UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2008

OR

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

For the transition period from                 to                

BLACK GAMING, LLC

(Exact Name of Registrant as Specified in its Charter)

Nevada		20-8160036
(State or Other Jurisdiction		(I.R.S. Employer
of Incorporation or Organization)		Identification Number)
10777 West Twain Avenue, Las Vegas, NV		89135
(Address of Principal Executive Offices)		(Zip Code)

(702) 318-6860
(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the Registrant (1) has filed all reports required 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 þ No o

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

Large Accelerated Filer o		Accelerated Filer o		Non-accelerated filer þ (do not check if smaller reporting company)		Smaller reporting company o

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

Number of shares of common stock outstanding of Virgin River Casino Corporation as of May 1, 2008: 100 shares of common stock.

Number of shares of common stock outstanding of B & B B, Inc. as of May 1, 2008: 16.75 shares of common stock.

 

 

PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets-March 31, 2008 (unaudited) and December 31, 2007			3
Condensed Consolidated Statements of Operations (unaudited) for the Three Months Ended March 31, 2008 and 2007			4
Condensed Consolidated Statements of Cash Flows (unaudited) for the Three Months Ended March 31, 2008 and 2007			5
Notes to Condensed Consolidated Financial Statements (unaudited)			6
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			17
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			22
ITEM 4. CONTROLS AND PROCEDURES			24
PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS			25
ITEM 1A. RISK FACTORS			25
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			25
ITEM 3. DEFAULTS UPON SENIOR SECURITIES			25
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS			25
ITEM 5. OTHER INFORMATION			25
ITEM 6. EXHIBITS			25
SIGNATURES			26
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

Black Gaming, LLC and Subsidiaries

Condensed Consolidated Balance Sheets
(in thousands)

		March 31, 2008				December 31, 2007
		(unaudited)
Assets
Current assets:
Cash and cash equivalents		$	9,797			$	9,503
Accounts receivable, net			2,333				1,986
Related party receivables			224				327
Inventories			1,806				1,800
Property held for vacation interval sales			336				336
Prepaid expenses			4,020				4,180
Current portion of notes receivable			260				150
Total current assets			18,776				18,282
Property and equipment, net			127,711				131,480
Notes receivable, less current portion			325				537
Goodwill and other intangible assets, net			34,962				35,828
Deferred financing fees			5,859				6,259
Other assets			1,895				1,898
Total assets		$	189,528			$	194,284
Liabilities and Members’ Deficit
Current liabilities:
Bank overdraft		$	—			$	821
Current portion of gaming equipment financing			950				1,025
Current portion of long-term debt			8,500				9,500
Accounts payable			3,147				2,950
Accrued liabilities			16,719				17,605
Total current liabilities			29,316				31,901
Gaming equipment financing, less current portion			7				15
Long-term debt			184,868				183,047
Members’ deficit			(24,663	)			(20,679	)
Total liabilities and members’ deficit		$	189,528			$	194,284

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

Black Gaming, LLC and Subsidiaries

Condensed Consolidated Statements of Operations (unaudited)
(in thousands)

		Three Months Ended
		March 31, 2008				March 31, 2007
Revenues:
Casino		$	24,333			$	29,552
Food and beverage			9,386				11,014
Hotel			8,105				10,349
Other			5,577				5,774
Total revenues			47,401				56,689
Less—promotional allowances			(8,847	)			(11,317	)
Net revenues			38,554				45,372
Operating expenses:
Casino			11,711				13,839
Food and beverage			5,490				5,964
Hotel			1,677				1,512
Other			2,451				3,436
General and administrative			10,447				12,936
Depreciation and amortization			4,281				4,156
Loss (gain) on sale and disposal of assets			163				(18	)
Impairment of long lived asset			973				—
Total operating expenses			37,193				41,825
Operating income			1,361				3,547
Other expense:
Interest expense, net			(5,345	)			(5,146	)
Net loss		$	(3,984	)		$	(1,599	)

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

Black Gaming, LLC and Subsidiaries

Condensed Consolidated Statements of Cash Flows (unaudited)
(in thousands)

		Three Months Ended
		March 31,				March 31,
		2008				2007
Cash flows from operating activities:
Net loss		$	(3,984	)		$	(1,599	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization			4,281				4,156
Loss (Gain) on sale and disposal of assets			163				(18	)
Amortization of deferred financing fees			400				400
Accretion of senior subordinated notes			1,822				1,611
Interest expense on gaming equipment financing			5				1
Impairment of long lived assets			973				—
Change in operating assets and liabilities:
Accounts and related party receivables, net			(244	)			(200	)
Inventories			(6	)			(104	)
Prepaid expenses			160				565
Notes receivable			102				161
Change in other assets			(64	)			(435	)
Accounts payable and accrued liabilities			(390	)			(611	)
Net cash provided by operating activities			3,218				3,927
Cash flows from investing activities:
Proceeds received from sale of assets			51				83
Capital expenditures			(250	)			(3,893	)
Net cash used in investing activities			(199	)			(3,810	)
Cash flows from financing activities:
Proceeds from issuance of long-term debt			5,000				9,500
Payment of gaming equipment financing			(904	)			(1,192	)
Payment of long-term debt			(6,000	)			—
Decrease in bank overdraft			(821	)			(722	)
Net cash provided by (used in) financing activities			(2,725	)			7,586
Net increase in cash and cash equivalents			294				7,703
Cash and cash equivalents at beginning of period			9,503				11,118
Cash and cash equivalents at end of period		$	9,797			$	18,821

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

Black Gaming, LLC and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

1. Basis of Presentation and Background

Black Gaming, LLC (“BG LLC”), through its wholly owned subsidiaries, B & B B, Inc. (doing business as Virgin River Hotel/Casino/Bingo) (“B&BB”) and Virgin River Casino Corporation (“VRCC”) and its wholly owned subsidiary RBG, LLC (doing business as CasaBlanca Resort/Casino/Golf/Spa) (“RBG”) and its wholly owned subsidiary CasaBlanca Resorts, LLC (doing business as Oasis Resort & Casino) (“Resorts LLC”) (collectively the “Company”) is engaged in the hotel casino industry in Mesquite, Nevada.

BG LLC was organized in Nevada on August 4, 2006 in anticipation of modifying B&BB’s and VRCC’s organizational structure through a holding company reorganization (“Reorganization”) for B&BB and VRCC. The Reorganization, which included a transfer of B&BB and VRCC shares for membership interests in BG LLC, was completed on December 31, 2006. As a result of the Reorganization, the Robert R. Black, Sr. Gaming Properties Trust (the “Black Trust”) owns 99.03% of the membership interests of BG LLC and Glenn Teixeira owns .97% of the membership interests of BG LLC. The members’ liability is limited to the amount of capital contributions they are required to make pursuant to BG LLC’s operating agreement.

