademarks, Licenses, Franchises and Concessions, Royalty Agreements and Labor Contracts.

In addition to the gaming licenses described below, Southwest owns a federally-registered trademark in the name “Lucky Star” for its gaming-related businesses.  Southwest does not own any other registered trademarks or patents or other significant intellectual property.

Need for Governmental Approvals of Principal Services.

The gaming industry is highly regulated at the federal and state levels and gaming on tribal land is further regulated by the National Indian Gaming Commission and the Bureau of Indian Affairs. We must maintain the gaming licenses applicable to each of our operations in order to continue our current business and, in most instances, must obtain new or amended gaming licenses in connection with any expansion of our current operations or development of new gaming facilities. At this time, we have a management contract with the Cheyenne and Arapaho Tribes of Oklahoma that has been approved by the National Indian Gaming Commission. Any modification of this contract must be approved by the NIGC. In addition, we hold licenses issued by Colorado for our Gold Rush, Gold Digger’s and Uncle Sam’s casinos in Cripple Creek.  On January 19, 2005, the Minnesota Racing Commission voted to grant North Metro Harness Initiative, LLC, in which we own a 50 percent membership interest, licenses to develop and operate a harness racetrack, and we will also seek approval of a plan of operation for a card club at this facility.  In connection with these licenses, the Colorado Division of Gaming, the NIGC and the Minnesota Racing Commission must approve any addition of a director, officer or five percent or greater shareholder.  In addition, any affiliate of ours, such as the joint venturers we have worked with in pursuit of some of our new gaming opportunities, is subject to review by and the rules and regulations of any jurisdiction in which we hold a gaming license, and we are subject to review by and the rules of jurisdictions in which they hold licenses.

Effect of Existing or Probable Governmental Regulations on Business.

The gaming industry and our operations within that industry are regulated extensively.  The services we provide to the Cheyenne and Arapaho Tribes of Oklahoma at the Lucky Star Casinos are regulated under the national Indian Gaming Regulatory Act, the rules and regulations of the National Indian Gaming Commission, and the rules and regulations of the Cheyenne and Arapaho Tribes of Oklahoma Gaming

8

Commission.  The Gold Rush, Gold Digger’s and Uncle Sam’s casinos in Cripple Creek, Colorado are subject to the Colorado Limited Gaming Act and related rules and regulations that are enforced by the Colorado Division of Gaming.  In addition, on January 19, 2005, the Minnesota Racing Commission voted to grant North Metro Harness Initiative, LLC, in which Southwest Casino and Hotel Corp. owns a 50 percent membership interest, Class A and Class B licenses to develop and operate a harness racetrack and card club on the north side of the Minneapolis-St. Paul metropolitan area.

Regulation of Indian Gaming

The terms and conditions of management contracts for the operation of Indian-owned casinos, and of all gaming on Indian land in the United States, are subject to the Indian Gaming Regulatory Act (“IGRA”), which is administered by NIGC, and also are subject to the provisions of statutes relating to contracts with Indian tribes, which are administered by the Secretary of the Interior (the “Secretary”) and the BIA. The regulations and guidelines under which NIGC will administer IGRA are evolving. The IGRA and those regulations and guidelines are subject to interpretation by the Secretary and NIGC and may be subject to judicial and legislative clarification or amendment.

We are required to provide the NIGC with background information on each of our directors and each shareholder who holds five percent or more of our outstanding securities, including a complete financial statement, a description of that person’s gaming experience, and a list of jurisdictions in which that person holds gaming licenses. Background investigations of key employees also may be required.

Under IGRA, the NIGC must approve our management contracts as well as any amendments to our management contracts and certain related agreements.  Our Gaming Management Agreement with the Cheyenne and Arapaho Tribes of Oklahoma has been approved by the NIGC and our performance under it remains subject to NIGC regulation. The NIGC may review any management contracts and related agreements of ours for compliance with IGRA at any time in the future. The NIGC will not approve a management contract if any of our directors or a 5% shareholders (i) is an elected member of the Indian tribal government that owns the facility we contract with; (ii) has been or is convicted of a felony gaming offense; (iii) has knowingly and willfully provided materially false information to the NIGC or the tribe; (iv) has refused to respond to questions from the NIGC; or (v) is a person whose prior history, reputation and associations pose a threat to the public interest or to effective gaming regulation and control, or create or enhance the chance of unsuitable activities in gaming or the business and financial arrangements incidental thereto.

In addition, the NIGC will not approve a management contract if we or any of our agents have attempted to unduly influence any decision or process of tribal government relating to gaming, or if the management company has breached materially the terms of the management contract or the tribe’s gaming ordinance, or a trustee, exercising due diligence, would not approve such management contract.

The NIGC also will not approve a management contract unless the NIGC determines that the contract provides, among other things, for (i) adequate accounting procedures and verifiable financial reports to be furnished to the tribe; (ii) tribal access to the daily operations of the gaming enterprise, including the right to verify daily gross revenues and income; (iii) minimum guaranteed payments to the tribe, which must have priority over the retirement of development and construction costs; (iv) a ceiling on the repayment of development and construction costs; and (v) a contract term not exceeding five years and a management fee not exceeding 30% of profits; provided that the NIGC may approve up to a seven year term and a management fee not to exceed 40% of profits if NIGC is satisfied that the capital investment required, the risk exposure, and the income projections for the particular gaming activity justify the larger profit allocation and longer term.

9

Three separate classes of tribal gaming were established under IGRA — Class I, Class II, and Class III. Class I gaming includes all traditional or social games played by a tribe in connection with celebrations or ceremonies. Class II gaming includes games such as bingo, pulltabs, punch boards, instant bingo and card games that are not played against the house. Class III gaming includes casino-style gaming including table games such as blackjack, craps and roulette, as well as gaming machines such as slots, video poker, lotteries, and pari-mutuel wagering.

IGRA prohibits substantially all forms of Class III gaming unless the tribe has entered into a written agreement with the state in which the casino is located that specifically authorizes the types of commercial gaming the tribe may offer (a “tribal-state compact”). IGRA requires states to negotiate in good faith with tribes that seek tribal-state compacts, and grants Indian tribes the right to seek a federal court order to compel such negotiations. Many states have refused to enter into such negotiations. Tribes in several states have sought federal court orders to compel such negotiations under IGRA; however, the Supreme Court of the United States held in 1996 that the Eleventh Amendment to the United States Constitution immunizes states from suit by Indian tribes in federal court without the states’ consent.

In addition to IGRA, tribal-owned gaming facilities on Indian land are subject to a number of other federal statutes. The operation of gaming on Indian land is also dependent upon whether the law of the state in which the casino is located permits gaming by non-Indian entities, which may change over time. Any changes in state law regarding Indian or non-Indian may have a material adverse effect on the casinos we manage and our business.

Indian tribes are sovereign nations with their own governmental systems, which have primary regulatory authority over gaming on land within the tribe’s jurisdiction. Because of their sovereign status, Indian tribes possess immunity from lawsuits to which the tribes have not otherwise consented or otherwise waived their sovereign immunity defense. Therefore, we are not able to enforce our contracts with Indian tribes unless the tribe has expressly waived its sovereign immunity as to the tribe’s contractual obligations. Courts strictly construe such waivers. We have obtained immunity waivers from the Cheyenne and Arapaho Tribes to enforce the terms of our management agreement with them, however, the scope of those waivers has never been tested in court, and may be subject to dispute.

In addition to NIGC regulation, the Cheyenne and Arapaho Tribes of Oklahoma Gaming Commission has primary jurisdiction over the Lucky Star casinos we manage for the Cheyenne and Arapaho Tribes of Oklahoma.  The Gaming Commission enforces the provisions of the Tribes’ gaming ordinance, which are subject to review by NIGC under standards established by IGRA and have received NIGC approval.  The Gaming Commission approves games played at the casinos, performs background checks and issues licenses to all employees of the casinos and to Southwest Casino and Hotel Corp. as manager of the casinos.  In addition, the Gaming Commission approves our internal control systems and insures that they meet the minimum internal control standards required by the NIGC, reviews reports required under our Gaming Management Agreement with the Tribes, the tribal gaming ordinance and as part of our internal controls, as well as conducting internal audits of our operations.  If the gaming compact between the Tribes and Oklahoma is finalized, the Gaming Commission will also be charged with developing technical standards for new games that can be played at the casinos under that compact.

Under the proposed gaming compact between the Tribes and Oklahoma, the state of Oklahoma will also have regulatory authority over the Lucky Star casino operations.  The state regulatory role will be secondary to that of the Tribes’ Gaming Commission, and we anticipate that it will consist mostly of monitoring our financial reporting and the work of the Gaming Commission.

10

Gaming Regulation in Colorado

The Colorado Division of Gaming has broad power to ensure compliance with the Colorado gaming laws and regulations (collectively, the “Colorado Regulations”).  The Division may inspect without notice, impound or remove any gaming device. The Colorado Director may examine and copy any licensee’s records, may investigate the background and conduct of licensees and their employees, and may bring disciplinary actions against licensees and their employees.  The Division of Gaming may also conduct detailed background investigations of persons who loan money to, or otherwise provide financing to, a licensee.

