$ Š Š Common Shares

A copy of this amended and restated preliminary prospectus has been filed with the securities regulatory authorities in each of the provinces and territories of Canada but has not yet become final for the purpose of the sale of securities. Information contained in this amended and restated preliminary prospectus may not be complete and may have to be amended. The securities may not be sold until a receipt for the prospectus is obtained from the securities regulatory authorities. No securities regulatory authority has expressed an opinion about these securities and it is an offence to claim otherwise. This prospectus constitutes a public offering of these securities only in those jurisdictions where they may be lawfully offered for sale and therein only by persons permitted to sell such securities. The securities offered hereby have not been, and will not be, registered under the United States Securities Act of 1933, as amended (“U.S. Securities Act”), or any state securities laws and, subject to certain exceptions, may not be offered or sold in the United States or to a U.S. person (as defined in Regulation S under the U.S. Securities Act (“Regulation S”)). See “Plan of Distribution”. AMENDED AND RESTATED PRELIMINARY PROSPECTUS DATED JUNE 12, 2012 AMENDING AND RESTATING THE PRELIMINARY PROSPECTUS DATED MAY 18, 2012 Initial Public Offering and Secondary Offering June 12, 2012

$ Š Š Common Shares This prospectus qualifies the distribution of an aggregate of Š common shares (“Common Shares”) in the capital of Gateway Casinos & Entertainment Limited (“Company”), consisting of a treasury issuance by the Company of Š Common Shares (the “Treasury Offering”) and a secondary offering (the “Secondary Offering”, and together with the Treasury Offering, the “Offering”) of Š Common Shares held by the Catalyst Capital Funds (as defined herein), TOP V New World Holdings LLC (“TOP V Holdings”) the Royal Bank of Canada (“RBC”) and the Babson Funds (as defined herein) (collectively, the “Selling Shareholders”) at a price of $ Š per Common Share (the “Offering Price”). Gateway will not receive any proceeds from the Secondary Offering. Common Shares are being offered by TD Securities Inc. (“TD”), BMO Nesbitt Burns Inc. (“BMO”), J.P. Morgan Securities Canada Inc. (“J.P. Morgan”) and Scotia Capital Inc. (“Scotiabank”) (collectively, the “Lead Underwriters”) on their own behalf and on behalf of CIBC World Markets Inc., GMP Securities L.P., Goldman Sachs Canada Inc. (“Goldman Sachs”), Macquarie Capital Markets Canada Ltd. (“Macquarie”), Morgan Stanley Canada Limited (“Morgan Stanley”), Raymond James Ltd. (“Raymond James”), and Canaccord Genuity Corp. (collectively, with the Lead Underwriters, the “Underwriters”) pursuant to an agreement between the Company, the Selling Shareholders and the Underwriters dated Š , 2012 (the “Underwriting Agreement”). There is currently no market through which Common Shares may be sold and purchasers may not be able to resell Common Shares purchased under this prospectus. This may affect the pricing of the securities in the secondary market, the transparency and availability of trading prices, the liquidity of Common Shares, and the extent of issuer regulation. See “Risk Factors”. Gateway has applied to list the Common Shares distributed under this prospectus on the Toronto Stock Exchange (“TSX”) under the symbol “GTW”. Listing will be subject to Gateway fulfilling all the listing requirements of the TSX. In connection with the Offering, the Underwriters may, subject to applicable law, over-allot or effect transactions that stabilize or maintain the market price of Common Shares at levels other than those which otherwise might prevail on the open market. The Underwriters may offer Common Shares at a price lower than that stated above. Any such reduction in price will not affect the proceeds received by the Company or the Selling Shareholders. Such transactions, if commenced, may be discontinued at any time. See “Plan of Distribution”. An investment in Common Shares is subject to a number of risks that should be considered by a prospective purchaser. Prospective purchasers should carefully consider the risk factors described under “Risk Factors” before purchasing Common Shares. Price: $ Š per Common Share

Net Proceeds Net Proceeds Price to the Underwriting to the to the Selling Public(2) Commissions Company(3) Shareholders(4) Per Common Share ...... $ Š $ Š $ Š $ Š Total Offering(1) ...... $ Š $ Š $ Š $ Š

Notes: (1) The Selling Shareholders have agreed to grant to the Underwriters an option (the “Over-Allotment Option”), exercisable in whole or in part at any time and from time to time for a period of 30 days following the closing of the Offering (the “Closing”), to purchase up to an additional Š Common Shares (representing approximately 15% of the Common Shares offered pursuant to the Offering), on the same terms as set forth above solely to cover over-allotments, if any, and for market stabilization purposes. The Company has agreed to pay commissions payable to the Underwriters in the amount of $ Š , and the Selling Shareholders have agreed to pay commissions payable to the Underwriters in the amount of $ Š or, if the Over- Allotment Option is exercised in full, $ Š , (the “Underwriting Commissions”). If the Over-Allotment Option is exercised in full, the total “Price to

the Public”, “Underwriting Commissions” and “Net Proceeds to the Selling Shareholders” will be $ Š ,$ Š and $ Š , respectively. This prospectus qualifies the grant of the Over-Allotment Option and the distribution of Common Shares upon the exercise of the Over- Allotment Option. A prospective purchaser who acquires Common Shares forming part of the Underwriters’ over-allocation position acquires those Common Shares under this prospectus, regardless of whether the over-allocation position is ultimately filled through the exercise of the Over-Allotment Option or secondary market purchases. See “Plan of Distribution” and “Principal Shareholders and Selling Shareholders”. (2) The Offering Price has been determined by negotiation among the Company, the Selling Shareholders and the Underwriters. (3) After deducting the Underwriting Commissions payable by the Company, but before deducting expenses of the Offering estimated to be $ Š , which the Company will pay out of the proceeds it receives from the Treasury Offering. (4) Each of the Selling Shareholders will be responsible for the payment of the Underwriting Commissions payable in respect of Common Shares sold by such Selling Shareholder; however, the Selling Shareholders will not be responsible for any further fees or expenses of the Underwriters in connection with the Offering as the Selling Shareholders, other than RBC and the Babson Funds have the right to participate in the Offering pursuant to the Company’s existing Shareholder Agreement. See “Existing Shareholder Arrangements”. The following table sets out the number of Common Shares that may be sold by the Selling Shareholders to the Underwriters pursuant to the exercise of the Over-Allotment Option: Maximum number of Common Shares Underwriter’s Position Available Exercise Exercise Price Over-Allotment Option Š Within 30 days following the closing of the Offering $ Š per Common Share Unless otherwise indicated, all information in this prospectus assumes that the Over-Allotment Option will not be exercised. The Underwriters, as principals, conditionally offer Common Shares qualified under this prospectus, subject to prior sale, if, as and when issued by the Company and sold by the Selling Shareholders and accepted by the Underwriters in accordance with the conditions contained in the Underwriting Agreement referred to under the heading “Plan of Distribution” and subject to the approval of certain legal matters on behalf of the Company by Bennett Jones LLP and on behalf of the Underwriters by McCarthy Tétrault LLP. TD, BMO, J.P. Morgan, Macquarie, Morgan Stanley and Raymond James are affiliates of financial institutions that are members of a syndicate of lenders under the Existing Senior Secured Credit Facility (as defined herein) available to the Company and affiliates of Scotiabank and Goldman Sachs beneficially own certain of the Company’s outstanding Notes (as defined herein) that will be partially redeemed with the proceeds of the Offering. In addition, each of the Lead Underwriters are affiliates of financial institutions that are members of a syndicate of lenders that intend to participate as lenders under the New Senior Secured Credit Facility (as defined herein), available to the Company. An affiliate of Goldman Sachs holds an approximate 7% indirect equity interest in the Company through CFLP III, and affiliates of Macquarie directly or indirectly own or manage a 1% interest in the Common Shares of the Company. Accordingly, in connection with the Offering and pursuant to applicable securities legislation, the Company may be considered a “connected issuer” of each of the foregoing Underwriters for the purposes of securities regulations in certain provinces and territories of Canada. See “Relationship Between the Company and Certain Underwriters”. Subscriptions for Common Shares will be received subject to rejection or allotment, in whole or in part, and the Underwriters’ reserve the right to close the subscription books at any time without notice. The closing date of the Offering is expected to occur on or about Š , 2012 or such other date as the Company and the Underwriters may agree, but in any event no later than Š , 2012 (the “Closing Date”). One or more certificates representing Common Shares sold in the Offering will be issued in registered form to CDS Clearing and Depository Services Inc. (“CDS”), or its nominee, and deposited with CDS on the Closing Date. A purchaser of Common Shares will receive only a customer confirmation from the registered dealer through which Common Shares are purchased. See “Plan of Distribution”. TOP V Holdings is incorporated, continued, organized or resides under the laws of a foreign jurisdiction or resides outside of Canada. Although TOP V Holdings has appointed Gowling Lafleur Henderson LLP, 1600 One First Canadian Place, Toronto, Ontario M5X 1G5 as its agent for service of process in the province of Ontario it may not be possible for purchasers to enforce judgments obtained in Canada against TOP V Holdings. The Babson Funds are incorporated, continued, organized or reside under the laws of a foreign jurisdiction or reside outside of Canada. Although the Babson Funds have appointed Š as their agent for service of process in the province of Š it may not be possible for purchasers to enforce judgments obtained in Canada against the Babson Funds. The Company is regulated under the Gaming Control Act of British Columbia (the “GCA”) and applicable regulations. Under the GCA, owners of securities issued by the Company and, in certain circumstances, transferees of securities issued by the Company are subject to approval by the general manager of the Gaming Policy and Enforcement Branch (the “GPEB”). The GPEB has the right to conduct due diligence with respect to holders of securities (including Common Shares) at any time while the securities are outstanding. Neither the British Columbia Lottery Corporation (“BCLC”) nor the GPEB have passed in any way upon the contents of this prospectus and assume no responsibility for any representations contained in this prospectus. The Company is also regulated under the Gaming and Liquor Act of Alberta (“GLA”) and applicable regulations. Under the GLA, the Company is required to seek Alberta Gaming and Liquor Commission (the “AGLC”) approval for the acquisition of a financial interest in the Company (including the ownership or beneficial ownership of Common Shares). The AGLC has not passed in any way upon the contents of this prospectus and assumes no responsibility for any representations contained in this prospectus. Anticipated transfers of Common Shares that may result in a person legally or beneficially holding, directly or indirectly, jointly or in concert with any other person or persons, 5% or more (or such other amount as may be established by the gaming regulators from time to time), of the outstanding Common Shares will require holders of such Common Shares to give notice to the Company and applicable gaming regulators of such anticipated transfers and may require the prior approval of applicable gaming regulators, see “Risk Factors”. For a description of the conditions and constraints on Common Shares imposed by applicable gaming regulators and the articles of the Company, see “Description of Share Capital”. TABLE OF CONTENTS

GENERAL MATTERS ...... 1 OPTIONS TO PURCHASE SECURITIES ..... 110 FORWARD-LOOKING INFORMATION ...... 2 DESCRIPTION OF OUR INDEBTEDNESS .... 110 PRESENTATION OF FINANCIAL CORPORATE GOVERNANCE ...... 112 MATTERS ...... 3 PLAN OF DISTRIBUTION ...... 117 NON-IFRS AND NON-GAAP FINANCIAL MEASURES ...... 3 RELATIONSHIP BETWEEN THE COMPANY AND CERTAIN UNDERWRITERS ...... 120 PROSPECTUS SUMMARY ...... 5 OUR COMPANY ...... 32 CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS ...... 120 PROPERTY HIGHLIGHTS ...... 37 ELIGIBILITY FOR INVESTMENT ...... 122 INVESTMENT HIGHLIGHTS ...... 38 BUSINESS STRATEGIES ...... 42 RISK FACTORS ...... 123 PROPERTY OVERVIEW ...... 43 MATERIAL CONTRACTS ...... 132 INDUSTRY OVERVIEW ...... 49 LEGAL PROCEEDINGS AND REGULATORY ACTIONS ...... 132 REGULATORY ENVIRONMENT ...... 56 USE OF PROCEEDS ...... 62 INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS ...... 133 DIVIDEND POLICY ...... 63 AUDITORS, TRANSFER AGENT AND MANAGEMENT’S DISCUSSION AND REGISTRAR ...... 133 ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ...... 64 EXPERTS ...... 133 DESCRIPTION OF SHARE CAPITAL ...... 92 PURCHASERS’ STATUTORY RIGHTS ...... 133 SHARE CONSOLIDATION ...... 93 AUDITOR’S CONSENT ...... 134 CONSOLIDATED CAPITALIZATION ...... 93 GLOSSARY OF TERMS ...... 135 PRIOR SALES ...... 94 APPENDIX A: BOARD MANDATE ...... A-1 PRINCIPAL SHAREHOLDERS AND SELLING APPENDIX B: AUDIT & RISK COMMITTEE SHAREHOLDERS ...... 94 CHARTER ...... B-1 EXISTING SHAREHOLDER INDEX TO FINANCIAL STATEMENTS...... F-1 ARRANGEMENTS ...... 97 DIRECTORS AND EXECUTIVE OFFICERS . . . 97 CERTIFICATE OF ISSUER ...... C-1 EXECUTIVE COMPENSATION ...... 101 CERTIFICATE OF THE SELLING SHAREHOLDERS ...... C-2 INDEBTEDNESS OF DIRECTORS AND SENIOR OFFICERS ...... 109 CERTIFICATE OF THE UNDERWRITERS .... C-3 GENERAL MATTERS As used in this prospectus, unless the context otherwise indicates or requires, the terms “Gateway”, the “Company”, “we”, “us” and “our” refer to Gateway Casinos & Entertainment Limited and its subsidiaries. References to “management” in this prospectus mean the executive officers of the Company. Any statements in this prospectus made by or on behalf of management are made in such persons’ capacities as officers of the Company and not in their personal capacities.

Prospective purchasers should rely only on the information contained in this prospectus. We have not, the Selling Shareholders have not, and the Underwriters have not, authorized any other person to provide prospective purchasers with additional or different information. If anyone provides prospective purchasers with additional or different or inconsistent information, including information or statements in media articles about the Company, prospective purchasers should not rely on it. The Company is not, the Selling Shareholders are not, and the Underwriters are not, making an offer to sell or seeking offers to buy Common Shares in any jurisdiction where the offer or sale is not permitted. Prospective purchasers should assume that the information appearing in this prospectus is accurate only as at its date, regardless of its time of delivery or of any sale of Common Shares. The Company’s business, financial conditions, results of operations and prospects may have changed since that date.

Unless otherwise indicated, the information in this prospectus gives effect to the Share Consolidation. See “Share Consolidation”.

Unless otherwise indicated, in this prospectus all references to “$” are to the lawful currency of Canada.

Certain capitalized terms and phrases used in this prospectus are defined in the “Glossary of Terms” beginning on page 134.

Unless otherwise indicated, information contained in this prospectus concerning Gateway’s industry and the regions in which Gateway operates, including Gateway’s general expectations and market position, market opportunity, market share and other management estimates, is based on information obtained from various independent publicly available sources (including reports from the BCLC, the AGLC, Statistics Canada, The Conference Board of Canada, BC Stats, Canadian Gaming Association, Tourism British Columbia, Tourism Vancouver, Edmonton Tourism, Thompson-Okanagan Tourism Association, Ontario Lottery and Gaming Corporation, HLT Advisory Inc. and other industry publications, surveys and forecasts). Management estimates are derived from publicly available information released by independent industry analysts and other third party sources and are based on assumptions made by Gateway based on such data and its knowledge of its industry and regions, which management believes to be reasonable. None of Gateway, the Underwriters or the Selling Shareholders have independently verified the accuracy or completeness of any third party information. While Gateway believes that the market data, industry forecasts and similar information included in this prospectus is generally reliable, such information is inherently imprecise. In addition, projections, assumptions and estimates of Gateway’s future performance and the future performance of its industry and markets in which it operates is necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the “Risk Factors” section of this prospectus and elsewhere in this prospectus. These and other factors could cause results to differ materially from those expressed in estimates made by third parties or Gateway.

As used in this prospectus, “casino” means a gaming facility with slot machines and table games, “community gaming centre” means a gaming facility with slot machines and bingo and “Racino” means a gaming facility with a race track. For greater certainty, references herein to casinos and casino metrics such as revenue, market share and number of slot machines and tables do not include other types of gaming facilities such as community gaming centres and Racinos. References to the number of “slot machines” in this prospectus include VLTs and electronic table games. References to the revenue generated from “slot machines” in this prospectus also include bingo, VLTs and electronic table games. References to the number of “table games” in this prospectus also include touch bet roulette and exclude poker tables. References to the revenue generated from “table games” in this prospectus also include touch bet roulette and poker tables.

1 FORWARD-LOOKING INFORMATION This prospectus contains certain statements which constitute “forward-looking information” within the meaning of Canadian securities legislation (each a “forward-looking statement”). Forward-looking statements relate to future events or the Company’s future performance, including management’s expectation of future growth, results of operations, performance and business of the Company. All statements other than statements of historical fact are forward-looking statements. The use of any of the words “anticipate”, “plan”, “contemplate”, “continue”, “estimate”, “expect”, “intend”, “propose”, “might”, “may”, “will”, “shall”, “project”, “should”, “could”, “would”, “believe”, “predict”, “forecast”, “pursue”, “potential” and “capable” and similar expressions are intended to identify forward- looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. No assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this prospectus should not be unduly relied upon. Forward-looking statements speak only as at the date of this prospectus. In addition, this prospectus may contain forward-looking statements attributed to third party industry sources, the accuracy of which has not been verified by the Company.

In this prospectus forward-looking statements may be found, among other places, under the headings “Prospectus Summary”, “Our Company”, “Risk Factors”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, “Use of Proceeds”, “Principal Shareholders and Selling Shareholders”, “Description of Our Indebtedness”, “Directors and Executive Officers”, “Executive Compensation”, “Plan of Distribution” and “Relationship Between the Company and Certain Underwriters”. Forward-looking statements include, among others, statements relating to: (i) future EBITDA; (ii) Adjusted EBITDA; (iii) Property EBITDA; (iv) Adjusted Property EBITDA; (v) EBITDA Margin; (vi) the availability of sufficient liquidity for planned growth; (vii) Gateway’s growth strategy; (viii) the South Surrey Property; (ix) Gateway’s plans for additional strategic acquisitions and capital expenditures; (x) Gateway’s dividend policy; (xi) Gateway’s investment in equipment, technology, and properties; (xii) operating cash flow; (xii) market opportunities and competition; (xiv) income tax liabilities, tax laws and tax proposals; (xv) legal, regulatory and contractual constraints; (xvi) working capital requirements; (xvii) renewal or availability of required operating licenses or agreements; (xviii) global, domestic and regional economic outlook; (xix) Gateway’s use of proceeds of the Treasury Offering; (xx) market growth; (xxi) the gaming regulatory environment; (xxii) Gateway’s director, officer and employee compensation; (xxiii) election and regulatory approval of Gateway’s directors; (xxiv) the amount of securities outstanding as a result of security based compensation arrangements at Closing; (xxv) Gateway’s revenue; (xxvi) Gateway’s equity incentive plan and equity incentive grants; (xxvii) useful lives of Gateway’s assets; (xxviii) value of long-lived assets; (xxix) interest rate risks; (xxx) collective agreement negotiations with labour unions; (xxxi) gaming participation rates; (xxxii) win ratios and hold percentage; and (xxxiii) marketing initiatives.

With respect to forward-looking statements and forward-looking information contained in this prospectus, assumptions have been made regarding, among other things: (i) future capital expenditures to be made by the Company; (ii) the Company’s future debt levels; (iii) the impact of competition on the Company; (iv) the regulatory framework governing gaming and taxes in the jurisdictions in which the Company conducts and will conduct its business; (v) no material defaults by the counterparties to agreements with the Company; (vi) the Company’s ability to obtain qualified personnel; (vii) operating costs; (viii) the fair values of assets (tangible and intangible) at the date of acquisition; (ix) renewal and extension of the Company’s operating licenses and agreements; and (x) impact of economic growth on market performance.

Actual results could differ materially from those anticipated in any forward-looking statements as a result of the risk factors, which are described in detail under “Risk Factors”, and other risks set out elsewhere in the prospectus. Prospective purchasers should reference the factors discussed under the heading “Risk Factors” in this prospectus. The forward-looking statements included in this prospectus are expressly qualified by this cautionary statement and are made as at the date of this prospectus. The Company does not undertake any obligation to publicly update or revise any forward-looking statements except as required by applicable securities laws.

2 PRESENTATION OF FINANCIAL MATTERS As discussed below under the heading “Our Company – Business History – Restructuring”, the business and operations of Gateway Casinos & Entertainment Inc. (“Old Gateway”) and its sole shareholder, New World Gaming Partners Holdings British Columbia Ltd. (“New World”) were transferred to us on September 16, 2010 as part of a restructuring pursuant to a court approved plan of arrangement (the “Plan of Arrangement”) under section 192 of the Canada Business Corporations Act (“CBCA”). Pursuant to the Plan of Arrangement, Old Gateway and New World were amalgamated to form 7588674 Canada Inc. (“Amalco”). As a result, the audited financial statements of Amalco presented in this prospectus for the years ended December 31, 2010 and 2009, reflect Old Gateway’s operations and the unaudited consolidated financial statements for the three months ended March 31, 2012 and 2011 and the audited consolidated financial statements for the year ended December 31, 2011, and for the period from May 18, 2010 to December 31, 2010 reflect the business and operations of Gateway.

The Company’s unaudited consolidated financial statements for the three months ended March 31, 2012 and 2011 and audited consolidated financial statements for the year ended December 31, 2011 and the period from May 18, 2010 to December 31, 2010 were prepared in accordance with International Financial Reporting Standards as set out in Part I, of the Canadian Institute of Chartered Accountants Handbook (“IFRS”). Amalco’s audited financial statements for the years ended December 31, 2010 and 2009, which include the results of Old Gateway, were prepared in accordance with Canadian Generally Accepted Accounting Principles as set out in Part V, Pre-changeover Accounting Standards, of the Canadian Institute of Chartered Accountants Handbook (“GAAP”).

The audited financial statements of Amalco for the year ended December 31, 2010 include the results of operations of Old Gateway from January 1, 2010 to September 15, 2010. The audited consolidated financial statements of the Company for the period from May 18, 2010 (the date of incorporation) to December 31, 2010 include the results of operations from September 16, 2010 to December 31, 2010. Unaudited financial information for the year ended December 31, 2010 combines the results of operations of Amalco presented in accordance with GAAP and the results of operations of the Company presented in accordance with IFRS. As described under the heading “Our Company – Business History – Restructuring”, on September 16, 2010 we acquired the business and operations of Amalco, and the assets and liabilities acquired were recognized at fair value in the consolidated financial statements of the Company. The audited financial statements of both Amalco and the Company, reflect the effects of the Restructuring as at September 16, 2010. The combined financial information for the year ended December 31, 2010 does not reflect any pro-forma adjustments to show the effects of the Restructuring as if it had occurred at the beginning of the combined period or any earlier period presented in respect of Amalco. Prospective purchasers are cautioned that the combination of the Company’s and Amalco’s financial information for the year ended December 31, 2010 is not necessarily comparable to other periods presented within this prospectus and may not be appropriate for their use as this information includes the combined results of two separate legal entities prepared under IFRS and GAAP, respectively. In addition, the combined financial information for the year ended December 31, 2010 may not be comparable to other periods presented because the Restructuring had a significant impact on the assets, liabilities and statements of operations of the respective entities being combined for the year ended December 31, 2010. The effects of the Restructuring are disclosed in the individual financial statements of Amalco and the Company for the period ended December 31, 2010.

NON-IFRS AND NON-GAAP FINANCIAL MEASURES EBITDA, Property EBITDA, Adjusted EBITDA, Adjusted Property EBITDA, EBITDA Margin and Total Property Revenue are non-IFRS or non-GAAP financial measures commonly used by financial analysts in evaluating financial performance of companies, including companies in the gaming industry. EBITDA, Property EBITDA, Adjusted EBITDA, Adjusted Property EBITDA, EBITDA Margin, Property EBITDA and Total Property Revenue are defined in the “Glossary of Terms”. Accordingly, we believe that EBITDA, Property EBITDA, Adjusted EBITDA, Adjusted Property EBITDA, EBITDA Margin and Total Property Revenue may be useful metrics for evaluating our financial performance, as they are measures that we use internally to assess our performance, in addition to IFRS or GAAP measures. As there is no generally accepted method of calculating EBITDA, Property EBITDA, Adjusted EBITDA, Adjusted Property EBITDA, EBITDA Margin and Total Property Revenue, the terms “EBITDA”, “Property EBITDA”, “Adjusted EBITDA”, “Adjusted Property EBITDA”, “EBITDA Margin” and “Total Property Revenue” as used herein, are not necessarily comparable to similarly titled measures of other companies. The items excluded from

3 EBITDA are significant in assessing our operating results and liquidity. EBITDA, Property EBITDA, Adjusted EBITDA, Adjusted Property EBITDA, EBITDA Margin and Total Property Revenue have limitations as an analytical tool and should not be considered in isolation from, or as an alternative to, net income, cash flow from operations or other data prepared in accordance with IFRS or GAAP. We use Property EBITDA, a non-IFRS and non-GAAP financial measure to evaluate our reporting segments, which are based on our individual properties. Property EBITDA does not include or reflect corporate operating expenses. For a presentation of net income (loss) as calculated under IFRS and GAAP and reconciliation to EBITDA, Adjusted EBITDA and Adjusted Property EBITDA see “Prospectus Summary – Selected Historical Financial Information” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.

4 PROSPECTUS SUMMARY The following is a summary of the principal features of the Offering and is qualified in its entirety by, and should be read together with, the more detailed information and the financial data and statements contained elsewhere in this prospectus. Refer to the “Glossary of Terms” beginning on page 134 of this prospectus for a list of defined terms used herein.

OUR COMPANY We are one of the largest casino operators in Canada. Our 12 gaming properties in British Columbia and Alberta are located in highly attractive gaming regions with strong gaming demographics, robust economies and growing populations. We operate in highly regulated markets which favour incumbent operators and have significant structural barriers to entry. We generate significant cash flow from our best-in-class properties which has enabled us to successfully execute upon internal and external growth strategies. Our Company has a successful track record of developing and operating gaming facilities and has an industry leading EBITDA Margin.

We are a leading gaming operator in British Columbia with the largest installed base of slot machines. We operate three casinos in the Greater Vancouver Region and four casinos in the Thompson-Okanagan Region. Our three casinos in the Greater Vancouver Region, the largest gaming region in British Columbia, have 2,673 slot machines, 115 table games and 29 poker tables. In the Thompson-Okanagan Region, where we are the only casino operator, our four casinos have 1,517 slot machines, 20 table games and 10 poker tables. In the Greater Vancouver Region we also operate two community gaming centres and a bingo hall (collectively, our “CGCs”) with 225 operational slot machines and 100 slot machines installed but not yet operational.

We are one of the largest casino operators in the Edmonton Region. We operate two casinos with 1,053 slot machines, 43 table games and 14 poker tables representing a market share of approximately 19% of the slot machines and approximately 35% of the table games in the Edmonton Region.

In total, our properties have approximately 386,200 square feet of gaming space in which we offer 5,568 slot machines, 178 table games, 53 poker tables and 577 bingo seats. Together with our business partners, we offer a wide range of amenities at our properties to support our gaming operations and differentiate us from our competition, including six hotels and convention centres (of which we own two), 22 restaurants, 10 bars and seven live entertainment venues. We actively look for opportunities to expand and enhance our existing properties and to acquire and develop additional properties.

The map below illustrates the location and operational status of our properties.

Greater Vancouver Region British Columbia Alberta

Chances Squamish

Grand Villa Starlight Chances Newton Bingo Mission Edmonton Region Country Cascades South Surrey Palace Baccarat Property

Thompson- Okanagan Region Kamloops Owned Casino Vernon Leased Casino Kelowna Penticton Leased CGCs Owned CGC Under Expansion Held for Development

5 Our revenue is primarily earned from gaming activities. The BCLC, the GPEB and the AGLC are responsible for managing and conducting or regulating gaming activities in the regions in which we operate. As a gaming operator, we provide facilities and operational services to the BCLC under multi-year operating agreements and to the AGLC under multi-year licenses and, in return, receive commissions from gaming activities conducted at our properties. We play an important role in the economies and communities of the provinces in which we operate. In 2010, the BCLC remitted $1.1 billion to the Government of British Columbia to support a range of public programs and, in Alberta, gaming activities provided $1.4 billion to Alberta’s Lottery Fund to support thousands of volunteer, public and community- based initiatives across Alberta. See “Regulatory Environment”.

PROPERTY HIGHLIGHTS The chart below summarizes some of the key attributes of each of our gaming properties and the expiration date of the operating agreements that we have entered into with the BCLC and licences from the AGLC, as at March 31, 2012. Adjusted Property EBITDA ($mm) LTM Approximate Operating ended Year Gaming Properties Total Agreement No. of No. of No. of March 31, Built/Latest Square Owned/ Investments or Licence Slot Table Poker Facility and Location 2012(1) Renovation Footage(2) Leased(3) ($mm)(4) Expiration(5) Machines(6) Games(7) Tables Greater Vancouver Region Grand Villa ...... 35.7 2008 100,000 Owned 188.0 Nov. 2018 + 1,001 48 12 10-year option Starlight ...... 16.6 2011 70,000 Owned 127.0 Dec. 2017 + 857 48 9 10-year option Cascades ...... 19.8 2008 70,300 Owned 66.0 May 2015 + 815 19 8 10-year option Chances Mission ..... 2.0 2010 6,500 Leased 3.5 Aug. 2017 + 125 — — 10-year option Chances Squamish .... 0.1 2010 8,700 Leased 8.7 Jan. 2020 + 100 — — 10-year option Newton Bingo Country ...... 0.6 2012 11,500 Owned 1.7 May 2016 100(8) —— Total ...... $ 74.8 267,000 $394.9 2,998 115 29 Thompson-Okanagan Region Lake City Kelowna .... 3.9 2011 31,000 Leased 10.3 Feb. 2021 518 10 5 Lake City Kamloops . . . 5.2 2011 8,000 Leased 4.9 Feb. 2021 301 6 — Lake City Vernon ..... 5.4 2009 20,000 Leased 10.6 June 2019 + 405 — — 10-year option Lake City Penticton . . . 3.5 2008 8,000 Leased 1.3 Nov. 2019 293 4 5 Total ...... 18.0 67,000 27.1 1,517 20 10 Edmonton Region Palace ...... 6.0 2001 25,300 Leased 12.0 Aug. 2013 671 23 7 Baccarat ...... 3.2 2009 26,900 Leased 0.5 Aug. 2013 382 20 7 Total ...... 9.2 52,200 12.5 1,053 43 14 Total ...... $102.0 386,200 $434.5(9) 5,568 178 53

Notes: (1) See “Prospectus Summary – Selected Historical Financial Information”. (2) Includes administrative and staff areas. (3) See “Property Highlights”. (4) Since 2004. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Capital Expenditures”. (5) See “Regulatory Environment”. (6) No. of slot machines includes VLTs and electronic table games. (7) Number of table games includes touch bet roulette. (8) At present, 100 temporary slot machines have been installed at Newton Bingo Country which will be activated when we enter into a project development agreement with the BCLC and the City of Surrey has reviewed and confirmed the agreement. Newton Bingo Country has been zoned by the City of Surrey for up to a total of 150 slot machines. The maximum number of slot machines that can be installed at Newton Bingo Country is, subject to the limit set by the City of Surrey, determined by the BCLC. (9) $434.5 million does not include the $22 million invested in the South Surrey Property. See “Property Highlights” and “Property Overview”.

6 INVESTMENT HIGHLIGHTS

The Company believes that its Common Shares provide an attractive investment opportunity as it is well positioned to execute its business strategies based on the following competitive advantages and key strengths.

Attractive Investment Opportunity with Strong Yield and Growth Prospects Management believes that our free cash flow supports an attractive dividend yield, expansion of current operations and growth opportunities. See “Dividend Policy”. Š Our properties generate strong, stable cash flow with high Adjusted EBITDA Margins (approximately 37% for the LTM ended March 31, 2012). The graph below illustrates the historical revenue and Adjusted EBITDA generated by our gaming properties for each of the last four financial years and the LTM ended March 31, 2012.

Historical Revenue and Adjusted EBITDA ($ millions) $300.0 $257.6 $257.7 $248.1 $254.0 $250.0 $234.9

$200.0

$150.0 $93.6 $96.5 $94.9 $94.3 $100.0 $77.3

$50.0

$0.0 2008 2009 2010 2011 LTM

Revenue Adjusted EBITDA Š Our cash flow supports the payment of dividends. For the LTM ended March 31, 2012, our Adjusted EBITDA was $94.3 million of which $69.4 million (or 73.6% of Adjusted EBITDA) is our estimated cash available for payment of dividends, after giving effect to the Offering and the Refinancing. See “Prospectus Summary – Summary of Cash Available for Payment of Dividends”. Š $456.5 million has been invested to date on our existing properties since 2004 with a focus on constructing new premises. Management believes that our free cash flow will support our maintenance capital and help fund our growth capital going forward, which will enhance our revenue generating capacity. Š Recent transactions, such as the acquisition of our CGCs and the South Surrey Property, demonstrate our ability to identify new gaming opportunities and execute on our growth strategy. For example: o We acquired our CGCs, including Newton Bingo Country, in June of 2011. In addition, we are now commencing a series of expansions and upgrades to convert Newton Bingo Country into a community gaming centre. At present, 100 temporary slot machines have been installed at Newton Bingo Country which will be activated when we enter into a project development agreement with the BCLC and the City of Surrey has reviewed and confirmed this agreement. Newton Bingo Country has been zoned by the City of Surrey for up to a total of 150 slot machines. The maximum number of slot machines that can be installed at Newton Bingo Country is, subject to the limit set by the City of Surrey, determined by the BCLC; and o We acquired the South Surrey Property in February of 2012. Surrey City Council has already approved the third reading of a proposal to rezone the South Surrey Property to permit commercial development including a hotel, convention centre, entertainment uses and a gaming facility (casino). However, any

7 development of a gaming facility at the South Surrey Property requires, among other things, a proposal from the BCLC to develop a gaming facility on site and the approval of the City of Surrey under the GCA. The BCLC has not at this time decided to propose the development of a gaming facility at the South Surrey Property. Management believes that there is a strong business case to proceed with the completion of the rezoning and are in ongoing discussions with the BCLC on the development of a gaming facility at the South Surrey Property.

Regulated Markets which Favour Incumbent Operators and have Significant Structural Barriers to Entry Š We operate in highly regulated markets built on mutually beneficial, collaborative and co-dependent relationships with the BCLC and the AGLC. Š Management believes that the BCLC and the AGLC have a vested interest in maintaining high quality gaming properties and preference for experienced and financially strong operators which are focused on growing the overall market. Š We provide facilities and operational services to the BCLC under multi-year operating agreements and to the AGLC under multi-year licenses in return for an operator’s commission. Š Suitable premises and experience as a casino operator are critical to obtaining a casino operating agreement or license and, as such, are a significant barrier for new entrants.

Strong Government Support of the Gaming Industry Š Management believes that the provincial governments in British Columbia and Alberta will continue to support the gaming industry because of the significant financial benefits that it provides. o On average, the lottery and gaming industry returns approximately $220 of net profit to every resident of Canada. o In addition to the jobs the gaming industry creates both directly and indirectly, gaming benefits citizens and communities by providing funding for health care, education, and charitable and municipal programs. o In 2010, the BCLC remitted $1.1 billion to the Government of British Columbia to support a range of public programs, and, in Alberta, gaming revenues provided $1.4 billion to Alberta’s Lottery Fund to support thousands of volunteer, public and community-based initiatives across Alberta. Š As a gaming service provider for the BCLC, we are entitled to earn additional commission based on making eligible qualifying expenditures for the development or improvement of gaming facilities and qualifying additional amenities. The additional commission is based on gaming revenues generated by the individual facilities where the expenditures were made. o Gaming operators earn an additional commission of 3% to 5% of Win through the BCLC’s FDC and AFDC programs. o While operators are required to initially finance all capital expenditures, these programs encourage operators to make capital investments and continually maintain and develop their facilities.

8 The graph below illustrates the expected additional commission to be earned through our British Columbia properties based on the total investments in our properties pursuant to the FDC and AFDC programs and Development Assistance Compensation.

Eligible Investments vs. Non-Eligible Investments ($ millions) $200 $188.0

$160 $127.0 $120

$80 $66.0

$40 $10.3 $10.6 $13.9 $4.9 $1.3 $0 Grand Villa Starlight Cascades Kelowna Kamloops Vernon Penticton CGCs

Eligible Investments Non-Eligible Investments

Note: See “Regulatory Environment”.

Highly Attractive Industry We operate in a resilient sector of the economy with demonstrated growth and growth potential. Š The British Columbia gaming industry has grown significantly. From 2006 to 2011, gaming revenue in British Columbia grew by over $418 million from $2.3 billion to $2.7 billion, which management believes can be attributed to: o a strong demand for gaming with 80% of adults in British Columbia participating in a form of gaming at least once during 2010 and 63% participating at least once a month in 2011; and o the BCLC’s focus on patrons through new games, services and marketing, continued improvements to gaming facilities and superior customer relations. Š Over the past 15 years, the Canadian gaming industry has more than doubled in size with gaming revenue in 2010 of $15.1 billion and non-gaming revenue of $900 million.

Favourable Demographic and Economic Trends Š Favourable demographic and economic trends have fuelled growth in the regions in which we currently operate. o British Columbia and Alberta had the highest provincial population growth during the 2006 to 2011 period at 7.0% and 10.8%, respectively, compared to a national average of 5.9% based on data from Statistics Canada. o Unemployment rates in British Columbia and Alberta are relatively low at 6.3% and 4.6%, respectively, according to the Conference Board of Canada. In comparison, the unemployment rate in Canada is 7.1% and is 8.2% in the United States according to Bloomberg. o British Columbia has a growing population of 4.6 million residents, with a significant portion of adults over the age of 45, which contributes to a stable and attractive market. o In 2012, GDP growth rates in British Columbia and Alberta are estimated to be 2.1% and 3.3%, respectively, compared to a national average of 2.1%.

9 Š We have a strong and growing local resident patron base in British Columbia and Alberta and are not as reliant on tourism as other gaming regions in North America.

Leading Market Position We are a leading casino operator in the regions in which we operate. Š We are a leading gaming operator in British Columbia with the largest installed base of slot machines. Š In British Columbia, we operate 48% of all slot machines and 36% of all table games in casinos. Š Of the $939 million of casino revenue in the Greater Vancouver Region, we are the number one casino operator based on total slot machine revenue, excluding Racinos, with a 50% market share and a 52% market share based on total number of slot machines. Š We are the only casino operator in the Thompson-Okanagan Region. Š We are one of the largest casino operators in the Edmonton Region, where we operate the Palace Casino and the Baccarat Casino. The Palace Casino and the Baccarat Casino contain 19% and 35% of the Edmonton Region’s slot machines and table games, respectively.

Best-In-Class Property Portfolio $456.5 million has been invested to date on our existing properties with a focus on constructing new premises and renovating and improving the amenities offered at our properties, provide us with a competitive advantage by ensuring a modern and interactive experience for our gaming patrons while minimizing capital requirements for our existing properties going forward. Š Our three Greater Vancouver Region casinos have been newly constructed in the last seven years. Š Most of the $434.5 million of capital expenditures invested in our existing gaming properties since 2004 has been invested in properties that have either opened or been renovated in the past five years, of which we expect to receive, or have received, $331.3 million under the BCLC’s Facility Development Program. We also earned additional commissions of $20.4 million under the Development Assistance Compensation program. Š We believe that our new or recently renovated properties and their amenities provide us with a competitive advantage by positioning our properties to maximize revenue from both existing customers and new guests, and enable our Company to generate significant cash flow. Experienced Management Team and Committed Shareholder Our experienced management team has over 80 years of combined experience in the gaming industry and is led by our Chief Executive Officer, Lorenzo Creighton. Mr. Creighton has over 20 years of experience in the gaming industry. Some of Mr. Creighton’s recent career highlights include: Š serving as President and Chief Operating Officer of MGM Grand Detroit, which became the second-most profitable casino among the 12 casinos owned by Las Vegas-based MGM Resorts International Inc. (including those located in Macau and Las Vegas); Š leading the renovation and redevelopment of the Flamingo Las Vegas; and Š serving as President and Chief Operating Officer of New York-New York Hotel and Casino in Las Vegas where he initiated the renovation of the 2,400 room hotel casino. Mr. Creighton is supported by a team of veteran executives, including: Š our Chief Financial Officer, Rehana Din, who has over a decade of experience in the gaming industry, starting as an auditor with PricewaterhouseCoopers LLP with Gateway as a long term client and, since 2008, as part of our management team; Š our Vice President, Marketing and Director of Business Development, Randolph Sears, who has over 30 years of experience in the gaming industry and has held various positions with Tropicana Entertainment, Tropicana Las Vegas, Spotlight 29 Casino, New Frontier, Bally’s & Paris Las Vegas and Flamingo Las Vegas; Š our Vice President, Human Resources, Trevor West, who has been employed by us since 1999 and has helped shape our reputation as an excellent employer; and

10 Š our Director of Operations, Jagtar Nijjar, who initially joined us in 1991, has been involved in the planning and development of many of our current properties such as the Grand Villa Casino, the Starlight Casino and the Cascades Casino and has served as casino manager for many of our properties.

For additional details regarding the experience and qualifications of our management team, see “Directors and Executive Officers”.

We also benefit from the strong and committed support of Catalyst. Š Upon completion of the Offering, the Catalyst Capital Funds will beneficially own approximately Š %of the outstanding Common Shares.

o Founded in 2002, and currently having an estimated $3 billion in assets under management, Catalyst is a world leading investment firm with rates of return on investments that rank it amongst the best in the world. o Catalyst employs a highly disciplined investment process and focuses on established companies with strong market positions that are under-managed, undervalued and/or poorly capitalized. o Catalyst is a private equity firm that focuses generally on building businesses and specifically on bringing operational improvements and excellence to its investment companies as it leads them through restructurings and other forms of improvement and repositioning. o Newton Glassman and Gabriel de Alba, as Catalyst’s representatives, have taken an active role on the Company’s board of directors (the “Board”) and will continue to work with management on the execution of the Company’s strategy. Both have extensive experience in restructuring, operations, deleveraging, growing and creating substantial value for investors in market-leading companies. o Gabriel de Alba, the former Chairman of Old Gateway’s Steering Committee of Creditors, will continue to act as the Company’s executive chairman (the “Executive Chairman”).

Conservative Leverage Profile due to Debt Reduction We expect to use substantially all of the net proceeds from the Treasury Offering to reduce our debt and, in conjunction with the Offering, to complete the Refinancing. This will result in a more conservative level of debt with no principal amortization payments, solid levels of liquidity resulting from uncommitted accordion options of $110 million on the term loan and $35 million on the revolving loan and a reduction in our interest expense.

Twelve Months As Adjusted Ended for this (in thousands) March 31, 2012 Offering(3) (unaudited) (unaudited) Existing Credit Agreement Revolver(1) ...... — — Term Loan A ...... 135,271 — Term Loan B ...... 176,379 — New Revolver(1) ...... — — New Term Loan ...... — 235,000 Notes ...... 170,000 110,500 Total long term debt(2) ...... 481,650 345,500

(1) The Company currently has $22.9 million in letters of credit issued against the Existing Credit Agreement which, will be rolled over under the New Credit Agreement. (2) Excludes unamortized portion of deferred transaction costs and debt premium related to embedded derivatives. (3) See “Description of Our Indebtedness”.

See “Investment Highlights”.

11 BUSINESS STRATEGIES

The Company’s primary objective is to maintain its position as a leading gaming company in Canada and to grow its market share. We are focused on maximizing total returns for our shareholders by executing on the following business strategies:

Enhance Properties to Drive Incremental Growth We continually review our portfolio of properties to determine potential growth in our product offerings that will enhance our customer’s gaming experience. We deploy capital strategically into value-enhancing projects to help increase visitation and gaming spend, attract new customers and drive incremental growth. Many of these enhancements are eligible to earn additional commissions under the Facility Development Program. Through targeted capital investment or reinvestment in our properties, we strive to ensure that our properties are attractive, best-in-class and cater to our customers’ unique tastes and demands. For example, we recently renovated our Starlight Casino to feature private gaming rooms and high quality interiors to maximize the sense of luxury and comfort to our patrons. We expanded the Kelowna Casino and renovated its interiors and we also refreshed the Cascades Casino which included the addition of a new spa area. We are also refurbishing Newton Bingo Country to convert it to a community gaming centre with slot machines. We are also planning to renovate the Palace Casino to refresh the décor and modernize the overall experience for our patrons, which is expected to commence in the fourth quarter of 2012. We have recently opened a new poker area and are enhancing food and beverage amenities at our Grand Villa Casino and we are also planning to enhance our food and beverage amenities at our Starlight Casino in 2013.

Customer Service, Direct Marketing and Enterprise-Wide Promotions We employ a number of strategies designed to attract new customers to our properties and to retain and maximize revenue from existing customers. Management aims to continuously increase our market share. Management also believes there are underserved areas in the regions in which we operate that can be further penetrated to increase the overall size of the market. We have developed core marketing programs designed to reach new and existing patrons, which include direct mail, print, internet, radio and television advertising to promote our properties. We use market analysis tools, such as focus groups, to better understand our customers and each local region so that we can cater to the specific entertainment preferences of existing and potential customers. We target the high-limit table and high-limit slot machine segments through focused marketing, special events and the development of player relationships. The mix of slot machines is also regularly modified to provide customers with the most current and popular games available.

Identify, Execute and Integrate External Growth Opportunities We will efficiently invest a portion of our stable cash flow into growth opportunities. These opportunities may include new projects, such as the South Surrey Property, as well as the acquisition of casinos, community gaming centres and bingo halls that we do not currently operate, such as our recently acquired CGCs. We continuously consider attractive opportunities to consolidate the number of gaming operators in the gaming industry and diversify our geographic footprint in provinces in which we do not currently operate.

Continuously Improve Operating Efficiency Our management team under the leadership of our Executive Chairman and our Chief Executive Officer is focused on implementing measures designed to improve our customer’s overall gaming experience while improving the Company’s operating efficiency. We recently completed a comprehensive review of our cost structure and we are implementing specific cost reduction programs with the aim of increasing operating margins. The main focus areas of the review included rationalization of staff positions and hours as well as identifying potential cost reductions in wages, maintenance, food and beverage and overall operations. We strive to continuously identify initiatives that will create opportunities to improve margins.

12 Encore Program, which allows slot machine players to earn points for play that can be redeemed. Our customer rewards program encourages repeat visits to our properties from existing customers. It also helps us understand our customers’ play patterns and allows us to target marketing messages to specific groups of players via our player database. A new gaming management system (“GMS”) that is being implemented by the BCLC will also enhance our ability to access real time data and statistics that will assist us in understanding our customers and allow us to reward them in a more timely manner. See “Industry Overview”.

Further Foster & Develop Strong Relations with the Local Community We are actively involved in our local communities through marketing initiatives that enhance our profile and image with the local community. We work with the communities in which we operate, including many of the charitable organizations who receive provincial grants from gaming revenue, to increase exposure for our properties and help better integrate us in our local markets.

See “Business Strategies”.

PROPERTY OVERVIEW We operate nine casinos, three of which are owned and six of which are leased, and our three CGCs, one of which is owned and two of which are leased. The entertainment experience we offer at our properties includes table games, slot machines and bingo. In addition to offering gaming, all of our properties offer many non-gaming entertainment options such as live entertainment and a variety of food and beverage amenities.

The chart below illustrates a breakdown, by percentage, of the Total Property Revenue generated at each of our properties for the LTM ended March 31, 2012.

Revenue by Property (LTM ended March 31, 2012)

Baccarat CGCs 5% 2% Palace 7% Grand Villa 32%

Lake City Casinos 18%

Cascades Starlight 18% 18%

Greater Vancouver Region Thompson-Okanagan Region Edmonton Region

Our Greater Vancouver Properties Our six gaming properties in the Greater Vancouver Region consist of the Grand Villa Casino, the Starlight Casino, the Cascades Casino and our three CGCs. We have the highest slot machine revenue of any gaming operator, excluding Racinos, in the Greater Vancouver Region. All of our casinos in the Greater Vancouver Region are in

13 operation 24 hours a day, 365 days a year. During the twelve months ended March 31, 2011, casino properties in the Greater Vancouver Region generated $939 million of casino revenue, representing approximately 74% of British Columbia’s casino revenue. Our casinos account for $415 million of this casino revenue, representing a 44% market share. In the Greater Vancouver Region, our casino patron profile is generally comprised of local residents, 45 years of age and older. The over-45 demographic in the Greater Vancouver Region continues to grow with an estimated growth rate of 9.3% from 2010 to 2015 and 17.5% from 2010 to 2020.

Grand Villa Casino The Grand Villa Casino, the Greater Vancouver Region’s newest casino, was opened in 2008 and offers 1,001 slot machines and 48 table games. With approximately $188 million invested, the Grand Villa Casino is our flagship property and largest contributor based on revenue and EBITDA. Located in Burnaby, British Columbia, the Grand Villa Casino includes the Delta Burnaby Hotel and Conference Centre and benefits from its central location in the Greater Vancouver Region and close proximity to Vancouver and surrounding suburban areas. The Grand Villa Casino is located adjacent to an interchange off of the Trans-Canada Highway, the main transportation corridor of the Greater Vancouver Region, resulting in excellent visibility and accessibility. The Grand Villa Casino has a high-limit slot machine room and is one of our two casinos that offer high-limit table games. We continually seek to enhance our customer’s experience at the Grand Villa Casino. For example, we have recently opened a new poker area and we will be enhancing our food and beverage amenities available to our patrons by the end of 2012.

The Grand Villa Casino is one of three casinos in the Greater Vancouver Region to offer hotel accommodations with its 200-room Delta Burnaby Hotel & Conference Centre. The conference centre caters to groups of all sizes with approximately 12,600 square feet of meeting space.

Starlight Casino The Starlight Casino, opened in late 2007, is located in New Westminster, British Columbia. We invested approximately $127 million in the Starlight Casino, which features best-in-class gaming equipment and entertainment amenities, and contains 857 slot machines, 48 table games and nine poker tables. The Starlight Casino is positioned in a highly visible location adjacent to the interchange of a major highway 24 kilometres southeast of downtown Vancouver and is in close proximity to Richmond, British Columbia and surrounding suburban areas. The Starlight Casino has one of the largest slot machine installations in British Columbia and offers high-limit table games and a high-limit slot machine room. We recently expanded and renovated our high-limit table area in August of 2011 to enhance the experience of our high-limit players. We recently opened additional table games on the main gaming floor and have expanded our entertainment area. This will be followed by an enhancement to our food and beverage amenities next year. For the twelve months ended March 31, 2011, the Starlight Casino generated $2,359 Table Win/ Table/Day, which was one of the highest in British Columbia.

Cascades Casino The Cascades Casino, opened in 2005 and expanded in 2008, is located in downtown Langley, British Columbia, in the Fraser Valley region of the Greater Vancouver Region. We invested approximately $66 million in the Cascades Casino, which contains 815 slot machines, 19 table games and eight poker tables. The Cascades Casino is located on 10 acres of land 40 kilometres east of downtown Vancouver and is within 16 kilometres of the Canada / United States border. The Cascades Casino is the only casino and hotel and convention centre complex in the Fraser Valley region. The Cascades Casino serves the growing communities of Surrey, Delta, White Rock and Langley, an area with a combined population of over 700,000. We are continuing to expand and improve our amenities at the Cascades Casino, including planned renovations to our hotel and convention centre complex.

The Cascades Casino, like the Grand Villa Casino, is one of three casinos in the Greater Vancouver Region to offer hotel accommodations with its 77-room hotel, the Coast Hotel & Convention Centre Langley City. We operate the hotel and its approximately 26,000 square foot convention space under the Coast Hotels brand and hotel management system.

14 Our CGCs On June 30, 2011, we acquired our CGCs which consist of Chances Mission (Mission, British Columbia), Chances Squamish (Squamish, British Columbia) and Newton Bingo Country (Surrey, British Columbia). Our CGCs provide alternative gaming options, mainly in the form of slot machines, in smaller communities without casinos. The CGCs offer, in total, approximately 26,700 square feet of gaming space as well as amenities including restaurants and bars. Chances Squamish opened in 2010 and we are commencing a series of upgrades and expansions to convert Newton Bingo Country from a bingo hall to a community gaming centre.

Our Thompson-Okanagan Properties We are the sole casino operator in the Thompson-Okanagan Region, where we operate four casinos: the Lake City Kelowna Casino, the Lake City Kamloops Casino, the Lake City Vernon Casino and the Lake City Penticton Casino (the “Lake City Casinos”). The Lake City Kelowna Casino and the Lake City Kamloops Casino have been extensively renovated in the last two years and Lake City Penticton Casino was renovated in 2008. The Lake City Vernon Casino was rebuilt in 2009. The Company has invested $27.1 million in the Lake City Casino’s properties. The Thompson- Okanagan Region is located in the southern interior of British Columbia and is a popular tourist and retiree destination. Consistent with the region’s local demographics, the slot machine and table patron profile at our Lake City Casinos is predominantly comprised of local residents, aged 45 and over, with a significant number of tourists and retirees.

Our Edmonton Properties We are one of the largest casino operators in the Edmonton Region, where we operate the Palace Casino and the Baccarat Casino. The Palace Casino and the Baccarat Casino, together, contain 19% and 35% of the Edmonton Region’s slot machines and table games, respectively. The Palace Casino is located in West Edmonton Mall, one of North America’s largest and most visited shopping centres with approximately 30.8 million visitors annually. The Palace Casino’s patrons are generally local residents and tourists visiting West Edmonton Mall. There is a major renovation which is expected to be completed in late 2013 to modernize the aesthetic appeal and amenities of the Palace Casino at an expected cost of approximately $4 million. The Baccarat Casino is the sole casino in downtown Edmonton. The City of Edmonton is currently planning to develop the downtown area as part of the construction of the new downtown sports and entertainment arena which is expected to host the NHL’s Edmonton Oilers if all approvals are obtained. See “Property Overview – Our Edmonton Properties”. The Baccarat Casino is located two blocks from Edmonton’s City Centre Mall, adjacent to Chinatown. This property attracts a large percentage of patrons from the local community.

See “Property Overview”.

INDUSTRY OVERVIEW

Canadian Gaming Market The Canadian economy positively withstood the recent global financial crisis. This economic strength is expected to continue over the coming years, as real GDP is estimated by the Conference Board of Canada to grow at 2.1% and 2.9% in 2012 and 2013, respectively. Further, the unemployment rate at the end of 2011 was 7.5%. Personal disposable income in Canada is anticipated to increase by 3.3% in 2012 and 4.2% in 2013.

Over the past 15 years, the Canadian gaming industry has more than doubled in size from approximately $6.4 billion in Win in 1995 to approximately $15.1 billion in 2010. In 2010, the industry generated approximately $900 million in non-gaming revenue, such as food and beverage, accommodations, entertainment and retail, for a total industry revenue base of approximately $16 billion.

15 The charts below illustrate the growth in the casino sector, which indicates that the casino sector increased its share of the Canadian gaming revenue from 15% in 1995 to 38% in 2011. From 1995 to 2011, the casino sector grew at a CAGR of 12%, which was three times faster than the overall gaming industry.

Canadian Gaming Industry Revenue ($ billions)

Total Revenue: $6.4 Total Revenue: $15.3

15%

38%

62% 85%

1995 2011 Casino Market Share

Source: HLT Advisory Inc., gaming industry includes revenue from horse race betting, bingo, lottery, VLTs, casinos and other.

The chart below illustrates the dominance of gaming and the significant profits generated by the gaming sector in comparison to other Canadian entertainment industries.

Revenue and Profitability of Selected Entertainment Industries ($ billions)

$16.0 $15.1

$14.0

$12.0

$10.0 $9.2 $7.9 $8.0 $7.1

$6.0 Total Revenue $4.0 $2.7 $2.6 $1.6 $1.5 $2.0

$0.0 Gaming Book, Amusement and Television Drinking PlacesSpectator Sports Movie Theater Performing Arts Newspaper and Recreation Broadcasting Periodicals Operating Profits

16 The Canadian gaming industry is an important economic driver in the Canadian economy. In 2010, the Canadian gaming industry generated significant economic benefits from the operation of all gaming activity and from the government and charity spending of gaming profits. Benefits included $31.1 billion in gross output, $14.6 billion in the purchase of goods and services, $16.5 billion in value-added GDP, $12.5 billion in labour income and 253,000 full- time equivalent jobs according to HLT Advisory. Governments and charities are major benefactors of the gaming industry’s ability to generate significant non-tax revenues. In 2010, governments and charities in Canada received $8.7 billion from gaming revenue to fund government and community programs and services.

Management believes the resilience of the Canadian gaming sector against the backdrop of the strong overall economy demonstrates both the acceptance of gaming as a form of entertainment and the opportunities available for our gaming properties.

British Columbia Gaming Region The British Columbia gaming industry consists of 15 casinos, two Racinos, 16 community gaming centres, approximately 4,000 lottery retailers, 11 commercial bingo halls and online gaming. During the twelve months ended March 31, 2011, the casino sector accounted for approximately 50% of the total industry revenue of $2.7 billion. As at March 31, 2010, 80% of adults in British Columbia had participated in a form of gaming at least once in the previous year, which is consistent with strong acceptance and participation numbers in previous years. As at March 31, 2011, 63% of adults in British Columbia engaged in gaming at least once a month. From 2006 to 2011, the provincial gaming industry revenue in British Columbia grew by over $418 million from $2.3 billion to $2.7 billion, despite having had only limited expansion of gaming facilities during such period. The majority of the revenue growth can be attributed to the construction, redevelopment and expansion of existing casinos and the introduction of a number of community gaming centres.

The British Columbia Region has demonstrated stability and remained resilient in light of recent macroeconomic trends. Casino and Racino gaming revenue in British Columbia increased from $1.32 billion for the twelve months ended March 31, 2010 to $1.34 billion for the twelve months ended March 31, 2011.