Immediately prior to the Reorganization, VRCC acquired, directly and indirectly, an additional aggregate 11.2% ownership in RBG as a result of the following transaction:

	•		VRCC received 100 shares of R. Black, Inc. (“RBI”) from the Black Trust. The Black Trust owns 100% of the outstanding shares of VRCC. The 100 shares of RBI representing 100% of the outstanding capital stock of RBI, was exchanged for 3.68 shares of VRCC held by the Black Trust, representing 3.68% of the outstanding capital stock of VRCC. RBI does not have any material operations, liabilities or assets other than a 5.47% ownership in RBG. The transfer of shares of RBI to VRCC was accounted for at the historical cost of RBG as RBI and VRCC were under common control.
	•		VRCC received a 3.8% membership interest in RBG from the Black Trust in exchange for 2.57 shares of VRCC held by the Black Trust, representing 2.57% of the outstanding capital stock of VRCC. The transfer of membership interests of RBG to VRCC was accounted for at historical cost as the Black Trust and VRCC were under common control.
	•		VRCC received a 1.92% membership interest in RBG from Glenn Teixeira in exchange for 1.29 shares of VRCC held by the Black Trust, representing 1.29% of the outstanding capital stock of VRCC. The acquisition of the membership interests from RBG from Glenn Teixeira was accounted for at fair value as it was considered an acquisition of a minority interest of a subsidiary. Based upon an internal analysis the fair value of Glenn Teixeira’s interest approximated book value.

The accompanying balance sheet as of December 31, 2007 and the unaudited condensed consolidated financial statements for the three month period ended March 31, 2008 include the accounts of the Company and all of its majority-owned subsidiaries and are maintained in accordance with U.S. generally accepted accounting principles. The Reorganization, predicated on the transfer of shares of B&BB and VRCC for membership interests in BG LLC, represented a transaction between entities under common control and is accounted for in a manner similar to a pooling-of-interests. Accordingly, the contributed assets and assumed liabilities were recorded at B&BB and VRCC’s historical cost basis. As a result of the Reorganization, B&BB and VRCC became majority owned subsidiaries of BG LLC which owns 100%, directly or indirectly, in each subsidiary operating Company. Because of this majority ownership, the financial statements are consolidated.

The acquisition of Glenn Teixeira’s interest was presented as of the date the exchange occurred on December 31, 2006. All significant intercompany balances and transactions have been eliminated.

Black Gaming, LLC and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

1. Basis of Presentation and Background (continued)

Interim Financial Statements — The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management of the Company, all adjustments considered necessary for a fair presentation are included and are of a normal recurring nature. Our results of operations tend to be seasonal in nature and operating results for the three months ended March 31, 2008 are not necessarily indicative of the results that may be expected for the year ending December 31, 2008.

The balance sheet at December 31, 2007 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2007.

Reclassifications — Certain previously reported amounts in the condensed consolidated financial statements have been reclassified to conform to the current period’s presentation.

Recently Issued Accounting Standards — In September 2006, the FASB issued SFAS 157, “Fair Value Measurements,” (“SFAS 157”) which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (“GAAP”) and expands disclosure about fair value measurements. In February 2008, the FASB issued FASB Staff Position No. SFAS 157-2, “Effective Date of FASB Statement No. 157” (“FSP 157-2”), which provides a one year deferral of the effective date of FAS 157 for non-financial assets and non-financial liabilities, except those that are recognized or disclosed in the financial statements at fair value at least annually. In accordance with this interpretation, the Company has only adopted the provisions of SFAS 157 with respect to its financial assets and liabilities that are measured at fair value within the financial statements as of December 31, 2007. The provisions of SFAS 157 have not been applied to non-financial assets and non-financial liabilities.  The adoption of this statement did not have a material impact the Company’s consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities Including an Amendment of FASB Statement No. 115.” SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value, with unrealized gains and losses related to these financial instruments reported in earnings at each subsequent reporting date. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. The adoption of this statement did not have a material impact on the Company’s consolidated financial statements.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations.” SFAS No. 141 (revised) establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and noncontrolling interest in the acquiree and the goodwill acquired. The revision is intended to simplify existing guidance and converge rulemaking under U.S. GAAP with international accounting rules. This statement applies prospectively to business combinations where the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The adoption of SFAS No. 141 (revised) is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interest in Consolidated Financial Statements, an amendment of ARB No. 51.” This statement establishes accounting and reporting standards for ownership interest in subsidiaries held by parties other than the parent and for the deconsolidation of a subsidiary. It also clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. SFAS No. 160 changes the way the consolidated income statement is presented by requiring consolidated net income to be reported at amounts that include the amount attributable to both the parent and the noncontrolling interests. The statement also establishes reporting requirements that provide sufficient disclosure that clearly identify and distinguish between the interest of the parent and those of the noncontrolling owners. This statement is effective for fiscal years beginning on or after December 15, 2008. The adoption of SFAS No. 160 is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

In March 2008, the FASB issued SFAS No. 161, “Disclosures About Derivative Instruments and Hedging Activities, an amendment of SFAS No. 133”. SFAS No. 161 is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash flows. This statement is effective for fiscal years beginning after November 15, 2008. SFAS No. 161 is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

2. Discontinued Operations

In October 2006, the Company moved forward with plans to dispose of the Palm’s Golf Course and Oasis Gun Club operations. In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 144 ,“Accounting for the Impairment or Disposal of Long-Lived Assets”, the Company accounted for this endeavor as discontinued operations. At December 31, 2007 the Company determined that it no longer met the criteria to continue to classify the operations as discontinued. As such, previously presented financial data has been re-characterized and presented as part of continuing operations.

The following table sets forth the operations for the three months ended March 31, 2007 related to Oasis Recreational Properties, Inc’s assets previously shown as held for sale that have been included as part of continuing operations (in thousands):

		For the three months
		ended March 31, 2007
Operating revenues		$	1,131
Operating expenses			861
Depreciation			45
Income from discontinued operations		$	225

Black Gaming, LLC and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

3. Property and Equipment

Property and equipment consists of the following (in thousands):

		March 31, 2008				December 31, 2007
Land		$	32,812			$	32,812
Buildings			77,906				77,897
Land and leasehold improvements			18,106				17,940
Furniture, fixtures and equipment			84,292				83,922
Construction in progress			4,084				5,325
			217,200				217,896
Less: accumulated depreciation			(89,489	)			(86,416	)
Property and equipment, net		$	127,711			$	131,480

4. Notes Receivable

Notes receivable consist of the following (in thousands):

		March 31, 2008				December 31, 2007
Vacation interval notes receivable		$	728			$	912
Allowance for possible credit losses			(143	)			(225	)
Total notes receivable			585				687
Less: current portion			(260	)			(150	)
Non-current notes receivable		$	325			$	537

Notes generated from the sale of vacation intervals generally bear interest at annual rates ranging from 12.75% to 14.75% and have terms of 5 to 7 years. The vacation interval notes receivable are collateralized by the right to use and deeds of trust on the vacation interval sold.