Colorado issues five types of gaming and gaming-related licenses.  These licenses are revocable and non-transferable.  All persons employed at our Colorado casinos, and involved in gaming operations must obtain a Colorado gaming license.  All licenses must be renewed annually, except those for key and support employees, which must be renewed every two years.  Failure to maintain any of the licenses or approvals required to operate the Gold Rush, Gold Digger’s or Uncle Sam’s casinos would have a material adverse effect on our operations.

As a general rule, no person may have an “ownership interest” in more than three retail gaming licenses in Colorado.  In addition, Colorado Regulations restrict the ability of any person with a substantial interest in a manufacturer or distributor of slot machines to also hold a substantial interest in a casino operator.  The Division of Gaming has ruled that a person does not have a “substantial interest” if that person’s sole ownership interest in a licensee is through the ownership of less than 5% of the outstanding voting securities of a publicly traded licensee or publicly traded affiliated company of a licensee.

Under the Colorado Regulations, any person or entity having any direct or indirect interest in Southwest may be required to supply the Colorado Commission with substantial information, including, but not limited to, background information, source of funding information, a sworn statement that such person or entity is not holding his or her interest for any other party, and fingerprints.  This information, investigation and licensing as an “associated person” will be required automatically of all persons (other than certain institutional investors) that directly or indirectly own beneficially 10 percent or more of our outstanding voting securities. Persons that own more than 10 percent of our outstanding securities must report their interest within 10 days and file appropriate applications within 45 days after acquiring that interest. Persons who directly or indirectly own beneficially 5% or more (but less than 10%) of a direct or indirect beneficial ownership or interest in our voting securities, must report their interest to the Colorado Commission within 10 days after acquiring that interest and may be required to provide additional information and to be found suitable.  All licensing and investigation fees will have to be paid by the person in question.

The Colorado Commission also has the right to request information from any person directly or indirectly interested in, or employed by, a licensee, and to investigate the moral character, honesty, integrity, prior activities, criminal record, reputation, habits and associations of: (1) all persons licensed pursuant to the Colorado Limited Gaming Act; (2) all officers, directors and stockholders of a licensed privately held corporation; (3) all officers, directors and stockholders holding either a 5% or greater interest or a controlling interest in a licensed publicly traded corporation; (4) all general partners and all limited partners of a licensed partnership; (5) all persons that have a relationship similar to that of an officer, director or stockholder of a corporation (such as members and managers of a limited liability company); (6) all persons supplying financing or loaning money to any licensee connected with the establishment or operation of limited gaming; (7) all persons having a contract, lease or ongoing financial or business arrangement with any licensee, where such contract, lease or arrangement relates to limited gaming operations, equipment devices or premises; and (8) all persons contracting with or supplying any goods and services to the gaming regulators.

11

The Division of Gaming interprets the Colorado Regulations to permit investigations of persons or entities providing financing to or acquiring securities from us or our Colorado casinos.  While the Colorado Regulations do not require prior approval for credit facilities or debt securities, the Division reserves the right to approve, require changes to or require the termination of any financing.  In any event, lenders, note holders, and others providing financing will not be able to exercise certain rights and remedies without the prior approval of the Colorado gaming authorities.  Information regarding lenders and holders of securities will be periodically reported to the Colorado gaming authorities.

An application for licensure or suitability may be denied for any cause deemed reasonable by the Colorado Commission or the Colorado Director, as appropriate. Specifically, the Colorado Commission and the Colorado Director must deny a license to any applicant who, among other things: (1) fails to prove by clear and convincing evidence that the applicant is qualified; (2) fails to provide information and documentation requested; (3) fails to reveal any fact material to qualification, or supplies information which is untrue or misleading as to a material fact pertaining to qualification; (4) has been convicted of, or has a director, officer, general partner, stockholder, limited partner or other person who has a financial or equity interest in the applicant who has been convicted of, specified crimes; or (5) has refused to cooperate with any state or federal body investigating organized crime, official corruption or gaming offenses.

If the Colorado Commission determines that a person or entity is unsuitable to directly or indirectly own interests in our company, one or more of our Colorado casinos may be sanctioned, which may include the loss of our approvals and licenses.

In addition, the Colorado Regulations prohibit us from paying any unsuitable person any dividends or interest upon any voting securities or any payments or distributions of any kind (except as set forth below), paying any unsuitable person any remuneration for services, or recognizing the exercise of any voting rights by any unsuitable person. Further, under the Colorado Regulations, we may repurchase voting securities from anyone found unsuitable at the lesser of the cash equivalent to the original investment or the current market price as of the date of the finding of unsuitability unless such voting securities are transferred to a suitable person (as determined by the Colorado Commission) within sixty (60) days after the finding of unsuitability.

Because of their authority to deny an application for a license or suitability, the Colorado Commission and the Colorado Director effectively can disapprove a change in corporate position of a licensee and can cause us to suspend or dismiss managers, officers, directors and other key employees or sever relationships with other persons who refuse to file appropriate applications or who the authorities find unsuitable to act in such capacities.

The sale, lease, purchase and conveyance or acquisition of a controlling interest in a Colorado Casino is subject to the approval of the Colorado Commission. Under some circumstances, we may not sell any interest in our Colorado gaming operations without the prior approval of the Colorado Commission.

We are required to provide information and file periodic reports with the Colorado Division identifying those who have a 5% or greater ownership, financial or equity interest in us, or who have the ability to control us or exercise significant influence over us, or who loan money or other things of value to us, or who have the right to share in our limited gaming revenues, or to whom any interest or share in profits of limited gaming has been pledged as security for a debt or performance of an act.  Any person licensed by the Division of Gaming and any associated person of a licensee must report criminal convictions and criminal charges to the Colorado Division.

12

The Colorado Commission has broad authority to sanction, fine, suspend and revoke a license for violations of the Colorado Regulations. Violations of many provisions of the Colorado Regulations also can result in criminal penalties.

We have been fined for failure to comply with Colorado gaming regulations related to maintenance and review of statistical information regarding slot machine performance and have entered into an agreement with the Colorado Division of Gaming under which we agreed to bring our practices into compliance. Failure to do so could lead to suspension or revocation of our license. For more information, see the risk factor regarding risks we face in connection with obtaining, maintaining and renewing our gaming licenses under the heading “Risk Factors” below in Item 1 of this Report.

Regulation of Horse Racing and Card Clubs in Minnesota

In December 2003, North Metro Harness Initiative, LLC and Southwest Casino and Hotel Corp. filed applications for Class A and Class B licenses, respectively, to develop and operate a harness racing track and card club in Anoka County, Minnesota.  The Class B license application was subsequently amended and, on January 19, 2005, the Minnesota Racing Commission voted to grant Class A and Class B licenses to North Metro.  The Class A License is effective until revoked or suspended by the Racing Commission, or relinquished by the licensee.  The Class B License is renewable each year by the Racing Commission after a public hearing (if required by the Racing Commission).

Minnesota established the Minnesota Racing Commission to regulate horse racing and card playing in the state under its pari-mutuel horse racing statute.  North Metro and Southwest, as a 50 percent owner of North Metro, have been subject to the horse racing statute and rules and regulations promulgated under it (the “Racing Act”) since we filed the Class A and Class B license application.  Our horse racing operations will also be subject to the federal Interstate Horse Racing Act of 1978.

The Racing Commission has broad authority to enforce the Racing Act and regulate substantially all aspects of horse racing in Minnesota.  The Racing Commission granted and will oversee North Metro’s ownership operating licenses, will license all employees of North Metro’s racetrack as well as jockeys, trainers, veterinarians and other participants, regulates the transfer of ownership interests in licenses, allocates live race days and simulcast-only race days, approves race programs, regulates the conduct of races, sets specifications for the racing ovals, animal facilities, employee quarters and public areas of North Metro’s racetrack, regulates the types of wagers on horse races and approves significant contractual arrangements with North Metro, including management agreements, simulcast arrangements, totalizator contracts and concessionaire agreements.  Decisions by the Racing Commission in regard to any one or more of these matters could adversely affect the Company’s operations.

The Racing Act requires prior approval by the Racing Commission of all officers, directors, 5% shareholders, or other persons having a present or future direct or indirect financial or management interest in any person applying for a Class A and Class B license, and if a change of ownership of more than 5% of the licensee’s shares is made after an application is filed or the license issued, the applicant or licensee must notify the Racing Commission of the changes within five days of this occurrence and provide the information required by the Racing Act.

North Metro intends to submit a card club plan of operation for approval by the Racing Commission in connection with North Metro’s Class B license.  If the card club plan of operation is approved and the Racing Commission will regulate the playing of “unbanked” or “player pool” card games at North Metro’s card club, as well as harness racing.  North Metro must reimburse the Racing Commission for its actual costs, including personnel costs, of regulating the card club.  North Metro must have the Class B

13

license and card club authorization renewed annually by the Racing Commission after a public hearing (if required by the Racing Commission).

Securities Law Regulation

We are also subject to certain aspects of the Sarbanes-Oxley Act of 2002.  This Act requires creation of a strong and independent accounting oversight board to oversee the conduct of auditors of public companies and strengthens auditor independence.  It also requires us to take steps to enhance the direct responsibility of senior members of management for financial reporting and for the quality of financial disclosures we make; establishes clear statutory rules to limit, and to expose to public view, possible conflicts of interest affecting securities analysts; creates guidelines for audit committee members’ appointment, compensation and oversight of the work of our auditors; prohibits certain insider trading during pension fund blackout periods; and establishes a federal crime of securities fraud, among other provisions.