17 The graph below illustrates the relative growth and stability of the gaming revenue generated by casinos and Racinos in British Columbia for the years 2007 to 2011 and Gateway’s share of this revenue and demonstrates how industry revenue grew even through the global economic downturn.

Casino and Racino Gaming Revenue in British Columbia ($ billions) $1.8 2007 - 2011 CAGR = 2.6% $1.6 $1.34 $1.34 $1.4 $1.32 $1.32 $1.21 $1.2 $1.0 $0.8 $0.6 44% $0.4 39% 41% 43% 44% $0.2 $0.0 2007 2008 2009 2010 2011

Gateway Market Share (% of Casino Revenue) Casino Revenue Racino Revenue Source: BCLC 2006/07 – 2010/11 Annual Reports and the BCLC 2012/13-2014/15 Service Plan.

The BCLC maintains a strategy that includes investing in infrastructure innovation to support its current gaming operations and stimulate future gaming growth in British Columbia. The BCLC is expected to spend over $100 million implementing the GMS that will be rolled out to all gaming sites in British Columbia. Our Lake City Kamloops Casino has been selected by the BCLC as a beta site for the GMS pilot beginning in May of 2012. Management believes this initiative will generate incremental revenue across all British Columbia gaming sites in the first year. The GMS will provide gaming properties with real time data and hour-by-hour gaming statistics. The GMS will also generate automated promotional credits and virtual draws on slot machines. Management believes the GMS will provide tools for better product management, improved tracking of patrons, more targeted marketing initiatives and improved integration of table games.

We are a leading gaming operator in British Columbia with the largest installed base of slot machines. We operate seven of the 15 casinos, two of the 16 community gaming centres and one bingo hall in British Columbia. In 2011, we earned approximately 88% of our revenue and approximately 92% of our Property EBITDA from properties in the British Columbia Region. As at March 31, 2011 our casinos operate 48% of the slot machines in casinos and 36% of the table games in British Columbia. See “Investment Highlights”.

Greater Vancouver Region The Greater Vancouver Region is British Columbia’s largest casino gaming market offering a total of 5,187 slot machines and 353 table games. We operate three of the six casinos in the Greater Vancouver Region. As at March 31, 2011, we are the largest casino operator in the Greater Vancouver Region, excluding Racinos, in terms of slot machine revenue and total number of slot machines, with a 50% and 52% market share, respectively.

Vancouver is a premier global destination and recently hosted the 2010 Olympic and Paralympic Winter Games. Vancouver attracts nearly nine million visitors each year. According to Tourism Vancouver, in 2011, 62% of visitors were from Canada, 23% from the United States and 7% from Asia. Vancouver is consistently ranked as one of the top 10 business meeting destinations in North America. Conventions and business meetings account for 1.9 million hotel nights per year, and visitor spending is approaching $600 million annually. These numbers are expected to grow by more than 50% between 2008 and 2015. Total spending by overnight visitors was more than $3.8 billion in 2010, with the average visitor staying five days in the region and spending $453 per trip.

18 Despite softening of the global economy, Vancouver’s economy remained resilient in the last two years. According to the Conference Board of Canada, real GDP growth was 3.5% in 2010 and 3.1% in 2011. Real GDP in 2012 is forecasted to be 2.5% with real GDP in 2013 estimated to rise to 3.7% due to stronger employment and income growth and an increase in construction activity. Furthermore, the unemployment rate in 2011 was 7.3%, but is forecasted to decrease in 2012 and 2013 to 6.2% and 5.6%, respectively.

The graph below illustrates the breakdown of gender and age demographics of our casino patrons in the Greater Vancouver Region.

Gender of Patrons Age of Female Patrons Age of Male Patrons

25-44 25-44 14% 15% 45-64 Male 45-64 19-24 44% 19-24 38% 48% 2% 3%

Female 62% 65+ 65+ 38% 36%

Source: BcGold Encore database maintained by the BCLC, which is comprised largely of slot machine patrons, although table games players can also sign up to the BcGold Encore Program regardless of whether they play slot machines.

Given the Greater Vancouver Region’s economic profile and status as a premier global destination, and its significant and growing adult populations, management believes that the Greater Vancouver Region is likely to remain an attractive gaming region for the foreseeable future.

For the past several years, the BCLC has made a significant effort to meet the expectations of the patrons in the Greater Vancouver Region while increasing gaming revenue. As a result of the BCLC’s initiatives, including the FDC and AFDC programs, casino properties now offer greater gaming options, food and beverage services, live entertainment venues and hotel amenities. We have constructed three new casinos in the Greater Vancouver Region to maintain our best-in-class product offerings.

Thompson-Okanagan Region

We are the only casino operator in the Thompson-Okanagan Region. With a population of approximately 528,000, this area has experienced substantial growth due to continued development of the British Columbia interior driven in large part by the tourism industry and an influx of retirees. Casino traffic has increased with the region’s growing population as well as its popularity as a vacation destination. The Lake City Casinos operate 100% of all table games and over 81% of all slot machines in the Thompson-Okanagan Region, with two community gaming centres accounting for the remainder of the slot machines.

19 The Thompson-Okanagan Region has the second-fastest growing population and the fastest-growing seniors population in British Columbia. Approximately 100,000 senior citizens live in the Thompson-Okanagan Region, making up 19% of the population, which is larger than any other part of British Columbia.

A major force in the Thompson-Okanagan Region’s economic outlook is tourism. This region is renowned for its lakes, golf courses, ski resorts and vineyards and accommodates approximately 3.5 million travelers each year. A 10-year regional tourism strategy is underway by the Thompson-Okanagan Tourism Association aimed at further increasing the Thompson-Okanagan Region’s $1.75 billion annual tourism industry during the next decade by 5% per year.

Alberta Gaming Region Alberta has one of the strongest provincial economies in Canada, which is primarily driven by the energy and agricultural industries. According to the Conference Board of Canada, Alberta’s annual GDP growth rate is the highest of all provinces and territories in Canada, with an estimated 2012 real GDP growth of 3.3% as compared to a national average of 2.1%. According to the Alberta Treasury Board of Finance, Alberta has strong employment demand, with 98,800 new jobs created between December of 2010 and December of 2011, which represents 50% of Canada’s overall employment growth, and the third lowest estimated 2012 provincial unemployment rate in Canada at 5.0%. Alberta’s population increased 2.9% from 2009 to 2011 and is expected to increase a further 2.0% in 2012 according to the Conference Board of Canada. Alberta ranked second among all Canadian provinces in 2010 based on personal disposable income.

We are well positioned in the Alberta gaming region, offering innovative gaming entertainment in high-traffic areas. As at January 1, 2012, the Alberta gaming industry consisted of 24 casinos, three horse racetracks each containing a racing entertainment centre, 6,000 VLTs located at 956 retail outlets including 78 video gaming entertainment centres, over 2,600 lottery ticket retailers and 28 bingo halls. These properties and outlets are located in regions of Alberta and generated over $2.6 billion in gaming revenue in 2011. Alberta has the highest provincial annual gaming expenditures per capita and enjoys high gaming participation levels. In addition, Alberta generated $789 per adult of gaming revenue, greater than the national average of $595 per adult in 2010.

From 2007 to 2011, the AGLC’s share of casino slot machine revenue grew at a CAGR of 3.7% and the AGLC expects its share of slot machine revenue to remain constant.

Edmonton Region We are one of the largest casino operators in Edmonton, the capital of Alberta, and a major centre of government and commerce in Western Canada. Edmonton is Canada’s sixth largest metropolitan area with an estimated population of 1.2 million residents in 2011. Additionally, Edmonton is the gateway to the natural resources-rich region of northern Alberta, providing the city with a constant influx of potential patrons. As such, Edmonton’s real GDP growth rate in 2011 was 4.4% according to the Conference Board of Canada. Furthermore, the Edmonton Region benefits from a significant tourism industry, attracting millions of visitors annually. Each year approximately 4.2 million visitors spend an estimated $1.11 billion in the Edmonton Region according to the Edmonton Economic Development Corporation. Edmonton ranked third among 28 Canadian cities in 2009 based on total median income. In Edmonton, personal income per capita is expected to increase by 2.3% in 2012 according to the Conference Board of Canada.

We operate approximately 19% and 35% of all Edmonton’s slot machines and table games, respectively. We are well positioned to benefit from Edmonton’s attractive economic and demographic characteristics. Our Edmonton properties offer innovative entertainment options and operate in high-traffic areas. One of our two Edmonton properties is located in West Edmonton Mall which is one of the world’s largest shopping centres and Alberta’s number one tourist attraction with more than 30.8 million visitors annually. The other casino property is located in the heart of downtown Edmonton, adjacent to Chinatown.

See “Industry Overview”.

20 RECENT DEVELOPMENTS

Acquisition of our CGCs On June 30, 2011, we acquired Chances Mission, Chances Squamish, Newton Bingo Country and the additional operational rights related to the former operations of Burnaby Bingo Country. The purchase of Chances Mission and Chances Squamish immediately added 225 slot machines to our operations, together with established bingo operations. At present, 100 temporary slot machines have been installed at Newton Bingo Country which will be activated when we enter into a project development agreement with the BCLC and the City of Surrey has reviewed and confirmed this agreement. Newton Bingo Country has been zoned by the City of Surrey for up to a total of 150 slot machines. The maximum number of slot machines that can be installed at Newton Bingo Country is, subject to the limit set by the City of Surrey, determined by the BCLC.

See “Recent Acquisitions”.

South Surrey Property We became aware of the opportunity to acquire a parcel of land in Surrey, British Columbia (the “South Surrey Property”) in October of 2011. Following extensive negotiations with the vendor of the South Surrey Property, we executed a term sheet in December of 2011 and concluded the acquisition in February of 2012.

Surrey City Council has already approved third reading of a proposal to rezone the South Surrey Property to permit commercial development including a hotel, convention centre, entertainment uses and a gaming facility (casino). However, any development of a gaming facility at the South Surrey Property requires, among other things, a proposal from the BCLC to develop a gaming facility on site and the approval of the City of Surrey under the GCA. The BCLC has not at this time decided to propose the development of a gaming facility at the South Surrey Property. Management believes that there is a strong business case to proceed with the completion of the rezoning and are in ongoing discussions with the BCLC on the development of a gaming facility at the South Surrey Property. There is no assurance that the BCLC will propose such a casino or that the City of Surrey will provide approval under the GCA. See “Risk Factors”. The land was acquired for a purchase price of approximately $32 million, consisting of approximately $22 million paid on closing and up to 883,626 Common Shares to be paid in the future contingent upon completion of milestones as described in the purchase agreement.

See “Recent Acquisitions”.

Refinancing Concurrently with and as a condition of the completion of the Offering, the Company will refinance certain of the Company’s existing indebtedness (the “Refinancing”). As part of the Refinancing, the Company expects to amend and restate the Existing Credit Agreement by entering into the New Credit Agreement which will provide Gateway with a new senior secured credit facility (the “New Senior Secured Credit Facility”) consisting of a senior secured first lien term loan facility (the “New Term Loan”) in an aggregate principal amount of $235 million (with an uncommitted term loan accordion option of $110 million), and a revolving credit facility of up to $35 million (with an uncommitted revolving loan accordion option of $35 million and a letter of credit sub-facility of $30 million), with a term of five years (the “New Revolver”). The New Term Loan is expected to have a five year maturity with no principal amortization payments.

Following the completion of the Offering and the Refinancing, the Company expects to have $235 million of outstanding term loans and expects to have no outstanding revolving loans under the New Senior Secured Credit Facility except for six existing letters of credit issued under the Existing Credit Agreement in the aggregate face amount of approximately $22.9 million which will be rolled over under the New Credit Agreement. For a summary of the anticipated material terms of the New Credit Agreement, see “Description of Our Indebtedness”.

21 As part of the Refinancing and in connection with the Offering, the Company intends to redeem, in aggregate, up to $59.5 million of the original aggregate principal amount of the $170 million principal amount of second priority senior secured notes (the “Notes”) with net cash proceeds from the Offering. For a summary of the material terms of the Indenture, pursuant to which the Notes were issued, see “Description of Our Indebtedness”.

The Refinancing and the Offering will significantly reduce our interest expense and leverage profile.

See “Description of Our Indebtedness”.

22 THE OFFERING

Issuer: Gateway Casinos & Entertainment Limited Selling Shareholders: The Catalyst Capital Funds, TOP V Holdings, RBC and the Babson Funds Offering: Š Common Shares Offering Price: $ Š per Common Share Treasury Offering: $ Š Secondary Offering: $ Š Common Shares Outstanding prior to the Offering: 35,782,525 Common Shares Common Shares Outstanding after the Offering: Immediately after the Offering Š Common Shares will be issued and outstanding. The foregoing information regarding the number of Common Shares outstanding after the completion of the Offering does not give effect to or take into account: (i) Common Shares issuable pursuant to RSUs that are expected to be outstanding upon completion of the Offering (expected to be less than 0.5% of the Common Shares outstanding prior to Closing); (ii) Common Shares issuable pursuant to Options that are expected to be outstanding at Closing (expected to be less than 0.1% of the Common Shares outstanding prior to Closing); (iii) 883,626 Common Shares issuable upon satisfaction of certain milestones with respect to the South Surrey Property; or (iv) Common Shares issued to the CEO upon completion of the Offering equal to 2.5% of the Common Shares sold by the Selling Shareholders. See “Executive Compensation”, “Options to Purchase Securities”, “Share Consolidation” and “Our Company – Recent Acquisitions – South Surrey Property”. Over-Allotment Option: The Selling Shareholders have granted the Underwriters an Over-Allotment Option exercisable for a period of 30 days from the Closing Date to purchase up to an additional Š Common Shares (being equal to 15% of Common Shares sold as part of the Offering) at the Offering Price. If the Over- Allotment Option is exercised in full, the total price to the public will be $ Š million, the Underwriting Commissions will be $ Š million and the net proceeds to the Selling Shareholders will be $ Š million. See “Plan of Distribution”. Use of Proceeds: Treasury Offering The net proceeds to be received by Gateway from the Treasury Offering are estimated to be $ Š million, after deducting its share of the Underwriting Commissions of $ Š million and the expenses of the Offering, which are estimated to be $ Š million. The Company expects to use the net proceeds from the Treasury Offering as follows: Š in connection with the Refinancing, O approximately $ Š million will be used to repay part of the Term Loans plus accrued and unpaid interest thereon and prepayment fees related thereto under the Existing Senior Secured Credit Facility;

23 O approximately $ Š million will be used to redeem $59.5 million of the original aggregate principal amount of the Notes plus accrued and unpaid interest thereon and redemption fees related thereto; and Š the balance, if any, for working capital and general corporate and administrative purposes.

While Gateway currently anticipates that it will use the net proceeds of the Offering received by it as set forth above, the Company may re-allocate the net proceeds of the Offering received by it from time to time, having consideration to its strategy relative to the market and other conditions in effect at the time. Pending use of the net proceeds of the Offering, such net proceeds will be invested in accordance with instructions from the Board.

Secondary Offering The aggregate net proceeds to be received by the Selling Shareholders from the sale of Common Shares pursuant to the Secondary Offering are estimated to be $ Š ($ Š if the Over-Allotment Option is exercised in full), after deducting the Underwriting Commissions payable by the Selling Shareholders. Gateway will not receive any of the proceeds payable to the Selling Shareholders under the Secondary Offering. The Selling Shareholders will not pay any expenses of the Offering other than the Underwriting Commissions in respect of the Secondary Offering (which expenses will be paid by the Company) in accordance with the provisions of the Shareholder Agreement. See “Principal Shareholders and Selling Shareholders” and “Use of Proceeds”.

Lock-Up Agreements: Prior to completion of the Offering, the Underwriters will enter into lock-up agreements with certain key shareholders, including the Selling Shareholders and all of the directors and officers of the Company holding, in the aggregate, Š Common Shares (including securities convertible into Common Shares), representing approximately Š % of the outstanding Common Shares on a fully-diluted basis after giving effect to the Offering. Pursuant to these lock-up agreements, the persons subject to the lock-up agreements agree, subject to certain exceptions, including, in the case of the Selling Shareholders, a right to participate in the Secondary Offering and the Over-Allotment Option, not to offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any Common Shares or securities convertible into or exchangeable or exercisable for any Common Shares, enter into a transaction which would have the same effect, or enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of Common Shares, other than to an affiliate, without the prior written consent of the Lead Underwriters for a specified period of time following Closing. The lock-up agreements with RBC and the Babson Funds will be effective for a period of 45 days following Closing and all other lock-up agreements will be for a period of 180 days following Closing. The Company will also enter into similar arrangements with the Underwriters. See “Plan of Distribution”.

24 Dividend Policy: The Board is expected to establish a dividend policy pursuant to which the Company will pay an annual dividend of approximately $ Š per Common Share, based on the number of Common Shares expected to be outstanding on Closing. Dividends are expected to be paid on a quarterly basis, with the first dividend for the period from the Closing Date to September 30, 2012 expected to be paid on or about October Š , 2012 in the amount of $ Š per Common Share (representing a quarterly dividend of $ Š per Common Share). Prior to completion of the Offering, the Company anticipates that it will pay a cash dividend or distribution on its Common Shares in the aggregate amount of approximately $25 million.

The New Senior Secured Credit Facility will contain and the Note Indenture contains certain restrictions relating to the payment of dividends. The payment of dividends is not guaranteed and the amount and timing of any dividends payable by Gateway will be at the discretion of the Board and will be established on the basis of Gateway’s earnings, financial requirements for the Company’s operations, the satisfaction of solvency tests imposed by applicable corporate law and the Company’s debt instruments. See “Description of Our Indebtedness” and “Dividend Policy”.

Risk Factors: An investment in Common Shares is speculative and involves a high degree of risk. Prospective purchasers of Common Shares should carefully consider information set forth under the heading “Risk Factors” and other information included in this prospectus before deciding to invest in Common Shares.

Risks related to Gateway include risks arising from competition, our casino gaming revenue not being nationally diversified, governmental gaming regulation, regulatory and municipal approvals required to develop the South Surrey Property, collective bargaining agreements, lease renewals for our properties, undiscovered liabilities and capital expenditures, a downturn in general economic conditions, dependence on technology services and electrical power, volatility in our hold percentage, fair value impairments, acquisition and development of our gaming operations, operating risks common to the hotel business, changes to our customer base, fraud or cheating risks, municipal restrictions, litigation risks, insurance coverage and existing indebtedness.

Risks related to an investment in our Common Shares include no existing market for the Common Shares, fluctuations in the price of Common Shares, additional issuances of Common Shares, future sales of Common Shares, cash dividend payments not being guaranteed and costs of compliance with reporting issuer requirements. See “Risk Factors”.

25 SUMMARY OF CASH AVAILABLE FOR PAYMENT OF DIVIDENDS The following analysis has been prepared by management on the basis of the information contained in this prospectus and the unaudited consolidated financial data for the twelve months ended March 31, 2012. This information should be read together with the Company’s consolidated financial statements and the related notes and the discussion under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus. This analysis is not a forecast or a projection of future results.

Management believes that cash available for the payment of dividends is an operating performance measure and an indicator of financial performance. As the Company intends to distribute a significant amount of its cash available for the payment of dividends on an ongoing basis, and since Adjusted EBITDA is a metric used by many investors and financial analysts to compare issuers on the basis of the ability to generate cash from operations, management believes that, in addition to net cash provided by operations, Adjusted EBITDA is a useful non-IFRS and non-GAAP, supplemental measure from which to make adjustments to determine cash available for the payment of dividends. Adjusted EBITDA adjusts for certain items, deemed to be cash, that provide investors and financial analysts the information necessary to assess the ongoing operating performance and the highlights of the key trends in the continuing business and, accordingly, the cash to be available for the payment of dividends. The term Adjusted EBITDA is defined in the “Glossary of Terms”. As there is no generally accepted method of calculating Adjusted EBITDA, the term “Adjusted EBITDA” as used herein, is not necessarily comparable to similarly titled measures of other companies.

In determining the estimated cash available for payment of dividends for the twelve months ended March 31, 2012, management notes that Adjusted EBITDA has closely approximated net cash provided by operations in the periods reported in the tables included in “Selected Historical Financial Information” within this Prospectus Summary. Management has made certain assumptions in preparing this summary that are set out in the notes below.

Twelve Months Ended March 31, 2012 (in thousands, except for per Common Share amounts) (unaudited) Adjusted EBITDA(1) ...... $ 94,278 Management estimates that the following amounts will reduce the amount of cash available for distribution: Maintenance capital expenditures(2) ...... (3,500) Interest(3) ...... (19,798) Additional administrative expenses(4) ...... (1,595) Provision for income taxes(5) ...... 0 Estimated cash available for payment of dividends ...... $ 69,385 Estimated cash dividends ...... Š Estimated cash available after payment of dividend ...... Š Estimated cash dividends per Common Share ...... Š

Notes: (1) See definition of Adjusted EBITDA in the “Glossary of Terms” and reconciliation of EBITDA to net cash flows from operations in “Selected Historical Financial Information” within this Prospectus Summary. Adjusted EBITDA is not recognized as a measure under IFRS or GAAP and does not have a standardized meaning prescribed by IFRS or GAAP. See “Non-IFRS and Non-GAAP Financial Measures”. (2) During the twelve months ended March 31, 2012 and for the years ended December 31, 2011, 2010 and 2009, the Company incurred maintenance capital expenditures of $3.1 million, $3.4 million, $2.8 million and $2.1 million, respectively. Management believes annual maintenance capital expenditures of $3.5 million allows for the necessary maintenance of the Company’s assets. (3) Represents estimated annual interest costs on the credit facilities described under “Description of Our Indebtedness”, assuming $235 million is outstanding and $22.9 million of letters of credit are issued on the senior secured credit facility at an average effective interest rate of 4.0% per annum on the outstanding balance and an average interest rate of 2.15% on the issued letters of credit. It also assumes the redemption of the Notes in the principal amount of $59.5 million leaving an outstanding principal balance of $110.5 million bearing interest at 8.875%. This amount excludes the amortization of deferred transaction cost and premium on long-term debt. (4) Subsequent to Closing, management estimates that the Company will incur additional general and administrative costs on a continuing basis relating to requirements of becoming a reporting issuer. These costs would include but not be limited to expenses associated with ongoing financial reporting and disclosure, public company listing fees, increased director fees and related director and officer insurance costs, investor relations and annual shareholder meetings. These amounts exclude any one time costs associated with the Offering and Refinancing. (5) Represents the combined Canadian federal and provincial income taxes of the Company and certain subsidiaries of the Company, at the current prevailing legislated rates of tax for the twelve months ended March 31, 2012. The estimated taxable income takes into account available deductions including the deduction of capital cost allowance and cumulative eligible capital in respect of the Company’s assets. As at March 31, 2012 the Company had non-capital losses of $52.2 million. The Company also has significant tax values for its property and equipment and operating licenses.

26 SELECTED HISTORICAL FINANCIAL INFORMATION The following table sets forth the Company’s summary historical consolidated financial data as at and for the periods indicated below, and with respect to Common Share information, does not give effect to the Share Consolidation. This information should be read together with the Company’s and Amalco’s financial statements and the related notes and the discussion under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” included elsewhere in this prospectus.

The summary of historical consolidated financial information for the three months ended March 31, 2012 and 2011 was derived from our unaudited consolidated financial statements and related notes for such periods, which were prepared in accordance with IFRS and are included elsewhere in this prospectus. The summary of historical consolidated financial information for the year ended December 31, 2011 was derived from our audited consolidated financial statements and related notes for such periods, which were prepared in accordance with IFRS and are included elsewhere in this prospectus. The summary historical financial information for the year ended December 31, 2010 is based on the combined financial results of Amalco for the year ended December 31, 2010 prepared in accordance with GAAP and the Company for the period from May 18, 2010 (date of incorporation) to December 31, 2010 prepared in accordance with IFRS. Accordingly, the summary historical financial information for the year ended December 31, 2010 includes the combined results of two separate legal entities prepared under GAAP and IFRS, respectively. As described under the heading “Our Company – Business History”, on September 16, 2010 we acquired the business and operations of Amalco, and the assets and liabilities acquired were recognized at fair value in the consolidated financial statements of the Company. The audited financial statements of both Amalco and the Company, respectively, reflect the effects of the Restructuring as at September 16, 2010. The combined financial information for the year ended December 31, 2010, does not reflect any pro-forma adjustments to show the effect of the Restructuring as if it had occurred at the beginning of the combined period or any earlier period presented in respect of Amalco. In addition, the combined financial information for the year ended December 31, 2010 may not be comparable to other periods presented because the Restructuring had a significant impact on the assets, liabilities and statements of operations of the respective entities being combined for the year ended December 31, 2010. The effects of the Restructuring are disclosed in the individual financial statements of Amalco and the Company, respectively, for the periods ended December 31, 2010 appearing elsewhere in this prospectus. The summary historical consolidated financial information for the year ended December 31, 2009 set forth below was derived from Amalco’s audited financial statements and related notes, which were prepared in accordance with GAAP and are included elsewhere in this prospectus.

Twelve Months Three Months Ended (in thousands) Ended March 31, Year Ended December 31, March 31, 2012 2012 2011 2011 2010(1) 2009(2) Statement of operations and comprehensive income (loss): (unaudited) (unaudited) (unaudited) (unaudited) Revenues Table Games ...... $ 63,210 $ 16,359 $ 15,370 $ 62,221 $ 67,978 $ 65,819 Slot Machine, Bingo and Other Electronic Games ...... 122,704 29,667 28,186 121,223 122,522 122,262 Food and Beverage ...... 27,411 6,682 6,162 26,891 25,351 23,192 Hotel ...... 8,431 1,690 1,617 8,358 8,590 4,826 Facility Development Commissions ...... 25,993 6,373 5,964 25,584 26,211 25,863 Other ...... 9,909 2,149 1,961 9,721 6,914 6,183 Gross Revenues ...... $ 257,658 $ 62,920 $ 59,260 $ 253,998 $ 257,566 $ 248,145 Costs and Expenses Cost of Food and Beverage Service ...... $ 10,998 $ 2,718 $ 2,527 $ 10,807 $ 11,147 $ 11,449 Human Resources ...... 102,108 25,806 24,730 101,032 101,228 98,209 Marketing and Promotion ...... 17,907 4,515 3,442 16,834 15,265 11,330 Occupancy ...... 12,920 3,645 3,155 12,430 12,162 12,674 Operating ...... 20,168 5,520 4,788 19,436 21,258 20,057 Share-based compensation ...... 1,074 1,074 — — — — Depreciation of property and equipment ...... 19,628 5,019 4,768 19,377 21,754 20,825 Amortization of intangible assets ...... 46,206 11,779 10,660 45,087 44,260 48,465 Total Costs and Expenses ...... $ 231,009 $ 60,076 $ 54,070 $ 225,003 $ 227,074 $ 223,009 Operating Income ...... $ 26,649 $ 2,844 $ 5,190 $ 28,995 $ 30,492 $ 25,136 Other Expenses (Income) (Gain)lossonsaleofpropertyandequipment...... — — — — (5) 25,742 Impairment of goodwill ...... — — — — — 111,260 Interest expense, net ...... 38,451 9,345 9,811 38,917 64,876 85,144 Foreign exchange gain on long-term debt ...... — — — — (46,676) (184,155) Loss on swap contracts ...... — — — — 47,168 143,024 Restructuring, acquisition, transaction and financing costs ...... 3,715 74 44 3,685 21,773 3,602 Impairment of non-financial assets ...... 1,243 — — 1,243 — — Change in fair value of embedded derivatives ...... 1,450 1,209 1,293 1,534 960 — Loss on debt extinguishment ...... 1,373 — — 1,373 — — Loss on restructuring ...... — — — — 248,194 — 46,232 10,628 11,148 46,752 336,290 184,617 Loss before income taxes ...... ($ 19,583) ($ 7,784) ($ 5,958) ($ 17,757) ($305,798) ($ 159,481) Recovery of income taxes ...... 4,503 1,368 1,315 4,450 169,760 36,048 Loss and comprehensive loss ...... ($ 15,080) ($ 6,416) ($ 4,643) ($ 13,307) ($136,038) ($ 123,433) EBITDA ...... 93,557 20,716 20,618 93,459 96,506 94,426 Adjusted EBITDA ...... 94,278 20,716 21,350 94,912 96,506 93,572 Adjusted Property EBITDA ...... 102,004 23,053 24,082 103,033 107,829 104,047

27 Notes: (1) The financial information in the table for the year ended December 31, 2010 is based on the combined financial results of Amalco for the year ended December 31, 2010 prepared in accordance with GAAP and the Company for the period from May 18, 2010 (date of incorporation) to December 31, 2010 prepared in accordance with IFRS. While the financial statements of Amalco for the year ended December 31, 2010 have been audited and the consolidated financial statements of the Company for the period from May 18, 2010 to December 31, 2010 have been audited, the financial information in the table for the year ended December 31, 2010 has not been subject to audit and represents the combined results of two separate legal entities prepared under GAAP and IFRS, respectively. Additionally, the financial information for the year ended December 31, 2010 does not reflect any pro-forma adjustments to show the impact of the Restructuring on Amalco assuming it had occurred at the beginning of the period. (2) The financial information in the table for the year ended December 31, 2009 is based on the financial results of Amalco for the year ended December 31, 2009 prepared in accordance with GAAP. The financial information for the year ended December 31, 2009 reflects the historical financial results of Amalco and does not reflect any pro-forma adjustments to show the impact of the Restructuring on Amalco assuming it had occurred at the beginning of the period.

EBITDA, Adjusted EBITDA and Adjusted Property EBITDA are defined in the “Glossary of Terms”.

We believe EBITDA, Adjusted EBITDA and Adjusted Property EBITDA facilitate company to company comparisons by removing potential differences caused by variations in capital structure (affecting interest expense), taxation and the age and book depreciation of facilities and equipment (affecting relative depreciation expense) and other items, which may vary for different companies for reasons unrelated to general performance or liquidity. However, our calculations of EBITDA, Adjusted EBITDA and Adjusted Property EBITDA are not necessarily comparable to other similarly titled measures of companies due to differences in the method of calculation.

EBITDA, Adjusted EBITDA and Adjusted Property EBITDA are non-IFRS and non-GAAP financial measures and should not be used in isolation or as a substitute for net (loss) income, cash flows from operating activities or other income or cash flow statement data prepared in accordance with IFRS or GAAP.

We have included information concerning EBITDA, Adjusted EBITDA and Adjusted Property EBITDA in this prospectus because we believe that such information is used by certain investors, securities analysts and others as one measure of an issuer’s performance and historical ability to service debt. In addition, we use EBITDA, Adjusted EBITDA and Adjusted Property EBITDA when interpreting operating trends and results of operations of our business.

There are inherent limitations in the use of EBITDA, Adjusted EBITDA and Adjusted Property EBITDA as analytical tools and you should not consider these measures in isolation, or as substitutes for analysis of our results as reported under IFRS or GAAP. Some of these limitations are: Š EBITDA, Adjusted EBITDA and Adjusted Property EBITDA do not reflect our current cash expenditure requirements, or future requirements, for capital expenditures or contractual commitments; Š EBITDA, Adjusted EBITDA and Adjusted Property EBITDA do not reflect changes in, or cash requirements for, our working capital needs; Š EBITDA, Adjusted EBITDA and Adjusted Property EBITDA do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debt; Š although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA, Adjusted EBITDA and Adjusted Property EBITDA do not reflect any cash requirements for such replacement; and Š our measures of EBITDA, Adjusted EBITDA and Adjusted Property EBITDA are not necessarily comparable to other similarly titled captions of other companies due to potential differences in the methods of calculation.

Because of these limitations, EBITDA, Adjusted EBITDA and Adjusted Property EBITDA should not be considered as discretionary cash available to us to reinvest in the growth of our business or as a measure of cash that will be available to us to meet our obligations. You should compensate for these limitations by relying primarily on our IFRS or GAAP results and use EBITDA, Adjusted EBITDA and Adjusted Property EBITDA as a supplemental measure. This information should be read together with the Company’s and Amalco’s financial statements and the related notes and the discussion under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus.

28 The following table is a reconciliation of net (loss) income to EBITDA for the periods indicated: Twelve Months Three Months Ended (in thousands) Ended March 31, Years Ended December 31, March 31, 2012 2012 2011 2011 2010(5) 2009(6) (unaudited) (unaudited) (unaudited) (unaudited) Loss and comprehensive loss ...... ($ 15,080) ($ 6,416) ($ 4,643) ($ 13,307) ($ 136,038) ($ 123,433) Excluding the impacts of: Share-based compensation ...... 1,074 1,074 Depreciationofpropertyandequipment...... 19,628 5,019 4,768 19,377 21,754 20,825 Amortization of intangible assets ...... 46,206 11,779 10,660 45,087 44,260 48,465 Interest expense, net ...... 38,451 9,345 9,811 38,917 64,876 85,144 Recovery of income taxes ...... (4,503) (1,368) (1,315) (4,450) (169,760) (36,048) (Gain) loss on sale of property and equipment ...... — — — — (5) 25,742 Impairment of goodwill ...... — — — — — 111,260 Foreign exchange gain on long-term debt . . . — — — — (46,676) (184,155) Loss on swap contracts ...... — — — — 47,168 143,024 Restructuring, acquisition, transaction and financing costs ...... 3,715 74 44 3,685 21,773 3,602 Impairment of non-financial assets ...... 1,243 — — 1,243 — — Change in fair value of embedded derivatives ...... 1,450 1,209 1,293 1,534 960 — Loss on debt extinguishment ...... 1,373 — — 1,373 — — Loss on restructuring ...... — — — — 248,194 — EBITDA ...... $ 93,557 $ 20,716 $ 20,618 $ 93,459 $ 96,506 $ 94,426 Add (Less): MTA Reimbursement(1) ...... — — — — — (1,719) Realized Foreign Exchange losses(2) ...... — — — — — 865 Boardwalk operations prior to acquisition(3) . . . 721 — 732 1,453 — — Adjusted EBITDA ...... $ 94,278 $ 20,716 $ 21,350 $ 94,912 $ 96,506 $ 93,572 Add (Less): Corporate Costs(4) ...... 7,726 2,337 2,732 8,121 11,323 10,475 Adjusted Property EBITDA ...... $ 102,004 $ 23,053 $ 24,082 $ 103,033 $ 107,829 $ 104,047

Notes: (1) MTA Reimbursement represents a $1.7 million reimbursement from the BCLC in relation to the marketing trust account (“MTA”). The MTA is an account, maintained by the BCLC and funded by a percentage of Win from various casinos in British Columbia including, the Grand Villa Casino, the Starlight Casino and the Cascades Casino. The MTA is used by the BCLC to fund marketing and related initiatives. In late 2008 and early 2009, the BCLC provided a one-time series of contribution “refunds” to the Company. These payments were recorded as a reduction of operating expenses. The Company does not expect to receive further payments of this nature from the BCLC. (2) A realized foreign exchange loss of $0.9 million resulting from our mandatory principal prepayments on the Pre-Restructuring First Lien Senior Credit Facility. This loss was recorded as a reduction of Other Revenue however, as it is not directly related to our operations, it has been excluded in the calculation of Adjusted EBITDA. (3) The Company acquired its CGCs on June 30, 2011. To reflect a full year’s results of operations from its acquired operations, an adjustment of $1.453 million was included in the calculation of Adjusted EBITDA for the year ended December 31, 2011 and $0.721 million for the twelve month period ended March 31, 2012 which represents management’s estimate of results of operations if a full twelve month period had been included. (4) Corporate costs include charges for non site specific staff such as finance, human resources, marketing and development departments at the Company’s head office in Burnaby, British Columbia and corporate office in Kelowna, British Columbia. These costs also include rent and other occupancy costs for the respective offices. (5) The financial information in the table for the year ended December 31, 2010 including and above the line item “EBITDA” is based on the combined financial results of Amalco for the year ended December 31, 2010 prepared in accordance with GAAP and the Company for the period from May 18, 2010 (date of incorporation) to December 31, 2010 prepared in accordance with IFRS. While the financial statements of Amalco for the year ended December 31, 2010 have been audited and the consolidated financial statements of the Company for the period from May 18, 2010 to December 31, 2010 have been audited, the financial information in the table for the year ended December 31, 2010 has not

29 been subject to audit and represents the combined results of two separate legal entities prepared under GAAP and IFRS, respectively. Additionally, the financial information for the year ended December 31, 2010 does not reflect any pro-forma adjustments to show the impact of the Restructuring on Amalco assuming it had occurred at the beginning of the period. (6) The financial information in the table for the year ended December 31, 2009 including and above the line item “EBITDA” is based on the financial results of Amalco for the year ended December 31, 2009 prepared in accordance with GAAP. The financial information for the year ended December 31, 2009 reflects the historical financial results of Amalco and does not reflect any pro-forma adjustments to show the impact of the Restructuring on Amalco assuming it had occurred at the beginning of the period.

The following table shows the reconciliation of the Company’s cash flow to EBITDA provided by operations.

Twelve Months Three Months Ended (in thousands) Ended March 31, Years Ended December 31, March 31, 2012 2012 2011 2011 2010(1) 2009(2) (unaudited) (unaudited) (unaudited) (unaudited) Net Cash generated from (used for) operating activities ...... $ 91,084 $21,115 $21,217 $ 91,186 $ 66,294 $ (6,342) Restructuring, acquisition, transaction and financing costs ...... 3,715 74 44 3,685 21,773 3,602 Cash payments relating to swaps ...... — — — — 3,940 8,755 Changes in non-cash working capital ...... (1,141) (473) (643) (1,311) 4,237 16,857 Interest expense(3) ...... — — — — 218 71,554 Other ...... (101) — — (101) 44 — EBITDA ...... $ 93,557 $20,716 $20,618 $ 93,459 $ 96,506 $ 94,426 Adjusted EBITDA ...... 94,278 20,716 21,350 94,912 96,506 93,572 Adjusted Property EBITDA ...... 102,004 23,053 24,082 103,033 107,829 104,047

Notes: (1) The financial information in the table for the year ended December 31, 2010 is based on the combined financial results of Amalco for the year ended December 31, 2010 prepared in accordance with GAAP and the Company for the period from May 18, 2010 (date of incorporation) to December 31, 2010 prepared in accordance with IFRS. While the financial statements of Amalco for the year ended December 31, 2010 have been audited and the consolidated financial statements of the Company for the period from May 18, 2010 to December 31, 2010 have been audited, the financial information in the table for the year ended December 31, 2010 has not been subject to audit and represents the combined results of two separate legal entities prepared under GAAP and IFRS, respectively. Additionally, the financial information for the year ended December 31, 2010 does not reflect any pro-forma adjustments to show the impact of the Restructuring on Amalco assuming it had occurred at the beginning of the period. (2) The financial information in the table for the year ended December 31, 2009 is based on the financial results of Amalco for the year ended December 31, 2009 prepared in accordance with GAAP. The financial information for the year ended December 31, 2009 reflects the historical financial results of Amalco and does not reflect any pro-forma adjustments to show the impact of the Restructuring on Amalco assuming it had occurred at the beginning of the period. (3) The presentation of net cash generated from (used for) operating activities for the Company excludes interest expense in accordance with IFRS. The presentation of net cash generated from (used for) operating activities for Amalco includes interest expense in accordance with GAAP. As EBITDA excludes interest expense, an adjustment is required for the years ended December 31, 2010 and 2009 in respect of interest expense included in Net Cash generated from (used for) operating activities related to Amalco.

30 Balance Sheet Data

(in thousands) March 31, December 31, 2012 2011 2010(1) 2009(2) (unaudited) Cash and cash equivalents ...... $ 31,203 $ 63,363 $ 59,043 $ 77,014 Property and equipment ...... $424,797 $406,000 $399,075 $ 376,595 Intangible assets ...... $437,349 $449,019 $463,165 $ 804,064 Total assets ...... $901,577 $928,529 $955,651 $1,336,625 Long-term debt ...... $464,056 $488,195 $504,402 $1,163,419 Shareholder loans and accrued interest ...... — — — $ 343,318 Total liabilities ...... $494,477 $516,087 $534,853 $1,752,588 Shareholders’ equity (deficiency) ...... $407,100 $412,442 $420,798 $ (415,963)

Notes: (1) The financial information in the table as at December 31, 2010 is based on the consolidated balance sheet of the Company as at December 31, 2010. (2) The financial information in the table as at December 31, 2009 is based on the balance sheet of Amalco as at December 31, 2009 prepared in accordance with GAAP. The financial information as at December 31, 2009 reflects the historical financial position of Amalco.

31 OUR COMPANY

Company Overview We are one of the largest casino operators in Canada. Our 12 gaming properties in British Columbia and Alberta are located in highly attractive gaming regions with strong gaming demographics, robust economies and growing populations. We operate in highly regulated markets which favour incumbent operators and have significant structural barriers to entry. We generate significant cash flow from our best-in-class properties which has enabled us to successfully execute upon internal and external growth strategies. Our Company has a successful track record of developing and operating gaming facilities and has an industry leading EBITDA Margin.

We are a leading gaming operator in British Columbia with the largest installed base of slot machines. We operate three casinos in the Greater Vancouver Region and four casinos in the Thompson-Okanagan Region. Our three casinos in the Greater Vancouver Region, the largest gaming region in British Columbia, have 2,673 slot machines, 115 table games and 29 poker tables. In the Thompson-Okanagan Region, where we are the only casino operator, our four casinos have 1,517 slot machines, 20 table games and 10 poker tables. In the Greater Vancouver Region we also operate three CGCs with 225 operational slot machines and 100 slot machines installed but not yet operational.

The map below illustrates the location and operational status of our properties.

Greater Vancouver Region British Columbia Alberta

Chances Squamish

Grand Villa Starlight Chances Newton Bingo Mission Edmonton Region Country Cascades South Surrey Palace Baccarat Property

Thompson- Okanagan Region Kamloops Owned Casino Vernon Leased Casino Kelowna Penticton Leased CGCs Owned CGC Under Expansion Held for Development

32 Our revenue is primarily earned from gaming activities. The BCLC, the GPEB and the AGLC are responsible for managing and conducting or regulating gaming activities in the regions in which we operate. As a gaming operator, we provide facilities and operational services to the BCLC under multi-year operating agreements and to the AGLC under multi-year licenses and, in return, receive commissions from gaming activities conducted at our properties. We play an important role in the economies and communities of the provinces in which we operate. In 2010, the BCLC remitted $1.1 billion to the Government of British Columbia to support a range of public programs and, in Alberta, gaming activities provided $1.4 billion to Alberta’s Lottery Fund to support thousands of volunteer, public and community- based initiatives across Alberta.

Company Structure The Company’s principal executive office is located at 4621 Canada Way, Suite 300, Burnaby, British Columbia V5G 4X8. Our website address is www.gatewaycasinos.com. Information contained in or linked from our website is not a part of this prospectus.

The Company was incorporated under the CBCA on May 18, 2010 as 7555237 Canada Ltd. On July 6, 2010, the Company’s articles were amended to change the Company’s name to “Gateway Casinos & Entertainment Limited”. The Company’s articles were subsequently amended on July 19, 2010 and September 14, 2010 to include restrictions on transfers of Common Shares required to comply with the regulations and policies of the gaming regulators. Prior to completion of this Offering, the Company articles will be amended further to among other things, (i) include specific provisions to reflect the ownership restrictions imposed under the GCA and the GLA and the terms and condition of our gaming registrations and licensing, our multiple operation services agreement with the BCLC dated October 22, 2009, as assigned (the “MCOSA”) and other operating agreements and licences; and (ii) implement the Share Consolidation. See “Description of Share Capital” and “Share Consolidation”.

33 The following organizational chart illustrates the beneficial ownership of Common Shares by principal shareholders upon completion of the Offering (assuming that the Over-Allotment Option is not exercised, in whole or in part, and that the Selling Shareholders do not acquire any Common Shares pursuant to the Offering). The organizational chart also illustrates the material components of the current structure of the Company, which is unaffected by the completion of the Offering. The jurisdiction of incorporation or organization, as applicable, are indicated in parentheses.

Public (1) TOP V Holdings(2) RBC(3) Babson Funds(4) Catalyst Shareholders

% % %

% % Gateway Casinos & Entertainment Limited (Canada)

100%(6) (7) (5) Grand Villa Casino 100% 100% 100% (Burnaby, BC)

Starlight Casino Boardwalk Gaming Squamish (New Westminster, BC) 427967 B.C. Ltd. Inc. (British Columbia) (British Columbia) South Surrey Project Cascades Casino Limited Partnership (Langley, BC) (British Columbia)

Lake City Kelowna Casino Chances Squamish Chances Mission (Kelowna, BC) (Squamish, BC) (Mission, BC)

Lake City Kamloops, Casino (Kamloops, BC) South Surrey Property Newton Bingo Country (Surrey, BC) (Surrey, BC) Lake City Vernon Casino (Vernon, BC)

Shareholder Lake City Penticton Casino (Penticton, BC)

Corporation Baccarat Casino (Edmonton, BC) Partnership Palace Casino Gaming Facilities (Edmonton, AB)

Development Properties

Notes: (1) The Company has been advised that, following the Offering, a total of Š Common Shares ( Š %) will be held by the Catalyst Capital Funds, which are, affiliated limited partnership funds managed, controlled and directed by Catalyst. See “Principal Shareholders and Selling Shareholders”. (2) The Company has been advised that, following the Offering, a total of Š Common Shares ( Š %) will be held by TOP V Holdings and that Tennenbaum, an affiliate of TOP V Holdings, will be the beneficial holder of such shares. See “Principal Shareholders and Selling Shareholders”. (3) The Company has been advised that, following the Offering, a total of Š Common Shares ( Š %) will be held by RBC. See “Principal Shareholders and Selling Shareholders”. (4) The Company has been advised that, following the Offering, a total of Š Common Shares ( Š %) will be held by Babson Funds. See “Principal Shareholders and Selling Shareholders”. (5) Newton Square Properties Ltd., a wholly owned subsidiary of 427967 B.C. Ltd, holds legal title of the land and premises on which Newton Bingo Country operates. The operating agreements for Chances Mission and Newton Bingo Country are held by 427967 B.C. Ltd. (6) Amalco is the registered owner of the land and premises on which the Grand Villa Casino, the Starlight Casino and the Cascades Casino are located and was appointed to hold legal title for Gateway pursuant to a declaration of bare trust and agency agreement in connection with the Restructuring. (7) 100% of the general partner and limited partner interests of South Surrey Project Limited Partnership are held directly by the Company.

34 Business History Restructuring On November 16, 2007, Macquarie Group Limited and Publishing and Broadcasting Limited (now known as Consolidated Media Holdings Limited) acquired through New World Gaming Partners Ltd., the outstanding units and convertible debentures of Gateway Casinos Income Fund, substantially all of the assets of Gateway Casinos Inc. and all of the outstanding shares of Star of Fortune Gaming Management (B.C.) Corp. for $1.365 billion (including fees and expenses). Following the acquisition, New World Gaming Partners Ltd. was amalgamated to form Old Gateway. After the amalgamation, New World became the sole shareholder of Old Gateway.

In October of 2009, Old Gateway initiated discussions with an ad hoc group of its first and second lien secured lenders with the goal of restructuring its existing first lien debt (the “Pre-Restructuring First Lien Senior Credit Facility”) and existing second lien debt (the “Pre-Restructuring Second Lien Senior Credit Facility”). In June of 2010, Old Gateway, the ad hoc group (led by Catalyst), the gaming regulators, and the BCLC agreed to the restructuring of Old Gateway pursuant to the Plan of Arrangement (the “Restructuring”). The Restructuring of Old Gateway was carried out on September 16, 2010 under Old Gateway’s governing corporate statute (the CBCA) and not under Canadian bankruptcy or insolvency laws. The Restructuring under the CBCA enabled Old Gateway to deleverage.

Pursuant to the Restructuring, Old Gateway’s business and operations were transferred to the Company. The Company emerged from the Restructuring with US$500 million of first lien term debt under the September 2010 Credit Agreement, C$35 million of revolving credit availability under the September 2010 Credit Agreement and approximately $40.2 million in cash, which represented a reduction of approximately $1 billion in debt, significantly enhancing the Company’s outlook.

Acquisition and Property Development History The following table summarizes the acquisition and development history of our properties. For the purposes of the following table, references to “Gateway” include all entities that previously conducted our gaming operations (which were acquired as part of the Restructuring).

In November, Gateway acquired the Palace Casino and performed an extensive renovation which more than doubled the size of the property. 1999 In March, Gateway opened the Burnaby Casino on the second floor of the parkade across from the existing Grand Villa Casino. The Burnaby Casino later became the Grand Villa Casino. 2002 In June, Gateway acquired the Baccarat Casino. In August, Gateway purchased the Lake City Casinos.

2005 Gateway opened the newly constructed Cascades Casino as part of a $66 million casino, hotel and conference centre development.

2007 In December, Gateway opened the newly constructed Starlight Casino following a $127 million development.

2008 Gateway opened the newly constructed Grand Villa Casino as part of a $188 million casino hotel and conference centre development. 2011 In June, Gateway purchased Chances Mission, Chances Squamish and Newton Bingo Country. 2012 In February, the Company acquired the South Surrey Property.

Recent Acquisitions Acquisition of our CGCs On June 30, 2011, we acquired our CGCs which consist of: Chances Mission (Mission, British Columbia), Chances Squamish (Squamish, British Columbia) and Newton Bingo Country (Surrey, British Columbia). Our CGCs provide alternative gaming options in smaller communities without casinos. Our CGCs offer, in total, approximately 26,700 square feet of gaming space as well as amenities including restaurants and bars. The aggregate purchase price

35 for this transaction was $39.9 million, satisfied by a combination of cash and the issuance of 4,850,000 Common Shares (without giving effect to the Share Consolidation). The purchase of the properties immediately added 225 slot machines to our operations, together with established bingo operations.

We are commencing a series of expansions and upgrades to convert Newton Bingo Country into a community gaming centre. At present, 100 temporary slot machines have been installed at Newton Bingo Country which will be activated when we enter into a project development agreement with the BCLC and the City of Surrey has reviewed and confirmed this agreement. Newton Bingo Country has been zoned by the City of Surrey for up to a total of 150 slot machines. The maximum number of slot machines that can be installed at Newton Bingo Country is, subject to the limit set by the City of Surrey, determined by the BCLC. See below in “Regulatory Environment” for a description of the operational rights of the former Burnaby Bingo Country.

The South Surrey Property was acquired for an aggregate purchase price of $32 million payable in $22 million in cash (the “Cash Payment”) and up to 883,626 Common Shares (the “Purchased Shares”) of the Company (collectively, the “Purchase Price”). The Purchase Price is payable by Gateway in three installments: (i) the Cash Payment and issuance of one Purchased Share was completed on February 9, 2012; (ii) the issuance of 618,538 Purchased Shares will take place upon completion of the First Milestones; and (iii) the issuance of 265,088 Purchased Shares will take place upon completion of the Second Milestones.

“First Milestones” means the receipt by the vendor of the South Surrey Property or the Company of : Š the fourth reading by the council of the City of Surrey of two amendment by-laws regarding the rezoning of the land and the amendment of the official community plan; Š an amendment of the Highway 99 Corridor Local Area Plan; and Š the final approval by the City of Surrey of the generalized development permit.

“Second Milestones” means receipt by the vendor of the South Surrey Property or the Company of: Š the final approval by the City of Surrey of a detailed development permit for the South Surrey Property; Š a comfort letter from the BCLC indicating acceptance in principle of the full service casino; and Š the final approval by the City of Surrey of the full service casino.

36 PROPERTY HIGHLIGHTS The chart below summarizes some of the key attributes of each of our gaming properties and the expiration date of the operating agreements that we have entered into with the BCLC and licences from the AGLC, as at March 31, 2012.

Adjusted Property EBITDA ($mm) LTM Approximate Operating ended Year Gaming Properties Total Agreement No. of No. of No. of March 31, Built/Latest Square Owned/ Investments or Licence Slot Table Poker Facility and Location 2012(1) Renovation Footage(2) Leased(3) ($mm)(4) Expiration(5) Machines(6) Games(7) Tables Greater Vancouver Region Grand Villa ...... 35.7 2008 100,000 Owned 188.0 Nov. 2018 + 1,001 48 12 10-year option Starlight ...... 16.6 2011 70,000 Owned 127.0 Dec. 2017 + 857 48 9 10-year option Cascades ...... 19.8 2008 70,300 Owned 66.0 May 2015 + 815 19 8 10-year option Chances Mission ...... 2.0 2010 6,500 Leased 3.5 Aug. 2017 + 125 — — 10-year option Chances Squamish ...... 0.1 2010 8,700 Leased 8.7 Jan. 2020 + 100 — — 10-year option Newton Bingo Country .... 0.6 2012 11,500 Owned 1.7 May 2016 100(8) —— Total ...... $ 74.8 267,000 $394.9 2,998 115 29 Thompson-Okanagan Region Lake City Kelowna ...... 3.9 2011 31,000 Leased 10.3 Feb. 2021 518 10 5 Lake City Kamloops ...... 5.2 2011 8,000 Leased 4.9 Feb. 2021 301 6 — Lake City Vernon ...... 5.4 2009 20,000 Leased 10.6 June 2019 + 405 — — 10-year option Lake City Penticton ...... 3.5 2008 8,000 Leased 1.3 Nov. 2019 293 4 5 Total ...... 18.0 67,000 27.1 1,517 20 10 Edmonton Region Palace ...... 6.0 2001 25,300 Leased 12.0 Aug. 2013 671 23 7 Baccarat ...... 3.2 2009 26,900 Leased 0.5 Aug. 2013 382 20 7 Total ...... 9.2 52,200 12.5 1,053 43 14 Total ...... $102.0 386,200 $434.5(9) 5,568 178 53

Notes: (1) See “Prospectus Summary – Selected Historical Financial Information”. (2) Includes administrative and staff areas. (3) See “Property Highlights”. (4) Since 2004. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Capital Expenditures”. (5) See “Regulatory Environment”. (6) No. of slot machines includes VLTs and electronic table games. (7) No. of table games includes touch bet roulette. (8) At present, 100 temporary slot machines have been installed at Newton Bingo Country which will be activated when we enter into a project development agreement with the BCLC and the City of Surrey has reviewed and confirmed the agreement. Newton Bingo Country has been zoned by the City of Surrey for up to a total of 150 slot machines. The maximum number of slot machines that can be installed at Newton Bingo Country is, subject to the limit set by the City of Surrey, determined by the BCLC. (9) $434.5 million does not include the $22 million invested in the South Surrey Property.

37 INVESTMENT HIGHLIGHTS The Company believes that its Common Shares provide an attractive investment opportunity as it is well positioned to execute its business strategies based on the following competitive advantages and key strengths.

The graph below illustrates the historical revenue and Adjusted EBITDA generated by our gaming properties for each of the last four financial years and the LTM ended March 31, 2012.

Historical Revenue and Adjusted EBITDA ($ millions) $300.0 $257.6 $257.7 $248.1 $254.0 $250.0 $234.9

$200.0

$150.0 $93.6 $96.5 $94.9 $94.3 $100.0 $77.3

$50.0

$0.0 2008 2009 2010 2011 LTM

Revenue Adjusted EBITDA

Our cash flow supports the payment of dividends. For the LTM ended March 31, 2012 our Adjusted EBITDA was $94.3 million of which $69.4 million (or 73.6% of Adjusted EBITDA) is our estimated cash available for payment of dividends, after giving effect to the Offering and the Refinancing. See “Prospectus Summary – Summary of Cash Available for Payment of Dividends”.

$456.5 million has been invested to date in our existing properties since 2004 with a focus on constructing new premises. Management believes that our free cash flow will support our maintenance capital and help fund our growth capital going forward, which will enhance our revenue generating capacity. See “Dividend Policy” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Capital Expenditures”.

Recent transactions, such as the acquisition of our CGCs and the South Surrey Property, demonstrate our ability to identify new gaming opportunities and execute on our growth strategy.

We acquired our CGCs, including Newton Bingo Country, in June of 2011. In addition, we are now commencing a series of expansions and upgrades to convert Newton Bingo Country into a community gaming centre. At present, 100 temporary slot machines have been installed at Newton Bingo Country which will be activated when we enter into a project development agreement with the BCLC and the City of Surrey has reviewed and confirmed this agreement. Newton Bingo Country has been zoned by the City of Surrey for up to a total of 150 slot machines. The maximum number of slot machines that can be installed at Newton Bingo Country is, subject to the limit set by the City of Surrey, determined by the BCLC.

We also acquired the South Surrey Property in February of 2012. Surrey City Council has already approved the third reading of a proposal to rezone the South Surrey Property to permit commercial development including a hotel, convention centre, entertainment uses and a gaming facility (casino). However, any development of a gaming facility at

38 the South Surrey Property requires, among other things, a proposal from the BCLC to develop a gaming facility on site and the approval of the City of Surrey under the GCA. The BCLC has not at this time decided to propose the development of a gaming facility at the South Surrey Property. Management believes that there is a strong business case to proceed with the completion of the rezoning and are in ongoing discussions with the BCLC on the development of a gaming facility at the South Surrey Property.

Regulated Markets which Favour Incumbent Operators and have Significant Structural Barriers to Entry We operate in highly regulated markets built on mutually beneficial, collaborative and co-dependent relationships with the BCLC and the AGLC. Management believes that the BCLC and the AGLC have a vested interest in maintaining high quality gaming properties and preference for experienced and financially strong operators which are focused on growing the overall market. We provide facilities and operational services to the BCLC under multi-year operating agreements and to the AGLC under multi-year licenses in return for an operator’s commission. Having suitable premises and experience as a casino operator are critical to obtaining a casino operating agreement or license and, as such, are a significant barrier for new entrants.

Strong Government Support of the Gaming Industry Management believes that the provincial governments in British Columbia and Alberta will continue to support the gaming industry because of the significant financial benefits that it provides. On average, the lottery and gaming industry returns approximately $220 of net profit to every resident of Canada. In addition to the jobs the gaming industry creates both directly and indirectly, gaming benefits citizens and communities by providing funding for health care, education and charitable and municipal programs. In 2010, the BCLC remitted $1.1 billion to the Government of British Columbia to support a range of public programs and, in Alberta, gaming revenues provided $1.4 billion to Alberta’s Lottery Fund to support thousands of volunteer, public and community-based initiatives across Alberta.