In January of 2006, the Company adopted the provisions of SFAS 152, “Accounting for Real Estate Time-Sharing Transactions.” SFAS 152 amends existing accounting guidance to reference the financial accounting and reporting guidance for real estate time-sharing transactions provided in AICPA Statement of Position 04-02, “Accounting for Real Estate Time-Sharing Transactions.” In determining the allowance for possible credit losses, the Company, in accordance with SFAS 152, uses a technique referred to as static pool analysis, which tracks uncollectible notes receivable based on each year’s sales over the entire life of those notes. The Company considers whether the historical economic conditions are comparable to current economic conditions. If current economic conditions differ from the economic conditions in effect when the historical experience was generated, the Company adjusts the allowance for possible credit losses to reflect the expected effects of current economic conditions on uncollectibility. The Company groups all notes receivables in one pool for analytical purposes based on historical collectibility and customer demographics.

Black Gaming, LLC and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

5. Accrued Liabilities

Accrued liabilities consist of the following (in thousands):

		March 31, 2008				December 31, 2007
Accrued management fees		$	235			$	863
Accrued taxes			1,886				1,072
Accrued insurance			1,214				1,212
Accrued slot program			4,516				4,299
Accrued wages, benefits and other personnel costs			3,742				2,043
Accrued interest on Senior Notes			2,548				5,343
Accrued other			2,578				2,773
Total accrued liabilities		$	16,719			$	17,605

Black Gaming, LLC and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

6. Gaming Equipment Financing

Gaming equipment financing consists of the following (in thousands):

		March 31, 2008				December 31, 2007
Gaming equipment financing to purchase 478 games, no payments for one year and monthly payments of $251 for 24 months beginning February 2006		$	—			$	248
Gaming equipment financing to purchase 68 games, no payments for one year and monthly payments of $43 for 24 months beginning January 2006			—				43
Gaming equipment financing to purchase 70 games, no payments for one year and monthly payments of $39 for 24 months beginning March 2006			—				38
Gaming equipment financing to purchase 80 games, monthly payments of $27 for 36 months beginning April 2005			—				165
Gaming equipment financing to purchase 64 games, no payments for one year and monthly payments of $26 for 24 months beginning February 2006			—				52
Gaming equipment financing to purchase 38 games, monthly payments of $13 for 36 months beginning April 2005			—				37
Gaming equipment financing to purchase 55 games, no payments for one year and monthly payments of $16 for 24 months beginning January 2006			169				282
Gaming equipment financing, monthly payments of $3 for 36 months beginning January 2005			—				1
Gaming equipment financing to purchase 4 games, monthly payments of $1 for 36 months beginning April 2005			—				8
Gaming equipment financing to purchase 6 games, no payments for one year and monthly payments of $6 for 24 months beginning February 2007			28				36
Gaming equipment financing, monthly payments of $1 for 36 months beginning July 2006			15				18
Gaming equipment financing, no payments for 18 months and monthly payments of $1 for 36 months beginning July 2006			8				104
Gaming equipment financing, monthly payments of $1 for 36 months and beginning on July 2006			6				8
Gaming equipment financing, monthly payments of $27 for 9 months and beginning April 2008			236				—
Gaming equipment financing, monthly payments of $12 for 11 months and beginning February 2008			102				—
Gaming equipment financing, monthly payments of $38 for 11 months and beginning February 2008			329				—
Gaming equipment financing, monthly payments of $7 for 9 months beginning April 2008			64				—
			957				1,040
Less: current portion			(950	)			(1,025	)
Gaming equipment financing, long-term portion		$	7			$	15

Black Gaming, LLC and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

7. Long-term Debt

Long-term debt consists of the following (in thousands):

		March 31, 2008				December 31, 2007
Revolving credit facility totaling $15 million with Wells Fargo Foothill at a margin above prime or LIBOR, as defined; collateralized by substantially all assets of the Company as defined		$	8,500			$	9,500
9% senior secured notes, interest payable semiannually, principal due January 15, 2012, callable January 15, 2009			125,000				125,000
12 3/4 % senior subordinated notes, non-cash interest will accrue at an annual rate of 12 3/4 % in the form of increased accreted value until January 15, 2009. Beginning July 15, 2009, interest payable semiannually, principal due January 15, 2013, callable January 15, 2009			59,868				58,047
			193,368				192,547
Less: current portion			(8,500	)			(9,500	)
Total long-term debt		$	184,868			$	183,047

Revolving Facility

The Wells Fargo Foothill, Inc. credit facility (“Foothill Facility”) is secured by substantially all the assets of the Company. During the life of the Foothill Facility, the Company may borrow up to the lesser of (1) $15.0 million less the Letter of Credit Usage, as defined, less the Bank Product Reserve, as defined, or (2) the Borrowing Base, as defined, less the Letter of Credit Usage. At March 31, 2008, $8.5 million was drawn under the Foothill Facility. Accordingly, the availability under the Foothill Facility at March 31, 2008 was limited to approximately $6.5 million.

Under the terms of the Foothill Facility, interest accrues on the outstanding principal balance at LIBOR plus the LIBOR Rate Margin, which is 3.5%, or the Base Rate, as defined, plus the Base Rate Margin, which is 2%. LIBOR was approximately 2.8% and prime was 5.25% at March 31, 2008. The Foothill Facility also contains certain financial and other covenants. These include a minimum trailing twelve-month Earnings before Interest, Taxes, Depreciation and Amortization (“EBITDA”) of $15,000,000 for the Company and limitations on other indebtedness and capital expenditures, as defined. On October 26, 2007, the Company entered into an amendment to the Foothill Facility. The amendment increased the Company’s allowable capital expenditures and modified the definition of “EBITDA” as well as changed some of the Company’s reporting obligations. The Company was in compliance with the covenants set by the Foothill Facility at March 31, 2008 and December 31, 2007, respectively. The outstanding balance on the Foothill Facility is a joint and several obligation of the Company.