The process of complying with all applicable state and federal governmental and tribal regulations is lengthy and has required and will continue to require the expenditure of substantial time and resources.  There can be no assurance that we will be able to comply on a continuous or timely basis with all applicable regulations, and delays in compliance, or failure to comply, could have a material adverse effect on our business, financial condition, results of operations and continuing licensability.  Changes in existing regulations or the adoption of new regulations at the federal level or in the states in which we currently operate or are pursuing new opportunities could delay or prevent our compliance with such regulations.  Our failure to comply with applicable laws or regulations, whether federal, state or tribal, could result in, among other things, the termination of management agreements to which we are a party, or the suspension of one or more of our operations, either of which would have a material adverse effect on our business.

Costs and Effects of Compliance with Environmental Laws.

Gold Rush I, LLC, a wholly owned subsidiary of Southwest, leases real property in Cripple Creek, Colorado, a portion of which included a gas station and convenience store.  The gas station and related storage tanks were removed in October 1998, before Gold Rush I leased the property. We participate in a Corrective Action Plan approved by the Colorado Department of Labor and Employment, Division of Oil and Public Safety related to groundwater monitoring and remediation at the site. We have spent approximately $82,000 monitoring and remediating this site since we leased it in March 1999 and estimate the total cost of remediation at approximately $91,000. We have applied for reimbursement of some or all of these expenses from the Colorado Petroleum Storage Tank Fund but are uncertain whether we will receive some or all of that reimbursement.

Number of Employees.

We currently employ approximately 194 full and part-time employees and we manage approximately an additional 312 full and part-time employees of the Cheyenne and Arapaho Tribes of Oklahoma under our management agreement with the Tribes.

Risk Factors

In addition to the influences identified elsewhere in this report, there are several important factors that could cause our actual results to differ materially from those anticipated by us or that are reflected in any of our forward-looking statements.  These factors, which may impact the success of our operations and our ability to achieve our goals, include the following:

14

We have an accumulated deficit and a history of uncertain profitability.  We have incurred substantial operating losses since inception and had an accumulated deficit of $11,426,396 as of December 31, 2004. These losses are primarily the result of expenses related to our ongoing pursuit of new gaming opportunities. There can be no assurance that we will be able to achieve profitability on a quarterly or annual basis in future periods.  Our future operating results will depend upon a number of factors, including (a) the continuing profitability of our Oklahoma and Colorado Operations; (b) our ability to maintain our current gaming licenses and to obtain additional gaming licenses for new or expanded gaming facilities; (c) our ability to continue to maintain our contractual and working relationships with the Cheyenne and Arapaho Tribe of Oklahoma and to establish working relationships with other Native American tribes involved in gaming; and (d) our ability to successfully identify, and obtain all necessary approvals and funding related to, any additional future gaming opportunities.

We have a continuing need for additional capital. We anticipate that we will need substantial additional funding for our current Oklahoma and Colorado operations and to effectuate our plans to develop a harness racing track and card room in Minnesota.  Failure to meet our capital commitments related to the harness racetrack and card room could lead to a dilution of our ownership interest in that project.  Moreover, our operating plans and financing needs are subject to change depending on, among other things, market conditions and opportunities; land, equipment or other asset-based financing that may be available in connection with our development of gaming facilities; cash flow from operations, if any; and the number of new gaming projects that we pursue. While additional funds may be provided through borrowings from institutional investors or project partners, equipment leasing or other forms of debt or equity financing, we do not have any unconditional commitments relating to additional financing and we cannot assure you that additional financing will be available when required. Even if financing is available when required, we cannot assure you that it will be on terms favorable to us and our security holders in terms of cost or dilution.

We will continue to face intense competition in the gaming industry.  The gaming industry, including the development, operation and management of racetracks and other types of facilities, is highly competitive, especially given the rapid rate at which the industry is expanding. For example, a number of management companies may make proposals to a particular tribe for the development and management of a single Indian gaming facility, and any gaming facilities developed or managed by us will compete with a rapidly expanding number of other gaming facilities of varying quality and size, including gaming facilities that are part of national or regional chains, and other forms of gaming and entertainment. Many of our competitors have substantially greater financial and personnel resources than we do. Competition in the future may also be affected by overbuilding which can adversely affect patronage levels. Given the current regulatory climate and limited number of lucrative gaming opportunities available, competition is likely to become more intense in the future.

We face risks associated with our pursuit of new gaming projects.  We have pursued, are pursuing, and will continue to pursue new gaming projects that involve substantial pre-development commitments of time and money with no assurance we will receive the approvals needed to develop and operate the proposed gaming facility. A number of these projects require legislation or voter approval, which not only increases the cost of such projects but also increases the risk the project will not be approved and extends the time required to obtain licenses, complete development and begin operations. As an example, we pursued development of a gaming project on the White River at Rockaway Beach, Missouri that required a constitutional amendment to the Missouri State Constitution.  After expending substantial funds and time in pursuit of this venture, the ballot initiative was defeated by Missouri voters on August 3, 2004.  In addition, gaming projects may be controversial in some areas and face significant opposition from competitors or individuals and groups opposed to gaming on moral grounds.  In addition to increasing the costs and difficulties in obtaining required permissions for gaming projects, these opponents may also use litigation to try to delay or block new projects.  For example, we have received all required approvals to

15

develop a harness racetrack in Anoka County, Minnesota, but a group opposed to gaming on moral grounds has filed two separate lawsuits in attempts to block the project.

We, and the gaming industry as a whole, are heavily regulated and any change in the regulatory environment could have a material adverse effect on our business and operations.  The gaming industry is highly regulated at the federal and state levels and gaming on tribal land is further regulated by the National Indian Gaming Commission and the Bureau of Indian Affairs. The process of complying with all applicable government and tribal regulations is complex and requires us to expend substantial time and resources. We cannot assure you that we will be able to comply on a continuous or timely basis with all applicable regulations, and delays in compliance, or failure to comply, could have a material adverse effect on our business, financial condition, results of operations and our ability to maintain and obtain needed licenses. Changes in existing regulations or the adoption of new regulations at the federal level or in the states in which we operate or pursue new opportunities could delay or prevent our compliance with those regulations. Our failure to comply with applicable laws or regulations, whether federal, state or tribal, could result in, among other things, the termination of management agreements to which we are a party or the suspension of some of our operations, both of which would have a material adverse effect on our business.

We will continue to face legislative and judicial hurdles and adverse legislative and judicial changes.  The legislative and judicial environments related to Indian and non-Indian gaming are dynamic and change rapidly. Any federal, state or tribal action, adverse legislation, or judicial or regulatory ruling that limits gaming or constricts the scope of our gaming operations could have a material adverse effect on the gaming industry or our operations and financial condition. For example, in 2002 we had a profitable consulting arrangement with the Alabama-Coushatta Tribes of Texas that was terminated due to an adverse ruling from federal district court in favor of the State of Texas.

Successful Native American gaming opportunities typically depend upon securing and maintaining Tribal-State gaming compacts which are subject to substantial uncertainty.  The Indian Gaming Regulatory Act of 1988 (“IGRA”) provides the framework for the regulation of Class II and Class III gaming on Indian land.  Before Class III gaming (video games including video slots and video blackjack; table games like blackjack, craps and roulette; and other gaming events like pari-mutuel wagering) may be conducted on Indian land, the IGRA requires that the applicable tribe and host state negotiate a tribal-state compact authorizing gaming on the tribe’s land. Tribal-state compacts specify how Class III gaming is to be conducted and allocates oversight responsibilities between the tribe and the state.  A tribal-state compact is not currently required to conduct Class II gaming for Native American tribes subject to the IGRA.

We believe that the management and operation of Class III casinos generally present significantly greater revenue opportunities than Class II gaming facilities.  However, our ability to enter into Class III casino management agreements is dependent upon states entering into tribal-state compacts that permit Class III gaming. The majority of states have not entered into tribal-state compacts that permit Class III gaming.  We cannot predict with any certainty (a) which additional states, if any, will approve Class III gaming on Indian land; (b) the timing of any such approval; (c) the types of gaming that may be permitted by any tribal-state compact; or (d) whether any state will attempt to renegotiate or take other steps that may adversely affect existing tribal-compacts.

Many states have resisted, and certain states continue to resist, entering into tribal-state compacts. This resistance has, at times, resulted in litigation. Interpretations by federal district courts of the scope of any particular state’s obligations to negotiate a tribal-state compact have varied widely and depend in part on the laws of the particular state in which a tribe is seeking to negotiate a compact. The failure or delay of states to compact with tribes, the repeal or adverse legal interpretation of tribal-state compacts, or the

16

enactment of amendments that limit or affect the types or number of games that can be operated on Indian land under such compacts, could all have a material adverse effect on our business and current and proposed operations.