As a gaming service provider for the BCLC, we are entitled to earn additional commission based on making eligible qualifying expenditures for the development or improvement of gaming facilities and qualifying additional amenities. The additional commission is based on gaming revenues generated by the individual facilities where the expenditures were made. Gaming operators earn an additional commission of 3% to 5% of Win through the BCLC’s FDC and AFDC programs. While operators are required to initially finance all capital expenditures, these programs encourage operators to make capital investments and continually maintain and develop their facilities.

The graph below illustrates the expected additional commission to be earned through our British Columbia properties based on the total investments in our properties since 2004 pursuant to the FDC and AFDC programs and Development Assistance Compensation.

Eligible Investments vs. Non-Eligible Investments ($ millions) $200 $188.0

$160 $127.0 $120

$80 $66.0

$40 $10.3 $10.6 $13.9 $4.9 $1.3 $0 Grand Villa Starlight Cascades Kelowna Kamloops Vernon Penticton CGCs

Eligible Investments Non-Eligible Investments

Note: See “Regulatory Environment”.

39 Highly Attractive Industry We operate in a resilient sector of the economy with demonstrated growth and growth potential. The British Columbia gaming industry has grown significantly. From 2006 to 2011, gaming revenue in British Columbia grew by over $418 million from $2.3 billion to $2.7 billion, which management believes can be attributed to (i) a strong demand for gaming with 80% of adults in British Columbia participating in a form of gaming at least once during 2010 and 63% participating at least once a month in 2011, and (ii) the BCLC’s focus on patrons through new games, services and marketing, continued improvements to gaming facilities and superior customer relations. We operate in a resilient and growing sector of the economy with demonstrated growth and growth potential. Over the past 15 years, the Canadian gaming industry has more than doubled in size with gaming revenue in 2010 of $15.1 billion and non-gaming revenue of $900 million.

Favourable Demographics and Economic Trends Favourable demographic and economic trends have fuelled growth in the regions in which we currently operate. British Columbia and Alberta had the highest provincial population growth during the 2006 to 2011 period at 7.0% and 10.8%, respectively, compared to a national average of 5.9% based on data from Statistics Canada. Unemployment rates in British Columbia and Alberta are relatively low at 6.3% and 4.6%, respectively, according to the Conference Board of Canada. In comparison, the unemployment rate in Canada is 7.1% and is 8.2% in the United States according to Bloomberg. British Columbia has a growing population of 4.6 million residents, with a significant portion of adults over the age of 45, which contributes to a stable and attractive market. In 2012, GDP growth rates in British Columbia and Alberta are estimated to be 2.1% and 3.3%, respectively, compared to a national average of 2.1%. We have a strong and growing local resident patron base in the British Columbia and Alberta regions and are not as reliant on tourism as other gaming regions in North America.

Leading Market Position We are a leading casino operator in each of the regions in which we operate. We have the largest installed base of slot machines in British Columbia. We operate 48% of all slot machines and 36% of all table games in British Columbia casinos. As at March 31, 2011, we are the largest casino operator in the Greater Vancouver Region, excluding Racinos, in terms of slot machine revenue and total number of slot machines, with 50% and 52% market share, respectively. We are the only casino operator in the Thompson-Okanagan Region. We are one of the largest casino operators in the Edmonton Region, where we operate the Palace Casino and the Baccarat Casino. The Palace Casino and the Baccarat Casino contain 19% and 35% of the Edmonton Region’s slot machines and table games, respectively.

Experienced Management Team and Committed Shareholder Our experienced management team has over 80 years of combined experience in the gaming industry and is led by our Chief Executive Officer, Lorenzo Creighton. Mr. Creighton has over 20 years of experience in the gaming industry. Some of Mr. Creighton’s recent career highlights include serving as President and Chief Operating Officer of MGM Grand Detroit, which became the second-most profitable casino among the 12 casinos owned by Las Vegas-based MGM Resorts International Inc (including those located in Macau and Las Vegas). leading the renovation and

40 redevelopment of the Flamingo Las Vegas, and serving as President and Chief Operating Officer of New York-New York Hotel and Casino in Las Vegas where he initiated the renovation of the 2,400 room hotel casino. Mr. Creighton is supported by a team of veteran executives. Our Chief Financial Officer, Rehana Din, has over a decade of experience in the gaming industry, starting as an auditor with PricewaterhouseCoopers LLP with Gateway as a long term client and since 2008, as part of our management team. Our Vice President, Marketing and Director of Business Development, Randolph Sears, has over 30 years of experience in the gaming industry and has held various positions with Tropicana Entertainment, Tropicana Las Vegas, Spotlight 29 Casino, New Frontier, Bally’s & Paris Las Vegas and Flamingo Las Vegas. Our Vice President, Human Resources, Trevor West, has been employed by us since 1999 and has helped shape our reputation as an excellent employer. Finally, our Director of Operations, Jagtar Nijjar, initially joined us in 1991, has been involved in the planning and development of many of our current properties such as the Grand Villa Casino, the Starlight Casino and the Cascades Casino and has served as casino manager for many of our properties. For additional details regarding the experience and qualifications of our management team, see “Directors and Executive Officers”.

We also benefit from the strong and committed support of Catalyst. Upon completion of the Offering, the Catalyst Capital Funds will beneficially own approximately Š % of the outstanding Common Shares. Founded in 2002, and currently having an estimated $3 billion in assets under management, Catalyst is a world leading investment firm with rates of return on investments that rank it amongst the best in the world. Catalyst employs a highly disciplined investment process and focuses on established companies with strong market positions that are under-managed, undervalued and/or poorly capitalized. Catalyst is a private equity firm that focuses generally on building businesses and specifically on bringing operational improvements and excellence to its investment companies as it leads them through restructurings and other forms of improvement and repositioning. Newton Glassman and Gabriel de Alba, as Catalyst’s representatives, have taken an active role on the Board and will continue to work with management on the execution of the Company’s strategy. Both have extensive experience in restructuring, operations, deleveraging, growing and creating substantial value for investors in market-leading companies.

Gabriel de Alba, the former Chairman of Old Gateway’s Steering Committee of Creditors, will continue to act as the Company’s Executive Chairman.

As Twelve Months Adjusted Ended for this (in thousands) March 31, 2012 Offering(3) (unaudited) (unaudited) Existing Credit Agreement Revolver(1) ...... — — Term Loan A ...... 135,271 — Term Loan B ...... 176,379 — New Revolver(1) ...... — — New Term Loan ...... — 235,000 Notes ...... 170,000 110,500 Total long term debt(2) ...... 481,650 345,500

(1) The Company currently has $22.9 million in letters of credit issued against the Existing Credit Agreement which, will be rolled over under the New Credit Agreement. (2) Excludes unamortized portion of deferred transaction costs and debt premium related to embedded derivations. (3) See “Description of Our Indebtedness”.

41 BUSINESS STRATEGIES The Company’s primary objective is to maintain its position as a leading gaming company in Canada and to grow its market share. We are focused on maximizing total returns for our shareholders by executing on the following business strategies:

Enhance Properties to Drive Incremental Growth We continually review our portfolio of properties to determine potential growth in our product offerings that will enhance our customer’s gaming experience. We deploy capital strategically into value-enhancing projects to help increase visitation and gaming spend, attract new customers and drive incremental growth. Many of these enhancements are eligible to earn additional commissions under the Facility Development Program. Through targeted capital investment or reinvestment in our properties, we strive to ensure that our properties are attractive and best-in-class and cater to our customers’ unique tastes and demands. For example, we recently renovated our Starlight Casino to feature private gaming rooms and high quality interiors to maximize the sense of luxury and comfort to our patrons. We expanded the Kelowna Casino and renovated its interiors and refreshed the Cascades Casino which included the addition of a new spa area. We are also refurbishing Newton Bingo Country to convert it to a community gaming centre with slot machines. We are also planning to renovate the Palace Casino to refresh the décor and modernize the overall experience for our patrons, which is expected to commence in the fourth quarter of 2012. We have recently opened a new poker area and are enhancing food and beverage amenities at our Grand Villa Casino and we are also planning to enhance our food and beverage amenities at our Starlight Casino in 2013.

We have developed core marketing programs designed to reach new and existing patrons, which include direct mail, print, internet, radio and television advertising to promote our properties. We use market analysis tools, such as focus groups, to better understand our customers and each local region so that we can cater to the specific entertainment preferences of existing and potential customers. We target the high-limit table and high-limit slot machine segments through focused marketing, special events and the development of player relationships. The mix of slot machines is also regularly modified to provide customers with the most current and popular games available.

42 The map below illustrates the numerous gaming properties held by independent operators (excluding the Company and Great Canadian) and the new properties recently proposed by provincial regulators.

Casinos

Other Gaming (2)

2 1

4 4 19 8 4 (1) 11 4 21 3 3 1 29 3 3 2

Source: HLT Advisory Inc. and provincial gaming regulator websites. 1. Includes new casino announced by the Ontario Lottery and Gaming Corporation. 2. Refers to community gaming centres and bingo halls in British Columbia, new gaming zones in Ontario and racetracks the in remaining provinces.

Continuously Improve Operating Efficiency Our management team under the leadership of our Executive Chairman and our Chief Executive Officer is focused on implementing measures designed to improve our customer’s overall gaming experience while improving the Company’s operating efficiency. We recently completed a comprehensive review of our cost structure and are implementing specific cost reduction programs with the aim of increasing operating margins. The main focus areas of the review included rationalization of staff positions and hours as well as identifying potential cost reductions in wages, maintenance, food and beverage and overall operations. We strive to continuously identify initiatives that will create opportunities to improve margins.

Leverage New Gaming Management System Being Implemented by the BCLC We have a number of marketing initiatives which build customer loyalty and drive additional visits to our properties. We market our product offerings through direct mail and e-mail to participants in the BCLC’s BcGold Encore Program, which allows slot machine players to earn points for play that can be redeemed. Our customer rewards program encourages repeat visits to our properties from existing customers. It also helps us understand our customers’ play patterns and allows us to target marketing messages to specific groups of players via our player database. The GMS that is being implemented by the BCLC will also enhance our ability to access real time data and statistics that will assist us in understanding our customers and allow us to reward them in a more timely manner. See “Industry Overview”.

Further Foster and Develop Strong Relations with the Local Community We are actively involved in our local communities through marketing initiatives that enhance our profile and image with the local community. We work with the communities in which we operate, including many of the charitable organizations who receive provincial grants from gaming revenue, to increase exposure for our properties and help better integrate us in our local markets.

PROPERTY OVERVIEW We operate nine casinos, three of which are owned and six of which are leased, and our three CGCs, one of which is owned and two of which are leased. The entertainment experience we offer at our properties includes table games, slot machines, and bingo. In addition to offering gaming, all of our properties offer many non-gaming entertainment options such as live entertainment and a variety of food and beverage amenities.

43 Our Greater Vancouver Properties Our six gaming properties in the Greater Vancouver Region consist of the Grand Villa Casino, the Starlight Casino, the Cascades Casino and our three CGCs. As at March 31, 2011, we are the largest casino operator in the Greater Vancouver Region, excluding Racinos, in terms of slot machine revenue and total number of slot machines, with 50% and 52% market share, respectively. All of our casinos in the Greater Vancouver Region are in operation 24 hours a day, 365 days a year. During the twelve months ended March 31, 2011, casino properties in the Greater Vancouver Region generated $939 million of casino revenue, representing approximately 74% of British Columbia’s casino revenue. Our casinos account for $415 million of this casino revenue, representing a 44% market share.

Our Casinos Grand Villa Casino (Burnaby, British Columbia) The Grand Villa Casino, the Greater Vancouver Region’s newest casino, was opened in 2008. With approximately $188 million invested, the Grand Villa Casino is our flagship property and largest contributor based on revenue and EBITDA. Located in Burnaby, British Columbia, the Grand Villa Casino includes the Delta Burnaby Hotel and Conference Centre and benefits from its central location in the Greater Vancouver Region and close proximity to Vancouver and surrounding suburban areas. The Grand Villa Casino is located adjacent to an interchange off of the Trans-Canada Highway, the main transportation corridor of the Greater Vancouver Region, resulting in excellent visibility and accessibility. The Grand Villa Casino has a high-limit slot machine room and is one of our two casinos that offer high-limit table games. For the twelve months ended March 31, 2011, the Grand Villa Casino generated $3,325 Table Win/Table/Day, which was one of the highest in British Columbia. The Grand Villa Casino offers approximately 100,000 square feet of gaming space, containing 1,001 slot machines, 48 table games and 12 new poker tables which were added in May of 2012. We expect that the Grand Villa Casino will continue to be the most significant contributor to our performance in the Greater Vancouver Region. The Grand Villa Casino is one of three casinos in the Greater Vancouver Region to offer hotel accommodations with its 200-room Delta Burnaby Hotel & Conference Centre, which opened in April of 2009. Delta operates the hotel at the site. The conference centre caters to groups of all sizes with approximately 12,600 square feet of meeting space and a parking garage with total capacity for approximately 1,300 cars. The Grand Villa Casino currently offers its patrons a variety of food and beverage options. Patrons can choose from the Grand Villa Casino’s full-service restaurant, EBO, or three high-quality vendors located in the property’s food court. The Grand Villa Casino also features Alpina, a wine bar and lounge, and Centro, a bar located in the centre of its gaming floor. The Grand Villa Casino offers patrons the Grand Dynasty Chinese restaurant and the G-Be Japanese Izakaya on the casino property to complement current food and beverage offerings and further cater to high-limit patrons. In addition, Grand Villa Casino will undergo a food and beverage expansion through the addition of a full-service buffet with 82 seats. We are also rebranding the Scala Lounge by adding 178 seats while serving small dishes and tapas with a raw bar, and replacing the Infusion Snack Bar with a new noodle bar. These changes involve a total cost of approximately $2 million and are expected to be completed by September of 2012.

Starlight Casino (New Westminster, British Columbia) The Starlight Casino, opened in late 2007, is located in New Westminster, British Columbia. We invested approximately $127 million in the Starlight Casino, which features best-in-class gaming equipment and entertainment amenities, and contains 857 slot machines, 48 table games and nine poker tables. The Starlight Casino is positioned in a highly visible location adjacent to the interchange of a major highway 24 kilometres southeast of downtown Vancouver and is in close proximity to Richmond, British Columbia and surrounding suburban areas. The Starlight Casino has one of the largest slot machine installations in British Columbia and offers high-limit table games and a high-limit slot machine room. We recently expanded and renovated our high-limit table area in August of 2011 to enhance the experience of our high-limit players. We recently opened additional table games on the main gaming floor and have expanded our entertainment area. This will be followed by an enhancement to our food and beverage amenities next year. The Starlight Casino’s location, visibility, accessibility and the demographics of surrounding areas contribute to the performance of the property. The Starlight Casino’s attractive food and beverage options include various restaurants, bars and lounges. The Starlight Casino features two Asian-themed restaurants, Shang Noodle House and Kirin Seafood Restaurant, which offer an assortment of authentic Chinese and Japanese cuisine. Additionally, the property offers patrons a fully interactive sports bar, Schanks, with over 120 video screens. Other options include Salt and Pepper, a self-selection style café, and Red Bar, a bar and lounge located near the gaming floor.

44 Cascades Casino (Langley, British Columbia) The Cascades Casino, opened in 2005 and expanded in 2008, is located in downtown Langley, British Columbia, in the Fraser Valley region of the Greater Vancouver Region. We invested approximately $66 million in the Cascades Casino, which contains 815 slot machines, 19 table games and eight poker tables. The Cascades Casino is located on 10 acres of land 40 kilometres east of downtown Vancouver and is within 16 kilometres of the Canada – United States border. The Cascades Casino is the only casino and hotel and convention centre complex in the Fraser Valley region. The Cascades Casino serves the growing communities of Surrey, Delta, White Rock and Langley, an area with a combined population of over 700,000. We are continuing to expand and improve our amenities at the Cascades Casino, including planned renovations to our hotel and convention centre complex.

The Cascades Casino, like the Grand Villa Casino, is one of three casinos in the Greater Vancouver Region to offer hotel accommodations with its 77-room hotel, the Coast Hotels & Convention Centre Langley City. We operate the hotel and its approximately 26,000 square foot convention space under the Coast Hotels brand and central reservation system. The Convention Centre features flexible meeting and function space, including the approximately 7,700 square foot Cascade Ballroom, five meeting rooms and an executive boardroom. The facility also features a parking garage with approximately 1,300 car-capacity. A wide variety of entertainment options are available in the 420-seat Summit Theatre, including live music acts, comedy shows and other entertainment. The casino expects to open a Starbucks outlet and an expanded buffet area in 2012. Additional renovations are expected for the convention area which will include carpet and wall coverings. We are planning on installing significantly enhanced exterior signage to improve our visibility.

The Cascades Casino also offers numerous dining options. The Pinnacle Bar and Grille Restaurant features an extensive selection of dishes and casual dining options are available at the Lobby Café. Casino patrons can also eat and enjoy the night life and gaming entertainment at the Glacier Bar which is centrally located on the gaming floor.

Construction on the Cascades Casino began in 2004. The property opened in May of 2005, after a $50 million capital investment. Further investments have been made since then to improve the facility and its entertainment options. The Cascades Casino’s new parkade opened in 2006 after a $9.4 million investment and an expansion was completed in 2008 for $6.2 million, part of which included space for the additional 225 slot machines. Subsequent to its development and construction, the Convention Centre was sold to the City of Langley for total consideration of approximately $5.6 million. Under the terms of the operating agreement with the City of Langley, we have the exclusive right to operate the convention centre for a period of 20 years, which began in December of 2005. We may terminate the agreement at our option on the fifth, tenth and fifteenth anniversaries by providing 12 months written notice. We retain all profits and incur any losses from the Convention Centre.

Our CGCs On June 30, 2011, we acquired our CGCs which consist of: Chances Mission (Mission, British Columbia), Chances Squamish (Squamish, British Columbia) and Newton Bingo Country (Surrey, British Columbia). Our CGCs provide alternative gaming options, mainly in the form of slot machines, in smaller communities without casinos. The CGCs offer, in total, approximately 26,700 square feet of gaming space as well as amenities including restaurants and bars.

Chances Mission (Mission, British Columbia) Chances Mission is located in Mission, British Columbia, in the Fraser Valley region. Chances Mission is located 70 kilometres east of downtown Vancouver and within 18 kilometres of the Canada-United States border. Chances Mission is an approximately 6,500 square foot facility offering various amenities including a bar, 125 slot machines, and 115 bingo seats. We believe the location is currently at capacity and we expect to approach city council and the BCLC to obtain permission to increase the number of machines and to obtain permission for off track betting.

Chances Mission opened in June of 2004 and was recently renovated in 2010. We lease the premises under a 10-year agreement. The current term expires on September 30, 2014 and has two five-year renewal options.

Chances Squamish (Squamish, British Columbia) Chances Squamish is located in a highly visible location adjacent to the Sea to Sky Highway in Squamish, British Columbia at the north end of Howe Sound. Chances Squamish is located 66 kilometres north of downtown Vancouver

45 and benefits from being enroute to North America’s premier mountain resort in Whistler which has over 6.5 million overnight visits per year. Chances Squamish is an approximately 19,000 square foot facility offering 100 slot machines, 102 bingo seats, off track betting and the Rock Bar & Grill.

Chances Squamish opened in January 2010. We lease the premises under a 20-year agreement with the Squamish Indian Band. The current term expires in January of 2030 and has two 20-year renewal options.

Newton Bingo Country (Surrey, British Columbia) Newton Bingo Country is located in Surrey, British Columbia, which is 33 kilometres southeast of downtown Vancouver. We are currently undergoing a series of upgrades and expansions to convert Newton Bingo Country from a bingo hall to a community gaming centre. At present, 100 temporary slot machines have been installed at Newton Bingo Country which will be activated when we enter into a project development agreement with the BCLC and the City of Surrey has reviewed and confirmed this agreement. Newton Bingo Country has been zoned by the City of Surrey for up to a total of 150 slot machines. The maximum number of slot machines that can be installed at Newton Bingo Country is, subject to the limit set by the City of Surrey, determined by the BCLC.

Competition In the Greater Vancouver Region, our most significant casino competitors are operated by Great Canadian Gaming Corporation (“Great Canadian”) and Paragon Gaming LLC (“Paragon”). Great Canadian operates the River Rock Casino in Richmond (1,006 slot machines and 140 table games), the Boulevard Casino in Coquitlam (1,000 slot machines and 94 table games), Fraser Down’s Racino in Cloverdale (469 slot machines and 16 table games) and the Hastings Park Racino in Vancouver (596 slot machines). Paragon operates the Edgewater Casino (“Edgewater”) in Vancouver (521 slot machines and 55 table games). The BCLC obtained approval from the City of Vancouver to relocate the Edgewater to a new downtown location. Edgewater’s redevelopment plan included increased gaming capacity to a maximum of 1,500 slot machines; however, the expanded gaming capacity was not approved by the municipality. As of the date of the Offering, to the knowledge of the Company no further application for gaming expansion has been submitted. In the Greater Vancouver Region, we also compete, to a lesser extent, with community gaming centres, including the community gaming centres in Maple Ridge (over 100 slot machines), Abbotsford (125 slot machines) and the planned relocation and conversion of Chilliwack Bingo in the first quarter of 2013 (estimated 150 slot machines) to a community gaming centre.

Our Thompson-Okanagan Properties We are the sole casino operator in the Thompson-Okanagan Region, where we operate four casinos: the Lake City Kelowna Casino, the Lake City Kamloops Casino, the Lake City Vernon Casino and the Lake City Penticton Casino. The Lake City Kelowna Casino and the Lake City Kamloops Casino have been extensively renovated in the last two years and Lake City Penticton Casino was renovated in 2008. The Lake City Vernon Casino was rebuilt in 2009. The Company has invested $27.1 million in the Lake City Casinos’ properties. The Thompson-Okanagan Region is located in the southern interior of British Columbia and is a popular retiree and seasonal tourist destination.

The Lake City Kelowna Casino (Kelowna, British Columbia) The Lake City Kelowna Casino, recently expanded in 2011, is the Lake City Casinos’ flagship property. This is located within the exclusive Grand Okanagan Lakefront Resort and Conference Centre. The area’s increasingly popular activities, including wineries, skiing, hiking and golfing, drive the thriving tourism sector and conference business. Furthermore, Kelowna has favourable gaming demographics as it is the largest city in the British Columbia interior, with 180,000 residents. The Lake City Kelowna Casino is an approximately 43,000 square foot facility and offers approximately 31,000 square feet of gaming space, including 518 slot machines, 10 table games and five poker tables.

The Grand Okanagan Lakefront Resort and Conference Centre is owned and operated by Delta. The Lake City Kelowna Casino attracts traffic from Prospera Place, a 5,000-seat multi-purpose sporting and entertainment facility which hosts major entertainers and events to the area and is home to the Kelowna Rockets of the Western Hockey League.

The Lake City Kelowna Casino opened in May of 1999. We lease the premises under a 20-year agreement. The current term expires on June 12, 2029 and has with two five-year renewal options.

46 The Lake City Kamloops Casino (Kamloops, British Columbia) The Lake City Kamloops Casino is located in downtown Kamloops, the second largest city in the British Columbia interior with a population of over 88,000 residents. The Lake City Kamloops Casino is an approximately 14,000 square foot facility and offers approximately 8,000 square feet of gaming space, including 301 slot machines and six table games. The Lake City Kamloops Casino was completely renovated in 2011 to update its décor and enhance its appeal to gaming patrons. We are considering plans for the potential expansion of the Lake City Kamloops Casino.

The Lake City Kamloops Casino opened in April of 1998 and was renovated in 2011. We lease the premises under a 10-year agreement. The current term expires on December 31, 2014 and has a five-year renewal option.

The Lake City Vernon Casino (Vernon, British Columbia) The Lake City Vernon Casino is located across the street from Vernon’s main shopping centre and has excellent visibility and accessibility from Vernon’s principal highway. Vernon’s population is 38,000 people and draws customers from surrounding areas due to Vernon’s robust tourism industry which is focused on local lakes and wineries. The Lake City Vernon Casino offers approximately 20,000 square feet of gaming space, including 405 slot machines. The Lake City Vernon Casino is a prominent entertainment destination in Vernon, featuring the Sevens Bar & Grill, a modern pub-style restaurant.

In 2009, the Lake City Vernon Casino was relocated to its current location in June of 2009 at a cost of $10.4 million. The relocation of, the Lake City Vernon Casino tripled the facility’s size and more than doubled the number of gaming devices offered. We lease the premises under a 10-year agreement. The current term expires in May of 2018 and has two ten-year renewal options.

The Lake City Penticton Casino (Penticton, British Columbia) The Lake City Penticton Casino is located in Penticton Lakeside Resort and Conference Centre directly on the Okanagan Lake. With a local population of approximately 35,000 residents, Penticton’s population increases significantly in the summer months due to the tourism season. The Lake City Penticton Casino is an approximately 13,000 square foot facility and offers approximately 8,000 square feet of gaming space, including 293 slot machines, four table games and five poker tables.

The Lake City Penticton Casino operates as a premier entertainment facility and complements the destination- oriented Penticton Lakeside Resort and Conference Centre. The resort offers 204 deluxe guest rooms and suites, each with its own balcony, offering views of the Okanagan Lake and surrounding mountains. The Lake City Penticton Casino offers the Sand Bar, a lakeside bar and restaurant.

We recently implemented a series of upgrades and expansions to the facility. In 2008, the Lake City Penticton Casino was expanded and modernized at a cost of $1.3 million which included a new five-table poker area, replacement of a live table game with an electronic table game and added an additional 40 slot machines in the third quarter of 2010.

The Lake City Penticton Casino opened in 2000. We lease the Lake City Penticton Casino facility. The current term of the lease expires on May 14, 2014 and has a six-year renewal option.

Customers Consistent with the region’s local demographics, the slot machine and table patron profile at our Lake City Casinos is predominantly comprised of local residents, aged 45 and over, with a significant number of retirees. While much of our business is generated from the growing population base, we also generate a significant portion of our revenue from tourists in the summer months.

Competition There are no competing casinos in the Thompson-Okanagan Region. Casinos in the Greater Vancouver Region are nearly 418 kilometres west of our southern most casino (Penticton) in the Thompson-Okanagan Region. Casino of the Rockies, a potential competitor, is located in Cranbook, British Columbia which is over 517 kilometres east of the Thompson-Okanagan Region. Our only competition in the Thompson-Okanagan Region exists from community

47 gaming centres in Kelowna and Kamloops with 225 and 90 slot machines, respectively. However, community gaming centres do not offer table games. Management anticipates limited additional competition in the market due to the BCLC’s control of gaming supply. Management believes that a community gaming centre in Salmon Arm is being considered, but has not yet been proposed by the BCLC. However, even if the BCLC proposed a gaming centre in Salmon Area management believes any such proposal would have minimal impact on our Lake City Casinos’ operations.

Our Edmonton Properties We are one of the largest casino operators in the Edmonton Region, where we operate the Palace Casino and the Baccarat Casino. The Palace Casino and the Baccarat Casino contain 19% and 35% of the Edmonton Region’s slot machines and table games, respectively. The Palace Casino is located in West Edmonton Mall, one of North America’s largest shopping centres with approximately 30.8 million visitors annually. The Baccarat Casino is the sole casino in downtown Edmonton. The City of Edmonton is currently planning to develop the downtown area as part of the construction of the new downtown sports and entertainment arena which is expected to host the NHL’s Edmonton Oilers if all approvals are obtained. See “Property Overview – Our Edmonton Properties”. For the year ended December 31, 2011 and the three months ended March 31, 2012, revenue at our Edmonton casinos amounted to approximately 12% and 13% of our total revenue and 8% and 10% of our Property EBITDA, respectively.

The Palace Casino (Edmonton, Alberta) The Palace Casino is located in West Edmonton Mall, one of the world’s largest shopping centres with approximately 30.8 million visitors annually. The Palace Casino is an approximately 55,500 square foot facility and offers approximately 25,300 square feet of gaming space, including 671 slot machines, 23 table games and seven poker tables. There is a major renovation which is expected to be completed in late 2013 to modernize the aesthetic appeal and amenities of the Palace Casino at an expected cost of approximately $4 million.

The Palace Casino offers high-limit Blackjack and Baccarat. The property’s poker room features weekly tournaments and is open 24-hours per day on the weekends. The Palace Casino’s show lounge provides patrons with weekly live entertainment, creating an exciting gaming atmosphere. The Palace Casino’s food and beverage options include Aces Grill and the Fortune Noodle House. In 2001, the Palace Casino was expanded by approximately 36,000 square feet at a cost of $12 million.

The Palace Casino opened in April of 1990. We lease the premises under a 16-year agreement. The current term expires on August 31, 2017 and has two five-year renewal options. The lease provides for a discount on rent reflecting the amortization of our initial tenant’s construction costs for the facility. The amortization discount expires on the earlier of the date that our construction costs are fully repaid and February 28, 2013.

The Baccarat Casino (Edmonton, Alberta) The Baccarat Casino is the sole casino in downtown Edmonton, located two blocks from Edmonton’s City Centre mall and adjacent to Chinatown. The Baccarat Casino is an approximately 55,270 square foot facility and offers approximately 26,900 square feet of gaming space, including 382 slot machines, 20 table games and seven poker tables.

The Baccarat Casino features a poker room that is open 24-hours per day on the weekends, and a high-limit gaming area. The facility also includes on-site ground level parking. The Baccarat Casino’s Café Paradice also provides patrons with dining options. The Baccarat Casino underwent significant renovations in 2009 to add a high- limit poker room.

The Baccarat Casino opened in October of 1996. We lease the premises under a five-year agreement. The current term expires on June 22, 2014 and has a five-year renewal period. Under the lease, the landlord has the right to terminate the lease upon two years-notice in order to redevelop the land. Upon such termination the landlord must pay the Company a termination fee of $4 million unless the landlord agrees to construct new casino premises which are leased by the Company. If a casino is part of such redevelopment and certain other conditions are met, the Company would have the option to lease such casino, and if the Company leased such casino, it would not be entitled to the termination fee.

48 The City of Edmonton is currently planning to develop the downtown area including the Baccarat Casino premises as part of the construction of the new downtown sports and entertainment arena. As a result, the landlord may exercise its right of termination and we may be required to relocate the Baccarat Casino. At present, management is not aware of any specific development plans for the Baccarat Casino property.

Customers Our patron profile in the Edmonton Region generally consists of local residents. Our Edmonton properties offer innovative entertainment options and operate in high-traffic areas. The Palace Casino is located in West Edmonton Mall which is one of North America’s largest shopping centres and Alberta’s number one tourist attraction with more than 30.8 million visitors annually. The Palace Casino’s patrons are generally local residents and tourists visiting West Edmonton Mall. The Baccarat Casino is located two blocks from Edmonton’s City Centre Mall, adjacent to Chinatown. This property attracts a large percentage of patrons from the local community.

Competition Competition for the Palace Casino primarily comes from the River Cree Casino, a First Nations-owned casino that is operated by Paragon. Located six kilometres away from the Palace Casino, the River Cree Casino benefits from permitted smoking due to its First Nations status. However, the Palace Casino’s competitive position is enhanced by its high-traffic location. The Baccarat Casino’s primary competitors in the Edmonton Region are Northlands Park, Casino Yellowhead, Casino Edmonton and Century Casino.

INDUSTRY OVERVIEW Canadian Gaming Market The Canadian economy positively withstood the recent global financial crisis. This economic strength is expected to continue over the coming years, as real GDP is estimated to grow at 2.1% and 2.9% in 2012 and 2013, respectively. Further, the unemployment rate at the end of 2011 was 7.5%. Personal disposable income in Canada is anticipated to increase by 3.3% in 2012 and 4.2% in 2013.

The charts below illustrate the growth in the casino sector, which indicates that the casino sector increased its share of the Canadian gaming revenue from 15% in 1995 to 38% in 2011. From 1995 to 2011, the casino sector grew at a CAGR of 12%, which was three times faster than the overall gaming industry.

Canadian Gaming Industry Revenue ($ billions)

Total Revenue: $6.4 Total Revenue: $15.3

15%

38%

62% 85%

1995 2011 Casino Market Share

Source: HLT Advisory Inc., gaming industry includes revenue from horse race betting, bingo, lottery, VLTs, casinos and other.

49 The chart below illustrates the dominance of gaming in the Canadian entertainment industry and the significant profits generated by the gaming sector in comparison to other Canadian entertainment industries.

Revenue and Profitability of Selected Entertainment Industries ($ billions)

$16.0 $15.1

$14.0

$12.0

$10.0 $9.2 $7.9 $8.0 $7.1

$6.0 Total Revenue $4.0 $2.7 $2.6 $1.6 $1.5 $2.0

$0.0 Gaming Book, Amusement and Television Drinking PlacesSpectator Sports Movie Theater Performing Arts Newspaper and Recreation Broadcasting Periodicals Operating Profits

Note: “Gaming” revenue includes revenue generated by casinos, Racinos, community gaming centres, lottery retailers, bingo halls, VLTs and online gaming. Source: HLT Advisory Inc. and based on data from Statistics Canada Catalogue no. 87F0004X (Book Publishers, 2010), 63-241-X (Newspaper Publishers, 2010), 87F0005X (Periodical Publishing, 2010), 63-248-X (Amusement and Recreation, 2010), 56-207-X (Television Broadcasting Industries, 2010), 63-243-X (Food Services and Drinking Places, 2010), 63-246-X (Spectator Sports, 2010), 87F0009X (Motion Picture Theatres, 2010) and 87f0003X (Performing Arts, 2010). The Canadian gaming industry is an important economic driver in the Canadian economy. In 2010, the Canadian gaming industry generated significant economic benefits from the operation of all gaming activity and from the government and charity spending of gaming profits. Benefits included $31.1 billion in gross output, $14.6 billion in the purchase of goods and services, $16.5 billion in value added GDP, $12.5 billion in labour income and 253,000 full- time equivalent jobs according to HLT Advisory. Governments and charities are major benefactors of the gaming industry’s ability to generate significant non-tax revenues. In 2010, governments and charities in Canada received $8.7 billion from gaming revenue to fund government and community programs and services. Gaming is a valuable source of revenue for provincial and territorial governments in Canada. Funds generated from gaming revenue are directed to, among other applications, government consolidated revenue accounts, health funding, charitable organizations and education. From 1992 to 2009, gaming profit to provinces had a CAGR of 8.4% in aggregate. The following table illustrates, on a province by province basis, contribution of gaming profit to provincial and territorial governments and demonstrates the growth of gaming in British Columbia and Alberta.

($ millions) Gaming Profit to Provinces(1) %of %of 1992 Total 2009 Total CAGR British Columbia ...... $ 239 14.2% $1,054 15.9% 9.1% Alberta ...... 125 7.4% 1,428 21.5% 15.4% Ontario ...... 529 31.5% 1,713 25.8% 7.2% Quebec ...... 472 28.1% 1,400 21.1% 6.6% Saskatchewan ...... 39 2.3% 331 5.0% 13.4% Manitoba ...... 105 6.3% 306 4.6% 6.5% New Brunswick ...... 49 2.9% 133 2.0% 6.0% Newfoundland and Labrador ...... 42 2.5% 108 1.6% 5.7% Nova Scotia ...... 72 4.3% 139 2.1% 3.9% Prince Edward Island ...... 7 0.4% 16 0.2% 5.0% Yukon, Northwest Territories and Nunavut ...... 1 0.1% 6 0.1% 11.1% Canada ...... $1,680 100.0% $6,634 100.0% 8.4%

50 Source: Data from Statistics Canada Catalogue no. 75-001-X (Gambling, 2011). (1) Net income from all provincial and territorial government-controlled gambling, such as lotteries, casinos and VLTs after prizes and winnings, operating expenses (including wages and salaries), payments to the federal government, other System of National Accounts adjustments, and other expenses are deducted. Other expenses includes categories such as ‘special payments’ or ‘win contributions,’ which vary by province and can influence profit rates.

British Columbia Gaming Region The British Columbia gaming industry consists of 15 casinos, two Racinos, 16 community gaming centres, approximately 4,000 lottery retailers, 11 commercial bingo halls and online gaming. During the twelve months ended March 31, 2011, the casino sector accounted for approximately 50% of the total industry revenue of $2.7 billion. As at March 31, 2010, 80% of adults in British Columbia had participated in a form of gaming at least once in the previous year, which is consistent with strong acceptance and participation numbers in previous years. As at March 31, 2011, 63% of adults in British Columbia engaged in gaming at least once a month. From 2006 – 2011, the provincial gaming industry revenue in British Columbia grew by over $418 million from $2.3 billion to $2.7 billion despite having had only limited expansion of gaming facilities during such period. The majority of the revenue growth can be attributed to the construction, redevelopment and expansion of existing casinos and the introduction of a number of community gaming centres. According to the Canadian Gaming Association, the gaming industry provided approximately 37,500 full-time equivalent jobs in 2010.

Gaming Industry Win Trends by Sector – British Columbia ($ billions)

$3.0

$2.0

$1.0

$0.0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Horse Race Betting Bingo Lottery Casinos

Source: HLT Advisory Inc. based on various provincial government agency/corporation annual reports. Note: Casinos includes slot revenue from community gaming centres and Racinos.

51 The graph below illustrates the relative growth and stability of the gaming revenue generated by casinos and Racinos in British Columbia for the years 2007 to 2011 and Gateway’s share of this revenue and demonstrates how industry revenue grew even through the global economic downturn.

Casino and Racino Gaming Revenue in British Columbia ($ billions)

$1.8 2007 - 2011 CAGR = 2.6% $1.6 $1.34 $1.34 $1.4 $1.32 $1.32 $1.21 $1.2 $1.0 $0.8 $0.6 44% $0.4 39% 41% 43% 44% $0.2 $0.0 2007 2008 2009 2010 2011

Gateway Market Share (% of Casino Revenue) Casino Revenue Racino Revenue

Source: BCLC 2006/07 – 2010/11 Annual Reports and the BCLC 2012/13-2014/15 Service Plan.

The following tables illustrate the five highest Slot Win/Slot/Day and Table Win/Table/Day averages in British Columbia.

Slot Win/Slot/Day(1) $400

$350 $336 $335 $323 $319 $318 $300

$250

$200

$150

$100

$50

$0 River Rock Grand Villa Edgewater Cascades View Royal

Note: Twelve months Ended March 31, 2011. Source: BCLC 2010/11 Annual Report. (1) Calculated using data as presented in report – Slot Win divided by the number of slots divided by number of days in the year.

52 Table Win/Table/Day $4,000 $3,503 $3,500 $3,325

$3,000 $2,513 $2,500 $2,359

$2,000 $1,826

$1,500

$1,000

$500

$0 River Rock Grand Villa Edgewater Starlight Cascades

Note: Twelve months Ended March 31, 2011. Source: BCLC 2010/11 Annual Report.

The BCLC maintains a strategy that includes investing in infrastructure and technology innovation to support its current gaming operations and stimulate future gaming growth in British Columbia. The BCLC is expected to spend over $100 million implementing a new GMS that will be rolled out to all gaming sites in British Columbia. Our Lake City Kamloops Casino has been selected by the BCLC as a beta site for the GMS pilot beginning in May of 2012. Management believes this initiative will generate incremental revenue across all British Columbia gaming sites in the first year. The GMS will provide gaming properties with real time data and hour-by-hour gaming statistics. The GMS will also generate automated promotional credits and virtual draws on the slots. Management believes the GMS will provide tools for better product management, improved tracking of patrons, more targeted marketing initiatives and improved integration of table games.

We are a leading gaming operator in British Columbia with the largest installed base of slot machines. We operate seven of the 15 casinos, two of the 16 community gaming centres and one bingo hall in British Columbia. In 2011, we earned approximately 88% of our revenue and approximately 92% of our Property EBITDA from properties in the British Columbia Region. As at March 31, 2011 our casinos operate 48% of slot machines in casinos and 36% of the table games in British Columbia. See “Investment Highlights”.

53 Despite softening of the global economy, Vancouver’s economy remained resilient in the last two years. According to the Conference Board of Canada, real GDP growth was 3.5% in 2010 and 3.1% in 2011. Real GDP in 2012 is forecasted to be 2.5% with real GDP in 2013 estimated to rise to 3.7% due to stronger employment and income growth and an increase in construction activity. Furthermore, the unemployment rate in 2011 was 7.3%, but is forecasted to decrease in 2012 and 2013 to 6.2% and 5.6%, respectively.

The Greater Vancouver Region also boasts highly attractive gaming demographics. According to Statistics Canada, Metro Vancouver is the third largest metropolitan area in Canada and has a growing population of 2.4 million residents. Metro Vancouver has a significant adult population, with the fastest growing segment of the population being those over the age of 45 with an estimated growth rate of 9.3% from 2010 to 2015 and 17.5% from 2010 to 2020 in the Greater Vancouver Region. This is the segment of the Canadian population that spends the most money on gaming activities, including slot machines and table games. In addition, immigrants account for 40% of the region’s population and are responsible for much of the population growth. The high proportion of foreign-born individuals provides Vancouver with strong international connections and a talented and diverse labour pool. More than 40% of the Greater Vancouver Region’s population regularly speaks a language other than English or French at home with approximately 37% of the region’s population being of Asian heritage.

Our casino patron profile is generally comprised of local residents. Approximately 85% of our players are aged 45 and older.

The graph below illustrates the breakdown of gender and age demographics of our casino patrons in the Greater Vancouver Region.

Gender of Patrons Age of Female Patrons Age of Male Patrons

25-44 25-44 14% 15% 45-64 Male 45-64 19-24 44% 19-24 38% 48% 2% 3%

Female 62% 65+ 65+ 38% 36%

Source: BcGold Encore database maintained by the BCLC, which is comprised largely of slot machine patrons, although table games players can also sign up to the BcGold Encore Program.

Located in the southern part of the Greater Vancouver Region, Surrey is the second largest city in British Columbia’s lower mainland. Management believes that Surrey demonstrates strong fundamentals for a placement of a new casino. Surrey is located in an ideal and accessible location. According to the City of Surrey, the city is traversed by five major highways and is in close proximity to two US border crossings with over 1.9 million residents living within a 30 kilometre radius. The total population is projected to grow by 21% from 2010 to 2020. Between 2006 and 2011, the unemployment rate decreased from 7.4% to 5.7%. In 2006, South Surrey had the second-lowest unemployment rate of Surrey’s communities at 4.2%. In South Surrey, the most commonly used home language

54 (excluding English) is Korean, followed closely by Mandarin. While the BCLC has not at this time proposed the development of a gaming facility at the South Surrey Property, management believes that there is a strong business case to proceed. See “Risk Factors”.

Thompson-Okanagan Region We are the only casino operator in the Thompson-Okanagan Region. With a population of approximately 528,000, this area has experienced substantial growth due to continued development of the British Columbia interior driven in large part by the tourism industry and an influx of retirees. Casino traffic has increased with the region’s growing population as well as its popularity as a vacation destination. The Lake City Casinos operate 100% of all table games and over 81% of all slot machines in the Thompson-Okanagan Region, with two community gaming centres accounting for the remainder of the slot machines. The Thompson-Okanagan Region has the second-fastest growing population and the fastest-growing seniors population in British Columbia. Approximately 100,000 senior citizens live in the Thompson-Okanagan Region, making up 19% of the population, which is larger than any other part of British Columbia. A major force in the Thompson-Okanagan Region’s economic outlook is tourism. This region is renowned for its lakes, golf courses, ski resorts and vineyards and accommodates approximately 3.5 million travelers each year. A 10-year regional tourism strategy is underway by the Thompson-Okanagan Tourism Association aimed at further increasing the Thompson-Okanagan Region’s $1.75 billion annual tourism industry during the next decade by 5% per year.

Alberta Gaming Region Alberta has one of the strongest provincial economies in Canada, which is primarily driven by the energy and agricultural industries. According to the Conference Board of Canada, Alberta’s annual GDP growth rate is the highest of all provinces and territories in Canada, with an estimated 2012 real GDP growth of 3.3% as compared to a national average of 2.1%. According to the Alberta Treasury Board of Finance, Alberta has strong employment demand, with 98,800 new jobs created between December of 2010 and December of 2011, which represents 50% of Canada’s overall employment growth and the third lowest estimated 2012 provincial unemployment rate in Canada at 5.0%. Alberta’s population increased 2.9% from 2009 to 2011 and is expected to increase a further 2.0% in 2012. According to the Conference Board of Canada, Alberta ranked second among all Canadian provinces in 2010 based on personal disposable income.

Gaming Industry Win Trends by Sector – Alberta ($ billions)

$3.0

$2.0

$1.0

$0.0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Horse Race Betting Bingo Lottery Casinos EGDs - VLTs

Note: Casinos includes slot win from Racinos. Source: HLT Advisory Inc. based on various provincial government agency/corporation annual reports. We are well positioned in the Alberta gaming region, offering innovative gaming entertainment in high-traffic areas. As at January 1, 2012, the Alberta gaming industry consisted of 24 casinos, three horse racetracks each containing a racing entertainment centre, 6,000 VLTs located at 956 retail outlets including 78 video gaming

55 entertainment centres, over 2,600 lottery ticket retailers and 28 bingo halls. These properties and outlets are located in regions of Alberta and generated over $2.6 billion in gaming revenue in 2011. Alberta has the highest provincial annual gaming expenditures per capita and enjoys high gaming participation levels. In addition, Alberta generated per adult $789 in gaming revenue, greater than the national average of $595 per adult in 2010.

From 2007 to 2011, the AGLC’s share of casino slot machine revenue grew at a CAGR of 3.7% and the AGLC expects its share of slot machine revenue to remain constant.

REGULATORY ENVIRONMENT Our gaming operations are highly regulated. The BCLC, the GPEB and the AGLC are responsible for managing and conducting or regulating gaming activities in the regions in which we operate. Gaming service providers, including Gateway, enter into long-term operating agreements with the BCLC and obtain licenses from the AGLC to provide facilities and operational services. In return for the provision of such facilities and services, service providers share in the revenue earned by the BCLC and the AGLC.

We receive additional commissions from the BCLC for the majority of our capital expenditures for our casino properties in British Columbia. In general, capital expenditures related to developing and improving our casinos, including, expenditures on land and capitalized interest during construction, are eligible to earn extra commissions under the Facility Development Program. The cost of developing ancillary amenities such as theatres, restaurants and convention centres are also generally eligible to the extent they enhance the gaming experience. We expect the majority of our future development programs and capital expenditures in British Columbia to be eligible.

Regulatory Framework – British Columbia In British Columbia, the GPEB is responsible for the overall integrity and regulation of gaming. The BCLC, a crown corporation, conducts and manages all gaming activity in the province. Registration with the GPEB is required for the Company and the Company’s directors, officers and key employees. The GPEB investigates all applicants for registration, including conducting background searches, and has the discretion to grant or refuse registration. See also “Description of Share Capital – Common Share Constraints Required by Gaming Regulators”.

British Columbia MCOSA The BCLC engages service providers, including us, to deliver gaming services pursuant to operational services agreements. Each of our casino gaming properties in British Columbia is operated pursuant to our amended and restated MCSOSA with the BCLC. Under the MCOSA, we provide the premises required and perform operational services. The BCLC remains solely responsible for the conduct, management and operation of all slot machines, table games and other such lottery and related promotional schemes, conducted, managed and operated by the BCLC in the premises from time to time. The BCLC additionally provides and maintains certain gaming equipment and supplies that enable us to perform the operational services set out in the MCOSA.

56 Under the MCOSA, we agree to indemnify and save harmless the BCLC from any and all liabilities, claims, actions and judgments arising from or relating to any acts or omissions of ours or any person engaged or employed by us in the provision of operational services or the performance of the MCOSA.

The following tables set out, for each of our British Columbia properties, the contract term, the renewal term, authorized games, principal gaming equipment and supplies provided by the BCLC and the operator’s commission that we earn for each of our casinos governed by the MCOSA:

Grand Villa Casino Starlight Casino Cascades Casino Contract Expiry November 4, 2018 December 9, 2017 May 3, 2015

Renewal Term 10 years 10 years 10 years

Š Slot machines and Š Slot machines and Š Slot machines and Authorized Games electronic table games electronic table games electronic table games Š Various table games(1) Š Various table games(1) Š Various table games(1) Š Slot Machines & Electronic Š Slot Machines & Electronic Š Slot Machines & Electronic Table games – Minimum of Table games – Maximum Table games – Minimum 900(2) of 850(3) of 450(2) Equipment & Supplies Š Roulette Wheels / Balls Š Roulette Wheels / Balls Š Roulette Wheels Balls Š Electronic Equipment Š Electronic Equipment Š Electronic Equipment Š Value & Non-Value Chips Š Value & Non-Value Chips Š Value & Non-Value Chips Š Slot & Electronic Table Š Slot & Electronic Š Slot & Electronic Table games – 25% of Win(4) Table games –25% of Win(4) games – 25% of Win(4) Š Craps – 75% / 40% of Š Craps – 75% / 40% of Š Craps – 75% / 40% of Win(5); Poker – 75% of rake Win(5); Poker –75% of rake Win(5); Poker – 75% of rake Remuneration Š Other Table games – 40% Š Other Table games – Š Other Table games – of Table Win(6) 40% of Table Win(6) 40% of Table Win(6) Š FDC of up to 3% of Win Š FDC of up to 3% of Win Š FDC of up to 3% of Win Š AFDC of up to 2% of Š AFDC of up to 2% of Š AFDC of up to 2% of the Win the Win the Win

Notes: (1) Table games may include Blackjack, Red Dog, Roulette, Wheel of Fortune, Mini Baccarat, Sic Bo and various poker or other games. (2) The BCLC has the discretion to increase the quantity provided above the minimum specified. (3) The BCLC has the discretion to reduce the maximum or increase it up to 1,000. (4) Less 25% of the BCLC’s cost to lease the games, provided that the number of leased games will not exceed 10% of the total number of slot machines and electronic table games supplied by the BCLC. (5) 75% of total Win up to an operator’s share of $270,000 per table per quarter and 40% thereafter. (6) Less 1% of such win on account of, and to reimburse the BCLC for, gaming equipment and gaming supplies provided by the BCLC.

57 Lake City Lake City Lake City Lake City Kelowna Casino Penticton Casino Vernon Casino Kamloops Casino Contract Expiry February 28, 2021 November 30, 2019 June 10, 2019 February 28, 2021

Renewal Term Currently in Currently in 10 years Currently in Renewal Term Renewal Term Renewal Term

Š Slot Machines Š Slot machines Š Slot machines and Š Slot Machines Authorized Games Š 15 table games and Š Various table games(1) electronic table games Š 6 table games(1) 1 poker table(1) Š Various table games (1) Š Slot Machines – 342 Š Slot Machines – 224 Š Slot Machines & Š Slot Machines – 300 Š Slot Machine Control Š Roulette Wheels / Balls / Electronic Table games Š Slot Machine Control Equipment – 1 Chips – 2 / 6 / 4,000 – Minimum of 350 (2) Equipment – 1 Š Š Roulette Wheels / Š Chips – $200,000 Roulette Wheels / Balls Š Roulette Wheels / Equipment & Supplies Balls – 1 / 8 Š Electronic Equipment Balls – 1 / 4 Š Electronic Equipment – 4 Š Value & Non-Value Š Electronic Equipment – Š Value & Non-Value Chips 4 Chips – 18,884 Š Value & Non-Value Chips – 16,686 Š Slot & Electronic Table Š Slot & Electronic Table Š Slot & Electronic Table Š Slot & Electronic Table games – 25% of Win(3) games – 25% of Win games – 25% of Win games – 25% of Win Š Craps – 75% / 40% of Š Craps – 75% / 40% of Š Craps – 75% / 40% of Š Craps – 75% / 40% of Win(4); Poker – 75% Win(4); Poker – 75% Win(4); Poker – 75% Win(4); Poker – 75% of rake of rake of rake of rake Remuneration Š Other Table games – Š Other Table games – Š Other Table games – Š Other Table games – 40% of Table Win(5) 40% of Table Win(5) 40% of Table Win(5) 40% of Table Win(5) Š FDC of up to 3% of Win Š FDC of up to 3% of Win Š FDC of up to 3% of Win Š FDC of up to 3% of Win Š AFDC of up to 2% of Š AFDC of up to 2% of Š AFDC of up to 2% of Š AFDC of up to 2% of the Win the Win the Win the Win

Notes: (1) Table games may include Blackjack, Red Dog, Roulette, Wheel of Fortune, Mini Baccarat, Sic Bo and various poker tables. (2) The BCLC has the discretion to increase the quantity provided above the minimum specified. (3) Less 25% of the BCLC’s cost to lease the games, provided that the number of leased games will not exceed 10% of the total number of slot machines and electronic table games supplied. (4) 75% of total Win up to an operator’s share of $270,000 per table per quarter and 40% thereafter. (5) Less 1% of such win on account of, and to reimburse the BCLC for, gaming equipment and gaming supplies provided by the BCLC.

The term with respect to each casino under the MCOSA may be renewed for the renewal term set out therein, subject to a number of conditions. These include the approval of a business and facilities plan for the renewal term by the BCLC, there having been no change to government gaming policy that materially adversely impacts the current gaming model reflected in the MCOSA, our not being in breach of the MCOSA beyond the period of time, if any, for curing such breach and the MCOSA not having been terminated by the BCLC. All of the terms and conditions contained in the MCOSA shall apply during the renewal term except that there shall be no further right of extension.

The BCLC may terminate any of our casino or CGC operating agreements without notice upon any of the following events: (i) our non-performance, misrepresentation, bankruptcy or insolvency; (ii) the criminal conviction of Gateway or any of our officers or directors; or (iii) regulation changes which render the agreement illegal.

British Columbia CGCOSA and BOSA Our CGCs in British Columbia are operated pursuant to a Community Gaming Centre Operational Services Agreement (“CGCOSA”) or Bingo Operational Services Agreement (“BOSA”) with the BCLC. Under the CGCOSAs and the BOSA, we provide the premises required and perform operational services. The BCLC remains solely responsible for the conduct, management and operation of all slot machines, bingo games and such other lottery and related promotional schemes, conducted, managed and operated by the BCLC in the premises from time to time. The BCLC additionally provides and maintains certain gaming equipment and supplies that enable us to perform the operational services set out in the CGCOSAs and the BOSA.

58 Following the closure of Burnaby Bingo Country effective March 20, 2011, the CGCOSA for Burnaby Bingo Country was suspended for a period of 36 months until March 19, 2014. The operational services agreement for the Burnaby Bingo Country may be used at a new gaming facility prior to March 19, 2014 on terms similar to other operational services agreement at that time provided the BCLC decides to proceed with such a new facility. The new gaming facility location may include sites located in communities other than Burnaby, British Columbia. If during the 36 month suspension period the requirements are not fulfilled, the BCLC can either terminate the CGCOSA or extend the suspension in its sole discretion.

The following table sets out, for each of our British Columbia CGCs, the contract term, the renewal term, authorized games, principal gaming equipment and supplies provided by the BCLC, the operator’s commission that we earn and termination criteria pursuant to our CGCOSAs and the BOSA:

Chances Squamish Chances Mission Newton Bingo Country(3) Contract Expiry January 30, 2020 August 22, 2017 May 31, 2016

Renewal Term 10 years 10 years None

Š Slot Machines Š Slot Machines Š Bingo Games Authorized Games Š Š Bingo Games Bingo Games Š Slot Machines Š Slot Machines Š Blowers Š Slot Machine Control Š Slot Machine Control Š Ball racks Equipment Equipment Š Closed circuit ball camera Š Š Integrated Voucher Integrated Voucher Š Electronic verifiers Equipment & Supplies Technology System Technology System Š Flashboards Š Bingo Equipment & Š Bingo Equipment & Š Supplies Supplies Monitors Š Š Monitors Š Monitors Bingo balls Š Bingo paper Š Slot Machine – 25% of Slot Š Slot Machine – 25% of Š Bingo Games – 60% / Win(1) Slot Win(1) 40% / 25% (2) Š Bingo Games – 60% / 40% / Š Bingo Games – 60% / 25% (2) 40% / 25%(2) Remuneration Š FDC of up to 5% of the Š FDC of up to 5% of the Bingo Win and 3% of the Bingo Win and 3% of the Win Win Š Revised AFDC of up to 2% Š Revised AFDC of up to of the Win 2% of the Win

Notes: (1) Less 25% of the BCLC’s cost to lease the games, provided that the number of leased games will not exceed 5% of the total number of slot machines and electronic table games supplied. (2) 60% of Win on the first $20,000 of weekly Win; 40% of Win in excess of $20,000 up to and including $80,000 of weekly Win; and 25% thereafter. (3) The Company is currently undertaking a series of upgrades and expansions to the Newton Bingo Country, to upgrade the facility from a bingo hall to a community gaming centre. At present, 100 temporary slot machines have been installed at Newton Bingo Country which will be activated when we enter into a project development agreement with the BCLC and the City of Surrey has reviewed and confirmed this agreement. Newton Bingo Country has been zoned by the City of Surrey for up to a total of 150 slot machines. The maximum number of slot machines that can be installed at Newton Bingo Country is, subject to the limit set by the City of Surrey, determined by the BCLC.

Facility Development Programs In May 1997, the FDC program was introduced to provide incentives for the casino development and maintenance capital expenditures relating to the development and improvement of eligible casinos. For our casinos under this program, where there are no eligible qualifying expenditures we deposit a facility development commission equal to 3% of Win from the slot machines and table games, conducted, operated and managed at each casino located in British Columbia into a trust account. Once eligible expenditures are incurred, and upon the BCLC’s approval, we can draw the funds out of the trust account. Where there are eligible approved expenditures we receive the 3% FDC weekly. For

59 our CGCs governed by a CGCOSA, where there are no eligible approved expenditures, the FDC accumulates in an account held by the BCLC. For Bingo, the FDC is equal to 5% of bingo revenue net of prizes. For Slot Win, the FDC is 3% of Slot Win generated. Once eligible expenditures are incurred and upon the BCLC’s approval the accumulated funds held by the BCLC are released to us. Where there are eligible approved expenditures we receive the bingo and Slot FDC weekly. As we have a balance of approved, eligible expenditures ($98.7 million as at December 31, 2011) we currently are paid all amounts of FDC earned at our casinos and CGCs weekly.