Senior Secured and Senior Subordinated Notes

In December 2004, VRCC, RBG and B&BB (the “Issuers”) issued $125.0 million of 9% senior secured notes (“Senior Notes”) due on January 15, 2012 and $39.9 million in gross proceeds of 12³/4% senior subordinated notes (“Senior Sub Notes”) due January 15, 2013 (collectively the “Notes”). The Notes are joint and several obligations of the Issuers and all current and future subsidiaries of the Issuers. The Guarantors are all the wholly owned subsidiaries of the Issuers.

The Senior Notes pay interest semiannually while the Senior Sub Notes accrue interest in the form of increased accreted value until January 15, 2009, when the carrying book value of the Senior Sub Notes will be $66.0 million. Beginning on July 15, 2009, the Senior Sub Notes will pay interest semiannually similar to the Senior Notes.

The indentures governing the Notes (the “Indentures”) contain certain customary financial and other covenants, which limit the Company’s ability to incur additional debt. The Indentures provide that the Company may not incur additional indebtedness, other than specified types of indebtedness, unless the Consolidated Coverage Ratio, as defined, on a pro-forma basis after the incurrence of the additional indebtedness is at least 2.00 to 1.00. As of March 31, 2008, the Company has a Consolidated Coverage Ratio that is less than 2.00 to 1.00 and accordingly has incurred $0 of additional indebtedness as defined.

Black Gaming, LLC and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

7. Long-term Debt (continued)

The Indentures also contain other covenants which limit the ability of the Issuers and Guarantors, as defined, to pay dividends, redeem stock, or make other distributions, make investments, create certain liens, enter into certain transactions with affiliates, utilize proceeds from asset sales, transfer or sell assets, issue or sell equity interests of subsidiaries and enter into certain mergers and consolidations, as defined in the Indentures. There are no restrictions related to the transfer of funds between the Issuers, Guarantors and their respective subsidiaries. The Issuers were in compliance with these covenants at March 31, 2008 and December 31, 2007.

The Senior Notes are secured by substantially all existing and future assets of the Issuers and the Guarantors, as well as the equity interest of the Guarantors and the equity interests of the Black Trust in the Issuers.

The Senior Notes are subordinated to the security interests of the Foothill Facility. The Senior Sub Notes are subordinate to the Senior Notes and all other indebtedness of the Company.

8. Related Party Transactions

Virgin River Foodmart, Inc., a Nevada corporation, (“Foodmart”) is owned by former shareholders of VRCC. Participants in the Company’s slot club program are able to redeem their points for gasoline at the Foodmart. Foodmart charges the Company the retail amount of gas purchased with player points. Charges associated with the point redemption for gasoline at the Foodmart were $9,000 and $10,000 for the three months ended March 31, 2008 and 2007, respectively.

Black & LoBello is a law firm managed by the daughter of Mr. Black. The Company retains Black & LoBello as outside legal counsel, and has incurred legal fees for legal services in the amount of $20,000 and $58,000 for the three months ended March 31, 2008 and 2007, respectively.

Pursuant to the Indenture, Mr. Black is entitled to a management fee for his management of the Companies of up to 5% of EBITDA. The Company expensed $235,000 and $342,000 during the three months ended March 31, 2008 and 2007, respectively.

Gaming Research is a consulting firm retained to perform marketing research for the Company. The principal of Gaming Research is the father of the Company’s former chief operating officer. Gaming research received consulting fees of $0 and $58,000 for the three months ended March 31, 2008 and 2007, respectively.

Resorts LLC provided management and other services to two related parties that manage and operate the home owners associations of the vacation intervals sold at the property. Included in the accompanying condensed consolidated balance sheet at March 31, 2008 and December 31, 2007, is a receivable for $224,000 and $327,000, respectively, related to amounts owed for those services.

During 2006, the Company entered into an agreement with Town Center Drive & 215, LLC to lease executive office space. The term of the lease is 84 months at a rate of approximately $11,508 a month. Mr. Black is the owner and manager of Town Center Drive & 215, LLC. The Company has expensed $43,000 and $21,000 during the three months ended March 31, 2008 and 2007.

Black Gaming, LLC and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

9. Impairment of Long Lived Assets

In conjunction with the Company’s plans to expand the Casablanca Hotel and Casino with a 180-room hotel tower, the Company incurred costs associated with the architectural design and planning of this project. These plans have since been re-evaluated and abandoned. As a result, the Company has recognized a non-cash write-off of these assets of approximately $1.0 million which is included as a component of operating expenses under the caption “Impairment of long lived asset”.

The Company has significant amounts of goodwill in the condensed consolidated balance sheet as of March 31, 2008. In accordance with SFAS No. 142, “Goodwill and Other Intangible Assets,” the Company performs an annual impairment test of these assets in the fourth quarter of each year, which resulted in no impairment charge for 2007; however, if` ongoing estimates of projected cash flows related to these assets are not met, the Company may be subject to a non-cash write-down of these assets in the future, which could have a material impact on our condensed consolidated statements of operations.

10. Commitment and Contingencies

On March 27, 2008, in the matter captioned Sparks Nugget, Inc. vs. State ex rel. Department of Taxation, the Nevada Supreme Court ruled that complimentary meals provided to employees and patrons are not subject to Nevada use tax. On April 15, 2008, the Department of Taxation filed a motion for rehearing of the Supreme Court’s decision. The Nevada Supreme Court has yet to rule on that motion. In the event that the Nevada Supreme Court does not reverse its original decision, the Company would be entitled to a refund on previously paid use tax on complimentary employee and patron meals for which it has generally filed for a refund, for the period from July 2000 through the current period. No assurances can be provided as to the outcome of the litigation. Accordingly, we have not recorded a receivable related to a refund for previously paid use tax on complimentary employee and patron meals in the accompanying condensed consolidated balance sheet at March 31, 2008.

11. Supplemental Guarantor Condensed Consolidating Financial Statements

At March 31, 2008, BG LLC and all of the Issuer’s, and Issuers’ subsidiaries, each of which is directly or indirectly wholly-owned by BG LLC, are guarantors under the Foothill Facility and the Indentures, see Note 7. These guarantees are full, unconditional and joint and several. The following tables represent the condensed consolidating balance sheets of BG LLC (“Parent”), the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries as of March 31, 2008 and December 31, 2007 and the related condensed consolidating statements of operations and cash flows for the three months ended March 31, 2008 and 2007.