Our facilities and operations, as well as our key personnel and some of our security holders, are subject to government and tribal background investigations.  Failure to complete these investigations satisfactorily could adversely affect our business and operations. Our facilities and business operations on Indian land are subject to approval, regulation and oversight by, among others, the National Indian Gaming Commission, the Bureau of Indian Affairs, the Secretary of the Interior and various tribal authorities. For example, all management agreements (and extensions or renewals of such agreements) for Class II or Class III gaming facilities on Indian land must be approved by the NIGC and the terms of these management agreements must conform to various NIGC requirements. The NIGC will not approve management agreements for Class II Indian gaming facilities (such as our Oklahoma operations) unless federally conducted background checks of our directors and officers, some of our security holders, and other parties interested in our management agreements have been completed satisfactorily. States entering into tribal-state compacts under which we may manage Class III gaming facilities may have similar (or more stringent) requirements for background checks.

Our non-Indian operations are subject to similar requirements. For example, the State of Colorado currently requires extensive background checks in connection with an application for gaming licenses.  Background checks and related approvals may take many months to complete.  The NIGC may, in its discretion, also conduct background checks with respect to Class III management contracts.  Although the NIGC has approved our current management agreement with the Cheyenne and Arapaho Tribes of Oklahoma, including a recent extension, as we pursue additional Indian and non-Indian opportunities (or as new directors or management personnel are added), we cannot assure you that the necessary background investigations will be completed satisfactorily. Furthermore, the NIGC continues to adopt procedures that effectively expand the NIGC’s role in the classification of Native American gaming devices and which, if adopted in their present form, could have a material adverse effect upon our operations.

The National Indian Gaming Commission has expressed concern about the distribution of gaming proceeds by the Cheyenne and Arapaho Tribes of Oklahoma, for whom we manage casinos.  In December 2004, the NIGC notified the Tribes that the NIGC is concerned the Tribes are not distributing properly the net revenue they receive from gaming operations.  The NIGC’s concerns relate to the use of gaming revenue after we have distributed it to the Tribes and are not related to our management of the Tribes’ casinos.  However, if the NIGC determines that the Tribes have committed a substantial violation of the Indian Gaming Regulatory Act, NIGC rules, or the Tribes’ gaming ordinance, it could bring an enforcement action against the Tribes.  If an enforcement action were successful, potential penalties range from fines to, in extreme cases, an order closing the Tribes’ gaming operations.  Even though the NIGC’s concerns are not related to our management of the Tribes’ casinos, closure of these facilities would eliminate a significant source of our operating revenue and have an immediate adverse impact on our business results.

We face risks in connection with obtaining, maintaining and renewing gaming licenses required for the conduct of our business.  The development and management of gaming facilities are subject to extensive licensing requirements and we cannot assure you that we will be able to obtain or maintain all necessary licenses, approvals and other clearances from regulatory authorities having jurisdiction over our gaming facilities.  Although we, and our affiliates, have obtained the governmental licenses, permits and approvals we believe are necessary for the development and continued management of the Oklahoma and Colorado operations and development of a harness racing track in Minnesota, we cannot

17

assure you that we will be able to maintain or renew the necessary licenses, approvals and other clearances required for our operations.

All licenses that have been or may be obtained by us or our affiliates are subject to various conditions and in many cases will be subject to renewal.  Notwithstanding the fact that we have earned a good reputation at federal, state and tribal levels relative to compliance and licensing ability, there is always the possibility that a failure to comply with gaming regulations or the conditions of any license we hold could have an adverse effect upon our ability to secure, maintain or renew our gaming licenses.  We were recently fined $50,000 by the Colorado Division of Gaming for failure to properly maintain and review statistical data on slot machine performance after receiving a warning letter regarding this deficiency and failing to comply with its recommended action for correction of the deficiency. We entered into a Stipulation and Agreement with the Colorado Limited Gaming Control Commission in which we admitted that we failed to comply with the applicable gaming regulations and agreed to take corrective action immediately. As part of these proceedings, James Druck, in his capacity as Manager of the facility in question, without any admission of guilt, has agreed to take the steps required to insure our compliance in this matter and, further, has agreed to pay the sum of $5,000 to Colorado’s Limited Gaming Fund as reimbursement for expenses incurred by Colorado in this investigation.  It is difficult to predict with any certainty whether, and to what extent, this occurrence may have a material adverse effect on our business or adversely affect our ability and the ability of our key personnel to obtain or retain required licenses in Colorado. In addition, we must disclose this violation to other jurisdictions in which we hold or apply for gaming licenses. It is difficult to predict what impact, if any, that disclosure may have on our licensability in those jurisdictions.

We face special risks related to investments in Indian gaming facilities.  Investment in Indian gaming facilities involves numerous special risks in addition to those usually associated with contractual arrangements or real estate development. Advances made by us to develop, construct and equip Indian gaming facilities will not result in our ownership of, or any security interest in, the gaming facilities located on Indian land or in the Indian land itself.  Our ability to build and maintain healthy personal and professional relationships with tribes and their officials is critical to the success and longevity of our current and proposed gaming activities and our ability to successfully obtain, develop, effectuate, retain and renew management or other types of service agreements.  As sovereign nations, tribes establish their own governmental systems under which tribal officials as well as tribal boards, commissions, committees and other bodies are subject to replacement by appointment or election and to policy changes.  Our relationship with a tribe could deteriorate for various reasons, including a change in tribal government or tribal policies.  Deterioration in the relationships between us and individual officials or collective bodies of any tribes with whom we deal could have a material adverse effect on our business and operations.  Similarly, our business relationships with Indian tribes, and revenues generated through service agreements with Indian tribes, could be adversely affected or even eliminated as the result of regulatory or judicial actions taken against the tribe itself, or against a tribe’s leaders or members as individuals. In addition, any investigation of an Indian tribe or tribal member that we work with could lead to an investigation of our relationship with that tribe or tribal member.

We face specific risks and are subject to limitations under our current Oklahoma agreement.  The duration of the Oklahoma Agreement was recently extended until May 19, 2007, and can be further extended only with the consent of the Cheyenne and Arapaho Tribes of Oklahoma and the approval of the National Indian Gaming Commission. The Tribes approved two additional amendments to the Oklahoma agreement at a Tribal Council meeting on January 22, 2005.  These amendments include an extension of our contract until May 19, 2011. However, a tribal court subsequently ruled the Tribal Council meeting at which these amendments were approved invalid.  We cannot predict at this time whether that ruling may be challenged.  In addition, amendments cannot become effective until approved by the NIGC.  The NIGC is unlikely to approve any amendments until issues regarding the legitimacy of the Tribal Council

18

meeting at which the amendments were approved are resolved or the amendments are again approved by the appropriate tribal authority.  We cannot assure you that any further extension will be granted and approved.  In addition, even if granted and approved, the NIGC and the Tribes have the power to unilaterally terminate or void the Oklahoma Agreement under certain circumstances.

We have limited recourse against Indian Tribes. Indian tribes are sovereign nations that are generally immune from legal proceedings commenced in state or federal courts, and congressional policy has mandated the limited liability of Indian tribes. In addition, because regulatory authorities have broad discretion when granting, renewing or revoking licenses, approvals and other clearances related to the development, management or operation of gaming facilities, an Indian tribe that desires to terminate a management contract with a third party management company may simply elect to refuse to renew a tribal gaming license based upon a minor technical default.  As a result, repayment of any funds advanced by us to, or on behalf of, tribes in connection with the development or expansion of a gaming facility, and any additional return from participation in payments made under gaming management agreements, will depend upon (a) our ability to enter into, and obtain requisite regulatory approval with respect to, effective management agreements; (b) the successful development and operation of the gaming facility; and (c) in light of our limited recourse against any tribe for breach of any agreement, the willingness of the tribe to comply with its obligations under the applicable agreement.

For the foregoing reasons, if a tribe were to breach a management agreement with us, our sole recourse to collect amounts owed to us under our agreements with that tribe may be to attach undistributed or future proceeds, if any, from the operation of the tribe’s gaming facilities. If gaming operations fail to develop or, if developed, cease to operate for any reason, our prospects for payment of amounts owed to us are minimal.  Accordingly, if we advance significant funds to tribes for the development, construction and furnishing of gaming facilities, we may not be able to recover those funds.

We face risks related to the nature of the gaming industry, including adverse economic and political conditions and changes in the legislative and land use regulatory climate.  Similar to investment in other entertainment enterprises, adverse changes in general and local economic conditions may adversely impact investments in the gaming industry.  Examples of economic conditions subject to change include, among others, (a) competition in the form of other gaming facilities and entertainment opportunities; (b) changes in regional and local population and disposable income; (c) unanticipated increases in operating costs; (d) restrictive changes in zoning and similar land use laws and regulations, or in health, safety and environmental laws, rules and regulations; (e) risks inherent in owning, financing and developing real estate as part of our casino operations, (f) the inability to secure property and liability insurance to fully protect against all losses, or to obtain such insurance at reasonable costs; (g) seasonality; (h) changes or cancellations in local tourist, recreational or cultural events; and (i) changes in travel patterns or preferences (which may be affected by increases in gasoline prices, changes in airline schedules and fares, strikes, weather patterns or relocation or construction of highways, among other factors).