In October of 2006, the BCLC established an initiative to further encourage casino and community gaming centre redevelopment in British Columbia. For casino projects approved by the BCLC after July 1, 2006, the AFDC provides for an additional operator’s commission in an amount equal to 2% (5% when combined with the FDC) of Win from these redeveloped casino properties. Once qualifying AFDC expenditures have been incurred the 2% AFDC is paid to us weekly. As at April 1, 2012, for our CGCs, where qualifying AFDC expenditures have been incurred we are entitled to 2% of bingo win net of prizes and 2% of the net Slot Win until the amount of the approved initial investment in developing our CGCs is recovered. The additional commission under the AFDC is available once per property and the additional commission is no longer payable once the additional commission earned is equal to the approved eligible costs of the AFDC approved project.

Although AFDC may only be used on one eligible project per facility and applies only to projects approved by the BCLC after July 1, 2006, we have received written confirmation from the BCLC that the Facility Development Programs will apply to the Grand Villa Casino development and the Cascades Casino parkade development, both projects which were announced prior to 2006.

As at December 31, 2011, we have approved eligible expenditures of $98.7 million and are anticipating approval on a further $98.9 million of expenditures from the BCLC.

Regulatory Framework – Alberta In Alberta, the provincial government, through the AGLC, licenses the operation of casinos to third party gaming service providers, including us. The AGLC is responsible for the licensing and regulation of gaming and liquor within Alberta. Gateway operates the Palace Casino and the Baccarat Casino under casino facility licenses with the AGLC. In return for operating the properties, we receive a certain percentage of the Win, which is shared with the Alberta Lottery Fund/AGLC and a designated charity (which varies from time to time).

AGLC registration is required for key gaming workers of the Company. The AGLC conducts background checks on all officers, directors, shareholders holding 5% or more of the Company, and applicants for registration, and has the discretion to grant or refuse registration or find unsuitable. See also “Description of Share Capital”.

Pursuant to our licences with the AGLC for the Baccarat Casino and the Palace Casino, we will earn an operator’s commission for slot machine and tables games (15% of Slot Win/Table Win), Craps (75% of Table Win), Poker (75% of Poker Rake) and other table games (50% of Table Win). The licences for both casinos expire on August 31, 2013.

Each of our licenses for the Palace Casino and the Baccarat Casino allows us to operate the applicable premises for the purpose of conducting licensed casino gaming events in accordance with the provisions of the Gaming and Liquor Act, the Gaming and Liquor Regulation, AGLC policies and all other conditions prescribed by the board of the AGLC, subject to certain restrictions. Under the terms of the licenses, the operation of casino gaming terminals is permissible Monday to Sunday, up to a maximum of 17 consecutive hours, commencing no earlier than 10:00 a.m. and ending no later than 3:00 a.m. and only on days that there is a licensed casino event in the facility. Poker at each facility is permissible on flexible hours and table games are permissible to be operated Monday to Sunday, up to a maximum of 14 consecutive hours, commencing no earlier than 10:00 a.m. and ending no later than 2:00 a.m. Each property is required to be closed on Christmas Day.

The AGLC has the right to suspend or cancel our licenses for the Baccarat Casino or the Palace Casino for certain reasons, including: (i) failure to comply with the GLA or an order of the AGLC; (ii) failure to comply with any condition imposed on our licenses; (iii) if Gateway is sold, reorganized or fails to remain actively involved in, or changes the nature of our business; or (iv) the criminal conviction of Gateway or any of our principals or senior employees.

60 Human Resources As at April 30, 2012, we had approximately 3,000 employees at our 12 gaming properties and two head offices. Approximately 1,700 employees at eight of our gaming properties are unionized. We are also in collective bargaining with certain non-managerial employees at the Baccarat Casino for their first collective agreement. We have no unionized employees at the Cascades Casino and at Chances Squamish and Chances Mission.

The vast majority of our unionized employees are front-line staff such as dealers and slot attendants. At our Grand Villa Casino and Palace Casino, we also have unionized front-line supervisors. Our gaming properties and offices are regulated by the labour and employment legislation applicable to the province in which each property is located.

Our collective agreements covering certain employees at the Grand Villa Casino, Starlight Casino and Newton Bingo Country have each expired. We are currently in collective bargaining at the Grand Villa Casino, and expect to enter into collective bargaining at the Starlight Casino and Newton Bingo Country by the end of the June 2012.

We believe that we have an excellent relationship with the British Columbia Government and Service Employees Union, which represents substantially all of our British Columbia unionized employees other than certain surveillance operators at our Penticton Casino. We have not had work stoppages at any of our British Columbia properties since 2001. Our relationship with The United Food and Commercial Workers Union, which represents the unionized employees at the Palace Casino, has also greatly improved since the strike for a first collective agreement in 2006. We have since successfully concluded a renewal of the collective agreement at the Palace Casino without incident.

Although management does not anticipate having any difficulty reaching agreements with the unions representing our employees, should an agreement not be reached, it may result in a work stoppage or interruption to the business of that specific operation.

Hotel Operators The Delta Hotel We have a contract with Delta to manage the hotel and conference centre located at the Grand Villa Casino (the “Management Agreement”). Under the Management Agreement, Delta operates the hotel and manages the staff of the hotel. In addition, Delta provides a reservation service and engages in various marketing activities. Pursuant to the terms of the Management Agreement, we pay a management fee for these services. The Delta Hotel opened in June of 2009. Delta manages the premises under the 10-year Management Agreement. The current term expires in December of 2019 and has two five-year renewal options. We have the right to terminate the Management Agreement if, in any two consecutive fiscal years, the hotel’s EBITDA falls below 80% of the hotel’s EBIDTA during the first full fiscal year of the operating term.

The Coast Hotel We have a franchise agreement in place with Coast Hotels for the hotel located at the Cascades Casino (the “Franchise Agreement”). Under the Franchise Agreement, Coast Hotels provides franchise services, including identifying the hotel on its website, toll-free reservation services and participation in Coast Hotel marketing initiatives. However, unlike our arrangement with Delta, the management of the hotel remains our exclusive responsibility. The Franchise Agreement commenced June 14, 2011 and expires on June 13, 2013. It automatically renews for a further period of five years provided that we are in compliance with the Franchise Agreement and neither party elects to terminate the Franchise Agreement.

Intellectual Property We regard our trademarks, trade names and other intellectual property as important to our success. We rely on a combination of laws and contractual restrictions with our employees, customers and others to establish and protect our proprietary rights. We have registered a large number of trademarks and service marks in Canada, including certain names of our casinos.

61 Environmental Matters We are subject to environmental legislation, including federal and provincial statutes and regulations and municipal by-laws, that govern activities or operations that may have adverse environmental effects, including the presence or migration of contaminants at or from our properties. We endeavour to maintain compliance with environmental laws, but, from time to time, current or historical operations on, or adjacent to, our properties may have resulted or may result in non-compliance with environmental laws or other liability for the investigation, remediation, monitoring or other work related to contaminants, including hazardous or toxic substances or wastes pursuant to environmental laws or common law obligations. Compliance with environmental laws or undertaking the investigation, remediation, monitoring or other work related to contaminants can require significant expenditures. Failure to comply with such laws could result in material fines, penalties and other liabilities or expenditures. We believe that we are in substantial compliance with current environmental laws and are not currently aware of any material environmental liabilities. However, environmental laws continue to evolve in a manner expected to result in stricter standards and enforcement, larger fines and liability and potentially increased capital expenditures and operating costs. Environmental requirements and potential liabilities related to the development and redevelopment of properties can result in material expenditures. No assurance can be given that environmental issues relating to currently unknown matters will not require investigation, assessment, remediation, other work or material expenditures.

USE OF PROCEEDS Treasury Offering The net proceeds to be received by Gateway from the Treasury Offering are estimated to be $ Š million, after deducting the Company’s share of the Underwriting Commissions of $ Š million and the expenses of the Offering, which are estimated to be $ Š million. Gateway expects to use the net proceeds from the Treasury Offering as follows: Š in connection with the Refinancing,

O approximately $ Š million will be used to repay part of the Term Loans plus accrued and unpaid interest thereon and prepayment fees related thereto under the Existing Senior Secured Credit Facility;

O approximately $ Š million will be used to redeem $59.5 million of the original aggregate principal amount of the Notes plus accrued and unpaid interest thereon and redemption fees related thereto; and Š the balance, if any, for working capital and general corporate and administrative purposes.

Proceeds of indebtedness of the offering of Notes and borrowings under the Existing Senior Secured Credit Facility were used to repay indebtedness of the Company under the September 2010 Credit Agreement, which was put in place in connection with the Restructuring, and pay the related fees and expenses.

While Gateway currently anticipates that it will use the net proceeds of the Offering received by it as set forth above, the Company may re-allocate the net proceeds of the Offering received by it, having consideration to its strategy relative to market and other conditions in effect at the time. Pending use of the net proceeds of the Offering, such proceeds will be invested in accordance with instructions from the Board. See “Our Company” and “Risk Factors”.

Secondary Offering The aggregate net proceeds to be received by the Selling Shareholders from the sale of Common Shares pursuant to the Secondary Offering are estimated to be $ Š ($ Š if the Over-Allotment Option is exercised in full), after deducting that portion of the Underwriting Commissions payable by the Selling Shareholders. Gateway will not receive any of the proceeds payable to the Selling Shareholders under the Secondary Offering. The Selling Shareholders will not pay any expenses of the Offering other than the Underwriting Commissions in respect of the Secondary Offering (which expenses will be paid by the Company) as the Selling Shareholders, other than RBC and the Babson Funds have the right to participate in the Offering pursuant to the Company’s existing Shareholder Agreement. See “Principal Shareholders and Selling Shareholders”.

62 DIVIDEND POLICY There are no restrictions in the Company’s constating documents that would restrict or prevent the Company from paying dividends.

The Board is expected to establish a dividend policy pursuant to which the Company will pay an annual dividend of approximately $ Š per Common Share, based on the number of Common Shares expected to be outstanding on Closing. Dividends are expected to be paid on a quarterly basis, with the first dividend for the period from the Closing Date to September 30, 2012 expected to be paid on or about October Š , 2012 in the amount of $ Š per Common Share (representing a quarterly dividend of $ Š per Common Share). The payment of dividends is not guaranteed and the amount and timing of any dividends payable by the Company will be at the discretion of the Board and will be established on the basis of the Company’s earnings, financial requirements for the Company’s operations, the satisfaction of solvency tests imposed by applicable corporate law and the Company’s debt instruments. See “Risk Factors.”

The New Credit Agreement is expected to include the following restrictions on the Company paying dividends: Š If the total leverage ratio is less than 4.5x, there will be no limit on the dividend amount payable. Š If the total leverage ratio is greater than 4.5x, the dividend amount payable will be limited to the quarterly dividend amount consistent with the quarterly dividend policy approved by the Board.

Under the New Credit Agreement, the total leverage ratio is expected to be calculated as the ratio of consolidated debt (less net cash up to a cap of $70 million for the purposes of determining the total leverage ratio in connection with the making of dividends or other restricted payments and $50 million for all other purposes) to consolidated EBITDA.

All dividend payments are subject to compliance with financial covenants under the New Credit Agreement on a pre- and post- payment basis and the absence of any defaults under the New Credit Agreement.

On Closing of the Offering and the anticipated Refinancing, management expects the Company’s total leverage ratio for the LTM ended March 31, 2012 to be approximately Š .

The Indenture contains a general restriction on the Company paying dividends together with specific exceptions to this restriction. Specific exceptions include the following (the “Permitted Indenture Dividend Payments”): Š dividend payments that are made with Excluded Contributions (defined in the Indenture as cash or other assets, valued at fair market value, received by the Company from the sale of Common Shares that is designated by the Company as Excluded Contributions); and Š dividend payments in an aggregate amount not to exceed the greater of $75 million and 3% of the total assets of the Company.

In addition to the specific exceptions in the Indenture including those above, the Company may pay dividends if: Š no default pursuant to the terms of the Indenture has occurred, would be continuing or would occur as a consequence thereof; Š immediately after giving effect to such dividend payment the Company could incur $1.00 of additional indebtedness and still have a Fixed Charge Coverage Ratio (defined in the Indenture as EBITDA divided by fixed charges) greater than 2:1; and Š such dividend payment together with the aggregate amount of all restricted payments under the Indenture, but excluding Permitted Indenture Dividend Payments, is less than the amount equal to the Cumulative Credit (defined in the Indenture as 50% of the consolidated net income of the Company for the period from July 1, 2010 to the end of the Company’s most recently ended fiscal quarter (or, in case such consolidated net income for such period is a deficit, minus 100% of such deficit) plus 100% of the aggregate net proceeds (including cash and other assets, valued at fair market value) received by the Company from the sale of Common Shares (excluding Excluded Contributions)).

The Company expects that the amount of dividends expected to be paid during the term of the Notes will be allowable under the Indenture for the near term.

Prior to the completion of the Offering, the Company expects that it will pay a cash dividend or distribution on its Common Shares in the aggregate amount of approximately $25 million.

63 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This management’s discussion and analysis of financial condition and results of operations contains forward- looking statements that involve risks and uncertainties. Please see “Forward-Looking Information” for a discussion of the uncertainties, risks and assumptions associated with these statements. You should read the following discussion in conjunction with the Company’s and Amalco’s financial statements and the notes thereto appearing elsewhere in this prospectus, as well as other information included in this prospectus, including “Presentation of Financial Matters”, “Non-IFRS and Non-GAAP Financial Measures”, “Consolidated Capitalization”, “Share Consolidation”, “Prospectus Summary – Selected Historical Financial Information”, and “Prospectus Summary – Summary of Cash Available for Payment of Dividends”. The results of operations for the periods reflected herein are not necessarily indicative of results that may be expected for future periods, and actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including but not limited to those listed under “Risk Factors” and included elsewhere in this prospectus.

Financial information presented in this Management’s Discussion and Analysis includes the results of the Company for the three months ended March 31, 2012 and 2011 and for the year ended December 31, 2011. Financial information presented in this Management’s Discussion and Analysis for the year ended December 31, 2010 combines the results of operations of Amalco for the year ended December 31, 2010, prepared in accordance with GAAP, and the results of operations of the Company from May 18, 2010 to December 31, 2010, prepared in accordance with IFRS. Given that the Restructuring of Old Gateway was accounted for as a business combination transaction in the financial statements of the Company, the consolidated financial statements of the Company will not be comparable in certain respects to those of Amalco. The combined information for the year ended December 31, 2010, included within this Management’s Discussion and Analysis does not reflect any pro-forma adjustments to show the effects of the Restructuring as if it had occurred at the beginning of the combined period or any earlier period presented in respect of Amalco. The combination of the Company and Amalco’s financial information for the year ended December 31, 2010 is not necessarily comparable to other periods presented within this Management’s Discussion and Analysis as this information includes the combined results of two separate legal entities prepared under IFRS and GAAP, respectively. In addition, the combined financial information may not be comparable to other periods presented because the Restructuring had a significant impact on the assets, liabilities and statements of operations of the respective entities being combined for the year ended December 31, 2010. While accounting for the business combination in a new entity results in significantly different amounts of recognized assets and liabilities, we believe that the comparison of the year ended December 31, 2011 versus the year ended December 31, 2010 provides the best analysis of our operating results. Where the comparability of specific income statement items have been significantly impacted, either temporarily or permanently, by the Restructuring and application of business combination accounting, we have provided detailed explanations of such in the discussion below. Financial information presented in this Management’s Discussion and Analysis for the year ended December 31, 2009 reflects the results of Amalco. Prospective purchasers are cautioned that such combination of these financial statements and historical financial statements are not necessarily comparable and may not be appropriate for their use.

Business Overview We are one of the largest casino operators in Canada. Our 12 gaming properties located in British Columbia and Alberta are located in highly attractive gaming regions with strong gaming demographics, robust economies and growing populations. We operate in highly regulated markets which favour incumbent operators and have significant barriers to entry. We generate significant cash flow from our best-in-class properties which has enabled us to successfully execute upon internal and external growth strategies. Our Company has a successful track record of developing and operating gaming facilities and an industry leading EBITDA Margin.

We are a leading gaming operator in British Columbia with the largest installed base of slot machines. We operate three casinos in the Greater Vancouver Region and four casinos in the Thompson-Okanagan Region. Our three casinos in the Greater Vancouver Region, the largest gaming region in British Columbia, have 2,673 slot machines, 115 table games and 29 poker tables. In the Thompson-Okanagan Region, where we are the only casino operator, our four casinos have 1,517 slot machines, 20 table games and 10 poker tables. In the Greater Vancouver Region we also operate our CGCs with 225 operational slot machines and an additional 100 slot machines installed but not yet operational.

64 We are one of the largest casino operators in the Edmonton Region. We operate two casinos with 1,053 slot machines, 43 table games and 14 poker tables representing a market share of approximately 19% of the slot machines and approximately 35% of the table games in the Edmonton Region.

In total, our properties have approximately 386,200 square feet of gaming space in which we offer 5,568 slot machines, 178 table games, 53 poker tables and 577 bingo seats. We offer in conjunction with our business partners, a wide range of amenities at our properties to support our gaming generations and differentiate us from our competition, including six hotels and convention centres (of which we own two), 22 restaurants, 10 bars and seven live entertainment venues. We actively look for opportunities to expand and enhance our existing properties and to acquire and develop additional properties.

The Company’s principal operating entities as at March 31, 2012 and December 31, 2011 were: Š Gateway Casinos & Entertainment Limited; Š Boardwalk Gaming Squamish Inc. (100% wholly owned subsidiary); and Š 427967 BC Ltd. (100% wholly owned subsidiary).

Revenue Our revenue is primarily earned from gaming activities. The BCLC, the GPEB and the AGLC are responsible for managing and conducting or regulating gaming activities in the regions in which we operate. As a gaming operator, we provide facilities and operational services to the BCLC under multi-year operating agreements and to the AGLC under multi-year licenses and, in return, receive commissions from gaming activities conducted at our properties. We play an important role in the economies and communities of the provinces in which we operate. In 2010, the BCLC remitted $1.1 billion to the Government of British Columbia to support a range of public programs, and, in Alberta, gaming activities provided $1.4 billion to Alberta’s Lottery Fund to support thousands of volunteer, public and community- based initiatives across Alberta.

Our expenses primarily relate to human resource costs, operating costs, and marketing expenses. We also incur costs for lease related occupancy, food and beverage costs, and other costs. Our growth capital expenditures relate to the development, expansion and major renovation of our facilities and include costs of construction as well as related furniture, fixtures, equipment and other infrastructure. Our maintenance capital expenditures are generally comprised of capital costs to maintain our facilities as well as costs of replacement furniture, fixtures and equipment. The BCLC and the AGLC own and are solely responsible for the cost of slot machine and related gaming machines and the gaming information systems used in our casinos and CGCs, and the BCLC is primarily responsible for our table game equipment used in British Columbia.

We focus on a variety of key indicators to monitor our financial performance. These indicators include Property EBITDA, revenue, operating margin, cash provided by operating activities and capital expenditures. Specifically, with respect to our gaming activities, we look at table games revenue and slot machines, bingo and other electronic games revenue, as well as amounts wagered (Table Drop and Slot Coin-in) and the amount we retain (Table Win, Poker Rake and Slot Win), in order to understand and measure the performance of our individual casinos. See “Non-IRFS and Non-GAAP Financial Measures”.

We manage our business and report our financial results in eight operating segments: (i) the Grand Villa Casino; (ii) the Starlight Casino; (iii) the Cascades Casino; (iv) the Lake City Casinos; (v) the Palace Casino; (vi) the Baccarat Casino; (vii) the CGC’s; and (viii) Corporate. We group these operating segments, excluding Corporate, into three distinct regions. The Greater Vancouver Region is comprised of the Grand Villa Casino, the Cascades Casino, the Starlight Casino, and the three CGCs. The Thompson-Okanagan Region is comprised of the Lake City Casinos. The Edmonton Region is comprised of the Palace Casino and the Baccarat Casino. We report our “corporate costs,” which include wages, professional fees, rent and certain other miscellaneous items, on a consolidated basis, and not as expenses of any operating segment. Accordingly, our segmented results and our calculation of Property EBITDA do not include corporate costs. Corporate costs are incurred at our corporate headquarters located in Burnaby, British Columbia as well as our regional corporate office in Kelowna, British Columbia.

65 Financial Highlights Three Three months months (in thousands) ended ended LTM Year ended December 31, March 31, March 31, March 31, 2012 2011 2012 2011 2010(1) 2009(2) (unaudited) (unaudited) (unaudited) (unaudited) Revenue ...... $ 62,920 $ 59,260 $257,658 $253,998 $ 257,566 $ 248,145 EBITDA ...... $ 20,716 $ 20,618 $ 93,557 $ 93,459 $ 96,506 $ 94,426 Loss and comprehensive loss ...... $ (6,416) $ (4,643) $ (15,080) $ (13,307) $(136,038) $ (123,433) Loss per Common Share Basic and diluted ...... $ (0.02) $ (0.01) $ (0.04) $ (0.03) n/a n/a Total Assets ...... $901,577 $943,061 $901,577 $928,529 $ 955,651 $1,336,625 Long-term debt excluding shareholder loans and accrued interest ...... $464,056 $500,735 $464,056 $488,195 $ 504,402 $1,163,419

(1) The financial information in the table for the year ended December 31, 2010 is based on the combined financial results of Amalco for the year ended December 31, 2010 prepared in accordance with GAAP and the Company for the period from May 18, 2010 (date of incorporation) to December 31, 2010 prepared in accordance with IFRS. While the financial statements of Amalco for the year ended December 31, 2010 have been audited and the consolidated financial statements of the Company for the period from May 18, 2010 to December 31, 2010 have been audited, the financial information in the table for the year ended December 31, 2010 has not been subject to audit and represents the combined results of two separate legal entities prepared under GAAP and IFRS, respectively. Additionally, the financial information for the year ended December 31, 2010 does not reflect any pro-forma adjustments to show the impact of the Restructuring on Amalco assuming it had occurred at the beginning of the period. The financial information in the table as at December 31, 2010 is based on the balance sheet of the Company as at December 31, 2010. (2) The financial information in the table as at and for the year ended December 31, 2009 is based on the financial results of Amalco for the year ended December 31, 2009 prepared in accordance with GAAP. The financial information as at and for the year ended December 31, 2009 reflects the historical financial results of Amalco and does not reflect any pro-forma adjustments to show the impact of the Restructuring on Amalco assuming it had occurred at the beginning of the period.

Historically, our property revenues and EBITDA experienced in the first quarter of the fiscal year are slightly lower than succeeding quarters mainly due to seasonality experienced at several of our properties. See “Consolidated Quarterly Results” within this Management’s Discussion and Analysis. However, our property revenue and EBITDA for the three months ended March 31, 2012 increased from the same period in the prior year due to increases in all of our revenue streams.

In fiscal 2011, the Company acquired our CGCs at the end of the second quarter which contributed to overall property revenue and increased overall property operating expenses. See “Our Company – Recent Acquisitions”. Total property revenue for the year ended December 31, 2011 was below that of fiscal 2010 mainly due to lower table revenue at the Starlight Casino’s high-limit table games as a result of a lower Table Win to 13.5% in fiscal 2011 from 22.7% in fiscal 2010. Slot revenue only experienced a slight decrease mainly seen at the Grand Villa Casino and the Cascades Casino due to a lower Slot Coin-in and Win %. Our food and beverage revenue and other revenue have increased for the twelve months ended December 31, 2011 by 6.1% and 41.0% respectively. Our food and beverage offerings were enhanced during the year after reviewing our patron profiles and demographics. We have also invested in renovating our existing food and beverage facilities in order to provide a comfortable and appealing location for patrons to enjoy their meals. For example, during fiscal 2011, we renovated the Lake City Kelowna Casino’s food and beverage facilities which for fiscal 2011 and for the three months ended March 31, 2012 saw an increase in revenue of 59.0% and 122.6% respectively. Our other revenue has increased considerably and is mainly due to an increase in our ATM fee per transaction at several of our properties.

The Vancouver Winter Olympic Games had a positive impact to our results in fiscal 2010. Due to increased demand for hotel accommodations by tourists, we experienced higher hotel revenue due to increased occupancy, which also resulted in increased revenue at our casinos, during the twelve months ended December 31, 2010 when compared to 2011. EBITDA in fiscal 2011 was lower than that of fiscal 2010 due to higher marketing costs incurred in 2011 as we continued to increase our brand awareness and introduced new marketing initiatives to attract a larger customer base. As a result of the acquisition of the CGCs which attributed to increasing our overall property revenue, we also incurred additional costs relating to those operations which were not present in fiscal 2010. During the twelve months ended December 31, 2011, we completed our expansion of the Lake City Kelowna Casino by building a new poker room and expanding our food and beverage facilities. As a result of this expansion, we also incurred higher operating and labour cost.

66 On June 23, 2009, Old Gateway ceased applying hedge accounting to its cross currency and interest rate swap agreements on a prospective basis, as it no longer met the conditions for an effective hedging relationship. During fiscal 2009, the Company recognized previously deferred unrealized loss on swap contracts in the amount of $143 million, because the hedged interest payments to which this amount pertained were no longer sufficiently probable. However, going forward in fiscal 2010 Old Gateway no longer recognized gains or losses on swap contracts. Old Gateway also recognized an impairment of goodwill of $111.3 million, of which $1.7 million related to the finalization of the Company’s annual impairment test for the year ended December 31, 2008. As the balance of goodwill was written off, the impact of this write down affected the results of fiscal 2009 but did not carry forward to the results of fiscal 2010.

Operations The table under “Prospectus Summary – Property Overview” provides an overview of our operations as at December 31, 2011.

Recent Developments On February 9, 2012, the Company acquired the South Surrey Property, British Columbia for potential future development. The purchase price of approximately $32 million consisted of approximately $22 million paid on closing and up to 883,626 Common Shares to be paid in the future contingent upon completion of milestones as described in the purchase agreement. To the extent the Company issues Common Shares in the future as contingent consideration, they will be recorded at fair value at the time of issuance and added to the land cost.

Results of Operations The following table presents our results of operations for the three months ended March 31, 2012 and 2011 and the years ended December 31, 2011, 2010 and 2009.

Three Months Ended (in thousands) March 31, Year Ended December 31, 2012 2011 2011 2010(1) 2009(2) (unaudited) (unaudited) (unaudited) Revenue Table Games ...... $16,359 $15,370 $ 62,221 $ 67,978 $ 65,819 Slot Machine, Bingo and Other Electronic Games ...... $29,667 $28,186 $121,223 $122,522 $122,262 Food and beverage ...... $ 6,682 $ 6,162 $ 26,891 $ 25,351 $ 23,192 Hotel ...... $ 1,690 $ 1,617 $ 8,358 $ 8,590 $ 4,952 Other ...... $ 2,283 $ 1,961 $ 9,567 $ 6,786 $ 6,832 Facility Development Commissions ...... $ 6,373 $ 5,964 $ 25,584 $ 26,211 $ 25,863 Total Property Revenue(3) ...... $63,054 $59,260 $253,844 $257,438 $248,920 Property Operating Expenses ...... $40,001 $35,910 $152,264 $149,609 $144,873 Property EBITDA ...... $23,053 $23,350 $101,580 $107,829 $104,047 Corporate Costs (EBITDA) ...... $(2,337) $ (2,732) $ (8,121) $ (11,323) $ (9,621) EBITDA ...... $20,716 $20,618 $ 93,459 $ 96,506 $ 94,426 Property EBITDA as a percentage of Total Property Revenue ...... 36.6% 39.4% 40.0% 41.9% 41.8% EBITDA as a percentage of Total Property Revenue ..... 32.9% 34.8% 36.8% 37.5% 37.9%

(1) The financial information in the table for the year ended December 31, 2010 is based on the combined financial results of Amalco for the year ended December 31, 2010 prepared in accordance with GAAP and the Company for the period from May 18, 2010 (date of incorporation) to December 31, 2010 prepared in accordance with IFRS. While the financial statements of Amalco for the year ended December 31, 2010 have been audited and the consolidated financial statements of the Company for the period from May 18, 2010 to December 31, 2010 have been audited, the financial information in the table for the year ended December 31, 2010 has not been subject to audit and represents the combined results of two separate legal entities prepared under GAAP and IFRS, respectively. Additionally, the financial information for the year ended December 31, 2010 does not reflect any pro-forma adjustments to show the impact of the Restructuring on Amalco assuming it had occurred at the beginning of the period. (2) The financial information in the table for the year ended December 31, 2009 is based on the financial results of Amalco for the year ended December 31, 2009 prepared in accordance with GAAP. The financial information for the year ended December 31, 2009 reflects the historical financial results of Amalco and does not reflect any pro-forma adjustments to show the impact of the Restructuring on Amalco assuming it had occurred at the beginning of the period. (3) Total Property Revenue is a non-IFRS and non-GAAP measure and excludes corporate revenue.

67 Revenue For the three month period ended March 31, 2012, total property revenue increased to $63.1 million from $59.3 million or 6.4%, compared to the same period in the prior year. Our property revenue increased primarily due to an increase in table revenue, slot revenue, food and beverage revenue and other revenue. The increase in table revenue was mainly driven by the Starlight Casino and the Palace Casino as a result of stronger Table Win in the current period when compared to the prior year period. Slot revenue was up due to stronger Slot Coin-in at our Edmonton properties. The increase in other revenue compared to the same period in the prior year was mainly attributable to an increase in ATM revenues. We also experienced an increase in food and beverage revenues due to a combination of increased customer volume and an enhancement in our product offerings. For the year ended December 31, 2011, total property revenue decreased to $253.8 million from $257.4 million or 1.4% compared to the prior year. Our property revenue decreased primarily due to the decline in table revenue and hotel revenue. The decline in table revenue was mainly attributable to the decline in our Table Win % at the Starlight Casino’s high-limit table games, from 22.7% in fiscal 2010 to 13.5% in fiscal 2011. The decline in hotel revenue was mainly due to a decrease in both the occupancy rate and the average daily room rate of the Delta Hotel compared to the prior year. The decrease in property revenue was partially offset by the increase of food and beverage revenue and other revenue compared to prior year results. February of 2010 was particularly strong due to the Vancouver Winter Olympic Games. This had a positive effect on the Grand Villa Casino’s property revenue as the nearby Hastings Park was closed for the month of February and Edgewater’s access was impeded. Although the Olympics were only a month long event, our 2010 results were positively impacted. For example, during the Olympics, our hotel revenue at our two Greater Vancouver hotels was $0.9 million or 176.2% higher when comparing 2010 and 2011. Also, during the Olympics our Greater Vancouver Region casinos generated $0.6 million or 10.0% more in slot revenue when comparing 2010 and 2011.

Vancouver Winter Olympic Games Impact on Slot Revenue (Unaudited) Jan. 24, 2010 – Jan. 23, 2011 – Difference Difference Casino Mar. 6, 2010 Mar. 5, 2011 ($) (%) Grand Villa ...... $2,695,516 $2,297,536 $397,980 17.3% Cascades ...... $1,900,880 $1,793,537 $107,343 6.0% Starlight ...... $1,492,429 $1,445,582 $ 46,847 3.2% Total ...... $6,088,825 $5,536,655 $552,170 10.0% We are currently implementing various marketing initiatives to help drive patronage to increase table and slot revenue, mainly focusing on the Greater Vancouver Region.

Property Operating Expenses For the three month period ended March 31, 2012, property operating expenses increased to $40.0 million from $35.9 million or 11.4% for the same period in 2011. This increase was mainly the result of the acquisition of the CGCs, which resulted in higher property operating costs overall. Other factors that attributed to the increase included higher labour costs related to the Lake City Kelowna Casino expansion and higher marketing costs related to marketing initiatives and coupon redemptions. For the twelve month period ended December 31, 2011, property operating expenses increased to $152.3 million from $149.6 million or 1.8% compared to the same period in the prior year. This increase was mainly the result of the acquisition of our CGCs at the end of the second quarter of 2011, which resulted in higher property operating costs overall. Other factors that attributed to the increase included higher labour cost incurred in third quarter of 2011 related to the Palace Casino as a result of a labour union settlement and higher labour costs associated with the Lake City Kelowna Casino expansion. Overall, marketing expenses for the year were also higher compared to the prior year due to the implementation of new marketing initiatives. For the twelve month period ended December 31, 2010, property operating expenses increased to $149.6 million from $144.9 million or 3.3% for the same period in 2009. While the amount of property expenses increased due to the various facility expansions and openings in 2009, property expenses declined when considered as a percentage of total property revenue, to 58.1% in 2010 from 58.2% in 2009. This reduction was mainly a result of the cost containment initiatives implemented by us during 2010, which resulted in savings through staff restructuring, renegotiation of certain supplier contracts and more effective management of food and beverage expenses. For the year ended

68 December 31, 2010, marketing expense increased when compared to the same period in 2009 due to initiatives that were introduced to increase patronage. Additional human resource expenses were incurred to run expanded facilities for the year ended December 31, 2010 as a result of various facility expansions made in the previous year.

We continue to look for ways to lower our property operating expenses across all of our facilities through various means such as labour management, centrally managing our facilities and increases in operational efficiency.

Corporate Operating Expenses Corporate costs for the three month period ended March 31, 2012 decreased to $2.3 million from $2.7 million for the same period in 2011 due to lower human resource costs as a result of labour restructurings made in fiscal 2011.

For the twelve month period ended December 31, 2011, total corporate costs significantly decreased to $8.1 million from $11.3 million for the same period in 2010. The decrease in corporate costs was mainly driven by restructuring our workforce and reductions in general expenses as part of our ongoing cost cutting initiatives. Management is committed in controlling corporate costs and continuously looks for opportunities to further improve our EBITDA which can be demonstrated by our corporate cost results for the twelve months ended December 31, 2011 and the three months ended March 31, 2012.

For the twelve month period ended December 31, 2010, total corporate costs increased when compared to the prior year period as no labour restructurings were performed and cost cutting initiatives were not yet implemented.

EBITDA EBITDA for the three month period ended March 31, 2012 increased to $20.7 million from $20.6 million for the same period in 2011. The increase in EBITDA can be attributed to the increase in total property revenue as explained above. EBITDA as a percentage of total property revenues for the three month period ended March 31, 2012 was 32.9% compared to 34.8% for the same period in the prior year.

For the twelve month period ended December 31, 2011, EBITDA decreased to $93.5 million from $96.5 million for the same period in 2010. EBITDA as a percentage of total property revenues for the year ended December 31, 2011 was 36.8% compared to 37.5% for the prior year. The decrease in EBITDA can be attributed to both a decrease in overall property revenue and an increase in property operating expense as a result of the factors discussed above.

EBITDA increased from $94.4 million to $96.5 million in the twelve month period ended December 31, 2010, or 2.2%, as compared to the same period in the prior year. EBITDA as a percentage of total property revenues for the twelve month period ended December 31, 2010 was 37.5%, compared to 37.9% for the same period in the prior year. EBITDA improvement can be attributed to an increase in our total property revenue.

Operating Segments The Grand Villa Casino The following table presents the Grand Villa Casino’s results of operations for the three months ended March 31, 2012 and 2011 and the years ended December 31, 2011, 2010 and 2009.

Three Months Ended Twelve Months Ended (in thousands) March 31, December 31, 2012 2011 2011 2010(1) 2009(2) (unaudited) (unaudited) (unaudited) Revenue Table Games ...... $ 6,347 $ 6,294 $23,968 $24,482 $25,737 Slot Machine, Bingo and Other Electronic Games ...... $ 7,496 $ 7,452 $30,630 $32,388 $32,346 Food and beverage ...... $ 2,149 $ 2,102 $ 9,239 $ 9,274 $ 8,186 Hotel ...... $ 1,316 $ 1,269 $ 6,640 $ 6,821 $ 3,299 Other ...... $ 551 $ 491 $ 2,218 $ 1,410 $ 1,430 Facility Development Commissions ...... $ 2,229 $ 2,227 $ 8,906 $ 9,205 $ 9,359 Total Property Revenue(3) ...... $20,088 $19,835 $81,601 $83,580 $80,357 Property Operating Expenses ...... $11,621 $10,866 $45,364 $45,423 $45,053 Property EBITDA ...... $ 8,467 $ 8,969 $36,237 $38,157 $35,304 Property EBITDA as a percentage of Total Property Revenue . . . 42.1% 45.2% 44.4% 45.7% 43.9%

69 (1) The financial information in the table for the year ended December 31, 2010 is based on the combined financial results of Amalco for the year ended December 31, 2010 prepared in accordance with GAAP and the Company for the period from May 18, 2010 (date of incorporation) to December 31, 2010 prepared in accordance with IFRS. While the financial statements of Amalco for the year ended December 31, 2010 have been audited and the consolidated financial statements of the Company for the period from May 18, 2010 to December 31, 2010 have been audited, the financial information in the table for the year ended December 31, 2010 has not been subject to audit and represents the combined results of two separate legal entities prepared under GAAP and IFRS, respectively. Additionally, the financial information for the year ended December 31, 2010 does not reflect any pro-forma adjustments to show the impact of the Restructuring on Amalco assuming it had occurred at the beginning of the period. (2) The financial information in the table for the year ended December 31, 2009 is based on the financial results of Amalco for the year ended December 31, 2009 prepared in accordance with GAAP. The financial information for the year ended December 31, 2009 reflects the historical financial results of Amalco and does not reflect any pro-forma adjustments to show the impact of the Restructuring on Amalco assuming it had occurred at the beginning of the period. (3) Total Property Revenue is a non-IFRS and non-GAAP measure and excludes corporate revenue.

Grand Villa (millions except Slot Win/Slot/Day) Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 2012 2011 2011 2011 2011 2010 2010 2010 2010 2009 Avg Table Drop ...... $ 82.1 $ 77.2 $ 77.1 $ 83.2 $ 90.3 $ 88.8 $ 86.0 $ 83.2 $ 87.2 $ 81.9 Table Win ...... $ 15.7 $ 14.5 $ 14.7 $ 14.3 $ 15.5 $ 14.3 $ 15.2 $ 15.3 $ 15.3 $ 15.2 Table Win % .... 19.1% 18.7% 19.1% 17.2% 17.2% 16.1% 17.7% 18.4% 17.5% 18.6% 18.0% Slot Coin-in ..... $415.9 $421.8 $418.7 $414.2 $385.7 $424.8 $429.3 $422.2 $433.6 $422.5 Slot Win ...... $ 30.1 $ 31.4 $ 30.6 $ 31.3 $ 30.0 $ 32.1 $ 32.2 $ 32.7 $ 33.5 $ 32.1 Slot Win/Slot/Day $ 331 $ 341 $ 332 $ 343 $ 332 $ 348 $ 349 $ 359 $ 371 $ 348 Slot Win % ...... 7.2% 7.4% 7.3% 7.5% 7.8% 7.5% 7.5% 7.8% 7.7% 7.6% 7.5%

Revenue For the three month period ended March 31, 2012, total property revenue increased to $20.1 million from $19.8 million. Table revenue increased due to stronger Table Win mainly at our high-limit tables, increasing to 19.1% in the three months ended March 31, 2011 from 17.2% in the same period in the prior year. This increase was offset by a decline in our table volumes both in regular and high-limit play as seen through our decrease in Table Drop to $82.1 in 2012 from $90.3 in 2011. High-limit table play can be subject to significant short-term volatility. Since the size and volume of the bets placed by high-limit players can be significant, this volatility may result in short-term decreases and or increases in revenue. Slot revenue increased due to an increase in Slot Coin-in to $415.9 in 2012 from $385.7 in 2011. Hotel revenue increased due to a combination of a higher occupancy rate of 54.4% compared to 53.2% in the prior year period, and an increase in the average daily room rate (“Average Daily Rate”or“ADR”) to $137 from $133. Other revenue increased due to higher ATM revenue compared to the prior year period.

For the twelve month period ended December 31, 2011, total property revenue decreased to $81.6 million from $83.6 million for the same period in 2010. This was primarily due to a decrease in table revenue, slot revenue and hotel revenue which was partially offset by higher other revenue associated with higher ATM revenue. The decrease in slot revenues was the result of lower Slot Coin-in to $1,640 in 2011 from $1,710 in 2010, combined with lower Slot Win % to 7.5% from 7.6%. The decrease in table revenues was the result of a lower Table Drop to $328 from $345 for the twelve month period ended December 31, 2011. Table Drop is subject to shifts in customer behavior around buying, retaining and cashing-in of casino chips. This decrease in Table Drop was partially mitigated by an increase in our Table Win % to 18.0% from 17.4%. The decrease in hotel revenue is mainly attributable to the combination of a decrease in the ADR and a decrease in our occupancy rate as in the prior year hotel occupancy was strong as a result of the Vancouver 2010 Winter Olympics. ADR decreased to $135.80 from $147.91 in the twelve month period ended December 31, 2011, compared to the same period in the prior year. Our occupancy rate increased to 66% from 62.7% in the twelve month period ended December 31, 2011 compared to the prior year.

For the twelve month period ended December 31, 2010, total property revenues increased to $83.6 from $80.4 million or 4.0%, compared to the same period in the prior year. The increase in total property revenue was due to the operation for the full period in 2010 of the Delta Burnaby Hotel and Conference Centre, which opened in two phases between April and June of 2009. In addition, hotel occupancy was strong during the Vancouver 2010 Winter Olympics.

70 Property EBITDA Property EBITDA decreased to $8.5 million from $9.0 million in the three month period ended March 31, 2012, or 5.6%, as compared to the same period in the prior year. Property EBITDA as a percentage of total property revenue for the three month period ended March 31, 2012 was 42.1% compared to 45.2% for the same period in the prior year. The decrease in Property EBITDA was due to an increase in operating costs resulting mainly from higher marketing costs as a result of new marketing initiatives being introduced.

Property EBITDA decreased to $36.2 million from $38.2 million in the twelve month period ended December 31, 2011, or 5.0%, as compared to the same period in the prior year. Property EBITDA as a percentage of total property revenue for the twelve month period ended December 31, 2011 was 44.4% compared to 45.7% for the same period in the prior year. The decrease in Property EBITDA was mainly attributed to a decrease in table revenue, slot revenue and hotel revenue which was partially offset by higher ATM fees per transaction as property expenses remained relatively stable when compared to the prior year.

Property EBITDA increased to $38.2 million from $35.3 million in the twelve month period ended December 31, 2010, as compared to the same period in the prior year. Property EBITDA as a percentage of total property revenue for the twelve month period ended December 31, 2010 was 45.7%, compared to 43.9% for the same period in the prior year. The increase in property revenue at the Grand Villa Casino was partially mitigated by an increase in property operating costs associated with the opening of the Delta Burnaby Hotel and Conference Centre in the second quarter of 2009.

The Starlight Casino The following table presents the Starlight Casino’s results of operations for the three months ended March 31, 2012 and 2011 and the years ended December 31, 2011, 2010 and 2009.

Three Months Ended Twelve Months Ended (in thousands) March 31, December 31, 2012 2011 2011 2010(1) 2009(2) (unaudited) (unaudited) (unaudited) Revenue Table Games ...... $ 3,675 $ 3,185 $14,820 $20,097 $15,323 Slot Machine, Bingo and Other Electronic Games ...... $ 4,633 $ 4,697 $19,578 $19,786 $18,958 Food and beverage ...... $ 699 $ 781 $ 3,050 $ 3,060 $ 2,716 Other ...... $ 425 $ 419 $ 1,817 $ 1,552 $ 1,502 Facility Development Commissions ...... $ 1,338 $ 1,285 $ 5,510 $ 6,229 $ 5,408 Total Property Revenue(3) ...... $10,770 $10,367 $44,775 $50,724 $43,907 Property Operating Expenses ...... $ 7,203 $ 6,824 $28,201 $29,370 $26,621 Property EBITDA ...... $ 3,567 $ 3,543 $16,574 $21,354 $17,286 Property EBITDA as a percentage of Total Property Revenue ...... 33.1% 34.2% 37.0% 42.1% 39.4%

(1) The financial information in the table for the year ended December 31, 2010 is based on the combined financial results of Amalco for the year ended December 31, 2010 prepared in accordance with GAAP and the Company for the period from May 18, 2010 (date of incorporation) to December 31, 2010 prepared in accordance with IFRS. While the financial statements of Amalco for the year ended December 31, 2010 have been audited and the consolidated financial statements of the Company for the period from May 18, 2010 to December 31, 2010 have been audited, the financial information in the table for the year ended December 31, 2010 has not been subject to audit and represents the combined results of two separate legal entities prepared under GAAP and IFRS, respectively. Additionally, the financial information for the year ended December 31, 2010 does not reflect any pro-forma adjustments to show the impact of the Restructuring on Amalco assuming it had occurred at the beginning of the period. (2) The financial information in the table for the year ended December 31, 2009 is based on the financial results of Amalco for the year ended December 31, 2009 prepared in accordance with GAAP. The financial information for the year ended December 31, 2009 reflects the historical financial results of Amalco and does not reflect any pro-forma adjustments to show the impact of the Restructuring on Amalco assuming it had occurred at the beginning of the period. (3) Total Property Revenue is a non-IFRS and non-GAAP measure and excludes corporate revenue.

71 Starlight (millions except Slot Win/Slot/Day) Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 2012 2011 2011 2011 2011 2010 2010 2010 2010 2009 Avg Table Drop ...... $ 46.4 $ 55.9 $ 46.8 $ 54.6 $ 53.0 $ 47.4 $ 56.4 $ 54.8 $ 52.4 $ 48.1 Table Win ...... $ 8.8 $ 9.2 $ 10.0 $ 8.3 $ 7.4 $ 11.1 $ 12.7 $ 11.2 $ 12.3 $ 10.1 Table Win % .... 18.2% 15.6% 20.1% 14.3% 12.8% 22.4% 21.6% 19.4% 22.3% 19.9% 18.6% Slot Coin-in ..... $248.6 $258.4 $255.4 $251.7 $237.5 $236.3 $254.5 $250.2 $238.5 $234.2 Slot Win ...... $ 18.7 $ 19.7 $ 19.8 $ 20.3 $ 19.0 $ 20.0 $ 19.9 $ 20.3 $ 19.4 $ 19.1 Slot Win/Slot/Day $ 240 $ 249 $ 251 $ 261 $ 246 $ 253 $ 253 $ 260 $ 251 $ 242 Slot Win % ...... 7.5% 7.6% 7.7% 8.1% 8.0% 8.4% 7.8% 8.1% 8.1% 8.2% 8.0%

Revenue For the three month period ended March 31, 2012, total property revenue increased to $10.8 million from $10.4 million or 3.9%, compared to the same period in the prior year. The increase in total property revenue was mainly due to the higher Table Win at both regular table games and high limit table games. The higher Table Win % of 18.2% compared to 12.8% for the same period in the prior year came primarily from high limit tables. This increase was offset by a decline in our table volumes both in regular and high-limit play as seen through our decrease in Table Drop to $46.4 in 2012 from $53.0 in 2011. Slot revenue showed a minimal decrease as the result of a lower Slot Win % to 7.5% in 2012 from 8.0% in 2011 which was partially mitigated by a higher Slot Coin-in in the current quarter to $248.6 in 2012 from $237.5 in 2011. The increase in property total revenue was slightly mitigated by a decrease in food and beverage revenue due to a decrease in customer volume by 4.7% when compared to the same period in the prior year. In order to drive our food and beverage revenue, in April of 2012, we completed a refurbishment in our show lounge areas. For the twelve month period ended December 31, 2011, total property revenue decreased to $44.8 million from $50.7 million, or 11.7%, compared to the same period in the prior year. The decrease in total property revenue was mainly due to the lower Table Win at the high limit tables which was 13.5% compared to 22.7% in the prior year. Inherent to any casino operation, our revenue may be negatively impacted by volatility in our Win % as our Table Win % can be impacted by various factors such as the level of a customer’s skill in a given game. In particular, high- limit table play can be subject to short-term volatility due to the size and volume of bets placed by high-limit players. If we were to normalize the Table Win % at our high-limit tables with our life to date win % of 18.2%, this would have approximately increased our table revenue by $2.4 million as at December 31, 2011. Slot revenue decrease as a result of a lower Slot Win % to 7.9% from 8.1% for the twelve month period ended December 31, 2011. Facility Development Commissions declined 11.5% compared to prior year period as a result of decreased gaming revenue. For the twelve month period ended December 31, 2010, total property revenue increased to $50.7 million from $43.9 million, or 15.5%, compared to the same period in the prior year. The increase in total property revenue was due to the improved revenue generated at the high-limit tables, mainly attributed to a Win % of 22.7% in the twelve month period ended December 31, 2010, compared to 13.6% during the same period in the prior year. Patron volumes also grew at our high limit table games as a result of our business development efforts. In addition, slot machines and other electronic games revenue increased by 4.4% in the twelve month period ended December 31, 2010.

Property EBITDA Property EBITDA remained relatively stable at $3.6 million for the three months ended March 31, 2012 from $3.5 million in the three months ended March 31, 2011. Property EBITDA as a percentage of total property revenue for the three month period ended March 31, 2012 was 33.1% compared to 34.2% for the same period in the prior year. Our stable Property EBITDA can be attributed to the increase in total property revenue as explained above which was partially mitigated by an increase in property operating expenses as a result of higher marketing costs due to new marketing initiatives. Property EBITDA decreased to $16.6 million from $21.4 million in the twelve month period ended December 31, 2011 or 22.4%, compared to the same period in the prior year. Property EBITDA as a percentage of total property revenue for the twelve month period ended December 31, 2011 was 37.0%, compared to 42.1% for the same period in the prior year. Our decrease in Property EBITDA can be attributed to the decrease in total property revenue resulting from the lower Table Win at the high limit tables. Property operating expenses decreased for the twelve month period ended December 31, 2011 compared to the same period in the prior year as a result of cost cutting initiatives

72 introduced. This resulted in lower human resource costs, lower property operating expenses relating to repairs and maintenance; cleaning and janitorial services; lower supplies costs and lower occupancy costs related to property taxes and utilities.

Property EBITDA increased to $21.4 million from $17.3 million in the twelve month period ended December 31, 2010, or 23.5%, compared to the same period in the prior year. Property EBITDA as a percentage of total property revenue for the twelve month period ended December 31, 2010 was 42.1%, compared to 39.4% for the same period in the prior year. Our increase in Property EBITDA can be attributed to the proportionately greater increase in total property revenue resulting from our business development efforts, over total expenses as a result of cost reduction initiatives.

The Cascades Casino The following table presents the Cascades Casino’s results of operations for the three months ended March 31, 2012 and 2011 and the years ended December 31, 2011, 2010 and 2009. Three Months Ended Twelve Months Ended (in thousands) March 31, December 31, 2012 2011 2011 2010(1) 2009(2) (unaudited) (unaudited) (unaudited) Revenue Table Games ...... $ 2,245 $ 2,281 $ 8,622 $ 8,350 $ 9,202 Slot Machine, Bingo and Other Electronic Games ...... $ 5,603 $ 5,801 $23,378 $24,792 $25,870 Food and beverage ...... $ 1,411 $ 1,464 $ 5,903 $ 5,629 $ 5,506 Hotel ...... $ 374 $ 348 $ 1,718 $ 1,769 $ 1,653 Other ...... $ 372 $ 336 $ 1,411 $ 1,129 $ 1,480 Facility Development Commissions ...... $ 1,338 $ 1,379 $ 5,479 $ 5,725 $ 6,001 Total Property Revenue(3) ...... $11,343 $11,609 $46,511 $47,394 $49,712 Property Operating Expenses ...... $ 6,529 $ 6,329 $26,217 $26,009 $25,547 Property EBITDA ...... $ 4,814 $ 5,280 $20,294 $21,385 $24,165 Property EBITDA as a percentage of Total Property Revenue ...... 42.4% 45.5% 43.6% 45.1% 48.6%

(1) The financial information in the table for the year ended December 31, 2010 is based on the combined financial results of Amalco for the year ended December 31, 2010 prepared in accordance with GAAP and the Company for the period from May 18, 2010 (date of incorporation) to December 31, 2010 prepared in accordance with IFRS. While the financial statements of Amalco for the year ended December 31, 2010 have been audited and the consolidated financial statements of the Company for the period from May 18, 2010 to December 31, 2010 have been audited, the financial information in the table for the year ended December 31, 2010 has not been subject to audit and represents the combined results of two separate legal entities prepared under GAAP and IFRS, respectively. Additionally, the financial information for the year ended December 31, 2010 does not reflect any pro-forma adjustments to show the impact of the Restructuring on Amalco assuming it had occurred at the beginning of the period. (2) The financial information in the table for the year ended December 31, 2009 is based on the financial results of Amalco for the year ended December 31, 2009 prepared in accordance with GAAP. The financial information for the year ended December 31, 2009 reflects the historical financial results of Amalco and does not reflect any pro-forma adjustments to show the impact of the Restructuring on Amalco assuming it had occurred at the beginning of the period. (3) Total Property Revenue is a non-IFRS and non-GAAP measure and excludes corporate revenue.

Cascades (millions except Slot Win/Slot/Day) Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 2012 2011 2011 2011 2011 2010 2010 2010 2010 2009 Avg Table Drop ...... $ 19.1 $ 18.5 $ 16.9 $ 18.9 $ 18.6 $ 19.9 $ 17.0 $ 18.7 $ 18.2 $ 19.4 Table Win ...... $ 4.9 $ 4.4 $ 3.9 $ 5.2 $ 4.8 $ 4.4 $ 4.1 $ 4.6 $ 4.8 $ 4.8 Table Win % ...... 22.0% 20.0% 19.7% 21.7% 21.8% 18.2% 20.2% 20.5% 22.1% 19.3% 20.5% Slot Coin-in ...... $322.7 $322.8 $318.4 $334.5 $326.4 $332.3 $326.9 $360.7 $339.1 $348.4 Slot Win ...... $ 22.7 $ 23.6 $ 22.9 $ 24.3 $ 23.4 $ 24.2 $ 24.5 $ 25.8 $ 25.1 $ 25.8 SlotWin/Slot/Day . . . $ 305 $ 315 $ 306 $ 328 $ 320 $ 323 $ 328 $ 349 $ 349 $ 356 Slot Win % ...... 7.0% 7.3% 7.2% 7.3% 7.2% 7.3% 7.5% 7.2% 7.4% 7.4% 7.3%

73 Revenue For the three month period ended March 31, 2012, total property revenue decreased to $11.3 million from $11.6 million, or 2.3% compared to the same period in the prior year. The decrease in total property revenue compared to 2011 was primarily due to lower slot revenues driven by decreases in both Slot Coin-in, to $322.7 in 2012 from $326.4 in 2011 and Slot Win % to 7.0% in 2012 from 7.2% in 2011. Table revenue also saw a small decline, driven mainly by a lower poker rake of $686 down from $786 in the same period in the prior year. This decrease was partially offset by higher hotel revenues driven by higher occupancy rates to 50.2% from 44.1% when compared to the same period in the prior year. The average daily room rate decreased from $109 in 2011 to $103 in 2012; however the increase in occupancy was large enough to mitigate the decrease in room rates.

For the twelve month period ended December 31, 2011, total property revenue decreased to $46.5 million from $47.4 million, or 1.9% compared to the same period in the prior year. The decrease in total property revenue compared to 2010 was mainly attributed to lower slot revenues. Slot revenue was down as a result of decreased Slot Coin-in down from 2010 by $56.9 and Slot Win % down to 7.2% from 7.3% for the twelve month period ended December 31, 2011. Facility Development Commissions declined 4.3% compared to prior year period as a result of decreased gaming revenue. This was partially offset by higher other revenue due to higher ATM revenue as well as higher food and beverage revenue due to increased volume and product offerings. In the fourth quarter of 2010, a competing community gaming centre in Maple Ridge was opened which had a modest effect on customer volume at the Cascades Casino, thereby attributing to part of the overall property revenue decrease in the year.

Hotel revenue decreased to $1.7 million from $1.8 million in the twelve month period ended December 31, 2011. The decrease in hotel revenue was mainly attributable to a decrease in the ADR to $105.19 for the twelve month period ended December 31, 2011 from an ADR of $112.18 for the same period in 2010. The decrease was partially mitigated by a slight increase in the occupancy rate to 55.9% from 54.6% for the twelve month period ended December 31, 2011.

For the twelve month period ended December 31, 2010, total property revenue decreased to $47.4 million from $49.7 million, or 4.7%, compared to the same period in the prior year. The decrease in total property revenue compared to 2009 was driven by soft performances in slot machines and other electronic games revenue, decreasing by $1.1 million, and table games revenue, decreasing by $0.9 million. Also, total property revenue was impacted by competition from the community gaming centre in Abbotsford, which is located approximately 24 kilometres, driving distance from the Cascades Casino and opened in June 2009.

Property EBITDA Property EBITDA decreased to $4.8 million from $5.3 million in the three month period ended March 31, 2012, or 8.8% as compared to the same period in the prior year. Property EBITDA as a percentage of total property revenue for the three month period ended March 31, 2012 was 42.4%, compared to 45.5% for the same period in the prior year. Our Property EBITDA decreased a result of lower total property revenue with a corresponding increase in property operating expenses for the three month period ended March 31, 2012 as compared to the same period in the prior year. Property operating expenses increased due to an increase in marketing costs, operating costs and utility costs.

Property EBITDA decreased to $20.3 million from $21.4 million in the twelve month period ended December 31, 2011, or 5.1%, as compared to the same period in the prior year. Property EBITDA as a percentage of total property revenue for the twelve month period ended December 31, 2011 was 43.6%, compared to 45.1% for the same period in the prior year. Our Property EBITDA decreased mainly as a result of the decrease in total property revenue as property operating expenses remained relatively consistent from the prior year.

Property EBITDA decreased to $21.4 million from $24.2 million in the twelve month period ended December 31, 2010, or 11.5%, as compared to the same period in the prior year. Property EBITDA as a percentage of total property revenue for the twelve month period ended December 31, 2010 was 45.1%, compared to 48.6% for the same period in the prior year. Our decrease in Property EBITDA can be attributed to our reduction in total property revenue.