Black Gaming, LLC and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

11. Supplemental Guarantor Condensed Consolidating Financial Statements (continued)

										Non-
						Guarantor				Guarantor
		Parent				Subsidiaries				Subsidiaries				Eliminations				Consolidated
As of March 31, 2008
BALANCE SHEET:
Current Assets, including intercompany accounts		$	4,043			$	52,680			$	—			$	(37,947	)		$	18,776
Property and equipment, net			272				127,439				—				—				127,711
Goodwill and Other Intangibles			—				34,962				—				—				34,962
Other assets excluding intercompany accounts			—				111,197				—				(103,118	)			8,079
		$	4,315			$	326,278			$	—			$	(141,065	)		$	189,528
Current Liabilities, including intercompany accounts		$	7,200			$	60,063			$	—			$	(37,947	)		$	29,316
Long-term debt, less current portion			—				184,868				—				—				184,868
Gaming equipment financing, less current portion			—				7				—				—				7
Members’ (Deficit) Equity			(2,885	)			81,340				—				(103,118	)			(24,663	)
		$	4,315			$	326,278			$	—			$	(141,065	)		$	189,528

										Non-
						Guarantor				Guarantor
		Parent				Subsidiaries				Subsidiaries				Eliminations				Consolidated
As of December 31, 2007
BALANCE SHEET:
Current Assets, including intercompany accounts		$	5,257			$	43,001			$	—			$	(29,976	)		$	18,282
Property and equipment, net			420				131,060				—				—				131,480
Goodwill and Other Intangibles			—				35,828				—				—				35,828
Other assets excluding intercompany accounts			—				111,812				—				(103,118	)			8,694
		$	5,677			$	321,701			$	—			$	(133,094	)		$	194,284
Current Liabilities, including intercompany accounts		$	8,077			$	53,800			$	—			$	(29,976	)		$	31,901
Long-term debt, less current portion			—				183,047				—				—				183,047
Gaming equipment financing, less current portion			—				15				—				—				15
Members’ (Deficit) Equity			(2,400	)			84,839				—				(103,118	)			(20,679	)
		$	5,677			$	321,701			$	—			$	(133,094	)		$	194,284

Black Gaming, LLC and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

11. Supplemental Guarantor Condensed Consolidating Financial Statements (continued)

						Guarantor				Non-Guarantor
		Parent				Subsidiaries				Subsidiaries				Eliminations				Consolidated
For the three months ending March 31, 2008
STATEMENT OF OPERATIONS
Net Revenues		$	—			$	40,129			$	—			$	(1,575	)		$	38,554
Operating Expenses:
Casino			—				11,711				—				—				11,711
Food and beverage			—				5,490				—				—				5,490
Hotel			—				1,677				—				—				1,677
Other			—				2,451				—				—				2,451
General and administrative			471				11,551				—				(1,575	)			10,447
Depreciation and amortization			13				4,268				—				—				4,281
Loss on disposal of assets			—				163				—				—				163
Impairment of long lived assets			—				973				—				—				973
Operating (loss) income			(484	)			1,845				—				—				1,361
Other Expense:
Interest expense			(1	)			(5,344	)			—				—				(5,345	)
Net loss		$	(485	)		$	(3,499	)		$	—			$	—			$	(3,984	)
STATEMENT OF CASH FLOWS
Net cash provided by operating activities		$	34			$	3,184			$	—			$	—			$	3,218
Net cash used in investing activities			(34	)			(165	)			—				—				(199	)
Net cash provided by financing activities			—				(2,725	)			—				—				(2,725	)

Black Gaming, LLC and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (continued)

11. Supplemental Guarantor Condensed Consolidating Financial Statements (continued)

						Guarantor				Non-Guarantor
		Parent				Subsidiaries				Subsidiaries				Eliminations				Consolidated
For the three months ended March 31, 2007
STATEMENT OF OPERATIONS
Net Revenues		$	—			$	46,947			$	—			$	(1,575	)		$	45,372
Operating Expenses:
Casino			—				13,839				—				—				13,839
Food and beverage			—				5,964				—				—				5,964
Hotel			—				1,512				—				—				1,512
Other			—				3,436				—				—				3,436
General and administrative			584				13,927				—				(1,575	)			12,936
Depreciation and amortization			3				4,153				—				—				4,156
Gain/loss on disposal of assets			—				(18	)			—				—				(18	)
Operating (loss) income			(587	)			4,134				—				—				3,547
Other Expense:
Interest expense			—				(5,146	)			—				—				(5,146	)
Net loss		$	(587	)		$	(1,012	)		$	—			$	—			$	(1,599	)
STATEMENT OF CASH FLOWS
Net cash provided by operating activities		$	95			$	3,832			$	—			$	—			$	3,927
Net cash used in investing activities			(95	)			(3,715	)			—				—				(3,810	)
Net cash provided by financing activities			—				7,586				—				—				7,586

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis together with our unaudited condensed consolidated financial statements and the accompanying notes. This discussion contains forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, including statements regarding our expected financial position, business and financing plans. Some of the forward-looking statements can be identified by the use of forward-looking terms such as “believes,” “expects,” “may,” “will,” “should,” “could,” “seek,” “intends,” “plans,” “estimates,” “anticipates,” or other comparable terms. Forward-looking statements involve inherent risks and uncertainties which could cause actual results to differ materially from those in the forward-looking statement, including those discussed herein and elsewhere in our Form 10-K for the year ended December 31, 2007, particularly under the heading “Risk Factors.” We caution readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Unless the context indicates otherwise, all references to the “Company”, “Black Gaming”, “we”, “us” and “our” refer to Black Gaming, LLC and its direct and indirect wholly owned subsidiaries, Virgin River Casino Corporation, RBG, LLC, B & B B, Inc., Casablanca Resorts, LLC, Oasis Interval Ownership, LLC, Oasis Interval Management, LLC, Oasis Recreational Properties, Inc. and R. Black, Inc.

Overview

We own and operate the CasaBlanca, the Oasis and the Virgin River in Mesquite, Nevada, which is located approximately 80 miles north of Las Vegas. We own three of the four operating casinos in Mesquite and our properties have a dominant market share in Mesquite. Our properties are well established, each having been in operation for at least ten years, and serve as significant drive-in gaming and resort destinations. Our properties collectively feature approximately 2,115 slot machines, 70 table games, and 2,300 deluxe hotel rooms, and offer extensive amenities, including championship golf courses, full service spas, a bowling center, movie theaters, restaurants, and banquet and conference facilities. With each of our properties, we leverage our extensive value-oriented amenities and emphasis on slot play to target middle market gaming customers.