The success of our current operations and our future growth potential are dependent upon key personnel and will, in the future, be increasingly dependent on our ability to attract and retain additional qualified managers and personnel.  Our success depends to a significant extent upon the efforts and abilities of our executive officers, James B. Druck, Thomas E. Fox, Jeffrey S. Halpern and Brian L. Foster.  We have entered into employment agreements with Messrs. Druck, Fox and Halpern. Each of these individuals has developed relationships and experience in the gaming industry that are integral to our success.  We do not maintain key man life insurance on any of these individuals.  The loss of the services of one or more of these individuals could have a material adverse effect on our business and current and proposed operations.

19

We will also be required to recruit and retain a significant number of management, administrative and other employees for any of our proposed gaming facilities that may come to fruition.  We anticipate that we will be required to develop and undertake a major training program at each new facility that we may develop or manage.  In addition, with regard to facilities on Indian land, we will generally be required to recruit and give preference to individuals of Native American heritage in order to comply with various tribal employment rights ordinances that have been adopted by most tribes, including the Cheyenne and Arapaho Tribes. While we believe that we will be able to attract and retain a sufficient number of employees to satisfy our current and future requirements, the competition for such employees, particularly at the management level, will increase significantly in the future if the gaming industry expands throughout the United States.  There can be no assurance that we will be able to attract and retain the personnel required to successfully operate our business.

In addition, now that we are conducting our gaming operations as a publicly owned corporation, we are subject to regulations under state and federal securities laws such as the Securities Act of 1933, the Securities Exchange Act of 1934, and the Sarbanes-Oxley Act of 2002. Compliance with these laws and regulations will require that we add personnel and recruit independent members for the Board of Directors. All of these directors and some new personnel must complete background investigations before joining our company or performing any services for us. Requiring potential directors and employees to complete these investigations may make it more difficult to recruit qualified candidates and delays in completing background investigations could adversely impact our business and, in the case of director candidates, our ability to comply with Sarbanes-Oxley Act requirements regarding director independence on a timely basis.

The success of our current operations and our future growth potential are dependent upon our relationship with and the performance of certain third parties.  The successful operation of our various proposed gaming facilities will be dependent to a significant extent on the efforts of third parties.  For example, (a) with respect to any facility located on Indian land, we will not own the facility and will depend on the performance by a tribe of its obligations under the applicable management agreement; (b) with respect to the harness racing track and card room proposed for Minnesota, the success of that project will depend to a great extent on the expertise our 50/50 partner in that venture, MTR-Harness, Inc., an affiliate of MTR Gaming Group, Inc., in managing racing facilities as well as the ability of our financing sources to meet their commitments to us; and (c) finally, with respect to any other project pursued by us, we may need to form partnerships or secure third party funding in order to meet the financial requirements that will likely transcend our own financial resources. The failure of any third party to perform its contractual obligations to us could have a material adverse effect on our business and operations.  In addition, depending upon the structure of any particular joint venture, we may be held responsible for the acts or omissions of our co-venturers.

We face risks related to the diminishing control of our existing management.  Our directors and executive officers currently beneficially own (together with their spouses, on a fully-diluted basis and including shares that may be received in connection with the exercise of outstanding options and warrants) approximately 28% of the outstanding shares of our common stock. By virtue of the forgoing, our directors and executive officers will have limited voting influence in connection with the election of our future directors and the control of our business and affairs.

Because our common stock is traded on the OTC Bulletin Board, your ability to sell your shares in the secondary trading market may be limited.  Our common stock is traded currently on the over-the-counter market on the OTC Bulletin Board.  Consequently, the liquidity of our common stock is impaired, not only in the number of shares that are bought and sold, but also through delays in the timing of transactions, and limited coverage by security analysts and the news media, if any, of our company.  As a result, prices for shares of our common stock may be lower and more volatile than might otherwise

20

prevail if our common stock was quoted on the Nasdaq Stock Market or traded on a national securities exchange, like The New York Stock Exchange or American Stock Exchange.

Because our shares are “penny stocks,” you may have difficulty selling them in the secondary trading market.  Federal regulations under the Securities Exchange Act of 1934 regulate the trading of so-called “penny stocks,” which are generally defined as any security not listed on a national securities exchange or Nasdaq, priced at less than $5.00 per share and offered by an issuer with limited net tangible assets and revenues.  Since our common stock currently trades on the OTC Bulletin Board at less than $5.00 per share, our common stock is a “penny stock” and may not be traded unless a disclosure schedule explaining the penny stock market and associated risks is delivered to a potential purchaser before any trade.

In addition, because our common stock is not listed on Nasdaq or any national securities exchange and currently trades at less than $5.00 per share, trading in our common stock is subject to Rule 15g-9 under the Exchange Act.  Under this rule, broker-dealers must take certain steps prior to selling a “penny stock,” which steps include:

•                  obtaining financial and investment information from the investor;

•                  obtaining a written suitability questionnaire and purchase agreement signed by the investor; and

•                  providing the investor a written identification of the shares being offered and the quantity of the shares.

If the broker-dealer does not follow these penny stock rules, the investor has no obligation to purchase the shares.  The application of these comprehensive rules will make it more difficult for broker-dealers to sell our common stock and our shareholders, therefore, may have difficulty selling their shares in the secondary trading market.

To comply with gaming regulations, we must seek shareholder approval to amend our Articles of Incorporation to place restrictions on ownership of our securities and add other considerations that could have anti-takeover effects.  In the near future, we intend to seek an amendment to our Articles of Incorporation of Southwest Casino Corporation to provide that no person or entity may become one of our 10 largest shareholders, or the beneficial owner of 5% or more of our capital stock, unless such person or entity (a) agrees to provide personal background and financial information to gaming authorities, (b) consents to a background investigation, and (c) responds to questions from gaming authorities.  Whether or not a shareholder is one of our 10 largest shareholders or a 5% shareholder, our amended Articles of Incorporation will provide that we may repurchase, at fair market value, shares held by any person or entity (y) who refuses to provide information requested by us or any gaming authority or (z) whose status as a shareholder, in the judgment of our Board of Directors, may result in the disapproval, modification, loss, non-renewal or non-reinstatement of any management agreement, or any of our licenses, approvals or consents from any gaming authority or any other governmental agency.

Item 2.    DESCRIPTION OF PROPERTY

We own, lease or manage the following real property:

Gold Rush I, LLC, a wholly owned subsidiary of Southwest Casino and Hotel Corp., operates the Gold Rush Casino with 322 slot machines, four table games, a bar/restaurant and 13 hotel rooms, and the Gold Digger’s Casino with 86 slot machines and a bar.  These properties are physically connected, but operate under separate Colorado gaming licenses.  The casino buildings, a building that houses our marketing and

21

accounting offices, the Gold Rush Palladium site, two additional storefronts and related parking lots are leased under a 20-year lease from Mark and Annesse Brockley, Cripple Creek Development Corporation and Blue Building Corporation that expires in June 2019.  Gold Rush I pays base rent in the amount of $40,000 per month for this property, plus an additional payment based on the combined net income of the Gold Rush and Gold Digger’s casinos. Through 2004, we have not been required to make any additional payments based on combined net income. In addition, Gold Rush I assumed obligations to make numerous payments to third parties for outstanding accounts payable and debt obligations related to acquisition and operation of the Gold Rush and Gold Digger’s before we entered into this lease.  These additional payments are capped at $125,000 per month. If the payments exceed that amount, the excess amount is deducted from the base rent due.  In 2004, these assumed obligations averaged approximately $97,000 per month.  Gold Rush I also held an option to purchase this real estate that expired on February 28, 2005.

Southwest Casino and Hotel Corp., a wholly owned subsidiary of Southwest, operates Uncle Sam’s Casino, which operates 67 slot machines and a bar.  The building is leased under a 5-year lease from Lois Woods that has been extended for an additional five years and expires in April 2009.  Southwest pays rent in the amount of $14,000 per month for this facility.

Southwest Entertainment, Inc., a wholly owned subsidiary of Southwest Casino and Hotel Corp., operates the Gold Rush Palladium, an outdoor music amphitheatre with 1,200 seats. The Palladium is located behind the Gold Rush and Gold Digger’s casinos on a portion of the property leased by Gold Rush I, LLC from Mark and Annesse Brockley, Cripple Creek Development Corporation and Blue Building Corporation under the lease described above that expires in June 2019.  Southwest Entertainment hosts music events at the Palladium intended to increase traffic at the Gold Rush and Gold Digger’s casinos. Under the sublease between Southwest Entertainment and Gold Rush I for this site, Southwest Entertainment is required to pay rent of $1,000 per month.

In addition to the Gold Rush and Gold Digger’s casinos, the lease with Mark and Annesse Brockley, Cripple Creek Development and Blue Building Corporation includes two additional storefronts that we sublease to a third party.  Under the current terms of the sublease, the tenant is making needed improvements to the real property, from which we will benefit, in lieu of rent payments, pending completion of those renovations.

North Metro Harness Initiative, LLC, in which Southwest Casino and Hotel Corp. owns a 50 percent membership interest, holds options to acquire approximately 180 acres of real property in Columbus Township, Anoka County, Minnesota. North Metro has not acquired these properties.  North Metro intends to build a harness racetrack and card room on this site.  We estimate the total cost of this development to be $48 million. North Metro will provide $10 million of that amount and will borrow the remainder.