We are commencing our food and beverage upgrades at the Cascades Casino with the goal of increasing our food and beverage revenue and attracting patrons to spend more time at our property. The upgrades are scheduled to be completed at the end of fiscal 2012 and include the addition of Starbucks and an increase to our dining seating capacity.

74 Thompson-Okanagan Region The following table presents the Lake City Casinos’ results of operations for the three months ended March 31, 2012 and 2011 and the years ended December 31, 2011, 2010 and 2009.

Three Months Ended Twelve Months Ended (in thousands) March 31, December 31, 2012 2011 2011 2010(1) 2009(2) (unaudited) (unaudited) (unaudited) Revenue Table Games ...... $ 851 $ 815 $ 3,452 $ 3,617 $ 3,968 Slot Machine, Bingo and Other Electronic Games ...... $ 7,372 $ 7,348 $32,490 $33,238 $32,390 Food and beverage ...... $ 894 $ 675 $ 3,515 $ 2,895 $ 2,396 Other ...... $ 458 $ 408 $ 2,096 $ 1,510 $ 1,381 Facility Development Commissions ...... $ 1,215 $ 1,073 $ 5,203 $ 5,052 $ 5,095 Total Property Revenue(3) ...... $10,790 $10,319 $46,756 $46,312 $45,230 Property Operating Expenses ...... $ 7,554 $ 6,467 $28,128 $27,577 $26,567 Property EBITDA ...... $ 3,236 $ 3,852 $18,628 $18,735 $18,663 Property EBITDA as a percentage of Total Property Revenue ...... 30.0% 37.3% 39.8% 40.5% 41.3%

(1) The financial information in the table for the year ended December 31, 2010 is based on the combined financial results of Amalco for the year ended December 31, 2010 prepared in accordance with GAAP and the Company for the period from May 18, 2010 (date of incorporation) to December 31, 2010 prepared in accordance with IFRS. While the financial statements of Amalco for the year ended December 31, 2010 have been audited and the consolidated financial statements of the Company for the period from May 18, 2010 to December 31, 2010 have been audited, the financial information in the table for the year ended December 31, 2010 has not been subject to audit and represents the combined results of two separate legal entities prepared under GAAP and IFRS, respectively. Additionally, the financial information for the year ended December 31, 2010 does not reflect any pro-forma adjustments to show the impact of the Restructuring on Amalco assuming it had occurred at the beginning of the period. (2) The financial information in the table for the year ended December 31, 2009 is based on the financial results of Amalco for the year ended December 31, 2009 prepared in accordance with GAAP. The financial information for the year ended December 31, 2009 reflects the historical financial results of Amalco and does not reflect any pro-forma adjustments to show the impact of the Restructuring on Amalco assuming it had occurred at the beginning of the period. (3) Total Property Revenue is a non-IFRS and non-GAAP measure and excludes corporate revenue.

Lake City Total (in millions except Slot Win/Slot/Day) Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 2012 2011 2011 2011 2011 2010 2010 2010 2010 2009 Avg Table Drop ...... $ 8.2 $ 8.1 $ 9.6 $ 9.7 $ 8.2 $ 9.8 $ 11.7 $ 10.6 $ 9.1 $ 9.7 Table Win ...... $ 1.9 $ 1.9 $ 2.1 $ 1.9 $ 1.9 $ 2.2 $ 2.2 $ 2.1 $ 2.0 $ 2.3 Table Hold % ...... 19.8% 20.4% 18.8% 18.6% 22.0% 20.7% 18.1% 18.6% 20.4% 22.0%19.9% Slot Coin-in ...... $394.7 $428.5 $488.0 $438.7 $382.8 $429.4 $481.3 $456.8 $393.2 $415.5 Slot Win ...... $ 29.7 $ 31.6 $ 36.2 $ 33.6 $ 29.6 $ 32.2 $ 36.2 $ 35.2 $ 30.5 $ 31.2 Slot Win/Slot/Day . . $ 215 $ 226 $ 261 $ 263 $ 242 $ 256 $ 293 $ 292 $ 257 $ 258 Slot Hold % ...... 7.5% 7.4% 7.4% 7.7% 7.7% 7.5% 7.5% 7.7% 7.8% 7.5% 7.6%

Revenue Historically, our property revenue and EBITDA in the first quarter of the fiscal year are slightly lower than succeeding quarters mainly due to seasonality experienced in the Thompson-Okanagan Region as tourism largely in the summer months is one of the key factors to the economy. For the three month period ended March 31, 2012, total property revenue increased to $10.8 million from $10.3 million or 4.6% from the same period in the prior year. This increase was primarily due to higher table games revenue mainly due to poker at Lake City Kelowna in the current quarter, and food and beverage revenue increasing by $0.2 million compared to prior year period derived from the expanded food and beverage facility at the Lake City Kelowna Casino. Other revenue increased from higher ATM fees per transaction compared to the prior year period with slot revenue remained relatively stable. Management believes that our revenue and EBITDA results will improve in the upcoming summer months.

75 For the twelve month period ended December 31, 2011, total property revenue increased to $46.8 million from $46.3 million, or 1.0%, from the same period in the prior year. This increase was primarily due to higher food and beverage revenue of 21.4% as a result of the expanded food and beverage facility and a higher ATM fee per transaction as compared to the prior year. This increase was partially offset by a decrease in our table revenue as a result of an overall lower Table Drop at all of our Lake City facilities which was partially mitigated by a higher Table Win % at our Lake City Kelowna and Lake City Kamloops facilities. Slot revenue decreased as a result of lower Slot Coin-in at our Lake City Kelowna and Lake City Vernon facilities and a lower Slot Win % at all Lake City facilities except for the Lake City Kelowna Casino.

For the twelve month period ended December 31, 2010, total property revenue increased to $46.3 million from $45.2 million, or 2.4%, from the same period in the prior year. This increase was primarily due to the full year of operations of the new Lake City Vernon Casino, which opened in June of 2009. The decline in table games revenue was primarily attributable to the removal of live table games which have been replaced by electronic table games.

Property EBITDA Property EBITDA decreased to $3.2 million from $3.9 million in the three month period ended March 31, 2012 when compared to the same period in the prior year. Property EBITDA as a percentage of total property revenue for the three month period ended March 31, 2012 was 30.0%, compared to 37.3% for the same period in the prior year. Our Property EBITDA decline can be attributed to an increase in property operating expenses which were mainly attributed to costs associated with the expanded Lake City Kelowna Casino including additional wages, rental and janitorial expenses.

Property EBITDA decreased to $18.6 million in the twelve month period ended December 31, 2011 from $18.7 million in the prior year. Property EBITDA as a percentage of total property revenue for the twelve month period ended December 31, 2011 was 39.8%, compared to 40.5% in the prior year. Our Property EBITDA decline can be attributed to an increase in property operating expenses which were mainly attributed to costs associated with the expanded Lake City Kelowna Casino as discussed above.

Property EBITDA remained relatively stable at $18.7 million in the twelve month period ended December 31, 2010 and 2009. Property EBITDA as a percentage of total property revenue for the twelve month period ended December 31, 2010 was 40.5%, compared to 41.3% for the same period in the prior year. Our Property EBITDA increase can be attributed to our increase in total property revenue which was partially mitigated by additional costs associated with the full year of operations of the new Lake City Vernon Casino in 2010.

Management is continuing to look for opportunities to increase our overall total property revenue and Property EBITDA at our Lake City Casinos. We are currently expanding our Lake City Kelowna Casino to include new event space to provide additional revenue and are exploring sublease opportunities which will offset our lease costs and improve our Property EBITDA. We currently lease the space for our Lake City office in Kelowna; however management intends to move this office to the Lake City Kelowna Casino which is expected to provide cost savings.

76 The Palace Casino The following table presents the Palace Casino’s results of operations for the three months ended March 31, 2012 and 2011 and the years ended December 31, 2011, 2010 and 2009. Three Months Ended Twelve Months Ended (in thousands) March 31, December 31, 2012 2011 2011 2010(1) 2009(2) (unaudited) (unaudited) (unaudited) Revenue Table Games ...... $1,682 $1,282 $ 5,262 $ 4,989 $ 4,898 Slot Machine, Bingo and Other Electronic Games ...... $2,007 $1,800 $ 7,756 $ 7,679 $ 7,807 Food and beverage ...... $ 718 $ 646 $ 2,560 $ 2,469 $ 2,349 Other ...... $ 181 $ 156 $ 975 $ 586 $ 104 Total Property Revenue(3) ...... $4,588 $3,884 $16,553 $15,723 $15,158 Property Operating Expenses ...... $2,922 $2,808 $11,154 $10,827 $10,888 Property EBITDA ...... $1,666 $1,076 $ 5,399 $ 4,896 $ 4,270 Property EBITDA as a percentage of Total Property Revenue ...... 36.3% 27.7% 32.6% 31.1% 28.2%

(1) The financial information in the table for the year ended December 31, 2010 is based on the combined financial results of Amalco for the year ended December 31, 2010 prepared in accordance with GAAP and the Company for the period from May 18, 2010 (date of incorporation) to December 31, 2010 prepared in accordance with IFRS. While the financial statements of Amalco for the year ended December 31, 2010 have been audited and the consolidated financial statements of the Company for the period from May 18, 2010 to December 31, 2010 have been audited, the financial information in the table for the year ended December 31, 2010 has not been subject to audit and represents the combined results of two separate legal entities prepared under GAAP and IFRS, respectively. Additionally, the financial information for the year ended December 31, 2010 does not reflect any pro-forma adjustments to show the impact of the Restructuring on Amalco assuming it had occurred at the beginning of the period. (2) The financial information in the table for the year ended December 31, 2009 is based on the financial results of Amalco for the year ended December 31, 2009 prepared in accordance with GAAP. The financial information for the year ended December 31, 2009 reflects the historical financial results of Amalco and does not reflect any pro-forma adjustments to show the impact of the Restructuring on Amalco assuming it had occurred at the beginning of the period. (3) Total Property Revenue is a non-IFRS and non-GAAP measure and excludes corporate revenue.

Palace (millions except Slot Win/Slot/Day) Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 2012 2011 2011 2011 2011 2010 2010 2010 2010 2009 Avg Table Drop ...... $ 17.4 $ 16.5 $ 15.6 $ 16.1 $ 15.9 $ 13.9 $ 14.3 $ 13.0 $ 12.8 $ 12.6 Table Win ...... $ 3.2 $ 2.8 $ 2.5 $ 2.2 $ 2.5 $ 2.5 $ 2.3 $ 2.4 $ 2.2 $ 2.1 Table Win % .... 17.0% 15.8% 15.0% 12.7% 14.1% 16.6% 14.7% 16.7% 15.4% 14.4% 15.3% Slot Coin-in ..... $174.7 $181.1 $171.8 $166.7 $151.8 $169.7 $170.1 $160.0 $153.8 $159.1 Slot Win ...... $ 14.0 $ 14.7 $ 13.9 $ 12.8 $ 12.5 $ 13.0 $ 13.5 $ 12.3 $ 12.3 $ 12.9 Slot Win/Slot/Day $ 230 $ 237 $ 217 $ 199 $ 196 $ 199 $ 208 $ 192 $ 193 $ 198 Slot Win % ...... 8.0% 8.1% 8.1% 7.7% 8.2% 7.7% 8.0% 7.7% 8.0% 8.1% 8.0%

Revenue For the three month period ended March 31, 2012, total property revenue increased to $4.6 million from $3.9 million or 18.1% from the same period in the prior year. This was primarily due to an increase in table revenue, slot revenue and food and beverage revenue. The increase in table revenues was the result of a higher Table Win % of 17.0% compared to 14.1% in the prior year quarter and an increase in Table Drop mainly at our high-limit tables in the current quarter. The increase in slot revenues was mainly driven by an increase in Slot Coin-in to $174.7 in 2012 from $151.8 in 2011. Food and beverage revenue was up over the prior year period mainly due to higher customer volume.

For the twelve month period ended December 31, 2011, total property revenue increase to $16.6 million from $15.7 million, or 5.3% from the same period in the prior year. This was primarily due to an increase in other revenues, but also an increase in table games and slot revenues. The increase in table revenues was the result of an 18.5% increase in Table Drop and the increase in slot revenues was attributed to a 2.7% increase in Slot Coin-in. The increase in other revenue was due to a higher ATM fees per transaction as compared to prior year same period.

For the twelve month period ended December 31, 2010, total property revenue increased to $15.7 million from $15.2 million, or 3.7%, compared to the same period in the prior year. Our total property revenue increased primarily

77 due to an increase in other revenues of $0.5 million in the twelve month period ended December 31, 2010. The largest component of other revenues is ATM fees which increased during the year due to pricing adjustments.

Property EBITDA Property EBITDA increased to $1.7 million from $1.1 million or 54.8% in the three month period ended March 31, 2012 as compared to the same period in the prior year. Property EBITDA as a percentage of total property revenue for the three month period ended March 31, 2012 was 36.3%, compared to 27.7% for the same period in the prior year. The increase in Property EBITDA can be mainly attributed to the increase in overall total property revenue in the current period.

Property EBITDA increased to $5.4 million from $4.9 million or 10.3% in the twelve month period ended December 31, 2011 as compared to the same period in the prior year. Property EBITDA as a percentage of total property revenue remained relatively consistent for the twelve month period ended December 31, 2011 was 32.6%, compared to 31.1% for the same period in the prior year.

Property EBITDA increased to $4.9 million from $4.3 million in the twelve month period ended December 31, 2010, or 14.7%, compared to the same period in the prior year. Property EBITDA as a percentage of total property revenues for the twelve month period ended December 31, 2010 was 31.1%, compared to 28.2% for the same period in the prior year. Our Property EBITDA increased mainly as a result of the increase in total property revenue discussed above.

To improve our property EBITDA, we have commenced a renovation program at the Palace Casino in which we will consolidate our gaming space all into one level which will reduce our property operating costs, as well as to refresh the entire space. We anticipate on completing this renovation in early 2013.

The Baccarat Casino The following table presents the Baccarat Casino’s results of operations for the three months ended March 31, 2012 and 2011 and the years ended December 31, 2011, 2010 and 2009. Three Months Ended (in thousands) March 31, Twelve Months Ended December 31, 2012 2011 2011 2010(1) 2009(2) (unaudited) (unaudited) (unaudited) Revenue Table Games ...... $1,556 $1,513 $ 6,091 $ 6,443 $ 6,691 Slot Machine, Bingo and Other Electronic Games ...... $1,143 $1,088 $ 4,621 $ 4,639 $ 4,891 Food and beverage ...... $ 548 $ 494 $ 2,122 $ 2,024 $ 2,039 Other ...... $ 153 $ 151 $ 657 $ 599 $ 935 Total Property Revenue(3) ...... $3,400 $3,246 $13,491 $13,705 $14,556 Property Operating Expenses ...... $2,719 $2,616 $10,334 $10,403 $10,197 Property EBITDA ...... $ 681 $ 630 $ 3,157 $ 3,302 $ 4,359 Property EBITDA as a percentage of Total Property Revenue ...... 20.0% 19.4% 23.4% 24.1% 29.9%

(1) The financial information in the table for the year ended December 31, 2010 is based on the combined financial results of Amalco for the year ended December 31, 2010 prepared in accordance with GAAP and the Company for the period from May 18, 2010 (date of incorporation) to December 31, 2010 prepared in accordance with IFRS. While the financial statements of Amalco for the year ended December 31, 2010 have been audited and the consolidated financial statements of the Company for the period from May 18, 2010 to December 31, 2010 have been audited, the financial information in the table for the year ended December 31, 2010 has not been subject to audit and represents the combined results of two separate legal entities prepared under GAAP and FRS, respectively. Additionally, the financial information for the year ended December 31, 2010 does not reflect any pro-forma adjustments to show the impact of the Restructuring on Amalco assuming it had occurred at the beginning of the period. (2) The financial information in the table for the year ended December 31, 2009 is based on the financial results of Amalco for the year ended December 31, 2009 prepared in accordance with GAAP. The financial information for the year ended December 31, 2009 reflects the historical financial results of Amalco and does not reflect any pro-forma adjustments to show the impact of the Restructuring on Amalco assuming it had occurred at the beginning of the period. (3) Total Property Revenue is a non-IFRS and non-GAAP measure and excludes corporate revenue.

78 Baccarat (in millions except Slot Win/Slot/Day) Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 2012 2011 2011 2011 2011 2010 2010 2010 2010 2009 Avg Table Drop ...... $ 24.3 $ 22.8 $ 20.5 $ 19.8 $18.5 $18.9 $21.5 $ 20.1 $18.9 $ 19.0 Table Win ...... $ 2.9 $ 3.2 $ 2.4 $ 3.0 $ 2.9 $ 3.6 $ 3.0 $ 3.2 $ 2.8 $ 3.3 Table Win % ...... 11.1% 13.2% 10.7% 14.1% 14.6% 17.6% 13.0% 14.4% 13.5% 16.0% 13.8% Slot Coin-in ...... $100.3 $106.7 $106.1 $105.7 $96.0 $98.9 $98.4 $101.8 $96.9 $100.0 Slot Win ...... $ 7.9 $ 8.3 $ 8.3 $ 8.0 $ 7.5 $ 7.6 $ 7.8 $ 8.0 $ 7.6 $ 7.7 Slot Win/Slot/Day .... $ 228 $ 235 $ 247 $ 250 $238 $234 $237 $ 248 $238 $ 235 Slot Win % ...... 7.9% 7.7% 7.8% 7.6% 7.8% 7.7% 7.9% 7.9% 7.9% 7.7% 7.8%

Revenue For the three month period ended March 31, 2012 total property revenue increased to $3.4 million from $3.2 million, or 4.7%, when compared with the same period in the prior year. This was due to increases in table revenue, slot revenue and food and beverage revenue. Table revenue was higher than the prior year period due to an increase in Table Drop mainly due to increase play at our Baccarat regular and high-limit table games, to $24.3 from $18.5 in 2011. The increase in Table Drop was offset by a decrease in our Table Win, to 11.1% from 14.6% when compared to same period in the prior year. Slot revenue was up due to a combination of higher Slot Coin-in to $100.3 in 2012 from $96.0 and Slot Win % to 7.9% from 7.8% in 2011. Food and beverage revenue was up from the prior year period mainly as a result of increased customer volume.

For the twelve month period ended December 31, 2011 total property revenue decreased to $13.5 million from $13.7 million, or 1.6%, the same period in the prior year. The decrease was primarily due to a decrease of table revenues. The decrease in table revenues was the result of a lower Table Win which decreased by 8.7% when compared to the same period in the prior year. Food and beverage saw a slight increase in revenue due to an increase in our customer volumes and a change in our product offerings.

For the twelve month period ended December 31, 2010, total property revenue declined to $13.7 million from $14.6 million, or 5.8%, compared to the same period in the prior year. The decrease was mainly attributed to a slight decrease in both our table and slot revenue. Our non high-limit Table Drop significant improved from fiscal 2009 by 11.0%; however, this was mitigated by our high-limit Table Drop which decreased in fiscal 2010 by 12.8% from the prior year period. Our slot revenue was impacted by our Slot Coin-in which decreased in fiscal 2010 by 4.0% when compared to the prior year period however, our Slot Win % held steady at 7.8% in 2010 compared to 7.9% in 2009.

Property EBITDA increased to $0.7 million from $0.6 million in the three month period ended March 31, 2012 or 8.1% compared to the same period in the prior year. Property EBITDA as a percentage of total property revenue for the three month period ended March 31, 2012 was 20.0% compared to 19.4% for the same period in the prior year.

Property EBITDA decreased to $3.2 million from $3.3 million in the twelve month period ended December 31, 2011 or 4.4%, compared to the same period in the prior year. Property EBITDA as a percentage of total property revenue for the twelve month period ended December 31, 2011 was 23.4%, compared to 24.1% for the same period in the prior year. The decrease in Property EBIDTA for the year is mainly due to a decrease in table revenues as property operating expenses remained relatively stable compared to the prior year.

Property EBITDA decreased to $3.3 million from $4.4 million in the twelve month period ended December 31, 2010, or 24.2%, as compared to the same period in the prior year. Property EBITDA as a percentage of total property revenue for the twelve month period ended December 31, 2010 was 24.1%, compared to 29.9% for the same period in the prior year. Our Property EBITDA decreased mainly as a result of the decrease in total property revenues, as discussed above.

79 Community Gaming Centres The following table presents our CGCs’ results of operations for the three months ended March 31, 2012 and the six months ended December 31, 2011. Three Months Ended Six Months Ended (in thousands) March 31, December 31, 2012 2011 (unaudited) Revenue Table Games ...... $ 3 $ 6 Slot Machine, Bingo and Other Electronic Games ...... $1,413 $2,770 Food and beverage ...... $ 263 $ 502 Other ...... $ 143 $ 393 Facility Development Commissions ...... $ 253 $ 486 Total Property Revenue (1) ...... $2,075 $4,157 Property Operating Expenses ...... $1,453 $2,866 Property EBITDA ...... $ 622 $1,291 Property EBITDA as a percentage of Total Property Revenue ...... 30.0% 31.1%

(1) Total Property Revenue is a non-IFRS and non-GAAP measure and excludes corporate revenue.

CGC Total (millions except Slot Win/Slot/Day)

Q1 Q4 Q3 2012 2011 2011 Avg Slot Coin-in ...... $54.3 $49.0 $52.0 Slot Win ...... $ 4.0 $ 3.7 $ 3.9 Slot Win/Slot/Day ...... $194 $179 $190 Slot Hold % ...... 7.3% 7.6% 7.5% 7.5%

We acquired the CGCs on June 30, 2011 and the above chart does not include the results of CGCs prior to the date of acquisition. The results above represent the three quarters in which we have operated our CGCs. Slot revenue was $1.5 million in the third quarter in fiscal 2011, $1.3 million and $1.4 million for the three month periods ended December 31, 2011 and March 31, 2012, respectively. The decrease in slot revenue in the fourth quarter of 2011 was attributed to a lower Slot Coin-in at our Mission property coupled with a lower Slot Win % when compared to the previous quarter. Slot revenues improved in the first quarter of 2012, when compared to the last quarter of 2011, due to a higher Slot Coin-in at both our Mission and Squamish properties and a stronger Slot Win % at Squamish.

While the CGCs each have their own management teams, our Greater Vancouver Region casino management teams have been working alongside them to optimize marketing plans and products to attract new customers and retain existing ones. For example, starting in May 2012, Chances Squamish will be offering off track betting. Property operating expenses for the three quarters have remained relatively stable. As a result, Property EBITDA has fluctuated mainly as a result of slot revenue generated each quarter.

Discussion of Items Excluded from EBITDA Amortization of intangible assets For the three month period ended March 31, 2012, amortization of intangible assets increased to $11.8 million from $10.7 million for the same period in the prior year. The increase in amortization expense was the result the amortization of intangible assets related to our CGCs as our CGCs were not acquired until June 30, 2011.

Effective January 1, 2011, a portion of intangible assets that relate to approved amounts of FDC acquired by the Company following the Restructuring were amortized on an accelerated basis over the estimated eight year recovery period of the approved amounts. This change in estimate resulted in $10.8 million of additional amortization being recognized during the year ended December 31, 2011.

80 Depreciation of property and equipment For the three month period ended March 31, 2012, depreciation of property and equipment remained relatively stable at $5.0 million compared to $4.8 million for the same period in the prior year. The increase in depreciation expense was the result of fixed asset additions made during the prior year. Depreciation expense for the twelve month period ended December 31, 2011 was $19.4 million.

Restructuring and acquisition costs For the three month periods ended March 31, 2012 and March 31, 2011, restructuring and acquisition costs were minimal as the majority of the restructuring costs were incurred in the second and third quarters of fiscal 2011.

Restructuring costs for the twelve month period ended December 31, 2011 was $1.8 million. These costs related primarily to severance costs associated with a significant corporate restructuring plan contemplated during the Restructuring and implemented during 2011. Acquisition costs for the twelve month period ended December 31, 2011 were $1.9 million. These costs relate to costs incurred in exploring potential acquisitions.

Impairment of non-financial assets As at March 31, 2012 no impairment of non-financial assets were identified. An impairment loss of $1.2 million was recognized by the Company for the twelve month period ended December 31, 2011. Since the acquisition of the Chances Squamish on June 30, 2011, the property has not performed as well as initially projected. As a result, an impairment analysis was performed as at December 31, 2011, and based on its value in use, the leasehold improvements were written down.

Interest expense For the three month period ended March 31, 2012, interest expense decreased to $9.4 million from $9.8 million from the same period in the prior year. The decrease was the result of a refinancing of the credit agreement relating to our Term Loans. The effect of the amendment was to decrease the interest rate spreads, thus resulting in a lower interest expense for the quarter and the year ended December 31, 2011.

Other expenses Other expenses include the change in fair value of the embedded derivatives related to the Notes and the loss on debt extinguishment related to the amendment of our Existing Credit Agreement. The change in the fair value of the embedded derivative recognized during the three month period ended March 31, 2012 was a loss of $1.2 million and for the year ended December 31, 2011 was a loss of $1.5 million. A loss on debt extinguishment of $1.4 million was recognized for the year ended December 31, 2011.

Share-based compensation For the three month period ended March 31, 2012, the Company recognized share-based compensation expense of $1.1 million. Under a share-based payment arrangement the Company may issue Common Shares (or share-based compensation in lieu of Common Shares) to the CEO if a liquidity event occurs. Potential liquidity events include the sale of the Common Shares of the Company by the original shareholders as at completion of the Restructuring. The estimated cost of the share-based compensation award is being recognized as an expense as the CEO provides services to the Company with a corresponding increase in contributed surplus in shareholder’s equity. See “Executive Compensation – Termination and Change of Control Benefits.”

Income taxes For the three month period ended March 31, 2012, an income tax recovery of $1.4 million was recognized. The Company is currently in a loss position and as at March 31, 2012 had $4.7 million in deferred income tax liabilities.

As at December 31, 2011, the Company had non-capital losses carried forward for federal income tax purposes of $44.3 million and unrealized net capital losses of $0.8 million. The non-capital losses expire from 2015 to 2031 and the net capital losses do not expire.

81 Consolidated Quarterly Results Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 (in thousands) 2012 2011 2011 2011 2011 2010 2010 2010 Total Property Revenue(1) ...... 63,054 65,922 65,176 63,486 59,260 63,936 64,347 65,056 EBITDA ...... 20,716 25,097 24,179 23,565 20,618 22,356 24,131 24,350 EBITDA as a % of Total Property Revenue ...... 32.9% 38.1% 37.1% 37.1% 34.8% 35.0% 37.5% 37.4%

(1) Revenue figure excludes corporate revenue Since the start of fiscal 2011, property revenue has gradually increased quarter over quarter. The increase in property revenue was mainly attributable to an increase in Slot Coin-in and ATM fees at most of our casino sites and the acquisition of our CGCs at the end of the second quarter of 2011. Average property revenues for the last eight quarters were $63.8 million per quarter. In the first quarter of 2012, we experienced lower than expected property revenues compared to the third and fourth quarters in fiscal 2011 as a result of a combination of lower slot, hotel and other revenue. In the first quarter of 2011, we experienced lower than expected property revenues as a result of low Table Win % at Starlight Casino’s high limit table games which averaged at 8.5% for the quarter versus a prior year Table Win % of 22.7% in 2010. This contributed to a lower than expected EBITDA as a result of lower revenues.

Changes in Financial Condition As at March 31, 2012, we had total assets of $902 million, compared to total assets of $929 million at December 31, 2011. The $27 million, or 2.9%, decrease in total assets primarily resulted from: Š a decrease in cash relating to the purchase of land for $22 million and principal debt repayments of $25.5 million; Š a decrease in the fair value of the embedded derivative relating to the Notes of $1.2 million; and Š a decrease in property, equipment and intangible assets due to depreciation and amortization of $5.0 million and $11.8 million, respectively. The decrease mentioned above was partially offset by an increase in property and equipment as a result of the acquisition of land for $22 million in the first quarter. As at December 31, 2011, we had total assets of $929 million, compared to total assets of $956 million at December 31, 2010. The $27 million, or 2.8%, decrease in total assets primarily resulted from: Š a decrease in prepaid expenses and deposits due to the return of a security deposit from the BCLC in the amount of $4.8 million; Š amortization relating to intangible assets of $45.1 million; Š depreciation of property and equipment of $19.4 million, and Š a decrease in the fair value of the embedded derivative relating to the Notes of $1.5 million. The decreases mentioned above were partially offset by an increase in cash and cash equivalents as a result of positive cash inflows from operations and an increase in intangible assets of $30.5 million and property and equipment of $15.2 million as a result of the acquisition of our CGCs at the end of the second quarter. We define working capital as current assets less current liabilities, excluding cash and cash equivalents and current portion of long-term debt. We use working capital and cash flow measures to evaluate the performance of our operations and our ability to meet our financial obligations. The following table presents the major components of our working capital as at the years listed below: As at March 31, As at December 31, % 2012 2011 Chg (in thousands) (unaudited) Amounts receivable ...... $ 3,640 $ 3,684 -1.2% Inventory ...... 832 901 -7.7% Prepaid expenses and deposits ...... 2,193 2,510 -12.6% Gaming revenue payable to the BCLC and the AGLC ...... (5,437) (6,262) -13.2% Accounts payable and accrued liabilities ...... (20,293) (15,571) 30.3% Working Capital ...... (19,065) (14,738) 29.4%

82 There were no significant changes in working capital from December 31, 2011 to March 31, 2012 except for an increase in accounts payable and accrued liabilities of $4.7 million due to timing.

(in thousands) As at December 31, % % 2011 2010(1) Chg 2009(2) Chg Amounts receivable ...... $ 3,684 $ 3,631 1.5% $ 2,149 69.0% Inventory ...... 901 875 3.0% 733 19.4% Prepaid expenses and deposits ...... 2,510 8,123 -69.1% 5,623 44.5% Gaming revenue payable to the BCLC and the AGLC ...... (6,262) (5,258) 19.1% (7,169) -26.7% Accounts payable and accrued liabilities ...... (15,571) (20,426) -23.8% (16,674) 22.5% Working Capital ...... (14,738) (13,055) 12.9% (15,338) -14.9%

(1) The financial information in the table as at December 31, 2010 is based on the consolidated balance sheet of the Company as at December 31, 2010. (2) The financial information in the table as at December 31, 2009 is based on the balance sheet of Amalco as at December 31, 2009 prepared in accordance with GAAP. The financial information as at December 31, 2009 reflects the historical financial position of Amalco and does not reflect any pro-forma adjustments to show the impact of the Restructuring on Amalco assuming it had occurred at the beginning of the period.

Significant changes in working capital from January 1, 2011 to December 31, 2011 included: Š a decrease in prepaid expenses and deposits due to the return of a security deposit from the BCLC in the amount of $4.8 million. This security has now been provided by a letter of credit; and Š a decrease in accounts payable and accrued liabilities of $4.9 million.

Liquidity and Capital Resources Three months ended (in thousands) March 31, Year Ended December 31, 2012 2011 2011 2010(1) 2009(2) Cash Flow Data: (unaudited) (unaudited) (unaudited) Net Cash generated from (used for) operating activities ..... 21,115 21,217 91,186 66,294 (6,342) Net Cash generated by (used for) investing activities ...... (23,579) 15,166 (30,116) (169,407) (1,405) Net Cash generated by (used for) financing activities ...... (29,696) (11,298) (56,750) 85,142 9,470 Gaming development costs and purchase of property and equipment ...... (23,816) (2,238) (12,363) (6,607) (32,065)

Generally our primary sources of liquidity are from cash flows from operations before interest.

Under the terms of the BCLC operational agreements, cash floats of $17.0 million were provided as at March 31, 2012 by the BCLC to the Company for the casinos and the CGCs located in British Columbia. These funds are used in the operations at our properties but are not reflected in our consolidated financial statements. In return for making these cash floats available, we have provided the BCLC with letters of credit totaling $22.0 million, as at March 31, 2012, as security for the cash floats provided.

We have $35 million of cash available under a revolving line of credit to help finance any short-term liquidity needs that may arise. We can issue letters of credit under the revolving line of credit. As at March 31, 2012 and

83 December 31, 2011, we have issued letters of credit totaling $22.9 million of which $nil has been drawn upon. Our ability to fund working capital needs, planned capital expenditures, scheduled debt payments and to comply with all of the financial covenants under the Existing Senior Secured Credit Facility and the Indenture governing the Notes, depends on our future operating performance and cash flow, which in turn, are subject to prevailing economic conditions and financial, business and other factors, some of which are beyond our control. Concurrently with and as a condition of the completion of the Offering, the Company will enter into the New Credit Agreement, which will provide Gateway with the New Senior Secured Credit Facility.

The Company’s objective when managing capital is to safeguard our ability to continue as a going concern in order to provide returns to our shareholders and to maintain an optimal capital structure to reduce the cost of capital.

The Company’s strategy is to ensure it remains compliant with all of its existing debt covenants, so as to ensure continuous access to debt capital markets. Management will review results and forecasts regularly to monitor the Company’s compliance.

As at March 31, 2012 and December 31, 2011, the Company is in compliance with the financial covenants of its long-term debt, which consist of a total leverage ratio, fixed charge coverage ratio, maximum capital expenditures and excess cash flow test as defined in the long-term debt agreements covering the Existing Senior Secured Credit Facility and the Notes.

Sources and Uses of Cash Operating Activities Net cash generated from operating activities during the three month period ended March 31, 2012 was $21.1 million and net cash generated from operating activities during the year ended December 31, 2011 and 2010 was $91.2 million and $66.3 million, respectively. The primary sources of cash during the periods were from casino operations.

Investing Activities Net cash used for investing activities totaled $23.6 million for the three month period ended March 31, 2012, which was attributable primarily to the acquisition of the South Surrey Property for $22 million.

Net cash used for investing activities totaled $30.1 million for the year ended December 31, 2011, which was attributable primarily to the $34.6 million acquisition of the CGCs offset by the provision of gaming bank roll by the BCLC which, in turn released $17.2 million from restricted cash that was previously used to fund the gaming bank roll. Capital expenditures of $12.4 million were made during year, further decreasing net cash.

Net cash used in investing activities totaled $169.4 million for the year ended December 31, 2010. As a result of the Restructuring, the Company used $162.9 million to pay the Pre-Restructuring First Lien Credit Facility during the period from May 18, 2010 to December 31, 2010. The remaining $6.6 million in cash used for investing activities funded casino development costs and purchases of property and equipment.

Financing Activities Net cash used in financing activities totaled $29.7 million for the three month period ended March 31, 2012, predominantly relating to principal repayments of $25.5 million and scheduled interest payments of $4.2 million.

Net cash used in financing activities totaled $56.8 million for the year ended December 31, 2011, predominantly relating to scheduled principal repayments of $17.9 million and scheduled interest payments of $35.6 million.

Net cash generated by financing activities totaled $85.1 million for the year ended December 31, 2010. As a result of the restructuring, the Company used $10.2 million to repay existing shareholder loans. During the period from May 18, 2010 to December 31, 2010, the Company used $500.9 million to repay the Pre-Restructuring First Lien Senior Credit Facility, $11.7 million to repay interest and incurred $26.4 million in transaction costs. This was offset by a total of $634.7 million in cash raised from the issuance of Common Shares, entering into the Existing Credit Agreement and issuance of the Notes.

84 Capital Expenditures Since 2004, the Company has expended $435 million on our existing operational properties. The following table summarizes our capital expenditures and the breakdown between maintenance and growth capital expenditures:

Three months ended Year ended March 31, December 31, 2012 2011 2011 2010(1) 2009(2) (in thousands) (unaudited) (unaudited) (unaudited) Maintenance capital expenditures ...... 613 932 3,388 2,847 2,087 Growth capital expenditures ...... 878 1,306 8,975 3,760 29,978 1,491(3) 2,238 12,363 6,607 32,065 Notes: (1) The financial information in the table for the year ended December 31, 2010 is based on the combined financial results of Amalco for the year ended December 31, 2010 prepared in accordance with GAAP and the Company for the period from May 18, 2010 (date of incorporation) to December 31, 2010 prepared in accordance with IFRS. While the financial statements of Amalco for the year ended December 31, 2010 have been audited and the consolidated financial statements of the Company for the period from May 18, 2010 to December 31, 2010 have been audited, the financial information in the table for the year ended December 31, 2010 has not been subject to audit and represents the combined results of two separate legal entities prepared under GAAP and IFRS, respectively. Additionally, the financial information for the year ended December 31, 2010 does not reflect any pro-forma adjustments to show the impact of the Restructuring on Amalco assuming it had occurred at the beginning of the period. (2) The financial information in the table for the year ended December 31, 2009 is based on the financial results of Amalco for the year ended December 31, 2009 prepared in accordance with GAAP. The financial information for the year ended December 31, 2009 reflects the historical financial results of Amalco and does not reflect any pro-forma adjustments to show the impact of the Restructuring on Amalco assuming it had occurred at the beginning of the period. (3) Excludes the acquisition of land for $22 million.

On an ongoing basis, the Company expects to spend approximately $3.5 million within the next 12 months on maintenance capital expenditures. The majority of the Company’s capital expenditures on gaming operations in British Columbia are eligible to earn additional commissions under the Facility Development Program. Over the last three fiscal years, growth capital expenditures pertained to the renovations and upgrades of our casino operations.

For the three months ended March 31, 2012, our growth capital expenditures consisted of the relocation of the Lake City corporate office space to the Lake City Kelowna Casino and expenditures incurred for the food and beverage expansion at the Grand Villa Casino. In fiscal 2009, our growth capital expenditures consisted of the construction of the Lake City Vernon Casino and the completion of the Grand Villa Casino construction. In fiscal 2009, we commenced the Lake City Kelowna Casino expansion, which was completed in fiscal 2011. In fiscal 2010 we expanded and renovated a parkade and a high-limit table games room at the Grand Villa Casino. In fiscal 2011, we expanded our high-end table games area at the Starlight Casino and renovated the Lake City Kamloops Casino. The Company’s capital expenditures are generally funded from cash generated from operations. Maintenance capital expenditures primarily relate to maintaining the operations of our various properties.

85 Contractual Obligations The following table summarizes our contractual obligations (excluding operating leases) as at March 31, 2012 and December 31, 2011 and the effect such obligations and commitments are expected to have on our liquidity and cash flow in future periods without giving effect to offerings or refinancing (if any):

Expected payments by period as at March 31, 2012 (in thousands) (unaudited) Expected More than within 1 year 2 - 3 years 4 - 5 years 5 years Total Gaming revenue payable to BCLC and AGLC ...... $ 5,437 — — — $ 5,437 Accounts payable and accrued liabilities ...... $20,293 — — — $ 20,293 Long-term debt(1) ...... $56,184 $129,540 $264,489 $185,170 $635,383

Expected payments by period as at December 31, 2011 Expected More than within 1 year 2 - 3 years 4 - 5 years 5 years Total Gaming revenue payable to BCLC and AGLC ...... $ 6,262 — — — $ 6,262 Accounts payable and accrued liabilities ...... $15,571 — — — $ 15,571 Long-term debt(1) ...... $55,154 $126,650 $302,220 $185,170 $669,194

(1) Long-term debt includes estimated interest payments.

Operating Lease Commitments We lease office space and equipment as well as certain of our casino and community gaming centre locations. The lease terms are between three and twenty years, and the majority of lease agreements are renewable at the end of the lease period at market rate. At March 31, 2012 and December 31, 2011, future minimum operating lease payments (excluding variable rent based on revenue and additional rent for operating expenses) are as follows:

March 31, 2012 (in thousands) (unaudited) No later than 1 year ...... $ 5,514 Later than 1 year and no later than 5 years ...... $18,162 Later than 5 years ...... $32,932 $56,608

December 31, 2011 No later than 1 year ...... $ 5,524 Later than 1 year and no later than 5 years ...... $18,681 Later than 5 years ...... $33,784 $57,989

Borrowings The Company had the following long-term debt:

March 31, December 31, December 31, 2011 2011 2010 (in thousands) (unaudited) Term Loan A ...... $135,271 $149,399 $115,000 Term Loan B-1 ...... 176,379 187,730 200,000 Term Loan B-2 ...... — — 40,000 311,650 337,129 355,000 Second Priority Senior Secured Notes ...... 170,000 170,000 170,000 Total Long-term debt ...... 481,650 507,129 525,000

86 Financial Instruments and Other Instruments In the normal course of business we are exposed to a variety of financial risks, which periodically include credit risk, liquidity risk, interest rate risk and foreign exchange risk, which could impact our results of operations and financial position. We manage the exposure to these risks through our regular operating and financing activities.

Credit Risk Credit risk is the risk that a party to one of the Company’s financial instruments will cause a financial loss to the Company by failing to discharge an obligation. Financial instruments that are subject to credit risk include cash and cash equivalents and amounts receivable. Credit risks associated with cash and cash equivalents are minimized by ensuring that cash and cash equivalents are held by high-quality financial institutions. Due to the nature of our business, there is insignificant exposure to any one party relating to receivables. As at March 31, 2012 and December 31, 2011, there are no amounts receivables past due or impaired.

Liquidity Risk Liquidity risk is the risk that the Company will encounter difficulties in meeting obligations associated with its financial liabilities that are settled by delivery of cash or another financial asset. The Company settles its financial obligations out of cash and cash equivalents. The ability to do this relies on the Company generating sufficient revenue, collecting amounts receivable in a timely manner and maintaining sufficient cash and cash equivalents in excess of anticipated needs. As at March 31, 2012, we had gaming revenue payable to the BCLC and the AGLC of $5.4 million, accounts payable and accrued liabilities of $20.3 million and current debt obligations of $26.9 million, all of which fall due within one year of the balance sheet date. As at December 31, 2011, we had gaming revenue payable to the BCLC and the AGLC of $6.3 million, accounts payable and accrued liabilities of $15.6 million and current debt obligations of $25 million, all of which fall due within one year of the balance sheet date.

Market Risk Market risk is the risk that fair value or future cash flows of a financial instrument will fluctuate because of changes in interest rates and/or foreign exchange rates or other price risk.

Interest Rate Risk Interest rate risk is the risk that the fair values or cash flow of a financial instrument will fluctuate because of changes in market interest rates. Our exposure to market risk for changes in interest rates is due to our variable-rate debt.

As at December 31, 2011, if interest rates on our variable rate long-term debt had been 1% higher or 1% lower, with all other variables held constant, the effect on interest expense for the three month period ended March 31, 2012 and the year ended December 31, 2011 would have been $0.8 million and $3.5 million, respectively. The effect on the interest expense of the Company for the period from May 18, 2010 to December 31, 2010 would have been $0.5 million.

See note 13 to our audited consolidated financial statements for additional information about interest rates on our debt.

Foreign Currency Exchange Rate Risk Foreign exchange rate risk is the risk that the fair value or cash flow of a financial instrument will fluctuate due to changes in foreign exchange rates. Our long term debt is denominated in Canadian dollars. We periodically have accounts payable and accrued liabilities denominated in U.S. dollars. As at March 31, 2012 and December 31, 2011, U.S. dollar denominated accounts payable and accrued liabilities totaled U.S. $216,000 and U.S. $151,000 (2010-U.S. $327,000).

Effects of Inflation The effects of inflation were not considered material in the periods covered, due to the steady nature of inflation over this time period.

87 As at March 31, 2012, December 31, 2011 and December 31, 2010, the Company does have prepayment options on our long-term debt which are considered embedded derivatives. The embedded derivatives are accounted for separately and disclosed as an “Other Asset” on the consolidated balance sheet. The Company has not entered into any derivative financial instrument.

Contingencies and Litigation Various claims and litigation arise in the course of the Company’s business. The Company has accounted for sufficient provisions in relation to such claims and litigation, and remaining contingencies should not have a material effect on the financial position or operating results of the Company.

Off-Balance Sheet Arrangements We do not currently have any off-balance sheet arrangements that have or are reasonably likely to have a material current or future adverse effect on our financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources. From time to time, we may enter into operating leases or letters of credit that would not be reflected in our balance sheet.

Transactions with Related Parties For the three month period ended March 31, 2012, the year ended December 31, 2011 and the period from May 18, 2010 to December 31, 2010, shareholders of the Company provided consulting and advisory services without charge.

During the three months ended March 31, 2012, the Company provided the CEO, with a non-interest bearing demand loan of $125,000.

Outstanding Share Data As at March 31, 2012 there are 404,951,246 Common Shares issued and outstanding compared to 404,951,245 as at December 31, 2011, without giving effect to the Share Consolidation.

As at June 12, 2012 there are 404,951,246 Common Shares issued and outstanding without giving effect to the Share Consolidation.

The Company expects to effect the Share Consolidation prior to the completion of the Offering at which time the Company will have 35,782,525 Common Shares outstanding.

International Financial Reporting Standards The Company prepares its financial statements in accordance with Canadian generally accepted accounting principles as defined in the Handbook of the Canadian Institute of Chartered Accountants (“CICA Handbook”). In 2010, the CICA Handbook was revised to incorporate IFRS as issued by the International Accounting Standards Board (“IASB”) and to require publicly accountable enterprises to apply these standards effective for years beginning on or after January 1, 2011. The Company chose to adopt IFRS in 2010. Accordingly, the Company’s consolidated financial statements have been prepared in accordance with IFRS since the Company’s incorporation on May 18, 2010.

Application of Critical Accounting Estimates Our reported financial position and results of operations are dependent on our selection of accounting policies that are based on IFRS and accounting estimates that underlie the preparation of our consolidated financial statements. Our financial statements contain a summary of our significant accounting policies and a summary of critical accounting estimates and judgements. Estimates by their nature are subject to risks, uncertainties and assumptions, which could cause our financial position and operating results to differ materially from those presented in our consolidated financial statements. Future changes in accounting estimates will be applied on a prospective basis. The critical accounting

88 estimates that we believe are the most subject to our judgment or material to our consolidated financial statements are as follows:

Impairment of Non-Financial Assets The determination of a long-lived asset impairment requires significant estimates and assumptions to determine the recoverable amount of a cash generating unit (“CGU”), the recoverable amount being the higher of fair value less costs to sell and value in use. The value in use method involves estimating the net present value of future cash flows derived from the use of the CGU, discounted at an appropriate rate. The Company did not have any goodwill or intangible assets with an indefinite useful life; therefore, no annual impairment test was performed. As such, no estimates or assumptions were made.

In the event an impairment analysis was required, the key assumptions that would be utilized in the determination of future cash flows would represent management’s best estimate of the range of economic conditions relating to the CGU, and would be based on historical experience, economic trends, and communication with other key stakeholders of the Company. These key assumptions would include the revenue growth rate, margin as a percentage of revenues, capital expenditures, the inflation growth rate and the discount rate. Significant changes in the key assumptions that would be utilized in the determination of future cash flows could result in an impairment loss or reversal of a previously recognized impairment loss.

Estimated Useful Lives of Non-Financial Assets Judgment is used to estimate each component of a tangible and intangible asset’s useful life and is based on an analysis of all pertinent factors including, but not limited to, the expected use of the asset and, in the case of an intangible asset, contractual provisions that enable renewal or extension of the asset’s legal or contractual life without substantial cost, and renewal history. If the estimated useful lives were incorrect, this could result in an increase or decrease in the annual amortization and depreciation expense, and future impairment charges.

Fair Value of Net Assets Acquired in Business Combinations The identifiable tangible and intangible assets purchased and liabilities assumed are recognized at their estimated fair values at the date of acquisition with the exception of deferred income tax which is recognized and measured in accordance with IAS 12, Income Taxes (“IAS 12”). The identification of assets purchased and liabilities assumed and their valuation is specialized and judgmental. Where appropriate, the Company engages business valuators to assist in the valuation of tangible and intangible assets acquired. Any excess of the fair value of consideration payable over the fair value of the identifiable tangible and intangible assets recognized in the business combination and liabilities assumed is allocated to goodwill.

Income Taxes Deferred tax assets and liabilities are due to temporary differences between the carrying amount for accounting purposes and the tax basis of certain assets and liabilities, as well as undeducted tax losses. Estimation is required for the timing of the reversal of these temporary differences and the tax rate applied. The carrying amounts of assets and liabilities are based on amounts recorded in the financial statements and are subject to the accounting estimates inherent in those balances. The tax basis of assets and liabilities and the amount of undeducted tax losses are based on the applicable income tax legislation, regulations and interpretations. The timing of the reversal of the temporary differences and the timing of deduction of tax losses are based on estimations of the Company’s future financial results.

Changes in the expected operating results, enacted tax rates, legislation or regulations, and the Company’s interpretations of income tax legislation, will result in adjustments to the expectations of future timing difference reversals, and may require material deferred tax adjustments.

Determination of Fair Value of Derivatives The Company is required to determine the fair value of embedded derivatives, such as prepayment options, separate from its long-term debt. Fair values for embedded derivatives are determined using valuation techniques and

89 require estimates of redemption dates and forward interest rates existing at the balance sheet date as the financial instruments are not traded in an active market.

Determination of Fair Value of Long-Term Debt The Company makes estimates and assumptions relating to fair value disclosure of the long-term debt. The critical assumptions underlying the fair value disclosure include the credit spread. The Company reviews various comparable debt securities and determines a reasonable credit spread applicable to the debt securities.

Contingencies Amounts are accrued for the financial resolution of contingent liabilities if, in the opinion of management, it is both likely that a future event will confirm that a liability had been incurred at the date of the financial statements and the amount can be reasonably estimated. In cases where it is not possible to determine whether such a liability has occurred or reasonably estimate the amount of loss until the performance of some future event, no accrual is made until that time. In the ordinary course of business, we may be party to legal proceedings which include claims for monetary damages asserted against the Company and its subsidiaries. The adequacy of contingent liability accruals are regularly assessed as new information becomes available. We do not record contingent assets.

Changes in Accounting Policies The Company adopted IFRS effective May 18, 2010, the date of incorporation of the Company. The Company did not exist prior to May 18, 2010. New World’s consolidated financial statements were prepared using GAAP as discussed under “Management’s Discussion and Analysis”.

IFRS 7 – Financial Instruments: Disclosures In October 2010, the IASB issued amendments to IFRS 7, Financial Instruments: Disclosures. These amendments increased the disclosure requirements in connection with the transfer of financial assets to a third party that are not derecognized from the Company’s consolidated financial statements. The amendments to IFRS 7 were effective for annual periods beginning on or after July 1, 2011. The Company adopted the standard on January 1, 2012. The adoption of the standard did not have an impact on the Company’s consolidated financial statements.

New Accounting Pronouncements Issued but not yet Applied IFRS 9 – Financial Instruments In October of 2010, the IASB issued IFRS 9, Financial Instruments, (“IFRS 9”) which is the result of the first phase of the IASB’s project to replace IAS 39, Financial Instruments: Recognition and Measurement, (“IAS 39”). IFRS 9 addresses classification and measurement of financial assets and replaces the multiple category and measurement models in IAS 39 for debt instruments with a new mixed measurement model having only two categories: amortized cost and fair value through profit or loss. IFRS 9 also replaces the models for measuring equity instruments, and such instruments are either recognized at fair value through profit or loss or at fair value through other comprehensive income. IFRS 9 is effective for interim and annual financial statements for fiscal years beginning on or after January 1, 2015, and is not expected to have a material impact on the Company’s consolidated financial statements.

In May of 2011, the IASB issued the following standards which have not yet been adopted by the Company: IFRS 10, Consolidated Financial Statements; IFRS 11, Joint Arrangements; IFRS 12, Disclosure of Interests in Other Entities; IFRS 13, Fair Value Measurement; IAS 27, Consolidated and Separate Financial Statements; and amended IAS 28, Investments in Associates and Joint Ventures. Each of the new standards is effective for annual periods beginning on or after January 1, 2013 with early adoption permitted. The Company has not yet begun the process of assessing the impact that the new and amended standards will have on its consolidated financial statements or whether to early adopt any of the new requirements.

90 The following is a brief summary of the new standards:

IFRS 10 – Consolidated Financial Statements IFRS 10 requires an entity to consolidate an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Under existing IFRS, consolidation is required when an entity has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. IFRS 10 replaces SIC-12, Consolidation—Special Purpose Entities, and parts of IAS 27, Consolidated and Separate Financial Statements.

IFRS 11 – Joint Arrangements IFRS 11 requires a venturer to classify its interest in a joint arrangement as a joint venture or joint operation. Joint ventures will be accounted for using the equity method of accounting whereas for a joint operation the venturer will recognize its share of the assets, liabilities, revenue and expenses of the joint operation. Under existing IFRS, entities have the choice to proportionately consolidate or equity account for interests in joint ventures. IFRS 11 supersedes IAS 31, Interests in Joint Ventures, and SIC-13, Jointly Controlled Entities—Non-monetary Contributions by Venturers.

IFRS 12 – Disclosure of Interests in Other Entities IFRS 12 establishes disclosure requirements for interests in other entities, such as subsidiaries, joint arrangements, associates, and unconsolidated structured entities. The standard carries forward existing disclosures and also introduces significant additional disclosure requirements that address the nature of, and risks associated with, an entity’s interests in other entities.

IFRS 13 – Fair Value Measurement IFRS 13 is a comprehensive standard for fair value measurement and disclosure requirements for use across all IFRS standards. The new standard clarifies that fair value is the price that would be received to sell an asset, or paid to transfer a liability in an orderly transaction between market participants, at the measurement date. It also establishes disclosures about fair value measurement. Under existing IFRS, guidance on measuring and disclosing fair value is dispersed among the specific standards requiring fair value measurements and in many cases does not reflect a clear measurement basis or consistent disclosures.

Amendments to other standards In addition, there have been amendments to existing standards, including IAS 27, Consolidated and Separate Financial Statements, and IAS 28, Investments in Associates and Joint Ventures. IAS 27 addresses accounting for subsidiaries, jointly controlled entities and associates in non-consolidated financial statements. IAS 28 has been amended to include joint ventures in its scope and to address the changes in IFRS 10 to 13.

91 DESCRIPTION OF SHARE CAPITAL The description of the share capital of the Company below discloses all attributes material to an investor in Common Shares but is a summary only. The articles of the Company will be filed with the Canadian securities regulatory authorities. Investors are encouraged to read the full text of such articles. The Company is authorized to issue an unlimited number of Common Shares. Immediately after completion of the Offering Š Common Shares will be issued and outstanding. The foregoing information regarding the number of Common Shares outstanding does not give effect to or take into account: (i) Common Shares issuable pursuant to RSUs that are expected to be outstanding upon completion of the Offering (expected to be less than 0.5% of the Common Shares outstanding prior to Closing); (ii) Common Shares issuable pursuant to Options that are expected to be outstanding at Closing (expected to be less than 0.1% of the Common Shares outstanding prior to Closing); or (iii) the 883,626 Common Shares issuable upon satisfaction of certain milestones with respect to the South Surrey Property; or (iv) Common Shares issued to the CEO upon completion of the Offering equal to 2.5% of the Common Shares sold by the Selling Shareholders. See “Executive Compensation”, “Options to Purchase Securities”, “Share Consolidation” and “Our Company – Recent Acquisitions”.

General Holders of Common Shares are entitled to receive notice of any meetings of shareholders, to attend and to cast one vote per Common Share at all such meetings. Holders of Common Shares do not have cumulative voting rights with respect to the election of directors and, accordingly, holders of a majority of Common Shares entitled to vote in any election of directors may elect all directors standing for election. Holders of Common Shares are entitled to receive dividends, if any, on a pro rata basis, as and when declared by the Board at its discretion from funds legally available therefore and upon the liquidation, dissolution or winding-up of the Company are entitled to receive on a pro rata basis the net assets of the Company after payment of debts and other liabilities. Common Shares do not carry any pre-emptive, subscription, redemption or conversion rights, nor do they contain any sinking or purchase fund provisions.

Common Share Constraints Required by Gaming Regulators and the BCLC Shareholders and the Company are subject to certain restrictions, constraints and conditions on ownership of our Common Shares imposed by both the GCA and the GLA and derived from the terms and conditions of our MCOSA and other operating agreements or licences. Shareholders must either submit to an advance approval process or obtain registration when certain ownership thresholds are met. See “Risk Factors”. Approval of the GPEB is required in advance of the acquisition or disposition of a 5% or greater ownership or beneficial ownership of Common Shares by any person or group of persons acting in concert. Any sale, assignment or transfer of a 5% or greater interest in the Company must be disclosed to and approved by the AGLC within 10 business days after the effective date of the transaction. Prior approval of the AGLC is required for the acquisition of any “financial interest” in the Company, the Company’s business or in a facility to which our AGLC licence relates, in a manner other than by way of a sale, assignment or transfer. A “financial interest” is defined to include any direct, indirect or contingent interest (i) whether as owner, partial or otherwise, of an interest, beneficial owner, owner of shares or owner through trusteeship, investment or otherwise, (ii) in management, whether by management agreement, partnership agreement or other agreement, or (iii) because of having loaned or advanced or caused to be loaned or advanced money or anything of value, with or without security. Further, through the MCOSA, the BCLC restricts share ownership of our Common Shares without approval from the BCLC. No person or group of persons acting jointly or in concert may hold or beneficially own a significant interest without obtaining prior written consent of the BCLC. In addition, any person or group of persons acting jointly or in concert holding or beneficially owning, either directly or indirectly, a significant interest in our Common Shares must obtain the BCLC consent prior to disposing or acquiring Common Shares or disposing of any part of that interest if such disposition or acquisition would result in a change of control of the Company. A “significant interest” for purposes of the BCLC is an interest greater than 10% of our Common Shares (a “Significant Interest”). At a Shareholders meeting to be held prior to the Closing of the Offering, the Company’s shareholders will approve amendments to the Company’s articles to include specific provisions (the “Share Restrictions”) restricting the ownership of Common Shares in order to accommodate and ensure compliance with the above constraints. The Company intends to file articles of amendment prior to Closing of the Offering to give effect to the Share Restrictions and enforcement thereof. These Share Restrictions will restrict the ability of a person or group of persons acting jointly

92 or in concert to hold or beneficially own, either directly or indirectly, a Significant Interest without obtaining prior written consent of the BCLC. In addition, a person or group of persons acting jointly or in concert who hold or beneficially own a Significant Interest will be required to obtain prior written consent of the BCLC prior to disposing or acquiring Common Shares if such disposition or acquisition would result in a change of control of the Company. The Share Restrictions will require advance written notice and approval of the Company and applicable gaming regulators to acquire or dispose of 5% or more, or such other amount as may be established by the gaming regulators from time to time, of the outstanding Common Shares. Under its articles, as amended, the Company will be able to enforce the Share Restrictions by placing stop transfers on Common Shares, suspending all voting, dividend and other distribution rights on Common Shares and seeking injunctive or other relief to ensure compliance with the Share Restrictions.