Our revenues are primarily derived from gaming revenues, which include revenues from slot machines, table games, live keno, race and sports book wagering and bingo. Gaming revenues are generally defined as gaming wins less gaming losses. In addition, we derive a significant amount of revenue from our hotel rooms and our food and beverage outlets. We also derive revenues from our golf courses, spa facilities, timeshare units, bowling center and other amenities. Promotional allowances consist primarily of hotel and food and beverages furnished gratuitously to customers. The retail value of such services is included in the respective revenue classifications and is then deducted as promotional allowances. We calculate operating income as net revenues less total operating costs and expenses. Operating income represents only those amounts that relate to our operations and excludes interest income, interest expense, and other non-operating income and expenses.

We are classified as “flow-through” entity under the partnership or Subchapter S provisions of the Internal Revenue Code of 1986, as amended. Under those provisions, the owners of the companies pay or are responsible for reporting our taxable income on their separate returns. Accordingly, a provision for income taxes is not included in our financial data.

We were organized as a limited-liability company in Nevada on August 4, 2006 in anticipation of modifying B&BB’s and VRCC’s organizational structure through a holding company reorganization (“Reorganization”) for B&BB and VRCC. The Reorganization, which included a transfer of B&BB and VRCC shares for membership interests in us, was completed on December 31, 2006. As a result of the Reorganization, the Robert R. Black, Sr. Gaming Properties Trust (the “Black Trust”) owns 99.03% of our membership interests and Glenn Teixeira owns 0.97% of our membership interests. The transfer of shares of B&BB and VRCC for membership interests has been accounted for as a reorganization of entities under common control in a manner similar to a pooling-of-interests. Accordingly, the contributed assets and assumed liabilities were recorded at B&BB’s and VRCC’s historical cost basis.

Immediately prior to the Reorganization, VRCC acquired, directly and indirectly, an additional aggregate 11.2% ownership in RBG as a result of the following transaction:

•

VRCC received 100 shares of R. Black, Inc. (“RBI”) from the Black Trust. The Black Trust owns 100% of the outstanding shares of VRCC. The 100 shares of RBI, representing 100% of the outstanding capital stock of RBI, were exchanged for 3.68 shares of VRCC held by the Black Trust, representing 3.68% of the outstanding capital stock of VRCC. RBI does not have any material operations, liabilities or assets other than a 5.47% ownership in RBG. The transfer of shares of RBI to VRCC was accounted for at the historical cost of RBG as RBI and VRCC were under common control.

	•		VRCC received a 3.8% membership interest in RBG from the Black Trust in exchange for 2.57 shares of VRCC held by the Black Trust, representing 2.57% of the outstanding capital stock of VRCC. The transfer of membership interests of RBG to VRCC was accounted for at historical cost as the Black Trust and VRCC were under common control.
	•		VRCC received a 1.92% membership interest in RBG from Glenn Teixeira in exchange for 1.29 shares of VRCC held by the Black Trust, representing 1.29% of the outstanding capital stock of VRCC. The acquisition of the membership interests in RBG from Glenn Teixeira was accounted for at fair value as it was considered an acquisition of a minority interest of a subsidiary. Based upon an internal analysis the fair value of Glenn Teixeira’s interest approximated book value.

The Reorganization, predicated on the transfer of shares of B&BB and VRCC for membership interests in us, represented a transaction between entities under common control and is accounted for in a manner similar to a pooling-of-interests. Accordingly, the contributed assets and assumed liabilities were recorded at B&BB and VRCC’s historical cost basis and the financials are prepared as though the reorganization of entities under common control took place as of January 1, 2006. As a result of the Reorganization, B&BB and VRCC became our majority owned subsidiaries and we own 100%, directly or indirectly, of each subsidiary operating Company. The acquisition of Glenn Teixeira’s interest was presented as of the date the exchange occurred on December 31, 2006. In addition, Black Gaming, LLC, VRCC, RBG and B&BB are jointly managed and share resources.

RBG was formed in February 1997 for the purpose of acquiring the assets of Player’s Island Resort in Mesquite, Nevada, currently operating as the CasaBlanca. RBG acquired the CasaBlanca for $30.5 million. In February 2001, RBG formed a subsidiary, CasaBlanca Resorts, LLC, a Nevada limited-liability company, in order to purchase the assets of the Oasis in Mesquite. RBG acquired the Oasis for $31.7 million. Currently, RBG directly owns and operates the CasaBlanca, and through its wholly-owned subsidiary, owns and operates the Oasis. In May 2001, CasaBlanca Resorts, LLC formed three subsidiaries—Oasis Interval Ownership, LLC, a Nevada limited-liability company; Oasis Recreational Properties, Inc., a Nevada corporation; and Oasis Interval Management, LLC, a Nevada limited-liability company. Oasis Interval Ownership, LLC and Oasis Interval Management, LLC were formed in connection with the operation and management of time share operations. Oasis Recreational Properties, Inc. owns the recreational facility that is associated with the Oasis.

B&BB was formed in December 1989 in connection with the construction and development of the Virgin River Hotel & Casino. B&BB operates the hotel casino and owns certain personal property including furniture and fixtures, leasehold improvements and gaming equipment within the casino. VRCC was formed in July 1988 in connection with the construction of the Virgin River. VRCC currently owns the land and buildings associated with the Virgin River as well as the Virgin River Convention Center. VRCC generates income from rents received from B&BB which operates the Virgin River.

The Virgin River Convention Center is currently a non-operating casino, which we acquired out of bankruptcy for $6.3 million in November 2000. The Virgin River Convention Center has 12,000 square feet of gaming space and 210 hotel rooms. We are presently using the property as a special events facility and for overflow hotel traffic from our other properties. We believe that the Virgin River Convention Center gives us a competitive advantage in the Mesquite market because it allows us the flexibility of opening the casino to meet market demand and to maintain our market share in the future on a cost-effective basis.

In order to offer our customers attractive and modern facilities, we plan to continue to renovate and maintain our facilities.

Key Performance Indicators

Our operating results are highly dependent on the volume of customers at our properties, which in turn impacts the price we can charge for our hotel rooms and other amenities. We generate a significant portion of our operating income from the gaming and hotel portions of our operations. Key performance in our gaming and hotel operations are as follows:

Gaming revenue indicators — table games drop and slot handle (volume indicators); “win” or “hold” percentage, which is not fully controllable by us. Our normal table games win percentage is in the range of 16% to 19% of table games drop and our normal slot win percentage is in the range of 6% to 7% of slot handle.

Hotel revenue indicators — hotel occupancy (volume indicator); average daily rate, or ADR, price indicator; revenue per available room, or REVPAR, a summary measure of hotel results, combining ADR and occupancy rate.

Most of our revenue is essentially cash-based, through customers wagering with cash or paying for non-gaming services with cash or credit cards. Our industry is capital intensive and we rely heavily on the ability of our properties to generate operating cash flow to repay debt financing, fund maintenance capital expenditures and provide excess cash for future development.