Lucky Star Concho and Lucky Star Clinton are enterprises of the Cheyenne and Arapaho Tribes of Oklahoma. Southwest Casino and Hotel Corp. manages these facilities under a NIGC-approved management agreement that terminates in May 2007.  As of December 31, 2004, these enterprises operated 1,050 electronic bingo and pull tab machines, a 500-seat bingo hall and a restaurant and snack bar.  In March 2005, we removed the bingo seats to create space for a new restaurant and bar and additional card games that the casinos will be permitted to offer when the gaming compact between the Tribes and the State of Oklahoma is finalized.

Southwest Casino Corporation leases 4,780 square feet of office space at 2001 Killebrew Drive, Suite 350 in Minneapolis, Minnesota with a base rent of $8,784 per month plus certain operating costs for its corporate offices under a five-year lease that expires in December 2009.

22

Southwest does not own any interest in real property solely for investment purposes.

Our management considers our leased properties suitable and adequate for our current operations.  In the opinion of our management, all of these properties are adequately covered by insurance.

Item 3.    LEGAL PROCEEDINGS.

North Metro Harness Initiative, LLC, in which Southwest Casino and Hotel Corp. owns a 50 percent membership interest, has intervened in litigation between an anti-gambling group and the Minnesota Racing Commission.  This litigation began on December 15, 2004 and is pending in the Second District Court, Ramsey County, Minnesota and alleges that members of the Minnesota Racing Commission violated Minnesota’s “open meeting” law while considering North Metro’s application for licenses to build and operate a harness racetrack and card room in Columbus Township, Anoka County, Minnesota.  The District Court denied plaintiff’s initial motion to enjoin the Racing Commission from reconsidering an October 2004 decision to deny North Metro’s license applications on December 29, 2004. An appellate court subsequently denied an emergency petition seeking the same relief.  The anti-gambling group continues to pursue this case in an effort to invalidate the licenses granted to North Metro by the Racing Commission on January 19, 2005.  In February 2005, the District Court entered a protective order requested by the Racing Commission and in which North Metro joined limiting the scope and timeframe for discovery in this matter.  North Metro does not believe the Racing Commission violated the Open Meeting Law and that even if a violation of the Open Meeting Law occurred the remedies for that violation do not include invalidation of its licenses. However, if the Court finds a violation of the Open Meeting Law and holds that the violation can invalidate North Metro’s licenses, the invalidation of the licenses would prevent North Metro from developing the racetrack and card room and prevent us from realizing any revenue or profit from this project.

In addition, on March 10, 2005, the anti-gambling group filed a petition with Minnesota Court of Appeals appealing the Minnesota Racing Commission’s grant of Class A and Class B licenses to North Metro to develop and operate the harness racetrack and card club.  North Metro and the Minnesota Racing Commission are the relator and the respondent, respectively, in this proceeding. The anti-gambling group seeks to have the licenses invalidated through this appeal.  We cannot predict the outcome of this appeal at this time. The invalidation of the licenses would prevent North Metro from developing the racetrack and card room and prevent us from realizing revenue or profit from this project.

On March 17, 2005, the Horsemen’s Benevolent and Protective Association (“HBPA”), which represents the thoroughbred horse owners that race at the other Class A licensed racetrack in Minnesota, filed a petition requesting the Minnesota Court of Appeals to review the decision of the Minnesota Racing Commission to grant Class A and Class B licenses to North Metro.  As in the above appeal, North Metro is a relator and the Minnesota Racing Commission is the respondent in this proceeding.  The HBPA seeks to invalidate the licenses granted to North Metro with this appeal.  We cannot predict the outcome of this appeal at this time. The invalidation of the licenses would prevent North Metro from developing the racetrack and card room and prevent us from realizing any revenue or profit from this project.

On March 3, 2005, Corporate Capital Management, LLC served a lawsuit against Southwest claiming failure to pay fees or deliver securities related to our 2004 convertible debenture offering and reorganization and a proposed investment transaction that we announced publicly on January 28, 2005 and in which the plaintiff played no role.  We believe the claims are without merit.

During 2003 and 2002, an employee issued and cashed company checks and deposited the amounts to the employee’s personal accounts.  Our insurance coverage paid a portion of the loss and we have also written off losses of $100,000 in 2004 and $267,000 in 2003.  The employee was terminated in January 2004

23

and criminal prosecution of the employee remains pending in Teller County, Colorado.  We anticipate that the employee will be required to pay restitution in connection with the criminal proceedings and that some portion of the lost amount may be recovered, but at this time, we cannot estimate with any certainty what that amount may be.

We are involved in other various claims, legal actions and other complaints arising in the ordinary course of business.  In the opinion of management, any losses that may occur from these matters are adequately covered by insurance or are provided for in our financial statements and the ultimate outcome of these other matters will not have a material effect on our financial position or results of operations.

Item 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

No matter was submitted to a vote of security holders during the fourth quarter of the fiscal year covered by this report.

24

PART II

Item 5.    MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

Our common stock is quoted on the Over-the-Counter Bulletin Board (OTCBB) of the National Association of Securities Dealers, Inc. under the symbol “SWCC.”  Quotation on the OTCBB began February 26, 2004.  Before February 26, 2004, our common stock was not quoted on the OTCBB or listed on any exchange. From February 26, 2004 until completion of our reorganization, our common stock was quoted under the symbol “LMAV.”  The market for shares in our common stock is limited because only a small number of our outstanding shares are available for trading in the public market. The following table sets forth the high and low bid prices for our common stock, as reported by the OTCBB, for the fiscal quarters indicated:

These bid quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

Number of Record Holders

As of March 24, 2005 there were 433 record holders of our common stock.

Dividends

We have not declared or paid any cash dividend on our common stock.

Sales of Unregistered Equity Securities during Fourth Fiscal Quarter

During the fourth quarter of fiscal 2004, we did not issue any equity securities without registration under the Securities Act of 1933, except as described below:

On December 8, 2004, we issued 45,455 shares of common stock to the holders of an outstanding Southwest Casino and Hotel Corp. Series A convertible debenture who, under the terms of our redemption offer, elected to convert the principal amount of their debenture to common stock at a conversion price of $1.10 per share of common stock.

On December 8, 2004, we issued 50,000 shares of common stock to Corporate Capital Management, LLC in consideration of a release of potential claims related to financial advisory services provided to us by Corporate Capital Management.

On December 8, 2004, we issued 20,000 shares of common stock to a former financial advisor in consideration of services rendered previously.

No underwriting commission or discounts were paid with respect to the sales of these unregistered securities.  All of the sales were made in reliance on either Section 4(2) of the Securities Act of 1933 as

25

transactions by an issuer not involving any public offering or Regulation D of the Securities Act.  In all of these transactions, we made inquiries to establish that the sales qualified for these exemptions from the registration requirements.  In particular, we confirmed that with respect to the exemption claimed under Section 4(2) of the Securities Act that (i) all sales were made by personal contact from officers and directors of Southwest or other persons closely associated with Southwest, (ii) each investor made representations that he or she was sophisticated in relation to his or her investment (and gave us no reason to believe that this representation was incorrect), (iii) each purchaser gave assurance of investment intent and the certificates for the shares bear a legend accordingly, and (iv) offers and sales within any offering were made to a limited number of persons.

Purchases of Equity Securities

We did not purchase any shares of our common stock or other equity securities during fourth quarter of fiscal 2004.

Item 6.    MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

The following is a discussion and analysis of the financial position and operating results of Southwest Casino Corporation for the years ended December 31, 2004 and 2003, and should be read in conjunction with our financial statements and accompanying notes.  Statements that are not historical are forward-looking and involve risks and uncertainties discussed under the heading “Risk Factors” in Item 1 of this report.

Overview:

Our principal business is the management, operation and development of gaming facilities in emerging and established gaming jurisdictions.  Currently, we operate three casinos in Cripple Creek, Colorado — Gold Rush, Gold Digger’s and Uncle Sam’s.  We also manage two Native American gaming operations in Oklahoma for the Cheyenne and Arapaho Tribes of Oklahoma - Lucky Star Concho and Lucky Star Clinton.  Lucky Star Concho is located on U.S. Highway 81, just north of the Oklahoma community of El Reno.  Lucky Star Clinton is located 60 miles west of Lucky Star Concho in the community of Clinton, Oklahoma on Old Route 66 near Interstate I-40.  An amendment to our management contract with the Tribes to develop and manage a third site at Canton, Oklahoma has been ratified by the Tribes and has been submitted to the National Indian Gaming Commission for approval.

In 2004 and 2003, we actively pursued additional gaming opportunities—a harness race track and card room in Minnesota and a riverboat casino in Missouri.  We continually evaluate other management, consulting, development and acquisition opportunities related to gaming that have the potential to generate new revenue streams for us.