SHARE CONSOLIDATION Prior to the Closing of the Offering, the Company will consolidate its Common Shares (the “Share Consolidation”) whereby all of the issued and outstanding Common Shares will be consolidated on the basis of one post-consolidation Common Share in exchange for 11.3170115546661 issued and outstanding pre-consolidation Common Shares. The number of Common Shares issuable pursuant to outstanding equity based compensation grants and in connection with the South Surrey Property will be adjusted to reflect the Share Consolidation in the manner described above. See “Executive Compensation” and “Our Company – Recent Acquisitions”. The Company will hold a special and annual meeting of the shareholders prior to the Closing at which the existing shareholders will approve the Share Consolidation. The Company intends to file articles of amendment prior to filing the final prospectus in connection with the Offering to give effect to the Share Consolidation. Any reference to Common Shares or other security based compensation amounts in this prospectus reflect the Share Consolidation, unless otherwise indicated. The Company’s unaudited consolidated financial statements for the three months ended March 31, 2012 and 2011 and the audited consolidated financial statements for the year ended December 31, 2011 and for the period from May 18, 2010 to December 31, 2010 included in this prospectus do not reflect the Share Consolidation.

CONSOLIDATED CAPITALIZATION The following table sets out the consolidated capitalization of the Company (i) as at March 31, 2012 and (ii) as at March 31, 2012 after giving effect to the Offering. The table below should be read together with “Prospectus Summary – Selected Historical Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, “Description of Our Indebtedness”, “Use of Proceeds” and our historical consolidated financial statements and related notes included elsewhere in this prospectus. As Adjusted As at March 31, for the 2012 Offering(2) (in thousands, except for Common Share amounts) (unaudited) (unaudited) Long term debt (including current portion): Existing Credit Agreement Revolver(1) ...... — — Term Loan A(1) ...... $ 135,271 — Term Loan B(1) ...... 176,379 — New Revolver ...... — — New Term Loan ...... — 235,000 Notes ...... 170,000 110,500 Total long term debt (including current portion)(3) ...... 481,650 345,500 Total shareholder’s equity ...... 407,100 Š Total capitalization ...... $ 888,750 $ Š Outstanding number of Common Shares(4) ...... 35,782,525 Š Notes: (1) Our Existing Senior Secured Credit Facility as amended and restated on August 11, 2011, consists of: (i) the approximately $154 million term loan A; (ii) the approximately $188 million term loan B; and (iii) the $35 million revolver with $22.9 million in letters of credit issued. For a description of our Existing Senior Secured Credit Facility, see “Description of Our Indebtedness”. (2) After deducting the Underwriting Commissions, estimated expenses of the Offering and the payment of a cash dividend or distribution on the Common Shares of approximately $25 million prior to completion of the Offering. (3) Excludes unamortized portion of deferred transaction costs and debt premium related to embedded derivatives. (4) After giving effect to the Share Consolidation. This table does not reflect outstanding Options to purchase Common Shares.

93 PRIOR SALES The following tables provide details regarding all Common Shares and all securities convertible into Common Shares that have been issued by the Company during the twelve month period prior to the date of this prospectus. The Selling Shareholders have not sold any Common Shares during the twelve month period prior to the date of this prospectus. The number of Common Shares and issue price per Common Share referred to below do not give effect to the Share Consolidation.

Common Shares Issued During the Last Twelve Months

Number of Issue Price Common Shares per Common Date of Issuance Issued Share February 9, 2012(1) ...... 1 $1.00 September 30, 2011(2) ...... 33,750 $1.00 June 30, 2011(2) ...... 33,750 $1.00 June 28, 2011(3) ...... 4,850,000 $1.00 April 29, 2011(2) ...... 33,750 $1.00

Notes: (1) One Common Share of the Company was issued in connection with the Company’s acquisition of the South Surrey Property. A further 9,999,999 Common Shares (without giving effect to the Share Consolidation) are expected to be issued upon satisfaction of certain specified milestones in connection with the South Surrey Property. See “Our Company – Business History”. (2) A total of 101,250 Common Shares (without giving effect to the Share Consolidation) of the Company were issued to Sentinel Strategies Inc. as compensation for providing the services of Michael C. Burns as a director in 2011. See “Executive Compensation”. (3) 4,850,000 Common Shares (without giving effect to the Share Consolidation) of the Company were issued to Plaza Gaming and Entertainment Corp. in connection with the acquisition of our CGCs. See “Our Company – Recent Acquisitions”.

PRINCIPAL SHAREHOLDERS AND SELLING SHAREHOLDERS Other than as set forth below, no other person or entity will beneficially own, directly or indirectly, or exercise control or direction over, 10% or more of the outstanding shares of any class of the Company upon completion of the Offering.

Number and Percentage of Common Shares Owned, Number and Percentage of Common Controlled or Directed after Shares Owned, Controlled or Directed giving effect to the Shareholder Name(1) prior to giving effect to the Offering(2) Offering(2)(11) Of Record Beneficial Of Record Beneficial Catalyst Fund II Parallel Limited Partnership . . . 725,315 (2%)(3)(4) 2,393,205 (6.7%)(3)(4) Š ( Š %)(4) Š ( Š %)(4) Catalyst Fund Limited Partnership II ...... 23,743,964 (66.4%)(3)(5) 9,892,701 (27.6%)(3)(5) Š ( Š %)(5) Š ( Š %)(5) Catalyst Fund Limited Partnership III ...... — 12,285,906 (34.3%)(3)(6) Š ( Š %)(6) Š ( Š %)(6) The Catalyst Capital Group Inc...... 1 (<1%)(3)(7) — Š ( Š %)(7) Š ( Š %)(7) TOP V New World Holdings, LLC ...... 6,843,047 (19.1%)(8)(9) — Š ( Š %)(9) Š ( Š %)(9) Tennenbaum Opportunities Partners V LP ...... — 6,843,047 (19.1%)(8)(10) Š ( Š %)(10) Š ( Š %)(10)

Notes: (1) To the knowledge of the Company except as described in note (3) and (8) below, no principal shareholder named above is an associate or affiliate of any other person or company named as a principal shareholder above. (2) To the knowledge of the Company, none of the Common Shares are held, or are to be held following the Closing, subject to any voting trust or similar agreement. (3) The Company has been advised that a total of 24,469,280 Common Shares (68.4%) are owned of record and 24,571,813 (68.7%) are owned beneficially by affiliated limited partnership funds managed, controlled and directed by Catalyst. Specifically, Catalyst manages, controls and directs the Catalyst Capital Funds. Mr. Glassman, a director of the Company and Mr. de Alba, Executive Chairman and director of the Company are key decision makers of Catalyst and the Catalyst Capital Funds and, as such, may be considered to exert some degree of direction or control, directly or indirectly, over such Common Shares. Each of Messrs. Glassman and de Alba disclaim beneficial ownership of all Common Shares owned by any of Catalyst and the Catalyst Capital Funds. The Company expects that each of the Catalyst Capital Funds will enter into a lock-up agreement of the type described under the heading “Plan of Distribution – Restrictions on the Sales of Common Shares – Restrictions on Certain Shareholders”. (4) To the knowledge of the Company, on a fully diluted basis: (i) on the date hereof, CFLP II PP owns 2% (of record) and 6.7% (beneficially) of the issued and outstanding Common Shares; and (ii) following the Closing, will own Š % (of record) and Š % (beneficially) of the issued and outstanding Common Shares.

94 (5) To the knowledge of the Company, on a fully diluted basis: (i) on the date hereof, CFLP II owns 66.4% (of record) and 27.6% (beneficially) of the issued and outstanding Common Shares; and (ii) following the Closing, will own Š % (of record) and Š % (beneficially) of the issued and outstanding Common Shares. (6) To the knowledge of the Company, on a fully diluted basis: (i) on the date hereof, CFLP III owns 34.3% (beneficially) of the issued and outstanding Common Shares; and (ii) following the Closing, will own Š % (beneficially) of the issued and outstanding Common Shares. (7) To the knowledge of the Company, on a fully diluted basis: (i) on the date hereof, Catalyst owns less than 1% (of record) of the issued and outstanding Common Shares; and (ii) following the Closing, will own Š % (of record) of the issued and outstanding Common Shares. (8) The Company has been advised that a total of 6,843,047 Common Shares (19.1%) are owned beneficially by Tennenbaum, an affiliate of TOP V Holdings. TOP V Holdings is managed by three managing members, Todd Gerch, a director of the Company, Timothy Gravely and Gabriel Goldstein, each of whom are employees of Tennenbaum Capital Partners, LLC (“TCP”) and, as such, may be considered to exert some degree of direction or control, directly or indirectly, over such Common Shares. Mr. Gerch disclaims beneficial ownership of all Common Shares owned by TOP V Holdings. The managing members have all authority and power to operate the business of TOP V Holdings except that, without the consent of Tennenbaum, the parent company of TOP V Holdings, the managing members may not: (i) acquire additional securities of the Company; (ii) sell, transfer, pledge or otherwise dispose of or encumber securities of the Company; or (iii) have outstanding at any one time loans or advances to the Company in an amount in excess of $250,000. Tennenbaum is a non-diversified, closed-end management investment company registered under the Investment Company Act of 1940, as amended. TCP serves as the investment advisor to Tennenbaum. The Company expects that TOP V Holdings will enter into a lock-up agreement of the type described under the heading “Plan of Distribution – Restrictions on the Sales of Common Shares – Restrictions on Certain Shareholders”. (9) To the knowledge of the Company, on a fully diluted basis: (i) on the date hereof, TOP V Holdings owns 19.1% (of record) of the issued and outstanding Common Shares; and (ii) following the Closing, will own Š % (of record) of the issued and outstanding Common Shares. (10) To the knowledge of the Company, on a fully diluted basis: (i) on the date hereof, Tennenbaum owns 19.1% (beneficially) of the issued and outstanding Common Shares; and (ii) following the Closing, will own Š % (beneficially) of the issued and outstanding Common Shares. (11) The information and the information in the notes above assumes that the Over-Allotment Option is not exercised, in whole or in part, and that the shareholders listed above do not acquire any Common Shares pursuant to the Offering. Except for Common Shares being sold by Babson Capital Loan Strategies Master Fund, L.P., which were acquired on November 9, 2010, all Common Shares being sold by the Selling Shareholders were acquired by the Selling Shareholders pursuant to the Restructuring. Below are the names, holdings of Common Shares and certain other information with respect to the Selling Shareholders. Common Shares Owned Common Shares Owned Prior to the Offering After the Offering Number and Percentage of Common Shares Owned, Controlled or Percentage of Directed (assuming no Common Shares on a Common exercise of the Over- fully diluted basis after Shares to be Allotment Option/ giving effect to the Number and Percentage of sold pursuant assuming exercise in full Offering and exercise Common Shares Owned, to Secondary of the Over-Allotment of Over-Allotment Name of Selling Shareholder Controlled or Directed (1) Offering (2) Option) (1) Option (1) Of Record Beneficial Catalyst Fund II Parallel Limited Partnership(3) ...... 725,315 (2%) 2,393,205 (6.7%) ŠŠ( Š %)/Š ( Š %) Š % Catalyst Fund Limited Partnership II(3) ...... 23,743,964 (66.4%) 9,892,701 (27.6%) ŠŠ( Š %)/Š ( Š %) Š % Catalyst Fund Limited Partnership III(3) ...... — 12,285,906 (34.3%) ŠŠ( Š %)/Š ( Š %) Š % TOP V New World Holdings, LLC(4) ...... 6,843,047 (19.1%) — ŠŠ( Š %)/Š ( Š %) Š % Royal Bank of Canada(5) ...... 1,535,833 (4.3%) 1,535,833 (4.3%) ŠŠ( Š %)/Š ( Š %) Š % Babson CLO Ltd 2007-I(6) ...... 82,027 (0.2%) 82,027 (0.2%) ŠŠ( Š %)/Š ( Š %) Š % U.S. Bank, NA as Trustee fbo Babson CLO Ltd 2005 III Custodial Account(7) ...... 82,027 (0.2%) — ŠŠ( Š %)/Š ( Š %) Š % Babson CLO Ltd 2005-III(7) ...... — 82,027 (0.2%) ŠŠ( Š %)/Š ( Š %) Š % Babson CLO Ltd 2006-II(8) ...... 54,684 (0.2%) 54,684 (0.2%) ŠŠ( Š %)/Š ( Š %) Š % U.S. Bank, NA as Trustee fbo Babson CLO Ltd 2004-I Custodial Account(9) ...... 54,684 (0.2%) — ŠŠ( Š %)/Š ( Š %) Š % Babson CLO Ltd 2004-I(9) ...... — 54,684 (0.2%) ŠŠ( Š %)/Š ( Š %) Š % Babson Capital Loan Strategies Master Fund, L.P.(10) ...... 44,181 (0.1%) 44,181 (0.1%) ŠŠ( Š %)/Š ( Š %) Š % Babson CLO Ltd 2005-I(11) ...... 41,013 (0.1%) 41,013 (0.1%) ŠŠ( Š %)/Š ( Š %) Š % Babson CLO 2005-II(12) ...... 27,342 (0.1%) 27,342 (0.1%) ŠŠ( Š %)/Š ( Š %) Š % Babson Mid-Market CLO Ltd 2007-II(13) ...... 27,342 (0.1%) 27,342 (0.1%) ŠŠ( Š %)/Š ( Š %) Š % Sapphire Valley CDO I, Ltd.(14) . . . 13,671 (<0.1%) 13,671 (<0.1%) ŠŠ( Š %)/Š ( Š %) Š % Massachusetts Mutual Life Insurance Company(15) ...... 75,465 (0.2%) 75,465 (0.2%) ŠŠ( Š %)/Š ( Š %) Š % C.M. Life Insurance Company(16) ...... 6,562 (<0.1%) 6,562 (<0.1%) ŠŠ( Š %)/Š ( Š %) Š %

95 Notes: (1) To the knowledge of the Company, none of Common Shares are held, or are to be held following the Closing, subject to any voting trust or similar agreement. (2) If the Over-Allotment Option is exercised in full, the number of Common Shares to be sold by the Catalyst Capital Funds, TOP V Holdings, RBC and the Babson Funds are Š , Š , Š and Š , respectively. (3) The Company has been advised that a total of 24,469,280 Common Shares (68.4%) are owned of record and 24,571,813 (68.7%) are owned beneficially by affiliated limited partnership funds managed, controlled and directed by Catalyst. Specifically, Catalyst manages, controls and directs the Catalyst Capital Funds. Mr. Glassman, director of the Company and Mr. de Alba, Executive Chairman and director of the Company are key decision makers of Catalyst and the Catalyst Capital Funds and, as such, may be considered to exert some degree of direction or control, directly or indirectly, over such Common Shares. Each of Messrs. Glassman and de Alba disclaim beneficial ownership of all Common Shares owned by any of Catalyst and the Catalyst Capital Funds. The Company expects that each of the Catalyst Capital Funds will enter into a lock-up agreement of the type described under the heading “Plan of Distribution – Restrictions on the Sales of Common Shares – Restrictions on Certain Shareholders”. (4) The Company has been advised that a total of 6,843,047 Common Shares (19.1%) are owned beneficially by Tennenbaum, an affiliate of TOP V Holdings. TOP V Holdings is managed by three managing members, Todd Gerch, a director of the Company, Timothy Gravely and Gabriel Goldstein, each of whom are employees of TCP and, as such, may be considered to exert some degree of direction or control, directly or indirectly, over such Common Shares. Mr. Gerch disclaims beneficial ownership of all Common Shares owned by TOP V Holdings. The managing members have all authority and power to operate the business of TOP V Holdings except that, without the consent of Tennenbaum, the parent company of TOP V Holdings, the managing members may not: (i) acquire additional securities of the Company; (ii) sell, transfer, pledge or otherwise dispose of or encumber securities of the Company; or (iii) have outstanding at any one time loans or advances to the Company in an amount in excess of $250,000. Tennenbaum is a non- diversified, closed-end management investment company registered under the Investment Company Act of 1940, as amended. TCP serves as the investment advisor to Tennenbaum. The Company expects that TOP V Holdings will enter into a lock-up agreement of the type described under the heading “Plan of Distribution – Restrictions on the Sales of Common Shares – Restrictions on Certain Shareholders”. (5) The Company has been advised that a total of 1,535,833 Common Shares (4.3%) are owned of record and beneficially by RBC. The Company expects that RBC will enter into a lock-up agreement of the type described under the heading “Plan of Distribution – Restrictions on the Sales of Common Shares – Restrictions on Certain Shareholders”. (6) The Company has been advised that a total of 82,027 Common Shares (0.2%) are owned of record and beneficially by Babson CLO Ltd 2007-I., a fund managed, controlled and directed by Babson Capital Management LLC. The Company has been advised that a total of 508,999 Common Shares (1.4%) are owned of record and beneficially by the Babson Funds, all of which are managed, controlled and directed by Babson Capital Management LLC. The Company expects that each of the Babson Funds will enter into a lock-up agreement of the type described under the heading “Plan of Distribution – Restrictions on the Sales of Common Shares – Restrictions on Certain Shareholders”. (7) The Company has been advised that a total of 82,027 Common Shares (0.2%) are owned of record by U.S. Bank, NA as Trustee fbo Babson CLO Ltd 2005-III Custodial Account and beneficially by Babson CLO Ltd 2005-III, a fund managed, controlled and directed by Babson Capital Management LLC. The Company has been advised that a total of 508,999 Common Shares (1.4%) are owned of record and beneficially by the Babson Funds, all of which are managed, controlled and directed by Babson Capital Management LLC. The Company expects that each of the Babson Funds will enter into a lock-up agreement of the type described under the heading “Plan of Distribution – Restrictions on the Sales of Common Shares – Restrictions on Certain Shareholders”. (8) The Company has been advised that a total of 54,684 Common Shares (0.2%) are owned of record and beneficially by Babson CLO Ltd 2006-II, a fund managed, controlled and directed by Babson Capital Management LLC. The Company has been advised that a total of 508,999 Common Shares (1.4%) are owned of record and beneficially by the Babson Funds, all of which are managed, controlled and directed by Babson Capital Management LLC. The Company expects that each of the Babson Funds will enter into a lock-up agreement of the type described under the heading “Plan of Distribution – Restrictions on the Sales of Common Shares – Restrictions on Certain Shareholders”. (9) The Company has been advised that a total of 54,684 Common Shares (0.2%) are owned of record by U.S. Bank, NA as Trustee fbo Babson CLO Ltd 2004-I Custodial Account and beneficially by Babson CLO Ltd 2004-I, a fund managed, controlled and directed by Babson Capital Management LLC. The Company has been advised that a total of 508,999 Common Shares (1.4%) are owned of record and beneficially by the Babson Funds, all of which are managed, controlled and directed by Babson Capital Management LLC. The Company expects that each of the Babson Funds will enter into a lock-up agreement of the type described under the heading “Plan of Distribution – Restrictions on the Sales of Common Shares – Restrictions on Certain Shareholders”. (10) The Company has been advised that a total of 44,181 Common Shares (0.1%) are owned of record and beneficially by Babson Capital Loan Strategies Master Fund, L.P., a fund managed, controlled and directed by Babson Capital Management LLC. The Company has been advised that a total of 508,999 Common Shares (1.4%) are owned of record and beneficially by the Babson Funds, all of which are managed, controlled and directed by Babson Capital Management LLC. The Company expects that each of the Babson Funds will enter into a lock-up agreement of the type described under the heading “Plan of Distribution – Restrictions on the Sales of Common Shares – Restrictions on Certain Shareholders”. (11) The Company has been advised that a total of 41,013 Common Shares (0.1%) are owned of record and beneficially by Babson CLO Ltd 2005-I, a fund managed, controlled and directed by Babson Capital Management LLC. The Company has been advised that a total of 508,999 Common Shares (1.4%) are owned of record and beneficially by the Babson Funds, all of which are managed, controlled and directed by Babson Capital Management LLC. The Company expects that each of the Babson Funds will enter into a lock-up agreement of the type described under the heading “Plan of Distribution – Restrictions on the Sales of Common Shares – Restrictions on Certain Shareholders”. (12) The Company has been advised that a total of 27,342 Common Shares (0.1%) are owned of record and beneficially by Babson CLO 2005-II, a fund managed, controlled and directed by Babson Capital Management LLC. The Company has been advised that a total of 508,999 Common Shares (1.4%) are owned of record and beneficially by the Babson Funds, all of which are managed, controlled and directed by Babson Capital Management LLC. The Company expects that each of the Babson Funds will enter into a lock-up agreement of the type described under the heading “Plan of Distribution – Restrictions on the Sales of Common Shares – Restrictions on Certain Shareholders”. (13) The Company has been advised that a total of 27,342 Common Shares (0.1%) are owned of record and beneficially by Babson Mid-Market CLO Ltd 2007-II, a fund managed, controlled and directed by Babson Capital Management LLC. The Company has been advised that a total of 508,999 Common Shares (1.4%) are owned of record and beneficially by the Babson Funds, all of which are managed, controlled and directed by Babson Capital Management LLC. The Company expects that each of the Babson Funds will enter into a lock-up agreement of the type described under the heading “Plan of Distribution – Restrictions on the Sales of Common Shares – Restrictions on Certain Shareholders”. (14) The Company has been advised that a total of 13,671 Common Shares (0.1%) are owned of record and beneficially by Sapphire Valley CDO I, Ltd., a fund managed, controlled and directed by Babson Capital Management LLC. The Company has been advised that a total of 508,999 Common Shares (1.4%) are owned of record and beneficially by the Babson Funds, all of which are managed, controlled and directed by Babson Capital Management LLC. The Company expects that each of the Babson Funds will enter into a lock-up agreement of the type described under the heading “Plan of Distribution – Restrictions on the Sales of Common Shares – Restrictions on Certain Shareholders”. (15) The Company has been advised that a total of 75,465 Common Shares (0.2%) are owned of record and beneficially by Massachusetts Mutual Life Insurance Company, a fund managed, controlled and directed by Babson Capital Management LLC. The Company has been advised that a total of 508,999 Common Shares (1.4%) are owned of record and beneficially by the Babson Funds, all of which are managed, controlled and directed by Babson Capital Management LLC. The Company expects that each of the Babson Funds will enter into a lock-up agreement of the type described under the heading “Plan of Distribution – Restrictions on the Sales of Common Shares – Restrictions on Certain Shareholders”. (16) The Company has been advised that a total of 6,562 Common Shares (<0.1%) are owned of record and beneficially by C.M. Life Insurance Company, a fund managed, controlled and directed by Babson Capital Management LLC. The Company has been advised that a total of 508,999 Common Shares (1.4%) are owned of record and beneficially by the Babson Funds, all of which are managed, controlled and directed by Babson Capital Management LLC. The Company expects that each of the Babson Funds will enter into a lock-up agreement of the type described under the heading “Plan of Distribution – Restrictions on the Sales of Common Shares – Restrictions on Certain Shareholders”.

96 EXISTING SHAREHOLDER ARRANGEMENTS The Company is party to a shareholder agreement dated September 16, 2010, by and among the Company and all of the shareholders of the Company (the “Shareholder Agreement”). Pursuant to the Shareholder Agreement, the Company is subject to certain restrictions and it has granted piggy-back registration rights to shareholders holding an interest of 15% or more (“Significant Shareholders”). If piggy-back registration rights are exercised, the Company must use commercially reasonably efforts to include in the Offering all of the Common Shares requested by a Significant Shareholder and the Significant Shareholder has an obligation to provide certain information to the Company.

Pursuant to the Shareholder Agreement, TOP V Holdings and the Catalyst Capital Funds have agreed to indemnify Gateway, its directors and officers and each person who controls the Company (within the meaning of any applicable securities laws) from and against any losses (excluding loss of profits), claims, damages, liabilities and expenses arising out of or based upon any misrepresentation in respect of any untrue statements or material fact or omissions of a material fact relating solely to TOP V Holdings and the Catalyst Capital Funds that was provided in writing by such entities for inclusion in this prospectus (the “Indemnity Information”). Gateway has agreed to indemnify the TOP V Holdings and the Catalyst Capital Funds, the Underwriters and their respective officers and directors and each person who controls a TOP V Holdings and the Catalyst Capital Funds or Underwriter (within the meaning of any applicable securities laws) from and against any losses (excluding loss of profits), claims, damages, liabilities and expenses arising out of or based upon any misrepresentation in respect of any information or statements or omissions in this prospectus other than those relating solely to the Indemnity Information. RBC and the Babson Funds each entered into an indemnification agreement with the Company dated June 12, 2012, which provides for indemnities on substantially the same terms as the Shareholder Agreement.

DIRECTORS AND EXECUTIVE OFFICERS Summary Information The following table sets forth certain summary information in respect of the officers and directors of the Company as at the Closing Date. The Common Share amounts in the footnotes to the following table gives effect to the Share Consolidation.

Name, Province/State and Country of Residence Position with the Company Principal Occupation Director Since Gabriel de Alba (1) ...... Executive Chairman and Managing Director and September 16, 2010 Ontario, Canada Director Partner, The Catalyst Capital Group Inc. Lorenzo Creighton ...... Chief Executive Officer and Chief Executive September 16, 2010 British Columbia, Canada Director Officer, Gateway Rehana Din ...... Chief Financial Officer Chief Financial Officer, N/A British Columbia, Canada Gateway Michael C. Burns (2) (3) ...... Director Chairman, Sentinel September 16, 2010 British Columbia, Canada Strategies Inc. Todd Gerch (2) (4) ...... Director Managing Director, September 16, 2010 California, United States Tennenbaum Capital Partners, LLC Newton Glassman (1) ...... Director Managing Partner, The September 16, 2010 Ontario, Canada Catalyst Capital Group Inc. Olga Ilich (2) (5) ...... Director Partner Performance N/A British Columbia, Canada Construction Ltd. Randolph Sears ...... Vice President, Marketing and Vice President, Marketing and N/A British Columbia, Canada Director of Business Director of Business Development Development Jagtar Nijjar ...... Director, Operations Director, Operations, Gateway N/A British Columbia, Canada

97 Name, Province/State and Director Country of Residence Position with the Company Principal Occupation Since

Trevor West ...... Vice President, Human Resources Vice President, Human Resources, N/A British Columbia, Canada Gateway Chih-Ming (James) Chen ...... General Counsel and Corporate General Counsel and Corporate N/A British Columbia, Canada Secretary Secretary, Gateway

Notes: (1) Mr. de Alba and Mr. Glassman are key decision-makers at Catalyst, which manages, controls and directs the Catalyst Capital Funds which beneficially own or control 24,571,813 (68.7%) Common Shares of Gateway. (2) Independent director. Todd Gerch will be an independent director upon Closing. (3) Sentinel Strategies Inc. and Gateway entered into a Services Agreement dated August 5, 2010 to provide the services of Michael C. Burns as a director of Gateway, subject to his election as a director of Gateway at its annual general meeting. Sentinel Strategies Inc. holds 101,250 Common Shares (subject to the Share Consolidation), which were issued as compensation for providing the services of Michael C. Burns in 2011. (4) Mr. Gerch is a Managing Director of TCP which beneficially owns or controls 6,843,047 (19.1%) Common Shares of Gateway registered in the name of TOP V Holdings. (5) Olga Ilich is not currently a member of the Board but has agreed to become a director, subject to regulatory approval, on or after Closing. It is expected that Ms. Ilich will be elected at a shareholder meeting to be held on or about June 22, 2012, with such election to become effective on or after Closing. As Ms. Ilich is not a member of the Board at the time of this prospectus, the Company does not believe that Ms. Ilich has any liability for the contents of this prospectus in such capacity under applicable Canadian securities laws.

Catalyst has agreed to vote or cause to be voted, all of the Common Shares beneficially held by it, or under its direction, in favour of electing Olga Ilich at the shareholders meeting to be held on or about June 22, 2012. The Board expects to appoint a second additional independent director within 90 days of the Closing, subject to regulatory approval. The election of the additional independent director will be subject to regulatory approval and effective on or prior to the Closing. Following the election and appointment described above, the Board will consist of a seven directors, four of whom are independent.

Biographies The following biographical information relates to each of the directors and officers of the Company as at the completion of the Offering and includes a description of each individual’s principal occupation within the past five years. Gabriel de Alba is a Managing Director and Partner of Catalyst. As one of Catalyst’s representatives, Mr. de Alba is the Executive Chairman and a Director of the Company, and in such capacity, also served as Chairman of the Steering Committee of Creditors of Old Gateway. Mr. de Alba’s responsibilities at Catalyst have included acting as a director or senior officer of various Catalyst portfolio companies, including Natural Markets Restaurants Corp., World Color Press Inc., Therapure Biopharma Inc., Cable Satisfaction International Inc./Cabovisão, Richtree Market Restaurants Inc. and Sonar Entertainment Inc. Catalyst and funds managed by it have, since 2002, been involved in numerous distressed and/or under-valued situations including (in addition to the portfolio companies previously referred to) AT&T Canada, Call-Net Inc., Stelco Inc., IMAX Corporation, Countryside Power Income Fund, Canwest, Callidus Capital Corporation and YRC Worldwide Inc. Prior to joining Catalyst at its inception in 2002, Mr. de Alba worked at AT&T Latin America. Mr. de Alba was a founding member of the Bank of America International Merchant Banking Group and, prior to that, worked in Bankers Trust’s New York Merchant Banking Group. Mr. de Alba is fluent in five languages and holds a double B.S. in Finance and Economics from the NYU Stern School of Business, an M.B.A. from Columbia University and has completed graduate courses in Mathematics, Information Technology and Computer Sciences at Harvard University. Lorenzo Creighton is Chief Executive Officer and a Director of the Company. Mr. Creighton was the President and Chief Operating Officer of MGM Grand Detroit from 2008 until 2010 and under his management the casino became the second-most profitable among the 12 casinos owned by Las Vegas-based MGM Resorts International Inc. Mr. Creighton was also President and Chief Operating Officer for the MGM New York-New York Hotel and Casino in Las Vegas from 2005 to 2008, where he initiated the renovation of the 2,400 room hotel casino, and received the Gold Key Award for the extensive redesign and expansion of its 21,000 sq. ft. of meeting and convention space. Mr. Creighton was employed by Caesars Entertainment from 1995 to 2005, where he managed various properties, and notably served as President and Chief Operating Officer of the Flamingo in Las Vegas. Mr. Creighton has also held several positions within the gaming industry, including: Deputy Director for the Iowa Gaming Commission, where he wrote gaming regulations and oversaw the opening of the initial Riverboat Casinos, and Executive Director for the Mississippi Gaming Commission, where he oversaw the opening of the initial casinos in the state. Additionally,

98 Mr. Creighton has served as General Manager for the Lady Luck in Natchez, Mississippi; General Manager for the President Casinos in St. Louis, Missouri, and Senior Vice President of Operations for Bally’s Casino in New Orleans, Louisiana. Before working in executive positions in casino operations and casino regulations, Lorenzo’s career includes serving as an Judicial Magistrate for the state of Iowa.

Rehana Din joined Old Gateway in 2008 as the Director, Finance & Administration and joined the Company upon completion of the Restructuring in the same role. Ms. Din was promoted to her current position of Chief Financial Officer on May 10, 2012. Prior to joining Gateway, Ms. Din was employed at PricewaterhouseCoopers LLP from 1998 to 2008. Ms. Din holds a Bachelors of Business Administration from Simon Fraser University and is a Chartered Accountant.

Michael C. Burns is a Director of the Company. He serves on the boards of Sentinel Strategies Inc., NaiKun Wind Energy Group Inc., Pacific Destinations Services Ltd., Securex Financial Ltd. and Advanced Applied Physics Solutions Corp. His previous directorships include Atomic Energy Canada Ltd., Lumira Capital Corp. and MDS Capital Inc. Mr. Burns holds a B.A. in Economics from the University of Manitoba. The services of Michael C. Burns are provided to the Company through an agreement with Sentinel Strategies Inc.

Todd Gerch is a Director of the Company. Mr. Gerch is a Managing Director of TCP, a multi-strategy alternative investment management firm located in Santa Monica, California where he has been employed since 2004. Mr. Gerch also serves as Chief Operating Officer of TCP Capital Corp., a publicly-traded business development company. Prior to joining TCP, Mr. Gerch worked at Ares Management, LLC, a private equity and leveraged finance investment management firm, and in the investment banking division of Credit Suisse First Boston. Mr. Gerch also serves as Chairman of Revere Industries, LLC. Mr. Gerch received his M.B.A. from the Wharton School of the University of Pennsylvania and his B.B.A. (Magna Cum Laude) in Finance from the University of Notre Dame.

Newton Glassman is the Founder, acting Chief Executive Officer and Managing Partner of Catalyst. Among his other duties with Catalyst, Mr. Glassman is, as a representative of Catalyst, a Director of the Company. Mr. Glassman was formerly a Director of FrontPoint Partners, LLC and Hollinger Inc. He also serves, or has formerly served, as a director or senior officer of various Catalyst portfolio companies, including, Cable Satisfaction International Inc./ Cabovisão, Snowbear Limited, Solarbear Company, Blackrock Trailers Corp., Natural Markets Restaurants Corp, Callidus Capital Corporation and Therapure Biopharma Inc. Mr. Glassman was previously a Managing Director at Cerberus Capital Management LP where he was involved in several Canadian restructurings, including Loewen Inc., Livent Corporation of Canada, Inc., Philip Services Corporation, GST Telecommunications, Inc., Pacifica Papers, Inc. and AT&T Canada Inc. Catalyst and funds managed by it have, since 2002, been involved in numerous distressed and/ or under-valued situations including those noted above in respect of the biography of Mr. de Alba. Mr. Glassman holds an M.B.A from the Wharton School of the University of Pennsylvania, a law degree from the University of Toronto and an undergraduate degree from the University of Toronto.

Olga Ilich is expected to be elected as a Director of the Company at a shareholder meeting to be held prior to the completion of the Offering, subject to regulatory approval. Ms. Ilich is a partner in Performance Construction Ltd., a general building contractor that specializes in wood and low-rise concrete construction. From 2005 to 2009, Ms. Ilich was an elected member of the Legislative Assembly of British Columbia. During that time, she served in various capacities, including as the Minister of Tourism, Sport, and the Arts, and the Minister of Labour and Citizens’ Services. Prior to entering politics, Ms. Ilich was the President of Suncor Developments Ltd., a company that built single-family subdivisions, multi-family projects and commercial shopping centres. Ms. Ilich is a member of the Board of Directors of the Vancouver Symphony Orchestra. Previously, she was a Director of the Vancouver International Airport Authority, a Director of UBC Properties Investment Ltd., the President and a Director of the Urban Development Institute, Pacific Region, the Chair of the BC Assessment Authority, a member of the Federal Business Development Bank’s Regional Advisory Committee, the Chair of the City of Richmond Advisory Planning Commission, a Member of the City of Surrey’s Economic Development Committee and a Director of St. George’s School. In 2009, Ms. Ilich was chosen as one of Canada’s Most Powerful Women: Top 100 Award winner after a 30 year career at senior levels in both business and government. Ms. Ilich has a Master of Business Administration from the Memorial University of Newfoundland, a Master of Arts from the University of Manitoba and a Bachelor of Arts degree from the University of British Columbia.

Randolph Sears joined Gateway in September 2011 as Vice President, Marketing and Director of Business Development. Mr. Sears has over 30 years of experience in the Casino industry and has held various positions at Tropicana Entertainment, Tropicana Las Vegas, Spotlight 29 Casino, New Frontier, Bally’s & Paris Las Vegas and Flamingo Las Vegas. Mr. Sears holds a Bachelor of Sciences from the University of Nevada.

99 Jagtar Nijjar first joined Gateway in 1991 and has held various management positions during his tenure with the Company. Mr. Nijjar has served as the Company’s Manager of Casino Surveillance/Security, and as Casino Manager of various properties in the Company’s history including the Mandarin Centre, the Burnaby Casino (the predecessor to the Grand Villa), Royal Towers, and Royal City Star. Mr. Nijjar has been involved in the planning, development and operation of many of the Company’s current properties such as the Grand Villa Casino, the Starlight Casino, the Cascades Casino and the Lake City Casinos in Kelowna and Vernon. Mr. Nijjar was promoted to his current position as the Company’s Director of Operations in 2006. Mr. Nijjar holds a Computer Sciences/General Diploma from Langara College in Vancouver, British Columbia.

Trevor West joined Old Gateway in 1999 as Director, Human Resources and was promoted to his current position of Vice President, Human Resources in 2006. Mr. West joined the Company upon completion of the Restructuring in the same role. Mr. West attended the Executive Development Program at the University of Nevada Reno and also holds a British Institute of Management National Diploma from the West Bromwich College of Commerce and Technology in the United Kingdom.

Chih-Ming (James) Chen is the General Counsel and Corporate Secretary of the Company. Mr. Chen was appointed as the General Counsel on January 30, 2012. Prior to joining Gateway, Mr. Chen practiced corporate and securities law with Blake, Cassels and Graydon LLP and with Stikeman Elliott LLP. He has served as Corporate Secretary for Zongshen PEM Power Systems Inc. and Yalian Steel Corporation. Mr. Chen holds a Bachelor of Laws from the University of Victoria. Mr. Chen is a member of the Law Society of British Columbia and the Law Society of Upper Canada.

Common Share Ownership The directors and officers of the Company, as a group do not beneficially own, or control or direct, directly or indirectly any Common Shares as at the date of this prospectus except as set forth in this prospectus. Immediately after Closing, the directors and officers of the Company, as a group, will beneficially own, control or direct, directly or indirectly, Š Common Shares.

Terms of Directors and Officers The Company’s directors have been elected for staggered terms in accordance with Gateway’s Shareholder Agreement. The Shareholder Agreement will be amended by Gateway’s shareholders prior to completion of the Offering to provide that the terms of all directors will expire on the first annual meeting following Closing. Directors will subsequently be elected for a term expiring at the conclusion of the next annual meeting of shareholders of the Company, or until their successors are duly elected or appointed pursuant to the CBCA and such directors will be eligible for re-election. Officers serve at the pleasure of the Board.

Corporate Cease Trade Orders and Bankruptcies To the knowledge of the Company, except as described below, no director or executive officer of the Company (nor any personal holding company of any such persons) is, as at the date of this prospectus, or was within 10 years before the date of this prospectus, a director, chief executive officer or chief financial officer of any company (including the Company), that: (i) was subject to a cease trade order (including a management cease trade order), an order similar to a cease trade order or an order that denied the relevant company access to any exemption under securities legislation, in each case that was in effect for a period of more than 30 consecutive days (collectively, an “Order”), and that was issued while the director or executive officer was acting in the capacity as director, chief executive officer or chief financial officer; or (ii) was subject to an Order that was issued after the director or executive officer ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer.

Mr. Glassman was installed as a director of Hollinger Inc. in July of 2005 as part of a court order. Hollinger Inc. was a Canadian media company that was listed on the Toronto Stock Exchange. In 2005, Hollinger Inc. was made subject to a management cease-trade order for being in default of its annual filing requirements. In August 2007, Hollinger Inc. made application for a Court-supervised restructuring under the Companies’ Creditors Arrangement Act (Canada) and a similar proceeding in the Unites States pursuant to Chapter 15 of the U.S. Bankruptcy Code. Mr. Glassman ceased to be a director in the Spring of 2007, and in August of 2008 the shares of Hollinger Inc. were delisted from the Toronto Stock Exchange.

100 To the knowledge of the Company, other than as described herein, no director or executive officer of the Company (nor any personal holding company of any such persons), or shareholder holding a sufficient number of securities of the Company to affect materially the control of the Company: (i) is, as at the date of this prospectus, or has been within the 10 years before the date of this prospectus, a director or executive officer of any company (including the Company) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or (ii) has, within the 10 years before the date of this prospectus, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the director, executive officer or shareholder.

Penalties and Sanctions To the knowledge of the Company, no director or executive officer of the Company (nor any personal holding company of any of such persons), or shareholder holding a sufficient number of securities of the Company to affect materially the control of the Company, has been subject to: (i) any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or (ii) any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor in making an investment decision.

Conflicts of Interest To the best of the Company’s knowledge, there are no existing or potential material conflicts of interest among the Company or a subsidiary of the Company and a director or officer of the Company or a subsidiary of the Company at the date of this prospectus. Certain of the directors and officers of the Company serve as directors and officers of other public companies or private equity funds. Accordingly, conflicts of interest may arise which could influence these persons in evaluating possible acquisitions or in generally acting on behalf of the Company.

The Company’s directors and officers are required by law to act honestly and in good faith with a view to the best interests of the Company and to disclose any conflicts to the Company if and when they arise. The Company has entered into indemnification agreements with each of its directors and officers. The indemnification agreements generally require that the Company indemnify and hold the indemnitees harmless to the greatest extent permitted by law for liabilities arising out of the indemnitees’ service to the Company as directors and officers, provided that the indemnitees acted honestly and in good faith with a view to the best interests of the Company and, with respect to criminal and administrative actions or proceedings that are enforced by monetary penalty, the indemnitees had reasonable grounds to believe that his or her conduct was lawful. The indemnification agreements also provide for the advancement of defense expenses to the indemnitees by the Company.

EXECUTIVE COMPENSATION Compensation Objectives The following discussion describes the significant elements of our executive compensation program upon completion of the Offering, with particular emphasis on the process for determining compensation payable to the Company’s Chief Executive Officer (the “CEO”), Chief Financial Officer (the “CFO”), and, other than the CEO and the CFO, each of the three most highly compensated executive officers, or the three most highly compensated individuals acting in a similar capacity (collectively, the “Named Executive Officers”or“NEOs”).

The NEOs are: Š Lorenzo Creighton, Director and CEO; Š Rehana Din, CFO; Š Randolph Sears, Vice President, Marketing and Director of Business Development; Š Trevor West, Vice President, Human Resources; and Š Chih-Ming (James) Chen, General Counsel and Corporate Secretary.

101 Compensation Methodology The Company expects the Board will review and approve recommendations from the Compensation Committee regarding salaries, annual bonuses and equity incentive compensation for the NEOs and approve corporate goals and objectives relevant to their respective compensation. The Board will solicit input from the CEO and the Compensation Committee regarding the performance of the Company’s other executive officers.

Risk Management The Company expects that the Compensation Committee will review the practices the Company uses to identify and mitigate compensation policies and practices that could create or incentivize any inappropriate or excessive risk- taking by executive officers.

Compensation Consulting Services On April 17, 2012, the Company retained the services of Towers Watson & Co. (“Towers Watson”), a risk management firm and human resources consulting firm, which provides independent advice on executive compensation and related governance issues. The Company expects that compensation data derived from Towers Watson will be used by the Company in setting competitive pay assessment and benchmarking for director compensation and incentive plan design.

The Company will work with Towers Watson to identify an appropriate comparator or peer group for benchmarking purposes for director compensation after the Closing of the Offering.

For the years ended December 31, 2011 and December 31, 2010, no fees were billed to or paid by the Company to Towers Watson for executive compensation-related services and all other services.

Compensation Components For 2012, the compensation package for NEOs is expected to be primarily comprised of three elements: base salary, annual bonus and equity based or share based compensation. Each element of compensation is described in more detail below. All salaries, salary increases, cash bonuses and share based compensation for the NEOs will be reviewed, considered and approved by the Compensation Committee and, in turn, the Board. Following the completion of the Offering, we expect that the aggregate of base salary, annual cash incentive plans and long-term incentive plans will be benchmarked relative to the market within the Company’s peer group through publicly available documents and available compensation surveys prepared by compensation consultants. The mix of pay and the weighting of short-term and long-term incentives will reflect the NEOs position and his or her ability to impact the short-term and long-term performance of the Company. Superior performance by individuals should result in above market compensation; however, below-market compensation should be payable if performance falls short of expectations. Following the Closing, the Compensation Committee, in conjunction with the Board, may establish an appropriate comparator group for purposes of setting future compensation of the NEOs.

Base Salary Base salary is the fixed component of total direct compensation for the NEOs, and is intended to attract and retain executives, providing a competitive amount of income certainty. The actual base salaries of the NEOs will reflect numerous factors relevant to the discharge of their duties, including the complexity of their respective roles, the amount of applicable industry experience, the function their respective roles play in Gateway’s corporate development and the need to attract and retain talented individuals. Base salaries will be reviewed and compared to similar benchmarked positions in the Company’s industry peer group in the relevant marketplace. Consideration will also be given to the NEO’s time in the role, and/or material differences in responsibilities compared with the benchmarked similar role in the peer group data. The NEO base salaries are generally targeted to Gateway’s peer group and adjusted for individual contribution and performance.

Annual Short-Term Incentive Plan Annual short-term compensation will be based on the Company’s overall performance and the NEO’s achievement of key performance objectives. Pursuant to their employment agreements: (i) each of Jagtar Nijjar and Randolph Sears qualify for a bonus after the financial year-end no greater than 25% of his base salary; (ii) each of

102 Rehana Din and Chih-Ming (James) Chen qualify for a bonus after the financial year-end no greater than 20% of his or her base salary; (iii) Trevor West is eligible for a bonus after the financial year-end no greater than 30% of his base salary; and (iv) Lorenzo Creighton is eligible for a bonus after the financial year-end of up to 50% of his base salary. Bonus awards for the NEOs, excluding the CEO, will be recommended by the CEO and reviewed by the Compensation Committee and, if deemed appropriate, will be recommended to the Board for approval. The CEO may be eligible for a bonus after the financial year-end up to 50% of his base salary. Bonus awards for the CEO will be determined solely by the Board based on recommendations received from the Compensation Committee.

Long-Term Equity Incentives We believe that equity based awards allow us to reward executive officers for their sustained contributions to the Company. We also believe that equity-based awards reward continued employment by an executive officer, with an associated benefit to us of employee continuity and retention. The Board believes that equity-incentives and share- based compensation provide management with a strong link to long-term corporate performance and the creation of shareholder value. The 2012 Incentive Plan will allow us the opportunity to grant various forms of compensation, the value of which will be tied to the success of the Company’s Common Shares. The Board will not award incentives under the 2012 Incentive Plan using a prescribed formula or target. Instead, the Board will take into account the individual’s position, scope of responsibility, ability to affect profits and the individual’s historic and recent performance and the value of the awards in relation to other elements of the executive’s total compensation.

Equity Program Purpose and Administration Prior to completion of the Offering, the Board will approve an equity incentive plan (the “2012 Incentive Plan”), pursuant to which it will be able to issue stock-based, stock denominated and other long-term incentives to the Company’s employees, officers and directors. The following discussion is qualified in its entirety by the text of the 2012 Incentive Plan. The 2012 Incentive Plan will permit the following award types: Š Options; Š Share Appreciation Rights (“SARs”); Š Restricted Share Units (“RSUs”); Š Performance Restricted Share Units (“Performance RSUs”); and Š Deferred Share Units (“DSUs”).

The granting of Options, SARs, RSUs, Performance RSUs and DSUs (“Grants”) is intended to motivate the Company’s employees, officers and directors to deliver long-term shareholder value, to provide them with a sense of ownership and to provide retention incentives. The terms and conditions attaching to the Grants will be determined by the Compensation Committee and approved by the Board.

The Compensation Committee will have the power and discretionary authority to determine the terms and conditions of the Grants, including the individuals who will receive the Grants, the term of the Grants, the exercise price, the number of Common Shares subject to each Grant, the limitations or restrictions on vesting and exercisability of Grants, acceleration of vesting or the waiver of forfeiture or other restrictions on awards, the form of consideration payable on exercise, whether Grants will entitle the participant to receive dividend equivalents and the timing of the Grants. The Compensation Committee will also have the power to establish award exercise procedures and procedures for payment of withholding tax obligations with cash.

Subject to compliance with applicable laws, rules and regulations (including, where required, applicable rules of the TSX), the Compensation Committee will be able to amend, alter, suspend, discontinue or terminate the 2012 Incentive Plan or any award at any time provided that (i) such amendment does not adversely affect an award previously granted to a participant without such participant’s consent, or (ii) such amendment cannot be made without obtaining the approval of shareholders of the Company, if such amendment would (a) increase the total number of Common Shares available for awards under the 2012 Incentive Plan, (b) reduce the exercise price or extend the term of any award benefiting an insider of the Company, or (c) otherwise cause the 2012 Incentive Plan to cease to comply with any tax or regulatory requirement, including TSX rules.

103 Awards Granted in Connection with this Offering Prior to the completion of the Offering, the Shareholder Agreement restricts the Company from issuing equity compensation awards representing greater than 5% of the outstanding Common Shares. We expect that between approximately 100,000 and 200,000 RSUs (representing approximately 0.5% of the Common Shares outstanding prior to Closing) may be awarded to Gateway’s management and employees, excluding the CEO, on or following the completion of the successful Offering. On or immediately prior to Closing, we expect that Options (representing approximately 0.1% of the Common Shares outstanding prior to Closing) to purchase Common Shares may be awarded to management for nominal consideration. See “Options to Purchase Securities” and “Executive Compensation — Compensation of Named Executive Officers”.

Certain Restrictions The maximum number of Common Shares which may be issued pursuant to, or paid in satisfaction of, awards granted under the 2012 Incentive Plan to any one participant in any calendar year will be 5% of the total issued and outstanding Common Shares at the commencement of such calendar year (subject to adjustments in the event of a recapitalization, share split, share dividend, reverse share split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of the Company’s securities, issuance of warrants or other rights to purchase the Company’s securities or similar corporate transactions that affect Common Shares (in each case a “Change in Capitalization”)). The maximum number of Common Shares which may be issued pursuant to, or paid in satisfaction of, Grants to insiders of the Company at any time under the 2012 Incentive Plan and all of the Company’s other security based compensation arrangements (if any) shall not exceed 10% of the total issued and outstanding Common Shares from time to time (subject to adjustments in the event of a Change in Capitalization). The maximum number of Common Shares which may be issued pursuant to, or paid in satisfaction of, Grants to insiders of the Company within any one year period under the 2012 Incentive Plan and under all of the Company’s other security based compensation arrangements (if any) will be 10% of the total issued and outstanding Common Shares at the commencement of such one year period (subject to adjustments in the event of a Change in Capitalization). Members of the Board who are not officers or employees of the Corporation may only be granted DSUs and will not be eligible to receive grants of Options, SARs, RSUs or Performance RSUs pursuant to the 2012 Incentive Plan. The maximum number of Common Shares which may be issued pursuant to awards granted to members of the Board who are not officers or employers of the Company cannot exceed 1% of the total issued and outstanding Common Shares.

Stock Options Our Compensation Committee may from time to time authorize grants of Options upon such terms and conditions as it may determine in accordance with the terms of the 2012 Incentive Plan. The exercise price of each Option granted will be determined by the Compensation Committee; which shall not be less than 100% of the fair market value of Common Shares on the date of the grant. Generally, Options granted under the 2012 Incentive Plan may be exercised for a term indicated in the applicable award agreement but not exceeding 10 years from the date of grant. Vesting of Options will be based on the required period or periods of continuous service of the participant, and may also be contingent upon the participant’s achievement of specified management objectives.

Share Appreciation Rights Our Compensation Committee may from time to time authorize grants of SARs upon such terms and conditions as it may determine in accordance with the terms of the 2012 Incentive Plan. A SAR is a right of the participant to receive from us, upon exercise, an amount which will be determined by our Compensation Committee at the date of grant and will be based on the difference between the fair market value of a Common Share at the date of grant and the date of exercise. Generally, SARs granted under the 2012 Incentive Plan may be exercised for a term indicated in the applicable award agreement but not exceeding 10 years from the date of grant.

Restricted Share Units Our Compensation Committee may from time to time authorize grants of RSUs upon such terms and conditions as it may determine in accordance with the terms of the 2012 Incentive Plan. Each grant will constitute an agreement to deliver Common Shares, cash or other consideration to the participant in the future in consideration of the performance of services, subject to the fulfillment during the deferral period of such conditions as our Compensation Committee may specify including, but not limited to, the participant’s achievement of specified management objectives. During

104 the applicable deferral period for a given RSU award, the participant will not have any right to transfer the rights associated with the RSUs and will have no ownership or voting rights with respect to the RSU or the underlying shares associated with the RSU.

Performance Restricted Share Units Our Compensation Committee may from time to time authorize grants of Performance RSUs upon such terms and conditions as it may determine in accordance with the terms of the 2012 Incentive Plan. Performance RSUs are effectively RSUs that only vest upon the achievement of specified management objectives. The number of Performance RSUs that vest will be dependent upon the satisfaction of certain performance criteria determined by the Compensation Committee and may include total shareholder return and individual performance objectives.

Deferred Share Units Our Compensation Committee may from time to time authorize grants of DSUs upon such terms and conditions as it may determine in accordance with the terms of the 2012 Incentive Plan. Only non-management directors will be eligible to receive DSUs under the 2012 Incentive Plan. Each grant will constitute an agreement to deliver Common Shares, cash or other consideration to the participant in the future in consideration of the performance of services after the participant’s term of employment ends. During the deferral period, the participant will not have any right to transfer the rights associated with the DSUs and will have no ownership or voting rights with respect to the DSU or the underlying shares associated with DSUs.

Termination of Employment Generally, except as otherwise provided for in an award agreement or upon an exercise of discretion by the Compensation Committee, when a participant is terminated for cause, or a participant voluntarily resigns without good reason, any outstanding Options, SARs, RSUs, Performance RSUs or DSUs which have not vested on or prior to the participant’s termination date shall terminate and become null and void as at such date and cancelled without payment. Upon termination of a participant as a result of the participant’s death, disability, retirement, termination without cause or voluntary termination by the participant for good reason, all DSUs previously granted to such participant shall become vested and generally a pro rata proportion of any outstanding Options, SARs, RSUs and Performance RSUs previously granted to such participant will vest on the ratio that (x) the number of full time months during the vesting period that the participant was actively employed is of (y) the number of full months in the vesting period.

Generally, except as otherwise provided for in an award agreement or upon an exercise of discretion by the Compensation Committee, upon termination of a participant as a result of the participant’s death, disability, retirement, termination without cause or voluntary termination by the participant for good reason, all of the participant’s vested Options and vested SARs shall remain exercisable for a period of 12 months from the termination date; in the event that termination is for any other reason, all of the participant’s vested Options and vested SARs shall remain exercisable for a period of 30 days from the termination date. Upon termination of a participant’s employment all of the participant’s vested RSUs, Performance RSUs and vested DSUs shall be redeemed and paid out.

Effect of a Significant Event Upon the occurrence of a significant event, as defined in the 2012 Incentive Plan, and unless otherwise provided in an award agreement or a written employment contract, the Compensation Committee may, provided that the successor corporation will assume each Grant or replace it with a substitute Grant on terms substantially similar, implement the acceleration or vesting of any or all Grants, the surrender for cash payments equal to the fair market value thereof or a combination of the foregoing.

Compensation of Named Executive Officers Each of the NEOs has entered into an executive employment agreement with the Company.

The employment agreements provide that the NEO shall be entitled to participate in all of the Company’s standard benefits plan that are generally available to similarly situated executives.

105 Summary Compensation Table – NEOs – Expectations for 2012 Based on information available at the date hereof, the following table sets out information concerning the compensation anticipated to be paid by the Company to the NEOs during the year ended December 31, 2012.

Share- Option- Non-equity based based incentive plan Pension All Other Total Salary(2) awards(3) awards(4) Compensation(5) Value compensation(6) Compensation Name and Principal Position Year ($) ($) ($) ($) ($) ($) ($) Lorenzo Creighton(1) ...... 2012 543,950 — — — N/A 624 544,574 Chief Executive Officer Rehana Din ...... 2012 225,000 — — — N/A 624 225,624 Chief Financial Officer Randolph Sears ...... 2012 200,000 — — — N/A 624 200,624 Vice President, Marketing and Director of Business Development Trevor West ...... 2012 180,000 — — — N/A 624 180,624 Vice President, Human Resources Chih-Ming (James) Chen . . . 2012 160,417(7) — — — N/A 624 161,041 General Counsel and Corporate Secretary

Notes: (1) Lorenzo Creighton receives a salary of US$550,000. The above amount is the Canadian dollar equivalent translated at the average exchange rate of U.S. $1 = C $0.989 during the fiscal year ended December 31, 2011. (2) Represents the base salaries in effect as at the date hereof. Actual salaries paid for the year ending December 31, 2012 may be greater than these amounts depending on whether the Board adjusts existing base salary levels during 2012. (3) The amount of Share-based awards to be paid to the NEOs during 2012 has not yet been determined by the Compensation Committee and the Board. (4) The amount of Option-based awards to be paid to the NEOs during 2012 has not yet been determined by the Compensation Committee and the Board. (5) The amount of Non-equity incentive plan compensation to be paid to the NEOs during 2012 has not yet been determined by the Compensation Committee and the Board. (6) Represents the Company’s anticipated contributions in respect of the NEO’s RRSP contribution plan. The value of other perquisites to be received by the NEOs during 2012, including property or other personal benefits provided to NEOs that are not generally available to all employees, are not in the aggregate anticipated to be either $50,000 or greater or 10% or greater of the respective NEO’s total anticipated salary for 2012. (7) Chih-Ming (James) Chen’s contract of employment with the Company commenced on January 30, 2012. His salary under his contract of employment is $175,000 per annum.

Short Term Incentive Plan Awards Pursuant to their employment agreements: (i) each of Rehana Din, Jagtar Nijjar and Randolph Sears qualify for a bonus after the financial year-end no greater than 25% of his or her base salary; (ii) Chih-Ming (James) Chen qualifies for a bonus after the financial year-end no greater than 20% of his base salary; (iii) Trevor West qualifies for a bonus after the financial year-end no greater than 30% of his base salary; and (iv) Lorenzo Creighton is eligible for a bonus after the financial year-end of up to 50% of his base salary.

Long-Term Incentive Plan Awards Prior to completion of the Offering, Management may grant certain Share-based or Option-based awards. Under the Shareholder Agreement, the Board cannot issue Options, SARs, RSUs or Performance RSUs to any NEO if the effect would be to increase their overall percentage interest from less than five percent to five percent or more unless approved by GPEB.