Our results of operations tend to be seasonal in nature. During the year ended December 31, 2007, approximately 38% of our operating income (less depreciation and amortization and other non-cash items) was generated in the first quarter and approximately 35% was generated in the second quarter with the remainder being generated during the final half of the year.

Recently, the residential real estate market in Las Vegas and Clark County, Nevada and the U.S. has experienced a significant downturn due to declining real estate values, substantially reducing mortgage loan originations and securitizations, and precipitating more generalized credit market dislocations and significant contraction in available liquidity globally. These factors, combined with rising oil prices, declining business and consumer confidence and increased unemployment, have precipitated an economic slow down and fears of a possible recession. Individual consumers are experiencing higher delinquency rates on various consumer loans and defaults on indebtedness of all kinds have increased. Further declines in real estate values in Las Vegas and Clark County, Nevada and the U.S. or elsewhere and continuing credit and liquidity concerns could have an adverse affect on our results of operations.

Financial Highlights of Black Gaming, LLC and Subsidiaries

For the three months ended March 31, 2008 and 2007 (unaudited) (in thousands)

		Three months ended March 31,
		2008				2007				% Change
Casino revenues		$	24,333			$	29,552				(17.7	)%
Casino expenses			11,711				13,839				(15.4	)%
Profit margin			51.9	%			53.2	%			—
Food and beverage revenues		$	9,386			$	11,014				(14.8	)%
Food and beverage expenses			5,490				5,964				(7.9	)%
Profit margin			41.5	%			45.9	%			—
Hotel revenues		$	8,105			$	10,349				(21.7	)%
Hotel expenses			1,677				1,512				10.9	%
Profit margin			79.3	%			85.4	%			—
Other revenues		$	5,577			$	5,774				(3.4	)%
Other expenses			2,451				3,436				(28.7	)%
Promotional allowances		$	8,847			$	11,317				(21.8	)%
Percent of gross revenues			18.7	%			20.0	%			—
General and administrative expenses		$	10,447			$	12,936				(19.2	)%
Percent of net revenues			27.1	%			28.5	%			—

Three months ended March 31, 2008 compared to the three months ended March 31, 2007

Consolidated Net Revenues. Consolidated net revenues decreased by 15.0% to $38.6 million for the three months ended March 31, 2008 as compared to $45.4 million for the three months ended March 31, 2007. The decrease was primarily due to a $5.2 million decrease in casino revenues, a $1.6 million decrease in food and beverage revenues, a $2.2 million decrease in hotel revenues and a $0.2 million decrease in other revenues offset by a $2.4 million decrease in promotional allowances.

Consolidated Operating Income. Consolidated operating income decreased to $1.4 million for the three months ended March 31, 2008 as compared to operating income of $3.5 million for the three months ended March 31, 2007. In addition, our operating income margin decreased to 3.5% of net revenues for the three months ended March 31, 2008 as compared to an operating income margin of 7.8% of net revenues for the three months ended March 31, 2007. The main reason for the decrease in operating income was primarily a decrease in consolidated net revenues of $6.8 million, a $0.2 million increase in hotel expenses and an impairment charge of $1.0 million offset by a $2.1 million decrease in casino expenses, a $0.5 million reduction in food and beverage expenses, a $1.0 million reduction in other expenses and a $2.5 million decrease in general and administrative expenses for the three months ended March 31, 2008 as compared to the three months ended March 31, 2007.

Casino. Casino revenues decreased 17.7% to $24.3 million for the three months ended March 31, 2008 as compared to $29.6 million for the three months ended March 31, 2007. The decrease in casino revenues was due to a decrease in slot revenues of $4.0 million between periods, a decrease of $0.5 million in table games revenues and a slight decrease in other gaming revenues of $0.4 million, as compared to the same period in the prior year. Casino profit margin decreased to 51.9% for the three months ended March 31, 2008 as compared to 53.2% for the three months ended March 31, 2007. Casino expenses decreased 15.4% to $11.7 million for the three months ended March 31, 2008 as compared to $13.8 million for the three months ended March 31, 2007. The decrease was mostly attributable to decreased advertising and promotional expenses as we better target our casino guests in addition to decreased taxes and license fees which decrease with decreased gaming revenues.

Food and Beverage. Food and beverage revenues decreased by 14.8% to $9.4 million for the three months ended March 31, 2008 as compared to $11.0 million for the three months ended March 31, 2007. Revenues decreased due to a reduction in covers combined with the effect of reduced pricing in all of our outlets. Food and beverage expenses decreased by 7.9% to $5.5 million for the three months ended March 31, 2008 as compared to $6.0 million for the three months ended March 31, 2007. The decrease in food and beverage expenses was mainly attributable to a reduction in salaries and benefits and a reduction in direct food costs associated with decreases in covers. Food and beverage profit margin decreased to 41.5% for the three months ended March 31, 2008 as compared to 45.9% for the three months ended March 31, 2007. The decrease in food and beverage profit margin is primarily due to decreased pricing.

Hotel. Hotel revenues decreased by 21.7% to $8.1 million for the three months ended March 31, 2008 as compared to $10.3 million for the three months ended March 31, 2007. The decrease in revenues was due primarily to lower average daily room rates on similar occupancy as in the prior period. Hotel expenses increased 10.9% to $1.7 million for the three months ended March 31, 2008 compared to $1.5 million for the three months ended March 31, 2007 primarily due to increases in temporary labor expenditures. Hotel profit margin decreased to 79.3% for the three months ended March 31, 2008 from 85.4% in the prior three month period ended March 31, 2007.

Other Revenues. Other revenues decreased 3.4% to $5.6 million for the three months ended March 31, 2008 as compared to $5.8 million for the three months ended March 31, 2007. The decrease in other revenues was due mainly to a decrease in concert revenues due to our reduced show schedule for the three months ended March 31, 2008 as compared to the three months ended March 31, 2007. Other expenses decreased 28.7% to $2.5 million for the three months ended March 31, 2008 as compared to $3.4 million for the three months ended March 31, 2007 mainly due to a decrease in costs associated with concert and showroom events.

Promotional Allowances. Promotional allowances decreased by 21.8% to $8.8 million for the three months ended March 31, 2008 as compared to $11.3 million for the three months ended March 31, 2007. As a percent of gross revenues, promotional allowances decreased to 18.7% for the three months ended March 31, 2008 as compared to 20.0% for the three months ended March 31, 2007 primarily due a reduction in general promotions attributable to servicing casino guests.