Project Development Costs:

Rockaway Beach – In September 2002, we responded to a request for a proposal from the City of Rockaway Beach, Missouri (approximately 11 miles from Branson, Missouri) to build a riverboat and redevelop their downtown.  In order to obtain a gaming license to build a riverboat on the White River at Rockaway Beach, it is first necessary to amend the Missouri Constitution, which currently permits riverboats only on the Mississippi and Missouri rivers. We were awarded the contract by the City and began incurring costs associated with pursuing this opportunity.   In June 2004, we established a separate entity (Southwest Missouri Gaming, LLC or SMG) to hold the development rights.   We transferred our rights and interests in this project to SMG in exchange for a 30% ownership interest.  Missouri businessman Robert Low acquired 70% of SMG. The initial commitment by both parties was to provide a

26

total of $10,000,000 in pre-development funding for the project and we received credit for amounts we had spent to date.  As of December 31, 2004, SMG had expended $13,978,766 including our expenditures before the formation of SMG. The primary use of the funds was to secure the necessary amendment to the State Constitution to allow riverboat gaming on the White River at Rockaway Beach.  This initiative was defeated in the state-wide primary election held August 3, 2004.  Our allocable share of SMG expenditures including expenditures made before the formation of SMG and expenses incurred that were not allowable under our SMG agreement were $2,681,470 in 2004 as compared to $1,302,980 expended in 2003 and $247,721 expended in 2002.

North Metro Harness Initiative, LLC - We also have been pursuing a harness track and card room in Columbus Township, Anoka County, Minnesota.  In December 2003, we filed a license application with the Minnesota Racing Commission.  This license application was amended to add a subsidiary of MTR Gaming Group, Inc. as our 50% partner. As of December 31, 2004, MTR-Harness, Inc. of Minnesota had invested $108,446.  The Minnesota Racing Commission approved North Metro’s licenses on a five to three vote on January 19, 2005.  Under the North Metro Member Control Agreement, approval of North Metro’s licenses triggered MTR-Harness’ commitment to contribute $7,490,000 and our obligation to contribute an additional $1,500,000 to North Metro.  During the years ended December 31, 2004 and 2003, we have expensed $365,132 net of loss allocated to minority interest and $467,407 of costs related to this project, respectively.  In addition, we have capitalized $1,823,154 in real estate options, construction in progress and contract rights as of December 31, 2004.

Operating segments:

Our executive officers review operating results, assess performance and make decisions related to the allocation of resources on a property-by-property basis. We, therefore, believe that each property is an operating segment.  In order to provide more detail in a more understandable manner than would be possible on a consolidated basis, and to facilitate discussion of operating revenue, we have grouped our properties as follows:

Casino Operations:

Gold Rush/ Gold Diggers Casino
Uncle Sam’s Casino

Casino Management:

Lucky Star – Concho
Lucky Star – Clinton

Casino operations:

Gold Rush/Gold Digger’s Casino Results

Gold Rush and Gold Digger’s recorded higher revenues in 2004 primarily as a result of an increase in the

27

number of slot machines on the floor in 2004 as compared to 2003.  The decrease in income from operations was due to an increase in operating expenses caused by the installation of a new player tracking and slot accounting system, increased accounting and compliance personnel, and an increase in depreciation expense.  The new player tracking and slot accounting system has not been approved by the Colorado Division of Gaming and, as a result, additional manpower was required to meet reporting requirements.  We are currently testing the new system. Once the system is fully operational, we anticipate that it will provide us with a competitive advantage in the market.

Uncle Sam’s Casino

Uncle Sam’s Casino is a facility with only 67 slot machines that serves the local resident market in Cripple Creek.  This market is the most vulnerable to increased competition. The increase of 628 slot machines in Cripple Creek and the opening of a new casino that also caters to the local residents market during 2004 have substantially impacted the casino revenues at this facility.  We have improved customer service and will be adding poker on the second floor in the second quarter of 2005 in an effort to recapture our share of the market, but cannot assure that we will be successful in doing so.

Casino Management:

Lucky Star Concho

Management fees from Lucky Star Concho were $2,478,603 in 2004 and $1,980,585 in 2003, an increase of 25%. Our increase in management fees was driven by increased patron visits and improved machine selection. In January 2005, the Tribes approved a compact with the state of Oklahoma which will provide the facility with additional electronic games as well as the ability to offer player banked card games.  We anticipate that Lucky Star Concho will begin to realize the benefits of this expanding gaming in the second quarter of 2005 but cannot assure you that it will do so. The advantage from expanded gaming at the Lucky Star facilities will be at least partially offset by competition from Remington Park, a racetrack in Oklahoma City, that will also be allowed to offer the same type of gaming machines as the tribal locations, but they will not be allowed player banked card games and their hours of operations will be limited, whereas the Lucky Star Casinos will continue to operate 24 hours a day, seven days a week.

Lucky Star Clinton

Management fees from Lucky Star Clinton were $1,604,586 in 2004 and $1,255,230 in 2003, an increase of 28%.  Our increase in management fees was driven by increased customer awareness of our location, customer service and improved machine selection.   In January 2005, the Tribes approved a compact with the state of Oklahoma which will provide the facility with additional electronic games as well as the ability to offer player banked card games.  We anticipate that Lucky Star Clinton will begin to realize the benefits of this expanding gaming in the second quarter of 2005. We anticipate that additional competition will come into our market area within the next 9 months, but we believe, although we cannot provide any assurance, that we will continue to benefit from the expanded gaming permitted under the compact.

28

We are also currently discussing with the Tribes the possibilities of expanding both the Concho and Clinton facilities which could have a significant impact on revenues for 2005.

Other Factors Affecting Our Net Loss:

The following table summarizes some of the factors our management believes are most significant in understanding our financial performance during the past two fiscal years.

N/M = Not Material

Southwest Entertainment, Inc is a wholly owned subsidiary of Southwest Casino and Hotel Corp. that conducts concerts at the Gold Rush Palladium, a 1,200 seat outdoor amphitheater adjacent to the Gold Rush Casino.   We conduct musical events for the purpose of attracting people to Cripple Creek and our casino properties.  During 2004 and 2003, we held six concerts each year.   The increased loss during 2003 compared to 2004 was due primarily to the higher cost of the acts that performed during 2003.

Corporate expenses increased 47%, primarily from an increase in legal and accounting expenses of $714,446 over the same period for the prior year. The additional legal and accounting expenses were incurred in connection with the merger with Lone Moose Adventures, Inc. and additional costs in connection with the filing requirements for the Securities and Exchange Commission.

Interest Expense increased 24% as a result of lease financing for the player tracking and slot accounting system installed at the Colorado casinos in January 2004.

Minority interest represents minority owner’s share of expense related to North Metro Harness Initiative, LLC.

Effective tax rates for all periods are lower than the federal and state statutory rates due primarily to the valuation allowance for deferred tax assets and lack of certainty that net operating loss carryforwards available to offset future income will not be limited under Section 382 of the Internal Revenue Code of 1986.

Discontinued Operations reflect the results of operations for Southwest Casino Deadwood, LLC which we closed February 28, 2004.  Since 2004 includes only two months of operations, the loss is 70% less than the loss in 2003.   For calendar year 2003, the loss from discontinued operations includes a $282,550 loss on sale and abandonment of fixed assets used in the operations.

29

Liquidity and Capital Resources:

We generate cash flow from our Oklahoma management activities and casino operations in Colorado.  We use the cash flows generated to fund reinvestment in existing properties for both refurbishment and replacement of assets, and to pursue additional growth opportunities.  We supplement the cash flows generated by our operations with funds provided by financing activities to balance our cash requirements.

We expect that cash flows from operations will be sufficient to meet our normal operating requirements during the next twelve months, including payment of our accounts payable as of December 31, 2004.  However, we will need additional equity and debt financing to fund the development of the racetrack and card room in Minnesota.  If we raise additional funds through the issuance of equity securities, our stockholders may experience dilution, which could be significant.  Furthermore, additional financing may not be available when required or, if available, may not be on terms favorable to us or our stockholders.  If financing is not available when needed or on acceptable terms, we may not be able to participate fully in the development of the racetrack and card room in Minnesota or participate in other new opportunities that we believe may be beneficial to our business.

During the years ended December 31, 2004, 2003 and 2002, we spent $2,681,470, $1,302,980 and $247,721, respectively in the unsuccessful pursuit of a riverboat casino in Missouri.  $1,514,900 of these expenditures was funded from cash flow from operations, equity financing provided $1,900,000, and cash provided from debt financing contributed $817,271. In addition, during the years ended December 31, 2004 and 2003, we spent $1,746,427 and $915,195 in pursuit of a license to operate a racetrack and card room in Minnesota.  These expenditures were funded from cash flow from operations of $1,656,782 and cash provided from accounts payable and debt financing of $1,000,840.

We continue to review additional opportunities to acquire or invest in companies, properties and other investments that meet our strategic and return on investment criteria. If a material acquisition or investment is completed, our operating results and financial condition could change significantly in future periods.

Net cash provided by operating activities during the year ended December 31, 2004 was $1,565,560 compared to $996,601 during the year ended December 31, 2003, an increase of $568,959. This increase was due primarily to an increase in accounts payable and accrued expenses of $923,914; a decrease in receivables and inventories of $216,056; and a decrease in the net loss from operations of $240,153, excluding depreciation and amortization; all offset by a decrease in accrued interest payable of ($261,730); an increase in prepaid expenses of ($238,841); and an increase in restricted cash of $202,147.