Prior to the completion of the Offering, the Shareholder Agreement restricts the Company from issuing equity compensation awards representing greater than 5% of the outstanding Common Shares. We expect that between approximately 100,000 and 200,000 RSUs (representing approximately 0.5% of the Common Shares outstanding prior to Closing) will be awarded to Gateway’s management and employees, excluding the

106 CEO, on or following the completion of the successful Offering. On or immediately prior to Closing, we expect that Options (representing approximately 0.1% of the Common Shares outstanding prior to Closing) to purchase Common Shares may be awarded to management for nominal consideration.

At the date of the prospectus, no Options, RSUs, Performance RSUs, SARs or other equity or share based awards have been granted to the NEOs. Options or RSUs may be awarded to management, including the NEOs, prior to or following Closing as described above.

Other Benefit Plans The NEOs also participate in the Gateway Group Retirement Savings Plan, a registered savings plan intended to assist participating members (available to all employees) in accumulating additional savings toward retirement. Company contributions will match employee contributions of $0.30 per hour worked based on a 40 hour work week. Withdrawals require the Company’s consent, and the member is entitled to the cash balance in the plan at retirement or termination of employment.

Termination and Change of Control Benefits Except as described below, Gateway has not entered into any contract, agreement, plan or arrangement that provides for payments to an NEO at, following or in connection with any termination (whether voluntary, involuntary or constructive), resignation, retirement, a change in control of Gateway or a change in an NEO’s responsibilities.

Each NEO has an employment contract in place that describes termination and change of control benefits. In the event of voluntary termination, retirement, death or permanent disability and termination for cause, the following will apply:

Voluntary Termination In the event of voluntary termination, no severance is paid, and remuneration of the NEO will remain unchanged during the resignation period. Payment will be made in lieu of any unused accrued vacation up to the last day of work of the NEO. In the event that an NEO elects to resign at a point in time that a bonus has been declared to be payable but remains unpaid, that bonus will nonetheless be paid to the NEO when due. If no bonus has been declared at the time of resignation, the NEO will not be entitled to receive any bonus. In the case of the retirement of an NEO, the NEO will be entitled to receive reasonable retirement benefits generally consistent with those provided by the Company to senior executives in accordance with the plans and policies in effect at the time of retirement.

Death or Disability In the event of an NEO’s death or permanent disability, any outstanding accrued remuneration, benefits, vacation and reimbursements up to the date of termination will be paid to the NEO or the NEO’s estate as appropriate. In the event that the death or disability occurs at a point in time that a bonus has been declared to be payable but remains unpaid, that bonus will nonetheless be paid to the estate when due. If no bonus has been declared at the time of death or disability, the estate will not be entitled to receive any bonus.

Termination for Cause If an NEO’s employment is terminated by the Company for just cause, no severance will be paid, and any outstanding base salary and benefits will be paid through to the date of termination. All other forms of unvested compensation, including bonus, payable to the NEO will terminate on the date of termination unless the Compensation Committee determines otherwise.

Involuntary Termination In the event of involuntary termination of an NEO, excluding the CEO, the Company will provide 12 months’ written notice (18 months in the case of Trevor West and 16 months in the case of Jagtar Nijjar) or base salary in lieu of notice (or a combination thereof as decided by the Company).

107 In the event of involuntary termination of the CEO, prior to September 16, 2012, the Company will pay in lieu of notice: Š 18 months of base salary as at the termination date; and Š 18 months of annual bonus calculated at 80% of the target annual bonus set for the year in which the termination occurred prorated for the period actually worked for the year in which termination occurred (together, the “Severance Pay”).

In the event of involuntary termination of the CEO, on or after September 16, 2012, in addition to the Severance Pay, the CEO is entitled to an additional month of Severance Pay for each additional completed year of service following September 16, 2012 to an aggregate maximum of 24 months base salary and bonus.

The table below reflects amounts that would be payable to each NEO if his or her employment is terminated on December 31, 2011 without cause:

Name Severance (1) Lorenzo Creighton ...... 815,925 Rehana Din ...... 225,000 Randolph Sears ...... 200,000 Trevor West ...... 270,000 Chih-Ming (James) Chen ...... 175,000

Notes: (1) Amount payable upon termination without cause in respect of any entitlements under the 2012 Incentive Plan, accrued salary and vacation pay, annual bonus and continuation of benefits cannot be reasonably estimated at this time as the Board has not adopted or granted any compensation of such nature to date.

Change of Control and Liquidity Events Other than the CEO, as described below, the Company has not entered into any contract, agreement, plan or arrangement with any NEO, which provides for change of control benefits.

The CEO’s employment agreement provides that, unless the parties subsequently agree otherwise, the CEO may receive a number of Common Shares issued from treasury (or share based compensation in lieu of Common Shares) equal to 2.5% of the Common Shares of the Company outstanding immediately following the Restructuring (the “Equity Participation”).

The CEO is only entitled an Equity Participation if and as when the Selling Shareholders dispose of the Common Shares held by them immediately following the Restructuring (such disposition, a “Liquidity Event”). There may be one or more Liquidity Events until the Equity Participation is fully earned, or until the CEO’s right to the Equity Participation is terminated in accordance with the terms of the CEO’s employment agreement. On the occurrence of each Liquidity Event, the CEO shall be entitled to earn a proportion of the Equity Participation equal to the ratio of the number of Common Shares being disposed of in the Liquidity Event to the number of Common Shares held by the Selling Shareholders immediately following the Restructuring.

The CEO is not entitled to compensation with respect to Common Shares issued pursuant to the Treasury Offering.

The CEO’s right to receive any Equity Participation ends on the earlier of: (i) the termination date of the CEO’s employment for any reason other than without just cause; and (ii) six months following the termination date in the event the Company terminated employment without just cause.

Compensation of Directors General The Company’s directors’ compensation program is designed to attract and retain qualified individuals to serve on the Board. Each director, other than the CEO, will receive an annual retainer of $135,000, a minimum of $67,500 will be payable in DSUs with the remaining $67,500 to be paid in DSUs or cash as elected by each director. The Chair of

108 the Audit & Risk Committee will receive an annual retainer of $12,500 and the Chair of each other committee of the Board that may exist from time to time will receive an annual retainer of $7,500. From time to time, the Board, in its discretion, may also compensate directors with fees for their services on Board projects. The Company has agreed to reimburse directors for all reasonable expenses incurred in order to attend meetings.

Summary Compensation Table – Directors – Expectations for 2012 Based on information available at the date hereof, the following table sets out information concerning the compensation anticipated to be paid by the Company to its directors (other than Mr. Creighton) during the year ended December 31, 2012.

Share- Option- Non-equity Fees based based incentive plan Pension All other earned(1) awards(2) awards(3) compensation(4) value(5) compensation(6) Total Name ($) ($) ($) ($) ($) ($) ($) Gabriel de Alba ...... ŠŠ— ———Š Michael C. Burns ...... ŠŠ— ———Š Todd Gerch ...... ŠŠ— ———Š Newton Glassman ...... ŠŠ— ———Š Olga Ilich ...... ŠŠ— ———Š

Notes: (1) Represents the anticipated 2012 pro rata portion of the annual retainer for serving as a Board member and excludes any fees for acting as the Chair of a Board committee (subject to the election by each director to take a greater amount of his or her compensation in the form of DSUs rather than cash). (2) Represents the anticipated pro rata portion of the annual retainer for serving as a Board member and excludes any fees for acting as the Chair of a Board Committee that are expected to be paid in DSUs (subject to the election by each director to take a greater amount of his or her compensation in the form of DSUs rather than cash). (3) The Company has not granted any Option-based or Share-based awards to directors during 2012; however, the Board may grant Option-based or Share-based awards to directors prior to completion of the Offering. (4) The Company has not paid any non-equity incentive plan compensation to directors during 2012; however, the Board may grant Option-based or Share-based awards to directors prior to completion of the Offering. (5) The Company does not currently provide for, or contribute to, either a defined benefit plan or defined contribution plan on behalf of its directors. (6) Mr. Creighton is compensated as CEO of the Company and does not receive additional director compensation. Except as otherwise noted in the above table and under the section titled “Executive Compensation – Termination and Change of Control Benefits” with respect to Mr. Creighton’s Equity Participation, the Company does not anticipate that any other compensation will be paid, payable, awarded, granted, given, or otherwise provided, directly or indirectly, by the Company to these directors in any capacity under any other arrangement in 2012 (including any plan or non-plan compensation, direct or indirect pay, remuneration, economic or financial award, reward, benefit, gift or perquisite to be paid, payable, awarded, granted, given, or otherwise provided to these directors for services provided, directly or indirectly, to the Company). Mr. Creighton’s Equity Participation entitlement as a result of the Secondary Offering will be satisfied by the issuance of Common Shares or security based compensation upon or about Closing.

INDEBTEDNESS OF DIRECTORS AND SENIOR OFFICERS As at June 12, 2012, the aggregate indebtedness of the Company and its subsidiaries to current or former directors, officers and employees was $125,000. No loans were made specifically for the purchase of Common Shares of the Company.

No director, proposed nominee for election as a director, executive officer or their respective associates or affiliates, or other management of the Company were indebted to the Company as of the end of the most recently completed financial year or as at the date hereof, except as follows:

Financially Largest Assisted Amount Securities Amount Outstanding Amount Purchases Forgiven During Year Outstanding During During Year Ended as at Year Ended Ended December 31, June 12, December 31, December 31, Involvement 2011 2012 2011 Security for 2011 Name and Principal Position of Gateway ($) ($) (#) Indebtedness ($) Lorenzo Creighton, CEO and Director . . Lender 0 125,000(1) Nil None 0

Notes: (1) The Canadian dollar denominated loan was provided to Mr. Creighton in connection with Mr. Creighton’s personal financial planning. The loan has an interest rate of 0% per year, is payable on demand and is unsecured.

109 There is no indebtedness of the Directors or Executive Officers of the Company in any securities purchase or other program.

OPTIONS TO PURCHASE SECURITIES

As of the date of this prospectus, no Options have been granted to the Company’s current or former executive officers, directors and employees. On or prior to Closing, we expect that approximately 50,000 Options (representing approximately 0.1% of the Common Shares outstanding prior to Closing) may be granted to the Company’s executive officers, other than the CEO, and employees for nominal consideration. No Options will be granted to Gateway’s current or former directors prior to Closing.

DESCRIPTION OF OUR INDEBTEDNESS The following is a summary of certain provisions of the agreements and instruments evidencing our material indebtedness as at the date of this prospectus. This summary does not purport to be complete, and is subject to, and is qualified in its entirety by reference to, all of the provisions of such agreements and instruments, including the definitions of certain terms therein that are not otherwise defined in this prospectus.

New Senior Secured Credit Facility Concurrently with the Offering, the Company intends to refinance the Existing Senior Secured Credit Facility with a New Senior Secured Credit Facility. The New Senior Secured Credit Facility is expected to consist of (i) a New Term Loan in an aggregate principal amount of up to $235 million (with an uncommitted term loan accordion option of $110 million) and (ii) the New Revolver in an aggregate principal amount of up to $35 million (with an uncommitted revolving loan accordion option of $35 million and a letter of credit sub-facility of $30 million).

The New Term Loan is expected to have a five-year maturity with no principal amortization payments. The New Revolver is expected to have a five-year maturity. The proceeds of the New Term Loan and the New Revolver will be used to complete the Refinancing and for general corporate purposes.

Borrowings and letters of credit under the New Senior Secured Credit Facility are expected to be available by way of Canadian dollar and U.S. dollar advances and bear interest at the following rates. Under the New Senior Secured Credit Facility the total leverage ratio is expected to be calculated as the ratio of consolidated debt (less net cash up to a cap of $70 million for the purposes of determining the total leverage ratio in connection with the making of dividends or other restricted payments and $50 million for all other purposes including determining the applicable margin below) to consolidated EBITDA.

Canadian $ BA and U.S. $ LIBOR plus Canadian $ and U.S. $ prime rate plus following applicable margin (bps) / Letter Total leverage ratio following applicable margin (bps) of credit fees (bps) > 4.00x ...... 187.5 287.5 3.50x < 4.00x ...... 150 250 3.00x < 3.50x ...... 125 225 2.50x < 3.00x ...... 100 200 2.00x < 2.50x ...... 75 175 < 2.00x ...... 50 150

The loans under the New Senior Secured Credit Facility are expected to be secured by a perfected first priority security interest in all of our and our subsidiaries’ tangible and intangible assets and all trust property held in trust for us by Amalco.

Existing Senior Secured Credit Facility The Existing Senior Secured Credit Facility is governed by an amended and restated credit agreement dated as at November 12, 2010 as amended and restated as at August 11, 2011 (the “Existing Credit Agreement”) and consists of a $35 million revolving line of credit, the approximately $154 million Term Loan A and the approximately

110 $188 million Term Loan B (the “Existing Senior Secured Credit Facility”). Concurrently with and as a condition of the Offering, the Company is expected to enter into the New Credit Agreement which will provide Gateway with the New Senior Secured Credit Facility.

The loans under the Existing Senior Secured Credit Facility are secured by a perfected first priority security interest in all of our and our subsidiaries’ tangible and intangible assets and all trust property held in trust for us by Amalco.

Second Priority Senior Secured Notes On November 12, 2010 Gateway issued $170 million principal amount of second priority senior secured Notes with a final maturity date of November 15, 2017. Subject to certain exceptions and permitted liens, the Notes are secured by a second priority lien on the assets that secure the Company’s Existing Senior Secured Credit Facility. The Notes rank pari passu in right of payment with all existing senior indebtedness, and, to the extent of the value of the collateral, will rank effectively senior to any unsecured senior indebtedness. The Notes were issued pursuant to an indenture dated November 12, 2010 (the “Indenture”) between Gateway and the note trustee and collateral agent. The Notes are guaranteed by all of the Company’s Restricted Subsidiaries (as defined in the Indenture). The Notes accrue interest at the rate of 8.875% per annum, payable in equal semi-annual installments in arrears on November 15 and May 15 of each year (or if such day is not a business day, the next following business day).

Starting on November 15, 2013, Gateway may, on one or more occasions, redeem the Notes, in whole or in part, upon not less than 30 nor more than 60 days’ notice, at the following redemption prices (expressed as a percentage of principal amount) plus accrued and unpaid interest and additional interest, if any, thereon, to the applicable date of redemption, if redeemed during the 12-month period commencing on November 15 of the years set below: Redemption Period Price 2013 ...... 106.656% 2014 ...... 104.438% 2015 ...... 102.219% 2016 and thereafter ...... 100.000%

Prior to November 15, 2013, Gateway may, on one or more occasions, redeem the Notes, in whole or in part, upon not less than 30 nor more than 60 days’ notice, at a redemption price equal to 100% of the principal amount of the Notes redeemed plus the Applicable Premium (as defined in the Indenture) as at, and accrued and unpaid interest and additional interest, if any, thereon, to the applicable date of redemption.

In certain circumstances, on or prior to November 15, 2013, Gateway may on any one or more occasions redeem in aggregate up to 35% of the original aggregate principal amount of the Notes with net cash proceeds of one or more Equity Offerings (as defined in the Indenture) at a redemption price of 108.875% of the principal amount of the Notes redeemed, plus accrued and unpaid interest and additional interest, if any, thereon to the date of redemption; provided, however, that at least 65% of the original aggregate principal amount of the Notes remain outstanding after each such redemption; provided, further, that such redemption shall occur within 90 days after the date on which any such Equity Offering is consummated upon not less than 30 nor more than 60 days’ notice.

In the event of a Change of Control (as defined in the Indenture), each holder of the Notes will have the right to require Gateway to purchase all or any part of such holder’s Notes at a repurchase price of 101% of the principal amount of the Notes plus accrued and unpaid interest, if any, thereon, to the applicable date of repurchase.

The Notes may also be subject to redemption or mandatory disposition following a determination by any applicable gaming regulatory authority that the holder or beneficial holder of such Notes is unsuitable to hold the Notes or upon the failure of the holder or beneficial holder to comply with certain disclosure requirements.

The Indenture contains various restrictive covenants customary for similar indebtedness, including, but not limited to, covenants restricting Gateway’s ability to incur indebtedness, issue disqualified stock and preferred stock, sell assets, make distributions or other restricted payments, enter into transactions with affiliates and merge or consolidate. There are also restrictions in the Indenture on dividend payments. See “Dividend Policy.”

Upon completion of the Refinancing, up to $59.5 million of the original aggregate principal amount of the Notes will be redeemed.

111 CORPORATE GOVERNANCE General The Company’s existing Shareholder Agreement, which restricts the appointment or election of directors, will cease to be effective at Closing. Following completion of the Offering, the Board will establish the Audit & Risk Committee, the Nominating & Governance Committee and the Compensation Committee, will adopt new Board and committee charters, review its charter and the charters of its committees, modify such charters and will adopt new charters, position descriptions and corporate governance principles and practices that are intended to meet or exceed the independence and other governance standards and guidelines as set out in National Instrument 52-109 – Certification of Disclosure in Issuers’ Annual and Interim Filings, National Instrument 52-110 – Audit Committees (“NI 52-110”), National Policy 58-201 – Corporate Governance Guidelines and National Instrument 58-101 – Disclosure of Corporate Governance Practices.

Board of Directors Independence The Board is currently comprised of five directors, of which two directors will be independent upon Closing. The Board is expecting to have three independent directors upon completion of the Offering and a total of six directors. Within 90 days of Closing, the Board expects to appoint one additional independent director, resulting in a majority of the Board being independent. Pursuant to NI 52-110, an independent director is one who is free from any direct or indirect material relationship with the Company which could, in the view of the Board, be reasonably expected to interfere with a director’s independent judgment. Certain types of relationships are by their nature considered to be material relationships. As the CEO of the Company, Lorenzo Creighton is not considered to be an independent director. Gabriel de Alba is Managing Director and Partner and Newton Glassman is Managing Partner at Catalyst and are not considered to be independent directors. Michael C. Burns and Todd Gerch (upon Closing) are the independent members of the Board and the Board. Olga Ilich will be an independent director and is expected to be elected to the Board, subject to regulatory approval, at a shareholder meeting to be held on June 22, 2012 with such election to become effective on or prior to Closing. The Board expects to appoint an additional independent director within 90 days of the date of the receipt for the prospectus. All new individual directors will be subject to the required approval from the GPEB and the AGLC.

Upon completion of the Offering, none of the directors of the Company is a director of other issuers that are reporting issuers (or the equivalent).

All current directors of the Company have attended 100% of the meetings of the Board held since September 16, 2010 to the extent that they were a director of the Company at the time of such meeting.

Mandate of the Board of Directors The Board has responsibility for the overall stewardship of the Company, generally through management to pursue the best interests of the Corporation in conducting the day to day business of the Company. The Board discharges this responsibility directly and indirectly through the delegation of specific responsibilities to committees of the Board, the Executive Chairman, the independent director, the officers of the Company, all as more particularly described in the Board Mandate which will be approved by the Board prior to completion of the Offering, a copy of which is attached to this prospectus as Appendix A. The Board Mandate provides that the Board’s fundamental objectives are to enhance and preserve long-term shareholder value, to ensure the Company meets its obligations on an ongoing basis and that the Company operates in a reliable and safe manner. In performing its functions, the Board should also consider the legitimate interests its other stakeholders such as employees, customers and communities may have in the Company. In broad terms, the stewardship of the Company involves the Board in strategic planning, financial reporting, risk management and mitigation, senior management determination, communication planning and internal control integrity.

As described below, the Board will establish the Audit & Risk Committee, the Nominating and Governance Committee, and the Compensation Committee and adopt charters defining the responsibilities of these committees.

112 Orientation and Continuing Education The orientation and continuing education of the directors will be the responsibility of the Nominating and Governance Committee of the Board. The details of the orientation of new directors will be tailored to their needs and areas of expertise and will include the delivery of written materials and participation in meetings with management and the Board. The focus of the orientation program will be on providing new directors with (i) information about the duties and obligations of directors, (ii) information about the Company’s business and operations, (iii) the expectations of directors (including, in particular, expected time commitments), (iv) opportunities to meet with management, and (v) access to documents from recent Board meetings.

The directors have all been chosen for their specific level of knowledge and expertise. All directors will be provided with materials relating to their duties, roles and responsibilities. In addition, the directors will be kept informed as to matters impacting, or which may impact, the Company’s operations through reports and presentations by internal and external presenters at meetings of the Board and during periodic strategy sessions held by the Board. Directors may periodically take part in visits to the Company’s properties, including gaming and office facilities of the Company, to observe for themselves the Company’s operations.

Position Descriptions Executive Chairman Gabriel de Alba is the Executive Chairman of the Company and, as a principal of Catalyst, Mr. de Alba is not considered to be an independent director. The Board will adopt a written position description for the Executive Chairman prior to completion of the Offering which will set out the Executive Chairman’s key responsibilities, which include, facilitating communication between the Board and management, assessing management’s performance, managing Board members, acting as chair of Board meetings and meetings of the Company’s shareholders and managing relations with shareholders, other stakeholders and the public. The Nominating and Governance Committee, with input from all Board members, will review this position description at least annually or, where circumstances warrant, at such shorter intervals as is necessary, to determine if further additions, deletions or amendments are required.

Chair of the Audit & Risk Committee The Board intends to appoint the chair of the Audit & Risk Committee on or following Closing. The Board will adopt a written position description for the chair of the Audit & Risk Committee prior to completion of the Offering which will set out the chair’s key responsibilities, which include, duties relating to leadership of the committee, fostering ethical and responsible decision making, overseeing committee structure and composition, acting as chair and establishing the agenda for committee meetings, reporting to the Board, facilitating communication between the committee and management, evaluating the performance of the committee members and retaining the necessary resources and advisors to assist the committee. The Nominating and Governance Committee, with input from all Board members, will review this position description at least annually or, where circumstances warrant, at such shorter intervals as is necessary, to determine if further additions, deletions or amendments are required.

Chair of the Nominating and Governance Committee The Board intends to appoint the chair of the Nominating and Governance Committee on or following Closing. The Board will adopt a written position description for the chair of the Nominating and Governance Committee prior to completion of the Offering which will set out the chair’s key responsibilities, which include, duties relating to leadership of the committee, fostering ethical and responsible decision making, overseeing the committee structure and composition, chairing and establishing the agenda for committee meetings, reporting to the Board, facilitating communication between the committee and management, evaluating the performance of the committee members and retaining necessary resources and advisors to assist the committee. The Nominating and Governance Committee, with input from all Board members, will review this position description at least annually or, where circumstances warrant, at such shorter intervals as is necessary, to determine if further additions, deletions or amendments are required.

113 Chair of the Compensation Committee The Board intends to appoint the chair of the Compensation Committee on or following Closing. The Board will adopt a written position description for the chair of the Compensation Committee prior to completion of the Offering which will set out the chair’s key responsibilities, which include, duties relating to leadership of the committee, fostering ethical and responsible decision making, overseeing the committee structure and composition, chairing and establishing the agenda for committee meetings, reporting to the Board, facilitating communication between the committee and management, evaluating the performance of the committee members and retaining necessary resources and advisors to assist the committee. The Nominating and Governance Committee, with input from all Board members, will review this position description at least annually or, where circumstances warrant, at such shorter intervals as is necessary, to determine if further additions, deletions or amendments are required.

Chief Executive Officer The CEO of the Company is Lorenzo Creighton. The Board will adopt a position description for the CEO prior to completion of the Offering which will set out the CEO’s key responsibilities, which include, providing leadership and vision, developing, in concert with the Board, the Company’s strategic direction, tactics and business plan necessary to realize organizational objectives and manage the overall business of the Company, ensuring strategic and business plans are effectively implanted, results are monitored and reported to the Board and financial and operational objectives are attained. The Nominating and Governance Committee, with input from all Board members, will review this position description at least annually or, where circumstances warrant, at such shorter intervals as is necessary, to determine if further additions, deletions or amendments are required.

Code of Conduct and Ethics The Company will adopt a written Code of Conduct and Ethics (the “Code of Conduct”) prior to completion of the Offering that will apply to all directors, officers, employees, contractors and consultants, including those employed by the Company’s subsidiaries. The Code of Conduct will encourage and promote a culture of ethical business conduct and will guide personnel in managing business situations and allow the Company to conduct business in a responsible and ethical manner, treating all those with whom the Company deals with fairness and respect. The Code of Conduct will address compliance with applicable laws and regulations, conflicts of interests, confidentiality and disclosure, employment practices, health, safety and environment, use of Company property and resources, retention of documents and records, reporting financial transactions, compliance and enforcement and non-compliance reporting.

As part of our Code of Conduct, any person subject to the Code of Conduct will be required to avoid or fully disclose interests or relationships that are harmful or detrimental to the Company’s best interests or that may give rise to real, potential or apparent conflicts of interest. The Board or the persons or committee appointed pursuant to the Code of Conduct will have the ultimate responsibility for the Code of Conduct.

All persons subject to the Code of Conduct will be required to provide, upon request, Code of Conduct and Ethics Certification, confirming compliance with all laws, rules and regulations of the jurisdictions where they carry out their duties and where the Company is conducting its business activities, as well as compliance with all Company policies, which includes the confidentiality and insider trading policy adopted by the Board prior to completion of the Offering.

In addition to the steps taken by the Board to encourage independence discussed elsewhere in this prospectus, the Nominating and Governance Committee will assist with advising the Board on related party transactions and other matters involving conflicts of interest. Further, the Board takes steps to encourage independence when directors have conflicting interests in transactions. These steps may include, among other things, excusing interested directors from meetings or votes to ensure that such directors are not involved in considering the merits and voting on transactions when there is a conflict or potential conflict of interest.

The Code of Conduct will be filed with the Canadian securities regulatory authorities through SEDAR and will be available at www.sedar.com.

114 Nomination of Directors

The responsibility for proposing new nominees for the Board will fall within the mandate of the Nominating and Governance Committee. New candidates for nomination to the Board will be identified and selected having regard to the strengths and constitution of the Board and the needs of the Board and its committees.

The Nominating and Governance Committee will also develop and determine the appropriate size of the Board from time to time and determine its composition, identify the competencies and skills required by the Board to discharge its oversight responsibilities, organize the process for recruiting potential candidates and provide orientation to such members.

The Nominating and Governance Committee is expected to consist of all independent directors.

Compensation of Directors and Chief Executive Officer

The Board will determine and review the form and amount of compensation to directors on the recommendation of the Compensation Committee.

It is intended that the Compensation Committee will annually assess and make a recommendation to the Board with regard to the competitiveness and appropriateness of compensation to the CEO, all other officers and key employees of the Company. See “Executive Compensation”.

Committees of the Board Of Directors

On or following completion of the Offering, the Board will establish the Audit & Risk Committee, the Nominating and Governance Committee, and the Compensation Committee as committees of the Board. These committees are discussed in greater detail below.

Audit & Risk Committee

All members of the Audit & Risk Committee will be “independent” and “financially literate” for the purposes of NI 52-110. The Audit & Risk Committee will meet at least once each financial quarter to fulfill its mandate. The Audit & Risk Committee will provide a report to the Board outlining the results of the Audit & Risk Committee’s activities and any reviews it has undertaken.

The Company expects that each member of the Audit & Risk Committee will have extensive business experience and/or education which provide him or her with the skills and background necessary to discharge his or her responsibilities as a member of the Audit & Risk Committee.

The specific responsibilities of the Audit & Risk Committee are set out in the Audit & Risk Committee Charter, a copy of which is attached to this prospectus as Appendix B. The Audit & Risk Committee’s primary role is to assist the Board in fulfilling its oversight responsibilities regarding the Company’s internal controls, financial reporting and risk management processes.

The primary duties and responsibilities of the Audit & Risk Committee will include: (i) identifying and monitoring the management of the principal risks that could impact the financial reporting of the Company; (ii) monitoring the integrity of the Company’s financial reporting process and system of internal controls regarding financial reporting and accounting compliance; (iii) monitoring the independence and performance of the Company’s external auditors; (iv) dealing directly with the external auditors to approve external audit plans, other services (if any) and fees; (v) overseeing the external audit process and results; (vi) ensuring that an effective “whistle blowing” procedure exists to permit stakeholders to express any concerns regarding accounting or financial matters to an

115 appropriately independent individual; and (viii) ensuring that an appropriate code of conduct and ethics is in place and understood by employees and directors of the Company. The Audit & Risk Committee will have the ability to retain external advisors to assist in fulfilling its mandate as necessary.

The Audit & Risk Committee will be directly responsible for overseeing the work of the external auditor engaged for the purpose of preparing or issuing an auditor’s report or performing other audit, review or attest services, including the resolution of significant financial reporting issues between the external auditor and management. The external auditor will report directly to the Audit & Risk Committee. The Audit & Risk Committee will pre-approve all non-audit services undertaken by the external auditor.

Nominating and Governance Committee On or following Closing, the Board intends to appoint the members of the Nominating and Governance Committee, all of whom are expected to be “independent”. The Board will adopt a written charter for the Nominating and Governance Committee that sets out its areas of responsibility.

The Nominating and Governance Committee will be responsible for annual reviews of the Company’s mission and strategic direction. The Nominating and Governance Committee will provide an assessment of the effectiveness of the Board as a whole, each committee of the Board, and the contribution of each individual director. The Nominating and Governance Committee will oversee the nominations to the Board and corporate governance practices of the Company.

The principal responsibilities of the Nominating and Governance Committee will include assisting the Board in fulfilling its responsibilities in relation to: (i) the selection of senior management; (ii) professional development for senior management; (iii) the Company’s overall approach to governance; (iv) the size, composition and structure of the Board and its committees; (v) orientation and continuing education for directors; (vi) related party transactions and other matters involving conflicts of interest; (vii) the Company’s Code of Conduct and Ethics; (viii) the Company’s written whistleblower policy, disclosure policy and insider trading and confidentiality policy; (ix) review of directors and officers third party liability insurance proposals and coverage; and (x) any additional matters delegated to the committee by the Board.

Compensation Committee On or following Closing, the Board intends to appoint the members of the Compensation Committee, a majority of whom will be “independent”. The Board will adopt a written charter for the Compensation Committee that sets out its areas of responsibility.

The Compensation Committee will establish and oversee policies with respect to compensation of the senior management of the Company and the Board. The principal responsibilities of the Compensation Committee will include assisting the Board in fulfilling its responsibilities in relation to: (i) the retention and compensation of senior management; (ii) the compensation of the Board and its committees; and (iii) any additional matters delegated to the committee by the Board. At least two of the three members of the Compensation Committee will be “independent” (provided there are three members). The Company and the Board believe that the interests of the Compensation Committee are aligned with the interests of shareholders to ensure that the compensation process is objective and that the Company’s practices are designed to retain, motivate and reward senior management for performance and contribution to the Company’s long term success.

Assessment of the Board and Board Committees The members of the Board will collectively assess the performance of the Board as a whole and its individual members, as well as the effectiveness and contributions of each Board committee. Such assessment will occur annually with an emphasis on the overall effectiveness and contributions made by the Board as a whole and each committee of the Board. Evaluations will include the completion of written effectiveness surveys by directors and interviews with each director by the Executive Chairman of the Board. The results of such assessments and surveys will be presented by the Nominating and Governance Committee to the full Board.

116 External Auditor Service Fee The Company has accrued the following fees for services rendered in respect of the audits by PricewaterhouseCoopers LLP for the two fiscal years ended December 31, 2011 and December 31, 2010.

Period from Fiscal year ended May 18, 2010 to December 31, 2011 December 31, 2010(5) Audit Fees(1) ...... $295,000 $295,000 Audit Related Fees(2) ...... $ 28,200 — Tax Fees(3) ...... — — All Other Fees(4) ...... — — $323,200 $295,000

Notes: (1) “Audit Fees” include fees necessary to perform the annual audit of the consolidated financial statements. (2) “Audit-Related Fees” include fees for assurance and related services by the external auditor that are reasonably related to the performance of the audit or review of the Company’s financial statements other than those included in “Audit Fees”. (3) “Tax Fees” include fees for all tax services other than those included in “Audit Fees” and “Audit-Related Fees”. This category includes fees for tax compliance, tax advice and tax planning. (4) “Other Fees” include fees for products and services provided by the auditor other than those included above. (5) Excluding fees charged to Amalco by PricewaterhouseCoopers LLP.

PLAN OF DISTRIBUTION Pursuant to the Underwriting Agreement between the Company, the Selling Shareholders and the Underwriters, the Company and the Selling Shareholders have agreed to sell, and the Underwriters have agreed to purchase, as principals, on the Closing Date or such other date as may be agreed upon by the Company and the Underwriters, but not later than Š , 2012, Š Common Shares at the Offering Price, subject to compliance with all of the applicable legal requirements and to the conditions contained in the Underwriting Agreement.

The obligations of the Company and the Selling Shareholders to issue and sell, and of the Underwriters to purchase, the Common Shares are subject to compliance with all necessary legal requirements and to the terms and conditions contained in the applicable Underwriting Agreement. The obligations of the Underwriters under the Underwriting Agreement are several and not joint and may be terminated upon the occurrence of certain stated events. The Underwriters are however, severally obligated to take up and pay for all of Common Shares if any of Common Shares are purchased under the Underwriting Agreement. The Underwriters are not required to take up or pay for Common Shares covered by the Over-Allotment Option described below. The Company and the Selling Shareholders have agreed to indemnify the Underwriters against certain liabilities, including liabilities under Canadian securities legislation in certain circumstances, or to contribute to payments the Underwriters may be required to make because of such liabilities.

The Offering is being made in all of the provinces and territories of Canada. Common Shares will be offered in each of the provinces and territories of Canada through those Underwriters or their affiliates who are registered to offer Common Shares in such provinces and territories and such other registered dealers as may be designated by the Underwriters. There is currently no market through which Common Shares may be sold and prospective purchasers may not be able to resell Common Shares purchased under this prospectus.

Gateway has applied to list the Common Shares distributed under this prospectus on the TSX under the symbol “GTW”. Listing will be subject to Gateway fulfilling all the listing requirements of the TSX.

The Offering Price and other terms of the Offering were determined by negotiation between the Company, the Selling Shareholders and the Underwriters. The Company and the Selling Shareholder have agreed to pay the Underwriters an aggregate Underwriting Commissions of $ Š (or $ Š if the Over-Allotment Option is fully exercised), or $ Š per Common Share.

Subscriptions for Common Shares will be received subject to rejection or allotment in whole or in part and the Underwriters reserve the right to close the subscription books at any time without notice. An acquisition or disposition of a 5% or greater ownership or beneficial ownership of Common Shares requires the approval of our gaming

117 regulators. See “Description of Share Capital”. It is expected that the Closing will take place on the Closing Date, or such other date as may be agreed upon by the Company, its Selling Shareholders and the Underwriters, but not later than Š , 2012. One or more certificates representing Common Shares to be sold in the Offering will be issued in registered form to CDS, or to its nominee and deposited with CDS on the Closing Date. A prospective purchaser of Common Shares will receive only a customer confirmation from the registered dealer from or through which Common Shares are purchased. Common Shares Offered under this prospectus (other than any Common Shares purchased under the Over-Allotment Option) are to be taken up by the Underwriters, if at all, on a date not later than 42 days after the date of the receipt for this prospectus.

The Common Shares offered hereby have not been, and will not be, registered under the U.S. Securities Act, or any state securities laws, and may not be offered or sold within the United States absent registration or pursuant to an applicable exemption from the registration requirements of the U.S. Securities Act, and applicable state securities laws. Each Underwriter has agreed that it will not offer or sell Common Shares within the United States, except in transactions exempt from the registration requirements of the U.S. Securities Act and applicable state securities laws. The Underwriting Agreement provides that the Underwriters (through one or more of their affiliates) may re-offer and re-sell the Common Shares that they have acquired pursuant to the Underwriting Agreement to qualified institutional buyers in the United States in accordance with Rule 144A under the U.S. Securities Act. The Underwriting Agreement also provides that the Underwriters may offer and sell the Common Shares outside the United States in accordance with Regulation S under the U.S. Securities Act. In addition, until 40 days after the commencement of the Offering, an offer or sale of the Common Shares within the United States by any dealer (whether or not participating in the Offering) may violate the registration requirements of the U.S. Securities Act, unless such offer is made pursuant to an exemption from registration under the U.S. Securities Act.

Over-Allotment Option The Selling Shareholders have granted the Underwriters the Over-Allotment Option, exercisable in whole or in part from time to time, at the sole discretion of the Underwriters at any time until the date which is 30 days after the Closing Date, to purchase up to an additional Š Common Shares (representing 15% of Common Shares sold in this Offering), at the Offering Price, to cover over-allotments, if any. If the Over-Allotment Option is exercised in full, the total price to the public will be $ Š , the Underwriting Commissions will be $ Š and the net proceeds to the Selling Shareholders will be $ Š . This prospectus also qualifies the grant of the Over-Allotment Option and the distribution of Common Shares upon exercise of the Over-Allotment Option. A prospective purchaser who acquires Common Shares forming part of the Underwriters’ over-allocation position acquires those Common Shares under this prospectus, regardless of whether the over-allocation position is ultimately filled through the exercise of the Over- Allotment Option or secondary market purchases.

Price Stabilization, Short Positions and Passive Market Making In connection with the Offering, the Underwriters may over-allocate or effect transactions which stabilize, maintain or otherwise affect the market price of Common Shares at levels other than those which otherwise might prevail on the open market, including: stabilizing transactions; short sales; purchases to cover positions created by short sales; imposition of penalty bids; and syndicate covering transactions.

Stabilizing transactions consist of bids or purchases made for the purpose of preventing or retarding a decline in the market price of Common Shares while the Offering is in progress. These transactions may also include making short sales of Common Shares, which involve the sale by the Underwriters of a greater number of Common Shares than they are required to purchase in the Offering. Short sales may be “covered short sales”, which are short positions in an amount not greater than the Over-Allotment Option, or may be “naked short sales”, which are short positions in excess of that amount.

The Underwriters may close out any covered short position either by exercising the Over-Allotment Option, in whole or in part, or by purchasing Common Shares in the open market. In making this determination, the Underwriters will consider, among other things, the price of Common Shares available for purchase in the open market compared with the price at which they may purchase Common Shares through the Over-Allotment Option. The Underwriters

118 must close out any naked short position by purchasing Common Shares in the open market. A naked short position is more likely to be created if the Underwriters are concerned that there may be downward pressure on the price of Common Shares in the open market that could adversely affect prospective purchasers who purchase in the Offering.

In addition, in accordance with rules and policy statements of certain Canadian securities regulators, the Underwriters may not, at any time during the period of distribution, bid for, or purchase, Common Shares. The foregoing restriction is, however, subject to exceptions where the bid or purchase is not made for the purpose of creating actual or apparent active trading in, or raising the price of, Common Shares. These exceptions include a bid or purchase permitted under the by-laws and rules of applicable regulatory authorities and the TSX, including the Universal Market Integrity Rules for Canadian Marketplaces, relating to market stabilization and passive market making activities and a bid or purchase made for and on behalf of a customer where the order was not solicited during the period of distribution.

As a result of these activities, the price of Common Shares may be higher than the price that otherwise might exist in the open market. If these activities are commenced, they may be discontinued by the Underwriters at any time. The Underwriters may carry out these transactions on any stock exchange on which Common Shares are listed, in the over-the-counter market, or otherwise.

The Underwriters propose to offer Common Shares initially at the offering price specified on the cover page of this prospectus. After the Underwriters have made their best effort to sell all of Common Shares at the price specified on the cover page, the offering price may be decreased and may be further changed from time to time to an amount not greater than that set out on the cover page, and the compensation realized by the Underwriters will be decreased by the amount that the aggregate price paid by prospective purchasers for Common Shares is less than the gross price paid by the Underwriters to the Company and the Selling Shareholders, as applicable. Any such reduction in price will not affect the proceeds received by the Company or the Selling Shareholders.

Restrictions on the Sales of Common Shares Restrictions on the Company Under the Underwriting Agreement, the Company has agreed that without the prior consent of the Lead Underwriters, which consent shall not be unreasonably withheld or delayed, the Company will not, during the period ending 180 days after Closing, (i) offer, sell, issue, contract to sell, pledge or otherwise dispose of, directly or indirectly, any Common Shares, rights to purchase such Common Shares or any securities convertible into or exercisable or exchangeable for such Common Shares; or (ii) enter into any swap, hedge or any other agreement that transfers, in whole or in part, the economic consequences of ownership of Common Shares; whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of such Common Shares, or such other securities or interests, in cash or otherwise, or agree or, within such period, announce any intention to do so, other than Common Shares issuable under equity compensation plans of the Company.

Restrictions on Certain Shareholders The Underwriters have entered into lock-up agreements with certain parties, including the Selling Shareholders and certain directors and officers of the Company holding, in the aggregate, Š Common Shares (including securities convertible into Common Shares) representing approximately Š % of the outstanding fully-diluted Common Shares after giving effect to the Offering. Pursuant to these lock-up agreements, the persons subject to the lock-up agreements have agreed, subject to certain exceptions, including, in the case of the Selling Shareholder, a right to participate in the Over-Allotment Option, not to offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any Common Shares or securities convertible into or exchangeable or exercisable for any Common Shares, enter into a transaction which would have the same effect, or enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of Common Shares, without the prior written consent of the Lead Underwriters for a specified period of time following Closing, which consent will not be unreasonably withheld or delayed. The lock-up agreements with RBC and the Babson Funds will be effective for a period of 45 days following Closing and all other lock-up agreements will be for a period of 180 days following Closing. None of the Common Shares held by existing shareholders or Common Shares issued or sold pursuant to this prospectus will be subject to escrow conditions or restrictions on sale pursuant to National Policy 46-201 – Escrow for Initial Public Offerings.

119 RELATIONSHIP BETWEEN THE COMPANY AND CERTAIN UNDERWRITERS TD, BMO, J.P. Morgan, Macquarie, Morgan Stanley and Raymond James are affiliates of financial institutions that are members of a syndicate of lenders under the Existing Senior Secured Credit Facility available to the Company and affiliates of Scotiabank and Goldman Sachs beneficially own certain of Gateway’s outstanding Notes. In addition, each of the Lead Underwriters are affiliates of financial institutions that are members of a syndicate of lenders that intend to participate as lenders under the New Senior Secured Credit Facility available to the Company. An affiliate of Goldman Sachs holds an approximate 7% indirect equity interest in the Company through CFLP III, and affiliates of Macquarie directly or indirectly own or manage a 1% interest in the Common Shares of the Company. Accordingly, in connection with the Offering and pursuant to applicable securities legislation, the Company may be considered a “connected issuer” of each of the foregoing Underwriters for the purposes of securities regulations in certain provinces and territories of Canada.

Gateway intends to use a portion of the net proceeds from the Offering to repay amounts outstanding under the Existing Senior Secured Credit Facility and the Notes. Upon Closing, the Company expects to be indebted to affiliates of the Lead Underwriters under the New Senior Secured Credit Facility for $ Š million and the Notes for $ Š million. For a description of the material terms, including security granted, of the Existing Senior Secured Credit Facility, the New Senior Secured Credit Facility and the Notes, see “Description of Our Indebtedness”.

Gateway is in compliance with the Existing Senior Secured Credit Facility and the Indenture. None of the affiliated financial institutions listed above were involved in the decision to undertake the Offering nor were involved in the determination of the terms of the Offering, including structure and pricing. As a consequence of the Offering, the above Underwriters will receive a commission in respect of Common Shares sold through the Underwriters. See “Use of Proceeds”.

The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include sales and trading, commercial and investment banking, advisory, investment management, investment research, principal investment, hedging, market making, brokerage and other financial and non-financial activities and services. Certain of the Underwriters and their respective affiliates have, from time to time, performed, and may in the future perform, various financial advisory and investment banking services for the Company, for which they received or will receive customary fees. In the ordinary course of their various business activities, the underwriters and their respective affiliates, officers, directors and employees may purchase, sell or hold a broad array of investments and actively trade securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments for their own account and for the accounts of their customers, and such investment and trading activities may involve or relate to assets, securities and/or instruments of the issuer (directly, as collateral securing other obligations or otherwise) and/or persons and entities with relationships with the issuer. The underwriters and their respective affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such assets, securities or instruments and may at any time hold, or recommend to clients that they should acquire, long and/or short positions in such assets, securities and instruments.

CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS In the opinion of Bennett Jones LLP, counsel to the Company, and McCarthy Tétrault LLP, counsel to the Underwriters, the following summary fairly describes, as at the date hereof, the principal Canadian federal income tax considerations under the Income Tax Act (Canada) (the “Tax Act”) generally applicable to a purchaser who acquires Common Shares pursuant to the Offering and who, for the purposes of the Tax Act and at all relevant times, holds such Common Shares as capital property, is not affiliated with the Company or the Underwriters, and deals with the Company and the Underwriters at arm’s length (a “Holder”). A Common Share will generally be capital property to a Holder unless it is held in the course of carrying on a business or has been acquired in a transaction or transactions considered to be an adventure or concern in the nature of trade.

This summary does not apply to a Holder (i) an interest in which is a “tax shelter investment” (as defined in the Tax Act), (ii) that is a “financial institution” for purposes of certain rules applicable to any income, gain or loss arising from a “mark-to-market property” (each as defined in the Tax Act), (iii) that is a “specified financial institution” (as defined in the Tax Act), or (iv) that has elected to determine its Canadian tax results in a foreign currency pursuant to the functional currency rules contained in the Tax Act. Such Holders should consult their own tax advisors with respect to the tax consequences of acquiring Common Shares pursuant to the Offering.

120 This summary is based on the current provisions of the Tax Act and the regulations thereunder, all specific proposals to amend the Tax Act and the regulations thereunder publicly announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof (the “Tax Proposals”), and counsel’s understanding of the current published administrative and assessing practices and policies of the Canada Revenue Agency. This summary assumes that the Tax Proposals will be enacted in the form proposed, although no assurance can be given that the Tax Proposals will be enacted in the form proposed or at all. Except for the Tax Proposals, this summary does not take into account or anticipate any changes in law or administrative practice, whether by judicial, legislative, governmental or administrative decisions or action, nor does it take into account provincial, territorial or foreign income tax legislation or considerations, which may differ significantly from the Canadian federal income tax considerations discussed herein. This summary is also based on the facts set out in this prospectus and representations made by management of the Company to counsel as to certain factual matters.

This summary is of a general nature only and is not exhaustive of all possible Canadian federal income tax considerations applicable to an investment in Common Shares. The tax consequences of acquiring, holding and disposing of Common Shares will vary according to the status and circumstances of the particular prospective purchaser of Common Shares. This summary is not intended to be, nor should it be construed to be, legal or tax advice to any particular prospective purchaser and no representations with respect to the income tax consequences to any particular prospective purchaser of Common Shares are made. Accordingly, prospective purchasers of Common Shares should consult their own tax advisors about the tax consequences to them of acquiring, holding and disposing of Common Shares in their own circumstances.

Taxation of Resident Holders The following portion of this summary applies to a Holder who, at all relevant times and for purposes of the Tax Act and any applicable tax treaty or convention, is or is deemed to be resident in Canada (a “Resident Holder”).

Dividends on Common Shares received or deemed to be received by a Resident Holder who is an individual (other than certain trusts) will be included in the Resident Holder’s income and will be subject to the gross-up and dividend tax credit rules under the Tax Act generally applicable to taxable dividends received from taxable Canadian corporations, including an enhanced dividend tax credit to the extent the Company designates a dividend on Common Shares as an “eligible dividend” in accordance with the Tax Act. Dividends received or deemed to be received on Common Shares by a Resident Holder that is a corporation will be included in its income and will generally be deductible in computing its taxable income to the extent and in the circumstances provided for in the Tax Act. A Resident Holder that is a “private corporation” or a “subject corporation” (each as defined in the Tax Act) may be liable to pay a 33 1⁄3% refundable tax on dividends received on Common Shares to the extent such dividends are deductible in computing taxable income.

A Resident Holder will generally realize a capital gain (or loss) on a disposition or deemed disposition of Common Shares (other than to the Company) to the extent that the proceeds of disposition exceed (or are less than) the aggregate of the adjusted cost base of Common Shares to the Resident Holder immediately before the disposition and any reasonable costs of disposition. A Resident Holder’s adjusted cost base of a Common Share will be averaged with the cost to the Resident Holder of all other Common Shares held as capital property at that time.

Generally, one-half of any capital gain (a “taxable capital gain”) realized by a Resident Holder in a taxation year must be included in computing such Resident Holder’s income for that taxation year, while one-half of any capital loss (an “allowable capital loss”) realized by a Resident Holder in a taxation year is deductible against any taxable capital gains realized by the Resident Holder in that taxation year. Allowable capital losses in excess of taxable capital gains realized in a taxation year may be carried back and deducted in any of the three preceding taxation years, or carried forward and deducted in any subsequent taxation year, against net taxable capital gains realized in such years, in the circumstances and to the extent permitted under the Tax Act. If the Resident Holder is a corporation, a capital loss realized on the disposition of a Common Share may be reduced by the amount of any dividends received or deemed to be received on such Common Share. Similar rules may apply where a Common Share is owned by a partnership or certain trusts of which a corporation, partnership or trust is a member or beneficiary.

A Resident Holder that is throughout the year a “Canadian-controlled private corporation” (as defined in the Tax Act) will be liable for an additional 6 2⁄3% refundable tax on its “aggregate investment income” (as defined in the Tax Act), which includes taxable capital gains.

121 Resident Holders who are individuals, including certain trusts, may be subject to alternative minimum tax as a consequence of receiving or being deemed to receive dividends on Common Shares or realizing a capital gain on the disposition or deemed disposition of Common Shares, depending on their circumstances.

Non-Resident Holders The following portion of this summary applies to a Holder who, at all relevant times and for purposes of the Tax Act, is neither resident in Canada nor deemed to be resident in Canada (including as a consequence of an applicable tax treaty or convention) and who does not use or hold, and is not deemed to use or hold, Common Shares in connection with carrying on business in Canada (a “Non-Resident Holder”). The following portion of this summary does not apply to a Non-Resident Holder who is an insurer who carries on business in Canada and elsewhere or to an “authorized foreign bank” (as defined in the Tax Act).

Dividends on Common Shares that are paid or credited, or deemed to be paid or credited, to a Non-Resident Holder will be subject to Canadian withholding tax at a rate of 25%, subject to reduction of such rate under an applicable income tax treaty or convention. Under the Canada-United States income tax treaty, the rate of withholding tax on dividends paid by a Canadian corporation to the beneficial owner of such dividends that is a resident of the United States for purposes of the treaty, and who qualifies for the benefits of the treaty, is generally reduced to 15%.

A Non-Resident Holder will not generally be subject to tax on any capital gain realized on the disposition of a Common Share unless the Common Share is “taxable Canadian property” (as defined in the Tax Act) of the Non-Resident Holder at the time of disposition. Provided Common Shares are listed on a designated stock exchange (which includes the TSX) at the time of disposition, a Common Share will generally not constitute “taxable Canadian property” of a Non-Resident Holder at the time of disposition unless (i) at any particular time during the 60-month period immediately preceding the disposition 25% or more of the issued shares of any class of the Company were owned by or belonged to any combination of the Non-Resident Holder and persons with whom the Non-Resident Holder did not deal at arm’s length for purposes of the Tax Act, and more than 50% of the value of the share was derived, directly or indirectly, from one or any combination of (a) real or immovable property situated in Canada, (b) “Canadian resource properties” (as defined in the Tax Act), (c) “timber resource properties” (as defined in the Tax Act), or (d) options in respect of, or interests in, or for civil law rights in, any property described in (a) to (c), or (ii) the Common Share is deemed to be “taxable Canadian property” of the Non-Resident Holder under certain provisions of the Tax Act which generally apply where a share is received in a tax-deferred exchange for property that was “taxable Canadian property”.

Even if a Common Share is taxable Canadian property to a Non-Resident Holder, any capital gain realized on the disposition of such Common Share may not be subject to tax under the Tax Act if such gain is exempt from Canadian tax pursuant to the provisions of an applicable income tax treaty or convention. Non-Resident Holders to whom the Common Shares may be taxable Canadian property should consult their own tax advisors.

ELIGIBILITY FOR INVESTMENT In the opinion of Bennett Jones LLP, counsel to the Company, and McCarthy Tétrault LLP, counsel to the Underwriters, based on the current provisions of the Tax Act and the regulations thereunder, provided the Common Shares are listed on a designated stock exchange (which includes the TSX), the Common Shares will be qualified investments under the Tax Act for trusts governed by a registered retirement savings plan (“RRSP”), registered retirement income fund (“RRIF”), registered education savings plan, registered disability savings plan, deferred profit sharing plan or tax-free savings account (“TFSA”), all as defined in the Tax Act.

Notwithstanding that Common Shares may be qualified investments for a trust governed by a RRSP, RRIF or TFSA, the annuitant or holder of a RRSP, RRIF or TFSA that holds Common Shares will be subject to a penalty tax if Common Shares constitute a “prohibited investment” (as defined in the Tax Act) for the trust. Common Shares will not be a “prohibited investment” for a trust governed by a RRSP, RRIF or TFSA provided the annuitant or holder of such RRSP, RRIF, or TFSA , as the case may be, deals at arm’s length with the Company for purposes of the Tax Act and does not have a “significant interest” (as defined in the Tax Act) in the Company, or in a corporation, partnership or trust with which the Company does not deal at arm’s length for purposes of the Tax Act.

122 RISK FACTORS The acquisition of the Common Shares involves significant risk. Any prospective purchaser should carefully consider the following risk factors and all of the other information contained in this prospectus before purchasing any Common Shares. If any event described in these risk factors occurs, the Company’s assets, liabilities, business, prospects, financial condition, results of operations and/or cash flows could be adversely affected. In that case, the trading price of the Common Shares could decline and prospective purchasers could lose all or part of their investment in the Common Shares. Additional risks and uncertainties not currently known to the Company, or that are currently considered immaterial, may also materially and adversely affect the Company’s business operations.

Risks Related to our Business The gaming industry is highly competitive and we may lose market share to our competitors. We compete with numerous gaming establishments of varying quality and size in the regions where our properties are located. We also compete with other non-gaming resorts and vacation areas, other entertainment businesses and to a limited extent, on-line gaming, and could compete with any new forms of gaming that may be legalized in the future. The casino and entertainment businesses are characterized by competitors that vary considerably in size, quality of properties, number of operations, brand identities, marketing and growth strategies, financial strength and capabilities, level of amenities, management talent and geographic diversity. In most of our regions, we compete directly with other casino properties operating in the immediate and surrounding regions, and in some regions we face competition from nearby regions.

In recent years, with fewer new gaming regions in Canada for development, competition in existing markets has intensified. As a result, we and many other casino operators have invested in expanding our existing properties. The expansion and the aggressive marketing strategies of our competitors have increased competition in many of the markets in which we compete, and this intense competition can be expected to continue.

If our competitors operate more successfully, if competitors’ properties are enhanced or expanded, or if additional hotels and casinos are established in and around the locations in which we conduct business, we may lose market share. In particular, the expansion of casino gaming in or near any geographic area from which we attract or expect to attract a significant number of our customers could have a significant adverse effect on our business, financial condition and results of operations. See “Property Overview”.

Our casino gaming revenue is concentrated in the Greater Vancouver Region which makes the Company especially subject to economic and competitive risks associated with the conditions in the that area. Because our revenue and profits are primarily derived from the Greater Vancouver Region, we are subject to greater risks from local conditions than a gaming company with more geographically diverse operations. A decrease in revenue from, or increase in costs for, our casinos located in the Greater Vancouver Region is likely to have a proportionally higher impact on our business, financial condition and results of operations than it would for a gaming company with revenue generated from more geographically diverse operations.

More generally, our business results are related to the economic and competitive conditions in the regions we operate in, and any downturn in the economic conditions or increase in competition in these regions will have a material adverse effect on our business, financial condition and results of operations.

Our business is subject to extensive governmental gaming regulation in British Columbia and Alberta. Although management believes that our interests are aligned with the GPEB, BCLC and AGLC, changes to the regulatory regime governing our business, our inability to renew the contracts governing our gaming operations or our inability to obtain new casino licenses could adversely affect us.

Regulatory Regime The conduct of gaming is, to the extent permitted by the Criminal Code of Canada, within the authority of the provincial and territorial governments. Gaming in the provinces in which we currently operate (British Columbia and

123 Alberta) is highly regulated. The GPEB, BCLC and AGLC have been granted powers to oversee aspects of the gaming industry by the provincial governments. There can be no guarantee that the GPEB, the BCLC and the AGLC will not adopt policies that have the effect of restricting gaming and the involvement of, or the profitability of, casino operators. Possible restrictions could include the hours/days of gaming operations, restrictions on advertising, betting limits, the number of tables or slot machines permitted, ages of permitted gamblers, casino locations and the future availability of and/or the amount of additional commission available for future capital expenditures under the Facility Development Programs. In addition, the provincial governments in British Columbia and Alberta may also enact legislation of a public policy or social benefit nature (such as responsible gaming legislation), or there may be changes in the jurisprudence that relate to the operation of the gaming industry that could have a material adverse effect on our business, financial condition and results of operations.

In British Columbia, we currently receive additional commissions through the BCLC’s Facility Development Program for capital expenditures related to developing and improving our casinos. Although we expect past expenditures not yet submitted to the BCLC and future capital expenditures to be eligible to earn additional commissions, there can be no assurance that this will be the case. In the event the BCLC does not qualify our capital expenditures or changes the FDC program, it may adversely impact our business, financial condition and results of operation or otherwise finance these expenditures.

Contracts and Licenses Related to our Gaming Operations Our gaming operations in British Columbia are conducted pursuant to operational services agreements with the BCLC. The MCOSA allows us to operate each casino for a specified term, with an option to renew at the end of such term.

Our CGCs in British Columbia are operated pursuant to two CGCOSAs and a BOSA with the BCLC. Under the CGCOSAs and the BOSA, we provide the premises required and perform operational services for a specified term, with an option to renew at the end of such term.