General and Administrative (“G&A”). G&A expenses decreased by 19.2% to $10.4 million for the three months ended March 31, 2008 as compared to $12.9 million for the three months ended March 31, 2007. As a percent of net revenues, G&A expenses decreased to 27.1% of net revenues for the three months ended March 31, 2008 as compared to 28.5% of net revenues for the three months ended March 31, 2007. G&A expenses decreased primarily due to a reduction in salaries and benefits, a decrease in employee awards and legal and other professional fees.

Depreciation and Amortization. Depreciation and amortization expense remained flat at $4.3 million for the three months ended March 31, 2008 compared to the three months ended March 31, 2007.

Interest Expense. Interest expense increased to $5.3 million for the three months ended March 31, 2008 as compared to $5.1 million for the three months ended March 31, 2007. The increase was due to an increase in the amount of outstanding debt.

Liquidity and Capital Resources

Cash Flows and Credit Facility

Our primary sources of liquidity and capital resources have been cash flow from operations and our credit facility with Wells Fargo Foothill (the “Foothill Facility”). As of March 31, 2008 and December 31, 2007, cash and cash equivalents were $9.8 million and $9.5 million, respectively. Additionally, approximately $6.5 million is available under the Foothill Facility.

Operating Activities

Cash provided by operating activities for the three months ended March 31, 2008 was $3.2 million compared to $3.9 million for the three months ended March 31, 2007. The $0.7 million decrease was primarily due to a $0.9 million decrease in operating income (excluding depreciation and amortization expense and other non-cash charges) offset by changes in operating assets and liabilities of $0.4 million during the three month period ended March 31, 2008 compared to the same period in the prior year.

Investing Activities

Cash used in investing activities for the three months ended March 31, 2008 was $0.2 million compared to $3.8 million for the three months ended March 31, 2007. The majority of cash used for the period ended March 31, 2008 was related to capital expenditures on new gaming equipment. The majority of cash used for the period ended March 31, 2007 was related to the Virgin River casino floor renovations and purchases related to our temporary concert space.

Financing Activities

Cash used by financing activities for the three months ended March 31, 2008 was $2.7 million compared to cash provided by financing activities of $7.6 million for the three months ended March 31, 2007. For the three months ended March 31, 2008, $0.8 million represented a decrease in the bank overdraft balance, $0.9 million related to payments on gaming equipment financing and $6.0 million related to payments of long term debt. These financing outflows were offset by $5.0 million of borrowings on the Foothill Facility. For the three months ended March 31, 2007, $0.7 million represented a decrease in the bank overdraft balance and $1.2 million related to payments on gaming equipment financing. These financing outflows were offset by $9.5 million of borrowings on the Foothill Facility.

Contractual Obligations and Commitments for Black Gaming, LLC

A description of our contractual obligations and commitments can be found in Item 7 of our Form 10-K for the year ended December 31, 2007.

Critical Accounting Policies for Black Gaming, LLC

A description of our critical accounting policies can be found in Item 7 of our Form 10-K for the year ended December 31, 2007.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

The following table provides information about our long-term debt at March 31, 2008 (in thousands):

		Maturity		Face				Carrying				Estimated
		Date		Amount				Value				Fair Value
Senior secured credit facility at an average interest rate of 6.6%		December 2008		$	15,000			$	8,500			$	8,500
9% senior secured notes		January 2012			125,000				125,000				94,850
12 3/4 % senior subordinated notes		January 2013			66,000				59,868				36,056
Total				$	206,000			$	193,368			$	139,406

We are also exposed to market risk in the form of fluctuations in interest rates and their potential impact upon our debt. Historically, this market risk is managed by utilizing derivative financial instruments in accordance with established policies and procedures. We evaluate our exposure to market risk by monitoring interest rates in the marketplace, and do not utilize derivative financial instruments for trading purposes. We currently do not enter into rate swap agreements.

The following table provides information about our financial instruments that are sensitive to changes in interest rates (dollars in thousands):

		Current portion as of March 31,
		2008				2009				2010				2011				2012				Thereafter				Total
Long-term debt (including current portion):
Fixed-rate		$	—			$	—			$	—			$	125,000			$	66,000			$	—			$	191,000
Average interest rate			10.21	%			10.30	%			10.30	%			10.30	%			12.48	%			12.75	%			10.30	%
Variable-rate		$	8,500			$	—			$	—			$	—			$	—			$	—			$	8,500
Average interest rate			6.58	%			—				—				—				—				—				6.58	%

The gaming equipment financing are agreements that because of their long-term nature we impute interest expense for accounting purposes. Contractually these agreements carry no interest, therefore we believe that there is no exposure to interest rate risk and therefore have excluded those contracts from the presentation above.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls

We evaluated the effectiveness of our disclosure controls and procedures as of and for the three months ended March 31, 2008. This evaluation was done with the participation of our management, including our Chief Executive Officer and Chief Accounting Officer.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 are recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Securities Exchange Act of 1934 is accumulated and communicated to our management, including our Chief Executive Officer and Chief Accounting Officer, as appropriate to allow timely decisions regarding required disclosure.

Limitations on the Effectiveness of Controls

Our management does not expect that our disclosure controls and procedures prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, but not absolute, assurance that the objectives of a control system are met. Further, any control system reflects limitations on resources, and the benefits of a control system must be considered relative to its costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within us have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of a control. Because the design of a control system is based upon certain assumptions about the likelihood of future events, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions as over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected.

Conclusions

Based on this evaluation, our management, with the participation of our Chief Executive Officer and Chief Accounting Officer, has evaluated our disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of March 31, 2008, and has concluded that they are effective.

Changes in Internal Controls

There were no changes in our internal controls over financial reporting that occurred during our last fiscal quarter, i.e., the quarter ended March 31, 2008, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors.

None.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Submission of Matters to a Vote of Security Holders.

None.

Item 5. Other Information.

None.

Item 6. Exhibits.

31.1		Certification pursuant to §302 of the Sarbanes-Oxley Act of 2002, Robert R. Black, Sr.
31.2		Certification pursuant to §302 of the Sarbanes-Oxley Act of 2002, Sean P. McKay
32.1		Certification pursuant to §906 of the Sarbanes-Oxley Act of 2002, Robert R. Black, Sr.
32.2		Certification pursuant to §906 of the Sarbanes-Oxley Act of 2002, Sean P. McKay

SIGNATURES

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

BLACK GAMING, LLC
By:		/s/ Sean P. McKay		May 15, 2008
		Sean P. McKay
		Chief Accounting Officer
		(Principal Financial Officer)

EXHIBIT INDEX

Exhibit
Number		Description
31.1		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002