Net cash used in investing activities for the year ended December 31, 2004 was $(3,911,095) compared to net cash used in investing activities of $(616,487) during the year ended December 31, 2003, an increase of $3,294,608. This increase in use of cash between the years was primarily due to investment of $2,251,767 in SMG, an unconsolidated subsidiary that pursued the Rockaway Beach initiative, a $733,809 reduction in funds provided from collection on notes receivable, a decrease in deposits of $119,466, offset by a $404,850 increase in the amount spent on capitalized licenses, land option payments and development costs related to North Metro Harness Initiative, LLC.

Net cash provided by financing activities for the year ended December 31, 2004 was approximately $2,367,801 compared to net cash used in financing activities for the year ended December 31, 2003 of approximately $(1,200,635), an increase of $3,568,436.  The increase in net cash provided by financing activities was due primarily to the issuance of $2,449,760 (net of issuance costs) of Convertible Demand Notes that converted to common stock after the merger with Lone Moose Adventures, Inc., additional short term borrowings of $590,672; a draw on our line of credit in the amount of $350,000; and proceeds

30

from minority interests of $108,446; offset by settlement of outstanding Convertible Debentures of $262,500.

Convertible Demand Notes.  During the year ended December 31, 2004, we issued $2,632,000 of convertible demand notes.  The notes accrued interest at 8%, and were due on September 27, 2004.  The notes together with accrued interest converted into common stock at a rate of $1.00 per share upon completion of the merger transaction with Lone Moose Adventures, Inc., a publicly traded company, on July 22, 2004.

Promissory Note.  We have entered into a collateral agreement and promissory note to collateralize a $500,000 bond related to the development of North Metro Harness Initiative, LLC.  The promissory note is due on June 1, 2005, with a variable interest rate (currently 5%).  At December 31, 2004, the note had not been drawn.  The note is personally guaranteed by four of our stockholders including three of our executive officers.

Summary of Commitments and Contractual Obligations:

Under the terms of the Member Control Agreement for North Metro Harness Initiative, LLC, we committed to contribute an additional $1,500,000 to North Metro if it received licenses to build and operate a harness racetrack in Columbus Township, Anoka County, Minnesota.  The Minnesota Racing Commission voted to grant these licenses on January 19, 2005.  In addition, we have other several other financial commitments, including repayment of bank loans, promissory note, and accounts payable, as well as minimum annual lease payments.

The following table summarizes the timing of these future contractual obligations and commitments as of December 31, 2004:

(1)          Consists of capitalized lease for the Gold Rush and Gold Digger’s Casinos, the Gold Rush Palladium, and related facilities in Cripple Creek, Colorado.

(2)          Consists of leases for Uncle Sam’s Casino in Cripple Creek, Colorado; Southwest Casino Corporation offices in Minneapolis, Minnesota; and office equipment.

(3)          Consists of additional capital contribution due under Member Control Agreement.  Obligation arose after December 31, 2004 when the Minnesota Racing Commission granted licenses on January 19, 2005.

(4)          Consists of pre-licensing expenditures for North Metro Harness Initiative, LLC that, under the North Metro Member Control Agreement, Southwest Casino and Hotel Corp. must pay.

(5)          Does not include amounts we anticipate will be paid to IGT in connection with a player tracking and slot accounting system installed in our Colorado casinos.  We anticipate that we will pay the $1,142,000 purchase

31

price of this system over four years at an interest rate of approximately 7% per year once the system is operational.

We expect to continue to spend capital on:

•                  reinvesting in our casinos in Cripple Creek, Colorado; and

•                  pursuing new gaming opportunities if and when suitable opportunities arise.

The amount of capital we may need will depend on many factors, including the:

•                  time and cost necessary for any new gaming opportunities we elect to pursue;

•                  new developments in our relationship with the Cheyenne and Arapaho Tribes of Oklahoma; and

•                  new collaborative relationships that we may establish in pursuit of suitable new gaming opportunities.

Off-Balance Sheet Arrangements:

Except for operating leases entered in the ordinary course of business and customary indemnification obligations under some of our agreements, we do not have any significant off-balance sheet arrangements.

Effects of Current Economic and Political Conditions:

Competitive Pressures:

Many casino operators are entering or expanding in our markets – Colorado and Oklahoma – thereby increasing competition. As companies have completed new or expanded projects, supply has sometimes grown at a faster pace than demand, and competition has increased significantly. Furthermore, several operators, including Southwest, have plans for additional developments or expansions.

Although, the short-term effect on Southwest of these competitive developments generally has been negative, we are not able to determine the long-term impact, whether favorable or unfavorable, that development and expansion trends and events will have on current or future markets. We believe that the geographic diversity of our operations, our service training, our rewards and customer loyalty programs, and our continuing efforts to improve our facilities will insure continued customer loyalty and will enable us to face the competitive challenges present within our industry.

Political Uncertainties:

The casino entertainment industry is subject to political and regulatory uncertainty. From time to time, individual jurisdictions have considered legislation or referendums that could adversely impact our operations. The likelihood or outcome of similar legislation and referendums in the future is difficult to predict.

The casino entertainment industry represents a significant source of tax revenues to the various jurisdictions in which casinos operate. From time to time, various state and federal legislators and officials have proposed changes in tax laws, or in the administration of tax laws, that would affect the industry. It is not possible to determine with certainty the scope or likelihood of possible future changes in tax laws or in the administration of tax laws. If adopted, changes in tax law could have a material adverse effect on our financial results.

32

Significant Accounting Policies and Estimates:

Our significant accounting policies are described in Note 2 to our consolidated financial statements included in Item 7 of this report.  The discussion and analysis of our consolidated financial statements and results of operation are based on those consolidated financial statements.  We prepare our Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States. Certain of our accounting policies, including, but not limited to, the estimated lives assigned to our assets, the determination of bad debt, asset impairment, fair value of guarantees, and the calculation of our income tax liabilities, require that we apply significant judgment in defining the appropriate assumptions for calculating financial estimates.  By their nature, these judgments are subject to an inherent degree of uncertainty. Our judgments are based on our historical experience, terms of existing contracts, our observance of trends in the industry, information provided by our customers and information available from other outside sources, as appropriate.  Although we believe our judgments are reasonable, they are based upon information available when they are made. We cannot assure you that our actual results will not differ significantly from our estimates.

Forward Looking Statements:

This Annual Report on Form 10-KSB contains “forward-looking statements” intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. You can identify these statements by the fact that they do not relate strictly to historical or current facts. These statements often contain words such as “may,” “will,” “project,” “might,” “expect,” “believe,” “anticipate,” “intend,” “could,” “would,” “estimate,” “continue” or “pursue,” or the negative or other variations thereof or comparable terminology. In particular, they include statements relating to, among other things, future actions, new projects, strategies, future performance, the outcome of contingencies such as legal proceedings and future financial results. We have based these forward-looking statements on our current expectations and projections about future events.

We caution the reader that forward-looking statements involve risks and uncertainties that cannot be predicted or quantified and, consequently, actual results may differ materially from those expressed or implied in the forward-looking statements. These risks and uncertainties include, but are not limited to, the following factors as well as other factors described from time to time in our reports filed with the Securities and Exchange Commission:

•        changes in laws (including increased tax rates), regulations or accounting standards, third-party    relations and approvals, and decisions of courts, regulators and governmental bodies applicable to us;

•        the effects of competition, including location of competitors and operating and market competition;

•        our ability to build and maintain healthy personal and professional relationships with tribes and their officials;

•        the potential change of policies and personnel of tribal governments which could adversely affect our relationships.

•        ability of our customer-tracking and customer loyalty programs;

•        abnormal gaming holds;

•        access to available and feasible financing;

33

•        our ability to recoup costs of capital investments through higher revenues;

•        litigation outcomes and judicial actions;

•        construction factors, including delays, zoning issues, environmental restrictions, soil and water conditions, weather and other hazards, site access maters and building permit issues;

•        the effect of economic, credit and capital market conditions on the economy in general, and on gaming companies in particular;

•        the effects of environmental and structural building conditions relating to our properties; and

•        acts of war or terrorist incidents.

Any forward-looking statements are made pursuant to the Private Securities Litigation Reform Act of 1995 and, as such, speak only as of the date made. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.  We advise you, however, to consult any further disclosures we make on related subjects in our quarterly reports on Form 10-QSB and current reports on Form 8-K we file with or furnish to the Securities and Exchange Commission.

34

Item 7.  FINANCIAL STATEMENTS

SOUTHWEST CASINO CORPORATION

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors

Southwest Casino Corporation

Minneapolis, Minnesota

We have audited the accompanying consolidated balance sheets of Southwest Casino Corporation (the Company) as of December 31, 2004 and 2003, and the related consolidated statements of operations, stockholders’ equity and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based upon our audits.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates by management, as well as evaluating the overall financial statement presentation. We believe our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Southwest Casino Corporation as of December 31, 2004 and 2003, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

As described in Note 13 to the consolidated financial statements, Southwest Casino Corporation recorded a prior period adjustment related to the correction of an error related to accounting for capital lease obligations.

/s/  Eide Bailly LLP

Minneapolis, Minnesota

March 22, 2005

* Par values and shares issued in 2003 have been restated as a result of the reverse merger with Lone Moose

See Notes to Consolidated Finanacial Statements

F-2

See Notes to Consolidated Finanacial Statements

F-3