The criteria for renewal under the MCOSA, CGCOSAs and BOSA (the “BCLC Operational Agreements”) are transparent and capable of being satisfied unless we are in breach of the BCLC Operational Agreements. Nevertheless, a breach of the BCLC Operational Agreements could result from certain specified reasons including non-performance, bankruptcy or insolvency. As a result of such a breach, the BCLC could suspend or terminate our right to provide the operational services under the BCLC Operational Agreements. Suspension or termination of the BCLC Operational Agreements would result in the loss of our ability to conduct business at our casinos located in British Columbia. In addition, BCLC may also claim under the indemnities we provide to them under the BCLC Operational Agreements, for any liability they may suffer from our operations. The occurrence of any of these events could have a significant adverse effect on our business, financial condition and results of operations.

In the Edmonton Region, each of our casinos can only be operated under casino facility licenses granted by the AGLC. Although we have no reason to believe we will not satisfy the conditions for reissuance of our licenses upon expiry due to our alignment of interests with the AGLC, there can be no guarantee that the casino facility licenses under which our Alberta casinos operate will be reissued, or, if reissued, that they will be on the same or as favourable terms as the existing casino facility licenses. The AGLC has enforcement powers with respect to licenses and may impose conditions or fines or suspend or cancel a casino facility license for certain reasons, including non-performance or breach and bankruptcy or insolvency. Although it has not been the practice of the AGLC to cancel licences, certain of our casino facility licences with the AGLC can be cancelled upon seven days notice. Suspension or cancellation of such licences could have a significant adverse effect on our business, financial condition and results of operations.

Registration and Reporting Requirements The CGA, GLA and our operating agreements with the BCLC impose general and specific reporting and disclosure requirements, including the obligation to provide information pertaining to our financing arrangements and shareholders. The GPEB, the BCLC and the AGLC, as applicable, require the Company to submit to background investigations, comply with standard operating rules, identify our creditors and submit detailed financial and operating reports. We are required to deliver advance notice to, and obtain the approval from, gaming regulators for the acquisition or disposition of our Common Shares above a 5% threshold, or such other amount as may be established by

124 the gaming regulators from time to time, and for changes to our directors, officers or interest holders. Further, through the MCOSA, the BCLC restricts share ownership of our Common Shares without approval from the BCLC. No person or group of persons acting jointly or in concert may hold or beneficially own a Significant Interest without prior written consent of the BCLC. In addition, any person or group of persons acting jointly or in concert holding or beneficially owning, either directly or indirectly, a Significant Interest in our Common Shares must obtain the BCLC consent prior to disposing or acquiring Common Shares or disposing of any part of that interest if such disposition or acquisition would result in a change of control of the Company. Under its articles, as amended, the Company will be able to enforce the restrictions by placing stop transfers on the Common Shares, suspending all voting and dividend and other distribution rights on the Common Shares and seeking injunctive or other relief. Persons acquiring or disposing of our Common Shares above a certain threshold may be required to be submitted to an investigation and be registered by the gaming regulators. This may affect the pricing and liquidity of the Common Shares in the secondary market, should one exist. See “Description of Share Capital”.

The GPEB or the AGLC, as applicable, may determine that a holder or beneficial owner of Common Shares must be registered, obtain a license, consent, qualification or finding of suitability under applicable gaming laws or operating agreements. If the GPEB or the AGLC, as applicable, determine not to register, license, give a consent to or qualify a holder or beneficial holder of Common Shares, or find that a holder or beneficial holder of Common Shares is not suitable (or such suitability is revoked), the Company will be able to, pursuant to the terms of its articles, place a stop transfer of the Common Shares, suspend all voting and distribution rights on the Common Shares and seek injunctive or other relief.

In addition, the GPEB and the AGLC have statutory authority to require holders of Common Shares to disclose certain information. While the gaming regulators have not exercised this authority to require such disclosure, there can be no assurance that the GPEB or AGLC would not require such disclosure at any time, which requirement may be triggered by the amount of Common Shares held by such holder or other factors. Also, we may be required to provide the GPEB, the BCLC and the AGLC with a list of holders of the Common Shares.

The Offering of Common Shares may trigger a change of control or other similar rules under applicable gaming regulations and operating agreements that may require the prior approval or consent of the GPEB, the BCLC or the AGLC. Although the Company does not foresee any difficulties with obtaining prior approval or consent, there is no guarantee that such approval or consent will be granted.

At any time, the GPEB, the BCLC or the AGLC, as applicable, may conduct inspections to monitor our compliance with legislation, regulations, rules and conditions of registration and operating agreements. We may be subject to disciplinary action by the GPEB, or AGLC or other action under our operating agreements if the GPEB, the BCLC or the AGLC inform us that a person is unsuitable to have a relationship with us and we fail to pursue all lawful efforts to require compliance with gaming control legislation or our operating agreements. If we are unable to comply with any current or future reporting or registration requirement, our registrations as a gaming service provider may be suspended or revoked which would adversely affect our business.

The GPEB, the BCLC or the AGLC may, as applicable, refuse to issue or renew our registration, licences or renew the terms of our operating agreements, for reasons including if we, or one of our directors, officers, employees or associates (i) is considered to be a detriment to the integrity of gaming; (ii) no longer meets a licensing or registration requirement; (iii) has breached a condition of licensing or registration or an operational agreement with a lottery corporation; (iv) has made a material misrepresentation to gaming regulators; (v) has been refused a similar license or registration in another jurisdiction; (vi) has held a similar license or registration, or license which has been suspended or cancelled; or (vii) has been convicted of an offence that calls into question our integrity.

Ability to Obtain Additional Casino Licenses or Operating Agreements Any new casino to be operating by us will require a casino facility license from the AGLC (in the case of a casino in Alberta) or the entering into or amendment of a BCLC Operational Agreement (in the case of a gaming facility in British Columbia). The process for obtaining a new license or operating agreement is complex and we anticipate that there would be intense competition for new licenses or operating agreements. There can be no guarantee that the AGLC will grant a new license or that the BCLC will agree to enter into or amend a BCLC Operational Agreement for any new gaming facility that we might propose in the provinces of Alberta or British Columbia in the future. Failure to

125 obtain these licenses or agreements or amendments would potentially limit our growth, thereby adversely affecting our growth potential. In addition, if we were to expand our business to other provinces and territories in Canada or other jurisdictions, we would be required to comply with the regulatory regimes of such provinces and territories or jurisdictions and obtain licenses to operate therein. As in Alberta and British Columbia, the process for regulatory approval and the obtaining of a new license or operating agreement is complex and there is intense competition for new licenses or operating agreements. Consequently, there can be no assurance that we will be able to expand our business into other provinces and territories or other jurisdictions.

The timely and successful completion of the development of the South Surrey Property is subject to regulatory and municipal approvals and the Company may not be able to determine when, or if, the necessary approvals will be granted. The successful expansion of our gaming operations involves significant risks. Under the GCA, development of a gaming facility requires, among other things, a proposal from the BCLC to develop a gaming facility on site and the approval of the host local government under the GCA. While Surrey City Council has already approved third reading of a proposal to rezone the South Surrey Property to permit commercial development including a gaming facility (casino), BCLC has not at this time decided to propose the development of a gaming facility at the South Surrey Property, and any development of a gaming facility will also require the prescribed approval of the City of Surrey required under the GCA. In addition, fourth reading from Surrey City Council to complete the rezoning and the issuance of a general development permit is required, and further development on the property will require additional discussions with the City of Surrey in order to develop the property in accordance with their by-laws. Development of the South Surrey Property is therefore contingent upon receiving and maintaining all regulatory licenses, permits, approvals, registrations, and findings of suitability. The timely and successful completion of the South Surrey Property is subject to a number of regulatory and municipal approvals and the Company may not be able to determine when, or if, the necessary approvals will be granted. If the BCLC does not propose a gaming facility on the South Surrey Property, or if any of the other necessary regulatory and municipal approvals are not obtained, it may have a material adverse effect on the Company’s results of operations and future prospects.

A significant portion of our labour force is covered by collective bargaining agreements. Wage and/or benefit increases resulting from new collective bargaining agreements or our inability to reach an agreement with the unions could have an adverse impact on our operations. Approximately 57% of our 3,000 employees are covered by collective bargaining agreements which must be renegotiated every few years. Currently three out of our seven collective agreements have expired and will be subject to renegotiation. Strikes, lockouts, work stoppages or similar actions could restrict our ability to operate our properties and service our customers and may negatively impact customer experience and access. In addition, wage and benefit increases resulting from new labour agreements and the certification of additional bargaining units at our properties could have an adverse impact on our results of operations. See “Regulatory Environment – Human Resources”.

Renewal of lease agreements for our properties may not be obtained or if obtained, may be on less favourable terms. A majority of the Company’s properties operate out of premises that are leased under lease agreements. There is a risk that the Company may not be able to negotiate lease renewals with landlords on terms that are commercially reasonable or acceptable to the Company.

The Baccarat Casino opened in October of 1996. We lease the premises under a five-year agreement. The current term expires on June 22, 2015 and has a five-year renewal period. Under the lease, the landlord has the right to terminate the lease upon two years-notice in order to redevelop the land. Upon such termination the landlord must pay the Company a termination fee of $4 million unless the landlord agrees to construct new casino premises which are leased by the Company. If a casino is part of such redevelopment and certain other conditions are met, the Company would have the option to lease such casino, and if the Company leased such casino, it would not be entitled to the termination fee.

There can be no assurance that the lease for the Baccarat Casino will be renewed or that any termination fee received by the Company will be sufficient to relocate and continue operating the Baccarat Casino in a timely manner or at all. This could negatively affect the business and the Company’s results of operations.

126 We may have potential undiscovered liabilities and capital expenditures associated with acquisitions. In connection with acquisitions made by the Company, there may be liabilities such as environmental liabilities (such as liabilities related to the presence or migration of contaminants at or from our properties), which the Company failed to discover or was unable to quantify in its due diligence conducted prior to the respective closing dates and the Company may not be indemnified for some or all of these liabilities. The discovery of any material liabilities could have a material adverse effect on the Company’s business, financial condition or future prospects.

Although the vendors in the Company’s acquisitions may have agreed to indemnify the Company for certain losses, there is no assurance that such vendors will have sufficient funds available to satisfy the indemnities if called upon to do so.

Current global economic conditions may have a material adverse effect on our business, financial condition and results of operations. Recent global economic conditions have resulted in tighter credit conditions and recession in most major economies continuing into 2012. The Canadian economy, and in particular the Alberta and British Columbia however, have not been as adversely impacted by these economic conditions as the economies of the United States and other industrialized countries. Although we have not been as adversely affected by these recent economic conditions as other gaming companies across North America, these conditions may impact our business in a number of ways in the future. For example, if the current global economic conditions continue or worsen, discretionary consumer spending in the British Columbia and Alberta economies may be adversely affected and our revenue may decrease while some of our costs would remain fixed or increase. As we cannot accurately predict how prolonged this global economic downturn may be, any current negative impact on our business, financial condition and results of operations may continue or worsen in the future. Additionally, if we were to require access to the capital markets in the future, there can be no assurance that we will be able to secure financing.

We are dependent upon technology services and electrical power to operate our business, and if we experience damage or service interruptions, we may have to cease some or all of our operations, resulting in a decrease in revenue. Our gaming operations rely heavily on technology services and an uninterrupted supply of electrical power. Our security system and all slot machines are controlled by computers and reliant on electrical power to operate. Without electrical power or the supply of technology services needed to run our computers, we may be unable to conduct all or parts of our gaming operations. Any unexpected interruption in our technology services or our electrical power supply is likely to result in an immediate, and possibly substantial, loss of revenue due to a shutdown of our gaming operations. Although our systems have been designed around industry-standard architectures to reduce downtime in the event of outages or catastrophic occurrences, they remain vulnerable to damage or interruption from earthquakes, floods, fires, power loss, telecommunication failures, terrorist attacks, computer viruses, computer denial-of-service attacks and similar events.

Our current gaming management system is outdated and is due to be replaced by the technologically new GMS currently being implemented by the BCLC. There can be no assurance that the new GMS will be implemented or will deliver the anticipated functionality or benefits.

Our revenue may be negatively impacted by volatility in our hold percentage (the ratio of net win to total amount wagered). Gaming revenue is recorded as the difference between gaming wins and losses or net win from gaming activities. Net win is impacted by variations in the hold percentage (the ratio of net win to total amount wagered), or actual outcome, on slot machines, table games and all other games we provide to our customers. We use the hold percentage as an indicator of a game’s performance against its expected outcome. Although each game generally performs within a defined statistical range of outcomes, actual outcomes may vary for any given period. The hold percentage and actual outcome on our games can be impacted by the level of a customer’s skill in a given game, errors made by our employees, the number of games played, faults within the computer programs that operate slot machines and the random nature of slot machine payouts. If our games perform below their expected range of outcomes, our cash flow and profitability may suffer.

127 In particular, high-limit table play can be subject to significant short-term volatility due to the deviation between the actual and theoretical win rates. Since the size and volume of the bets placed by high-limit players can be significant, this volatility may result in short-term losses by our casinos. While over the long-term we expect high-limit table game hold to even out to theoretical hold percentages, an increase in table limits and high-limit players may increase short-term casino losses and have a significant adverse affect on our business, financial condition and results of operations.

If we have a fair value impairment in a business segment, our net earnings and net worth could be materially and adversely affected by a write-down of intangible assets or fixed assets. We conduct an impairment analysis at the end of each reporting period when events or changes in circumstances indicate that the carrying amount may not be recoverable. This analysis requires our management to make significant judgments and estimates, primarily regarding expected growth rates, the terminal value calculation for cash flow and the discount rate. We determine expected growth rates based on internally developed forecasts, which consider our future financial plans. We establish the terminal cash flow value based on expected growth rates, capital spending trends and investment in working capital to support anticipated sales growth. We estimate the discount rate used based on an analysis of comparable company weighted average costs of capital, which consider market assumptions obtained from independent sources. The estimates that our management uses in this analysis could be materially impacted by factors such as specific industry conditions, changes in cash flow from operations and changes in growth trends. In addition, the assumptions our management uses are management’s best estimates based on projected results and market conditions as at the date of testing. Significant changes in these key assumptions could result in indicators of impairment when completing the annual impairment analysis. We remain subject to future financial statement risk in the event that goodwill or other identifiable intangible assets become impaired. For further discussion of key assumptions in our critical accounting estimates, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Application of Critical Accounting Estimates”.

Our efforts to grow through the acquisition and development of new gaming operations may not be successful. The acquisition and development of our gaming operations involves significant risks and is dependent on the ability of the Company to identify, acquire and develop suitable sites for potential development of new properties or acquisition of existing properties in both new and existing markets. The cost of acquiring or developing a new property is substantial, but its success it not assured. The expansion of our gaming operations is also contingent upon receiving and maintaining all regulatory licenses, permits, approvals, registrations, and findings of suitability. The timely and successful completion of any acquisition or capital development is subject to regulatory and municipal approvals and the Company may not be able to determine when, or if, the necessary approvals will be granted.

We will be subject to all operating risks common to the hotel business, which may adversely affect our hotel occupancy and rental rates. A portion of our revenue is derived from our hotel and convention services. The hotel business is highly competitive and may be subject to greater volatility than our gaming business. While our hotel business represents a small portion of our operations, operating risks common to the hotel business could adversely affect hotel occupancy and the rates that can be charged for hotel rooms, as well as increase our operating expenses. Such risks generally include, among other things: Š competition from existing hotels in our region and new hotels entering our region, particularly those providing convention services; Š reduced business and leisure travel; and Š the quality and performance of the managers and other staff of our hotel.

This competition may affect our occupancy and rental rates and have an adverse effect on our business, financial condition and results of operations.

Changes to our customer base may adversely affect our business and result of operations. We cater to our local regions by providing entertainment suited to the demographics of each local region to maximize customer retention and secure repeat visitors. The Greater Vancouver Region is a stable, locals-driven

128 region. While our business in the Thompson-Okanagan Region is primarily generated from local residents, we also benefit from seasonal tourism, as the region is a popular tourist destination. The Edmonton Region profits from a stable demographic of customers with relatively high disposable income. We cannot predict what changes our customer demographics may undergo in the future, and such changes or our potential inability to cater to those changes may have an adverse effect on our business, financial condition and results of operations.

We face the risk of fraud or cheating commonly faced by the gaming business, which could adversely affect our results of operations. Players in our casino may commit fraud or cheat in order to increase their winnings. Acts of fraud or cheating could involve the use of counterfeit chips or other tactics, possibly in collusion with our employees. Internal acts of cheating could also be conducted by employees through collusion with dealers, surveillance staff, floor managers or other casino or gaming area staff. Failure to discover such acts or schemes in a timely manner would negatively impact our gaming revenue. In addition, negative publicity related to such schemes could have an adverse effect on our reputation and have a significant adverse effect on our business, financial condition and results of operations.

Municipal restrictions or prohibitions may affect our gaming operations. Several of our gaming operations are located in British Columbia. Municipalities in British Columbia have the right to restrict or prohibit gaming properties, including slot machines, within their boundaries. In the event that the host municipality passes a by-law or zoning change prohibiting or restricting gaming properties, the Company’s business, financial conditions and future prospects would be adversely effected.

From time to time, we are a defendant in a variety of litigation matters that may cause us to pay damages if we are unsuccessful in defending against the actions or unable to cover damages with insurance proceeds. We are involved, from time to time, in a variety of litigation arising out of our business, including actions related to patron claims, labour and employees, BCLC’s Voluntary Self-Exclusion Program and other operational matters. We establish reserves for matters in which losses are probable and can be reasonably estimated. While we believe that we have established adequate accruals for our expected future liability with respect to our pending legal actions and proceedings, our liability with respect to any such action or proceeding may exceed our established accruals. There can be no assurance that our established accruals or insurance will cover all claims that may be asserted against us. Should any final judgments or settlements not be adequately covered by our established accruals or insurance, such uncovered losses could increase our costs and thereby lower our profitability.

The Company may not have or be able to obtain adequate insurance to cover all risks incident to the Company’s business. The Company currently maintains customary insurance of the types and amounts consistent with prudent industry practice; however, the Company is not fully insured against all risks incident to the Company’s business. The Company is not obliged to maintain any such insurance if it is not available on commercially reasonable terms. There can be no guarantee that such insurance coverage will be available in the future on commercially reasonable terms or at commercially reasonable rates or that the amounts for which the Company is insured, or the proceeds of such insurance, will compensate the Company fully for the Company’s losses. In addition, the insurance coverage obtained with respect to the Company’s business and facilities will be subject to limits and exclusions or limitations on coverage that are considered by management to be reasonable, given the cost of procuring insurance and current operating conditions. There can be no assurance that the insurance proceeds received by the Company in respect of a claim will be sufficient in any particular situation to fully compensate the Company for losses and liabilities suffered. If a significant accident or event occurs that is not fully insured, it could adversely affect the Company’s results of operations, financial position or cash flows.

We have existing indebtedness which could affect our business given our company must be in compliance with debt covenants and make payments on our indebtedness. The New Credit Agreement imposes covenants and obligations on the Company. The New Credit Agreement contains restrictions upon distributions by the Company when certain financial tests are not satisfied. There is a risk

129 that a breach in complying with such covenants and obligations may cause a default under the New Credit Agreement. The restrictions on distributions, as well as the consequences of a default and the lenders realizing on their security, would result in the Company being unable to make dividend payments to shareholders.

The New Senior Secured Credit Facility is made available at floating rates of interest. The Company may enter into “swaps” or hedging agreements to fix the rate of interest for the loans thereunder for fixed periods. In the event the Company does not hedge and there is an increase in the base reference interest rates or discount rates, the Company’s interest expense will increase and could have an adverse effect on the amount of cash available for dividend payments to shareholders.

Risks Related to this Offering There is no existing market for the Common Shares and one may not develop to provide adequate liquidity. Prior to this Offering, there has been no public market for the Common Shares. An active and liquid market for the Common Shares may not develop following the completion of the Offering or, if developed, may not be maintained. If an active trading market does not develop, it may be difficult to sell Common Shares at a profitable price, if at all. The Offering Price will be determined by negotiation between the Company, the Selling Shareholders and the Underwriters based upon a number of factors and may not be indicative of prices that will prevail following the completion of the Offering. The market price could decline below the Offering Price, and prospective purchasers may not be able to resell their Common Shares at or above the Offering Price. In addition, the share ownership notification and approval required by our regulators and articles may adversely affect investor interest in and liquidity and price of our Common Shares.

The price of the Common Shares may fluctuate significantly after the Offering. The market price of the Common Shares may be volatile and subject to wide price fluctuations in response to various factors, including: Š market conditions in the broader stock market in general; Š actual or anticipated fluctuations in the Company’s results of operations; Š introduction of new products or services by the Company or its competitors; Š issuance of new or changed securities analysts’ reports or recommendations; Š additions or departures of executive officers and other key personnel of the Company; Š changes in the economic performance or market valuations of other companies that prospective purchasers deem comparable to the Company; Š sales or perceived sales of additional Common Shares; Š litigation and governmental or regulatory investigations; Š economic and political conditions or events; Š significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving the Company or its competitors; and Š trends, concerns, technological or competitive developments, regulatory changes and other related issues in the Company’s business or target markets.

These and other factors may cause the market price and demand for the Common Shares to fluctuate substantially, which may limit or prevent prospective purchasers from readily selling their Common Shares and may otherwise negatively affect the liquidity of the Common Shares. The trading price of the Common Shares may also decline in reaction to events that affect other companies in the gaming industry or related industries, even if these events do not affect the Company.

Financial markets have experienced significant price and volume fluctuations in the last several years that have particularly affected the market prices of equity securities of companies and that have, in many cases, been unrelated to

130 the operating performance, underlying asset values or prospects of such companies. Accordingly, the market price of the Common Shares may decline even if the Company’s operating results, underlying asset values or prospects have not changed. Additionally, these factors, as well as other related factors, may cause decreases in asset values which may result in impairment losses. As well, certain institutional prospective purchasers may base their investment decisions on consideration of the Company’s governance and social practices and performance against such institutions’ respective investment guidelines and criteria, and failure to meet such criteria may result in a limited or no investment in the Common Shares by those institutions, which could adversely affect the trading price of the Common Shares. If such increased levels of volatility continue, the trading price of the Common Shares may be adversely affected.

Issuance of additional securities following the Offering may dilute the interest of Shareholders. The Board may issue an unlimited number of Common Shares or other securities of the Company without any vote or action by the Company’s shareholders, subject to the rules of any stock exchange on which the Company’s securities may be listed from time to time. The Company may make future acquisitions or enter into financings or other transactions involving the issuance of securities. The Company may be required to issue additional Common Shares under the purchase and sale agreement executed in connection with the South Surrey Property notwithstanding that there can be no assurance that the South Surrey Property will proceed. See “Our Company – Recent Acquisitions”.

In addition, pursuant to the 2012 Incentive Plan, the Company may issue securities exercisable to acquire, together with Common Shares issuable pursuant to any other security-based compensation arrangements of the Company, up to 10% of the issued and outstanding Common Shares, from time to time. If the Company issues any additional equity, the percentage ownership of existing shareholders will be reduced and diluted. The Company has agreed to a lock-up agreement pursuant to which the Company will not issue any Common Shares without prior consent of the Lead Underwriters, for 180 days after Closing, as described under the heading “Plan of Distribution – Restrictions on the Sales of Common Shares of the Company”. The Company may be released from its lock-up agreement with the prior consent of the Lead Underwriters at any time and without notice, which would allow for the earlier issuance of Common Shares into the public market.

Sales of Common Shares by existing shareholders, directors or executive officers of the Company may negatively affect the market price of the Common Shares. The Selling Shareholders, certain officers and directors of the Company holding, in the aggregate, Š Common Shares, representing approximately Š % of the outstanding Common Shares after giving effect to the Offering (assuming the Over-Allotment Option is not exercised; Š % if the Over-Allotment Option is exercised in full) have entered into lock-up agreements with the Company and the Underwriters pursuant to which they have agreed to restrictions on dispositions of Common Shares without the prior written consent of the Lead Underwriters, for a period of 45 days or 180 days after Closing, as applicable, as described under the heading “Plan of Distribution – Restrictions on the Sales of Common Shares of the Company”. The purpose of these restrictions is to help ensure that there will be an orderly trading market in the Common Shares and to prevent the Selling Shareholders, certain officers and director from attempting to dispose of a large number of their Common Shares before the Company has had an opportunity to establish a stable trading history. The Selling Shareholders, certain officers and directors may be released from their lock-up agreements with the consent of the Lead Underwriters at any time and without notice, which would allow for the earlier sale of Common Shares into the public market.

Existing shareholders holding, in the aggregate Š Common Shares, representing approximately Š %of the outstanding Common Shares after giving effect to the Offering ( Š % assuming the Over-Allotment is not exercised; Š % if the Over-Allotment Option is exercised in full) are not subject to lock-up agreements and are under no contractual obligation to hold their Common Shares for any period following the Closing.

Subject to compliance with applicable securities laws, officers, directors, existing shareholders and their affiliates may sell some or all of their Common Shares in the open market upon closing. No prediction can be made as to the effect, if any, such future sales of Common Shares will have on the market price of the Common Shares prevailing from time to time. The sale of a substantial number of Common Shares by the Company’s officers and directors, shareholders or their affiliates, or the perception that such sales could occur, could adversely affect prevailing market prices for the Common Shares.

131 Cash dividend payments are not guaranteed. The payment of dividends under the Company’s proposed dividend policy is not guaranteed and will fluctuate with the performance of the Company and its subsidiaries. The Board has the discretion to determine the amount of dividends to be declared and paid to shareholders. The Company may alter its dividend policies at any time and the payment of dividends will depend on, among other things, results of operations, financial condition, current and expected future levels of earnings, operating cash flow, liquidity requirements, market opportunities, income taxes, maintenance capital, growth capital expenditures, debt repayments, legal, regulatory and contractual constraints, working capital requirements, tax laws and other relevant factors. The Company’s short and long-term borrowings may prohibit the Company from paying dividends at any time at which a default or event of default would exist under such debt, or if a default or event of default would exist as a result of paying the dividend.

Over time, the Company’s capital and other cash needs may change significantly from its current needs, which could affect whether the Company pays dividends and the amount of any dividends it may pay in the future. If the Company pays dividends at the level currently anticipated under the proposed dividend policy, it may not retain a sufficient amount of cash to finance growth opportunities, meet any large unanticipated liquidity requirements or fund its operations in the event of a significant business downturn. The Board, subject to the requirements of the Company’s by-laws and other governance documents, may amend, revoke or suspend the Company’s dividend policy at any time. A decline in the market price or liquidity, or both, of the Common Shares could result if the Board establishes large reserves that reduce the amount of dividends paid or if the Company reduces or eliminates the payment of dividends, which could result in losses to shareholders.

We will incur increased costs as a result of complying with the reporting requirements, rules and regulations affecting public companies. As a public company, we are subject to the reporting requirements and rules and regulations under the applicable Canadian securities laws and rules of any stock exchange on which the Company’s securities may be listed from time to time. Additional or new regulatory requirements may be adopted in the future. The requirements of existing and potential future rules and regulations will increase our legal, accounting and financial compliance costs, make some activities more difficult, time-consuming or costly and may also place undue strain on our personnel, systems and resources, which could adversely affect our business and financial condition.

MATERIAL CONTRACTS The only material contracts, which the Company or its subsidiaries have entered into since the beginning of the last financial year or before the beginning of the last financial year and are still in effect, other than contracts entered into in the ordinary course of business, are as follows:

(i) Underwriting Agreement – see “Plan of Distribution”; (ii) Indenture – see “Description of Our Indebtedness”; (iii) New Credit Agreement – see “Description of Our Indebtedness”; and (iv) MCOSA – see “Regulatory Environment”.

Copies of the material contracts set out above may be inspected at the offices of the Company located at 4621 Canada Way, Suite 300, Burnaby, British Columbia V5G 4X8 during normal business hours during the period of distribution of Common Shares offered hereunder, or they are available at www.sedar.com.

LEGAL PROCEEDINGS AND REGULATORY ACTIONS We are not a party to any legal proceeding or regulatory actions, the outcome of which, in the opinion of management, would have a material adverse effect on our business or financial condition. However, we are involved, from time to time, in a variety of litigation arising out of our business, including actions related to patron claims, labour and employees and other operational matters. We establish reserves for matters in which losses are probable and can be reasonably estimated. While we believe that we have established adequate accruals for our expected future liability

132 with respect to our pending legal actions and proceedings, our liability with respect to any such action or proceeding may exceed our established accruals. There can be no assurance that our established accruals or insurance will cover all claims that may be asserted against us.

INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS Other than the interests of certain directors or executive officers of the Company or the Selling Shareholders, as described in this prospectus, none of the directors or executive officers of the Company or Selling Shareholders, nor any associate or affiliate of any of them, has or had a direct or indirect material interest in any transaction within the three years prior to the date of this prospectus or proposed transaction which has materially affected or will materially affect the Company.

AUDITORS, TRANSFER AGENT AND REGISTRAR The independent auditors of the Company are PricewaterhouseCoopers LLP (“PwC”), 250 Howe Street, Suite 700, Vancouver, British Columbia, V6C 3S7.

The Company will retain Valiant Trust Company in Vancouver, British Columbia to act as registrar and transfer agent for Common Shares.

EXPERTS There is no person or company whose profession or business gives authority to a report, valuation, statement or opinion made by such person or company and who is named as having prepared or certified a report, valuation, statement or opinion in this prospectus, other than Bennett Jones LLP, McCarthy Tétrault LLP (collectively, the “Experts”) and PwC.

There were no registered or beneficial interests, direct or indirect, in any securities or other property of the Company or of one of its associates or affiliates: (i) held by an Expert, when such Expert prepared the report, valuation, statement or opinion referred to herein as having been prepared by such Expert; (ii) received by an Expert, after the time specified above; or (iii) to be received by an Expert; except in each case for the ownership of Common Shares, which in respect of each Expert, as a group, has at all relevant times represented less than 1% of the outstanding Common Shares. In addition, none of the Experts, and no director, officer or employee of any of the Experts, is or is expected to be elected, appointed or employed as a director, officer or employee of the Company or of any associate or affiliate of the Company.

PwC is independent within the meaning of the Rules of Professional Conduct of the Institute of Chartered Accountants, British Columbia.

PURCHASERS’ STATUTORY RIGHTS Securities legislation in certain of the provinces and territories of Canada provides purchasers with the right to withdraw from an agreement to purchase securities within two business days after receipt, or deemed receipt, of a prospectus and any amendment. In several of the provinces and territories, securities legislation further provides a purchaser with remedies of rescission or, in some jurisdictions, damages where the prospectus and any amendment contains a misrepresentation or is not delivered to the purchaser, provided that such remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. Purchasers should refer to any applicable provisions of the securities legislation of their province or territory for the particulars of these rights or consult with a legal advisor.

133 AUDITOR’S CONSENT We have read the prospectus of Gateway Casinos & Entertainment Limited (the “Company”) dated Š , 2012 relating to the sale of Common Shares by way of an initial public offering. We have complied with Canadian generally accepted accounting standards for an auditor’s involvement with offering documents.

We consent to the use in the above-mentioned prospectus of our report to the directors of the Company on the consolidated balance sheets of the Company as at December 31, 2011 and 2010 and the consolidated statements of operations and comprehensive income (loss), changes in shareholders’ equity and cash flows for the year ended December 31, 2011 and period from May 18, 2010 (date of incorporation) to December 31, 2010. Our report is dated Š , 2012. We also consent to the use in the above-mentioned prospectus of our report to the directors of 7588674 Canada Inc. (“Amalco”) on the balance sheets of Amalco as at December 31, 2010 and 2009 and the statements of loss and comprehensive loss, changes in shareholders’ deficiency, and cash flows for the years ended December 31, 2010 and 2009. Our report is dated May 18, 2012.

Chartered Accountants

Vancouver, British Columbia Š , 2012

134 GLOSSARY OF TERMS In this prospectus, unless otherwise indicated or the context otherwise requires, the following terms shall have the meaning set forth below: “2012 Incentive Plan” has the meaning set out under the heading “Executive Compensation – Equity Program”. “Adjusted EBITDA” represents EBITDA further adjusted to reflect the impact of non-recurring and other items as described under the heading “Prospectus Summary – Selected Historical Financial Information”. “Adjusted EBITDA Margin” is the ratio of Adjusted EBITDA divided by total revenue. “Adjusted Property EBITDA” represents the Adjusted EBITDA for each operating segment before corporate costs. “ADR” has the meaning set out under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Operating Segments”. “AFDC” means the BCLC’s Accelerated Facility Development Commission. “AGLC” has the meaning set out on the cover page. “allowable capital loss” has the meaning set out under the heading “Certain Canadian Federal Income Tax Considerations”. “Amalco” has the meaning set out under the heading “Presentation of Financial Matters”. “ATM” means automated teller machines. “Audit & Risk Committee” means the audit and risk committee of the Board. “Audit & Risk Committee Charter” means the charter of the Audit and Risk Committee, a copy of which is attached as Appendix B. “Average Daily Rate”or“ADR” has the meaning set out under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations”. “Babson Funds” means, collectively, Babson CLO Ltd 2007-I, U.S. Bank, NA as Trustee fbo Babson CLO Ltd 2005- III Custodial Account, Massachusetts Mutual Life Insurance Company, Babson CLO Ltd 2006-II, U.S. Bank, NA as Trustee fbo Babson CLO Ltd 2004-I Custodial Account, Babson Capital Loan Strategies Master Fund, L.P., Babson CLO Ltd 2005-I, Babson CLO 2005-II, Babson Mid-Market CLO Ltd 2007-II, Sapphire Valley CDO I, Ltd. and C.M. Life Insurance Company. “BCLC” has the meaning set out on the cover page. “BCLC Operational Agreements” has the meaning set out under the heading “Risk Factors – Risks Related to Our Business”. “BMO” has the meaning set out on the cover page. “Board” has the meaning set out under the heading “Prospectus Summary – Investment Highlights”. “Boardwalk” means Boardwalk Gaming and Entertainment Inc. “BOSA” has the meaning set out under the heading “Regulatory Environment”. “British Columbia Region” means British Columbia, Canada. “CAGR” means compound annual growth rate. “Code of Conduct” has the meaning set out under the heading “Corporate Governance – Code of Conduct and Ethics”. “GAAP” has the meaning set out under the heading “Presentation of Financial Matters”. “Cash Payment” has the meaning set out under the heading “Our Company – Recent Acquisition”. “Catalyst” means The Catalyst Capital Group Inc. “Catalyst Capital Funds” means, collectively, CFLP II PP, CFLP II and CFLP III. “CBCA” has the meaning set out under the heading “Presentation of Financial Matters”. “CDS” has the meaning set out on the cover page. “CEO” has the meaning set out under the heading “Executive Compensation – Compensation Objectives”. “CFLP II” Catalyst Fund Limited Partnership II. “CFLP II PP” Catalyst Fund II Parallel Limited Partnership. “CFLP III” Catalyst Fund Limited Partnership III.

135 “CFO” has the meaning set out under the heading “Executive Compensation – Compensation Objectives”. “CGCs” has the meaning set out under the heading “Prospectus Summary – Our Company”. “CGCOSA” has the meaning set out under the heading “Regulatory Environment”. “CGU” has the meaning set out under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Application of Critical Accounting Estimates – Impairment of Non-Financial Assets”. “Change in Capitalization” has the meaning set out under the heading “Executive Compensation – Equity Program”. “CICA Handbook” has the meaning set out under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations – International Financial Reporting Standards”. “Code of Conduct” has the meaning set out under the heading “Corporate Governance – Code of Conduct and Ethics”. “Common Shares” has the meaning set out on the cover page. “Company” has the meaning set out on the cover page. “Compensation Committee” means the compensation committee of the Board. “Closing” has the meaning set out on the cover page. “Closing Date” has the meaning set out on the cover page. “Delta” means Delta Hotels No. 48 Limited Partnership (doing business as Delta Burnaby Hotel and Conference Centre) unless the context requires otherwise. “Development Assistance Compensation” means reimbursements recovered from the Province of British Columbia for approved eligible capital expenditures related to the Starlight Casinos pursuant to the Destination Casinos Project Development Amendment Agreement. “DSUs” has the meaning set out under the heading “Executive Compensation – Equity Program”. “EBITDA” represents, unless otherwise noted or the context otherwise indicates, income (loss) and comprehensive income (loss) for the period plus (i) amortization of intangible assets, (ii) depreciation of property and equipment, (iii) restructuring, acquisition, transaction and financing costs, (iv) impairment of non-financial assets, (v) interest expense, net, (vi) foreign exchange loss (gain) on long-term debt, (vii) changes in fair value of the embedded derivative, (viii) loss on debt extinguishment, (ix) provision for (recovery of) income taxes, (x) impairment of goodwill, (xi) loss (gain) on sale of property and equipment, (xii) loss (gain) on swap contracts, (xiii) loss on restructuring, and (xiv) share-based compensation. “EBITDA Margin” is the ratio of EBITDA divided by total revenue. “Edgewater” has the meaning set out under the heading “Property Overview – Competition”. “Edmonton Region” means Edmonton, Alberta. “Equity Participation” has the meaning set out under the heading “Executive Compensation – Termination and Change of Control Benefits.” “Executive Chairman” has the meaning set out under the heading “Prospectus Summary – Investment Highlights”. “Existing Credit Agreement” has the meaning set out under the heading “Description of Our Indebtedness – Existing Senior Secured Credit Facility”. “Existing Senior Secured Credit Facility” has the meaning set out under the heading “Description of Our Indebtedness – Existing Senior Secured Credit Facility”. “Experts” has the meaning set out under the heading “Experts”. “Facility Development Program” means, collectively, the FDC and the AFDC. “FDC” means the BCLC’s Facility Development Commission “First Milestones” has the meaning set out under the heading “Our Company – Recent Acquisitions”.

136 “forward-looking statement” has the meaning set out under the heading “Forward-Looking Information”.

“Franchise Agreement” has the meaning set out under the heading “Our Company – Human Resources.

“GAAP” has the meaning set out under the heading “Presentation of Financial Matters”.

“GCA” has the meaning set out on the cover page.

“GLA” has the meaning set out on the cover page.

“GMS” has the meaning set out under the heading “Prospectus Summary – Business Strategies”.

“GPEB” has the meaning set out on the cover page.

“Grants” has the meaning set out under the heading “Executive Compensation – Equity Program”.

“Great Canadian” means Great Canadian Gaming Corporation.

“Greater Vancouver Region” means Metro Vancouver and Squamish, British Columbia.

“Holder” has the meaning set out under the heading “Certain Canadian Federal Income Tax Considerations”.

“IASB” has the meaning set out under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations – International Financial Reporting Standards”.

“IAS 12” has the meaning set out under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Fair Value of Net Assets Acquired in Business Combinations”.

“IAS 39” has the meaning set out under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations – New Accounting Pronouncements Issued but not yet Applied”.

“IFRS” has the meaning set out under the heading “Presentation of Financial Matters”.

“IFRS 7” means IFRS 7, Financial Instruments – Disclosures.

“IFRS 9” has the meaning set out under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations – New Accounting Pharmaceuticals issued but not yet Applied”.

“Indemnity Information” has the meaning set out under the heading “Existing Shareholder Arrangements”.

“Indenture” has the meaning set out under the heading “Description of Our Indebtedness – Second Priority Senior Secured Notes”.

“J.P. Morgan” has the meaning set out on the cover page.

“Lake City Casinos” has the meaning set out under the heading “Prospectus Summary – Property Overview”.

“Lead Underwriters” has the meaning set out on the cover page.

“LTM” means last twelve months.

“Management Agreement” has the meaning set out under “Regulatory Environment – Human Resources”

“Marketing Trust Account”or“MTA” has the meaning set out under the heading “Prospectus Summary – Selected Historical Financial Information”.

“MCOSA” has the meaning set out under the heading “Our Company – Company Structure”.

“Metro Vancouver” means metropolitan Vancouver and its surrounding cities and municipalities as defined under British Columbia legislation.

“NI 52-110” has the meaning set out under the heading “Corporate Governance”.

“NEO”or“Named Executive Officers” has the meaning set out under the heading “Executive Compensation – Compensation Objectives”.

137 “New Credit Agreement” means the second amended and restated credit agreement to be entered into concurrently with the Offering among Gateway, as borrower, the subsidiary guarantors party thereto, the term lenders party thereto, the revolving lenders party thereto, the swingline lender party thereto, the issuing bank party thereto and Š . “New Revolver” has the meaning set out under the heading “Prospectus Summary – Recent Developments”. “New Senior Secured Credit Facility” has the meaning set out under the heading “Prospectus Summary – Recent Developments”. “New Term Loan” has the meaning set out under the heading “Prospectus Summary – Recent Developments”. “New World” has the meaning set out under the heading “Presentation of Financial Matters”. “Nominating and Governance Committee” means the nominating and governance committee of the Board. “Non-Resident Holder” has the meaning set out under the heading “Certain Canadian Federal Income Tax Considerations”. “Notes” has the meaning set out under the heading “Prospectus Summary – Recent Developments”. “Offering” has the meaning set out on the cover page. “Offering Price” has the meaning set out on the cover page. “Old Gateway” has the meaning set out under the heading “Presentation of Financial Matters”. “Order” has the meaning set out under the heading “Directors and Executive Officers – Corporate Cease Trade Orders and Bankruptcies”. “Over-Allotment Option” has the meaning set out on the cover page. “Paragon” has the meaning set out under the heading “Property Overview”. “Performance RSUs” has the meaning set out under the heading “Executive Compensation – Equity Program”. “Permitted Indenture Dividend Payments” has the meaning set out under the heading “Dividend Policy”. “Plan of Arrangement” has the meaning set out under the heading “Presentation of Financial Matters”. “Poker Rake” is the commission we earn from poker tables and is calculated as a fixed percentage of the amount wagered by our customers on every hand of poker played. “Pre-Restructuring First Lien Senior Credit Facility” has the meaning set out under the heading “Our Company – Business History”. “Pre-Restructuring Second Lien Senior Credit Facility” has the meaning set out under the heading “Our Company – Business History”. “Property EBITDA” represents the EBITDA for each operating segment before corporate costs. “Purchased Shares” has the meaning set out under the heading “Our Company – Recent Acquisitions”. “Purchase Price” has the meaning set out under the heading “Our Company – Recent Acquisitions”. “PwC” has the meaning set out under the heading “Auditors, Transfer Agent and Registrar”. “Racinos” means a gaming facility with a race track. “Refinancing” has the meaning set out under the heading “Prospectus Summary – Recent Developments”. “Regulation S” has the meaning set out on the cover page. “Resident Holder” has the meaning set out under the heading “Certain Canadian Federal Income Tax Considerations”. “Restructuring” has the meaning set out under the heading “Our Company – Business History”. “RBC” has the meaning set out on the cover page. “RRIF” has the meaning set out under the heading “Eligibility For Investment”. “RRSP” has the meaning set out under the heading “Eligibility For Investment”. “RSUs” has the meaning set out under the heading “Executive Compensation – Equity Program”. “SARs” has the meaning set out under the heading “Executive Compensation – Equity Program”.

138 “Secondary Offering” has the meaning set out on the cover page. “Second Milestones” has the meaning set out under the heading “Our Company – Recent Acquisitions”. “Scotiabank” has the meaning set out on the cover page. “Selling Shareholders” has the meaning set out on the cover page. “September 2010 Credit Agreement” means the credit agreement dated September 16, 2010 among Gateway, as borrower, the subsidiary guarantors party thereto, the term lenders party thereto, the revolving lenders party thereto, the revolving L/C issuing bank party thereto, the United States and Canadian administrative agent, the collateral agent, and Jefferies Finance LLC, RBS Securities Inc., J.P. Morgan Securities LLC, Goldman, Sachs & Co. and Morgan Stanley Senior Funding, Inc., as joint lead arrangers and joint lead bookrunners. “Severance Pay” has the meaning set out under the heading “Executive Compensation – Termination and Change of Control Benefits”. “Share Consolidation” has the meaning set out under the heading “Share Consolidation”. “Share Restrictions” has the meaning set out under the heading “Description of Share Capital – Common Share Constraints Required by Gaming Regulators”. “Shareholder Agreement” has the meaning set out under the heading “Existing Shareholder Arrangements”. “Significant Interest” has the meaning set out under the heading “Description of Share Capital – Common Share Constraints Required by Gaming Regulators”. “Significant Shareholders” has the meaning set out under the heading “Existing Shareholder Arrangements”. “Slot Coin-in” is the aggregate amount of money customers have wagered on slots and other electronic gaming machines. “Slot Win” is the Slot Coin-in less prizes won by customers. “Slot Win %” is the ratio of Slot Win divided by Slot Coin-in. “Slot Win/Slot/Day” is the average daily Slot Win earned per slot machine, and is calculated as the Slot Win divided by the number of days in the period, divided by the average number of slot machines that operated during the period. “South Surrey Property” has the meaning set out under the heading “Our Company – Recent Acquisitions”. “Table Drop” represents the aggregate amount of money customers deposit to purchase casino chips to wager on table games, and is commonly computed as the aggregate amount of money counted in the table games’ drop boxes. Generally, the Table Drop is an indicator of our gaming business; however, over the short-term, the Table Drop is subject to shifts in customer behavior around buying, retaining and cashing-in of casino chips. “Table Win” is calculated as the Table Drop plus or minus the net change in casino chip inventory. “Table Win %” is the ratio of Table Win divided by Table Drop. The Table Win percentage fluctuates with the statistical variations or volatility inherent in casino games, as well as with changes in customer behavior around buying, retaining and cashing-in of casino chips. “Table Win/Table/Day” is the average daily Table Win earned per table, and is calculated as the Table Win divided by the number of days in the period, divided by the average number of tables that operated during the period. “Tax Act” has the meaning set out under the heading “Certain Canadian Federal Income Tax Considerations”. “Tax Proposals” has the meaning set out under the heading “Certain Canadian Federal Income Tax Considerations”. “taxable capital gain” has the meaning set out under the heading “Certain Canadian Federal Income Tax Considerations”. “TCP” has the meaning set out under the heading “Principal Shareholders and Selling Shareholders”. “TD” has the meaning set out on the cover page. “Tennenbaum” means Tennenbaum Opportunities Partners V LP.

139 “Thompson-Okanagan Region” means the Thompson-Okanagan Region, British Columbia. “TFSA” has the meaning set out under the heading “Certain Canadian Federal Income Tax Considerations”. “TOP V Holdings” has the meaning set out on the cover page. “Total Property Revenue” is a non-IFRS and non-GAAP measure and excludes Corporate revenue. “Towers Watson” has the meaning set out under the heading “Executive Compensation – Compensation Consulting Services”. “Treasury Offering” has the meaning set out on the cover page. “TSX” has the meaning set out on the cover page. “U.S.”or“United States” means United States of America, its territories and possessions, any state of the United States and the District of Columbia. “U.S. Securities Act” has the meaning set out on the cover page. “Underwriters” has the meaning set out on the cover page. “Underwriting Agreement” has the meaning set out on the cover page. “Underwriting Commissions” has the meaning set out on the cover page. “VLT” means Video Lottery Terminal. “Win” means the amount wagered on gaming activities, less prizes paid to customers.

140 APPENDIX A

GATEWAY CASINOS & ENTERTAINMENT LIMITED BOARD MANDATE

To each of the directors of Gateway Casinos & Entertainment Limited (the “Company”).

1. GENERAL The fundamental responsibility of the Board of Directors (the “Board”) is to supervise the management of the business and affairs of the Company.

The Board has adopted this Mandate, which reflects the Company’s commitment to high standards of corporate governance, to assist the Board in supervising the management of the business and affairs of the Company.

The Board believes that sound corporate governance practices are essential to the well-being of the Company and the promotion and protection of its shareholders’ interests. The Board oversees the functioning of the Company’s governance system, in part through the work of the Nominating and Governance Committee.

The Board promotes fair reporting, including financial reporting, to shareholders of the Company and other interested persons as well as ethical and legal corporate conduct through an appropriate system of corporate governance, internal controls and disclosure controls. The Board believes that the Company is best served by a board of directors that functions independently of management and is informed and engaged.

The Nominating and Governance Committee will review this mandate annually, or more often if warranted, and recommend to the Board such changes as it deems necessary and appropriate in light of the Company’s needs and legal and regulatory developments.

2. COMPOSITION AND OPERATION OF THE BOARD The Board operates by delegating certain of its authorities to management and by reserving certain powers to itself. The Board retains the responsibility of managing its own affairs including selecting its chairman, nominating candidates for election to the board, constituting committees of the full Board and determining compensation for the directors. Subject to the articles and by-Laws of the Company and the Canada Business Corporations Act (“CBCA”), the Board may constitute, seek the advice of and delegate powers, duties and responsibilities to committees of the Board.

3. RESPONSIBILITIES The Board’s fundamental objectives are to enhance and preserve long-term shareholder value, to ensure the Company meets its obligations on an ongoing basis and that the Company operates in a reliable and safe manner. In performing its functions, the Board should also consider the legitimate interests that its other stakeholders such as employees, customers and communities may have in the Company. In broad terms, the stewardship of the Company involves the Board in strategic planning, financial reporting, risk management and mitigation, senior management determination, communication planning and internal control integrity.

4. DUTIES The Board’s specific duties, obligations and responsibilities fall into the following categories.

4.1 Legal Requirements A. The Board has the oversight responsibility for meeting the Company’s legal requirements and for properly preparing, approving and maintaining the Company’s documents and records.

B. The Board has the statutory responsibility to:

i. manage the business and affairs of the Company;

A-1 ii. act honestly and in good faith with a view to the best interests of the Company;

iii. exercise the care, diligence and skill that responsible, prudent people would exercise in comparable circumstances;

iv. act in accordance with its obligations contained in the CBCA and the regulations thereto, the articles and by-Laws of the Company, securities laws and regulations, and other relevant legislation and regulations; and

v. comply with applicable gaming regulations and legislation.

C. The Board has the statutory responsibility for considering the following matters as a full Board which in law may not be delegated to management or to a committee of the Board:

i. any submission to the shareholders of a question or matter requiring the approval of the shareholders;

ii. the filling of a vacancy among the Directors;

iii. the issuance of securities;

iv. the declaration of dividends;

v. the purchase, redemption or any other form of acquisition of shares issued by the Company;

vi. the payment of a commission to any person in consideration of his/her purchasing or agreeing to purchase shares of the Company from the Company or from any other person, or procuring or agreeing to procure purchasers for any such shares;

vii. the approval of management proxy circulars; and

viii. the approval of any take-over bid circular or directors’ circular.

4.2 Independence The Board shall have the responsibility to:

A. implement appropriate structures and procedures to permit the Board to function independently of management;

B. implement a system which enables an individual director to engage an outside advisor at the reasonable expense of the Company in appropriate circumstances; and

C. provide an orientation and education program for newly appointed members of the Board.

4.3 Strategy Determination The Board shall:

A. adopt and annually review a strategic planning process and approve the corporate strategic plan, which takes into account, among other things, the opportunities and risks of the business; and

B. annually review operating and financial performance results relative to established strategy, budgets and objectives.

4.4 Managing Risk The Board has the responsibility to understand the principal risks of the business in which the Company is engaged, to achieve a proper balance between risks incurred and the potential return to shareholders, and to confirm that systems are in place to effectively monitor and manage those risks with a view to the long-term viability of the Company.

A-2 4.5 Appointment, Training and Monitoring of Senior Management The Board shall:

A. appoint the Chief Executive officer (“CEO”) and such other senior officers as it determines to be appropriate;

B. approve (upon recommendations from the Compensation Committee) the compensation of the CEO and other senior officers;

C. monitor the CEO’s performance against a set of mutually agreed corporate objectives directed at maximizing shareholder value;

D. ensure that a process is established that adequately provides for succession planning, including the appointment, training and monitoring of the CEO and other senior officers; and

E. establish limits of authority delegated to management.

4.6 Reporting and Communication The Board has the responsibility to:

A. verify that the Company has in place policies and programs to enable the Company to communicate effectively with its shareholders, other stakeholders and the public generally;

B. verify that the financial performance of the Company is reported to shareholders, other security holders and regulators on a timely and regular basis;

C. verify that the financial results are reported fairly and in accordance with generally accepted accounting standards (including International Financial Reporting Standards as applicable);

D. verify the timely reporting of any other developments that have a significant and material impact on the value of the Company; and

E. report annually to shareholders on its stewardship of the affairs of the Company for the preceding year.

4.7 Monitoring and Acting The Board has the responsibility to:

A. review and approve the Company’s financial statements and oversee the Company’s compliance with applicable audit, accounting and reporting requirements;

B. verify that the Company operates at all times within applicable laws and regulations to the highest ethical and moral standards;

C. approve and monitor compliance with significant policies and procedures by which the Company is operated;

D. Recommend to shareholders the appointment of the Company’s external auditor, pursuant to the recommendation of the Audit & Risk Committee, and set the external auditor’s compensation.

E. monitor the Company’s progress towards its goals and objectives and to revise and alter its direction through management in response to changing circumstances;

F. take such action as it determines appropriate when performance falls short of its goals and objectives or when other special circumstances warrant; and

G. verify that the Company has implemented adequate internal controls and information systems which ensure the effective discharge of its responsibilities.

A-3 4.8 Other Activities The Board may exercise or delegate any other powers consistent with this mandate, the Company’s articles and by-laws, the CBCA and any other governing laws, as the Board deems necessary or appropriate. The powers of the Board may be exercised by a resolution passed at a meeting of the Board at which a quorum is present or by a resolution in writing signed by all the directors entitled to vote on that resolution at a meeting. If there is a vacancy in the Board, the remaining directors may exercise all the powers of the Board so long as a quorum remains in office. The Board may perform any other activities consistent with this mandate, the by-laws of the Company, the CBCA and any other governing laws as the Board determines necessary or appropriate.

A-4 APPENDIX B

GATEWAY CASINOS & ENTERTAINMENT LIMITED AUDIT & RISK COMMITTEE CHARTER

1. GENERAL It is the policy of Gateway Casinos & Entertainment Limited (the “Company”) to establish and maintain an Audit & Risk Committee (the “Committee”), composed entirely of independent directors, to assist the Board of Directors (the “Board”) in carrying out its oversight responsibility for the Company’s internal controls, financial reporting and risk management processes. The Committee will be provided with resources commensurate with the duties and responsibilities assigned to it by the Board, including administrative support. If determined necessary by the Committee, it will have the discretion to institute investigations of improprieties, or suspected improprieties within the scope of its responsibilities, including the standing authority to retain special counsel or experts.

2. COMPOSITION OF THE COMMITTEE A. The Committee shall consist of at least three directors. The Board shall appoint the members of the Committee and may seek the advice and assistance of the Nominating and Governance Committee in identifying qualified candidates. The Board shall appoint one member of the Committee to be the chair of the Committee (the “Chair”). B. Each director appointed to the Committee by the Board shall be an outside director who is unrelated. An outside, unrelated director is a director who is independent of management and is free from any interest, any business or other relationship which could, or could reasonably be perceived, to materially interfere with the director’s ability to act with a view to the best interests of the Company, other than interests and relationships arising from shareholdings. In determining whether a director is independent of management, the Board shall make reference to the then current legislation, rules, policies and instruments of applicable regulatory authorities. C. Each member of the Committee shall be “financially literate”. In order to be financially literate, a director must be, at a minimum, able to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the issuer’s financial statements. D. A director appointed by the Board to the Committee shall be a member of the Committee until replaced by the Board or until his or her resignation.

3. MEETINGS OF THE COMMITTEE A. The Committee shall convene a minimum of four times each year at such times and places as may be designated by the Chair and whenever a meeting is requested by the Board, a member of the Committee, the auditors, or a senior officer of the Company. Meetings of the Committee shall also correspond with the review of the quarterly financial statements and management’s discussion and analysis. B. Notice of each meeting of the Committee shall be given to each member of the Committee and to the auditors, who shall be entitled to attend each meeting of the Committee and shall attend whenever requested to do so by a member of the Committee. C. Notice of a meeting of the Committee shall: (i) be in writing; (ii) state the nature of the business to be transacted at the meeting in reasonable detail; (iii) to the extent practicable, be accompanied by copies of documentation to be considered at the meeting; and (iv) be given at least two business days prior to the time stipulated for the meeting or such shorter period as the members of the Committee may permit.

B-1 D. A quorum for the transaction of business at a meeting of the Committee shall consist of a majority of the members of the Committee. However, it shall be the practice of the Committee to require review, and, if necessary, approval of certain important matters by all members of the Committee. E. A member or members of the Committee may participate in a meeting of the Committee by means of such telephonic, electronic or other communication facilities, as permits all persons participating in the meeting to communicate adequately with each other. A member participating in such a meeting by any such means is deemed to be present at the meeting. F. In the absence of the Chair, the members of the Committee shall choose one of the members present to be chair of the meeting. In addition, the members of the Committee shall choose one of the persons present to be the secretary of the meeting. G. The chairman of the Board, senior management of the Company and other parties may attend meetings of the Committee; however, the Committee (i) shall meet with the external auditors independent of management, as necessary, in the sole discretion of the Committee, but in any event, not less than quarterly; and (ii) may meet separately with management. H. Minutes shall be kept of all meetings of the Committee and shall be signed by the chair and the secretary of the meeting.

4. COMMITTEE RESPONSIBILITIES The Committee’s primary responsibilities are to: A. identify and monitor the management of the principal risks that could impact the financial reporting of the Company; B. monitor the integrity of the Company’s financial reporting process and system of internal controls regarding financial reporting and accounting compliance; C. monitor the independence and performance of the Company’s external auditors; D. deal directly with the external auditors to approve external audit plans, other services (if any) and fees; E. directly oversee the external audit process and results; F. provide an avenue of communication among the external auditors, management and the Board; G. ensure that an effective “whistle blowing” procedure exists to permit stakeholders to express any concerns regarding accounting or financial matters to an appropriately independent individual; and H. ensure that an appropriate code of conduct and ethics is in place and understood by employees, officers and directors of the Company.

5. DUTIES A. The Committee shall: i. review the audit plan with the Company’s external auditors and with management; ii. discuss with management and the external auditors any proposed changes in major accounting policies or principles, the presentation and impact of significant risks and uncertainties and key estimates and judgments of management that may be material to financial reporting; iii. review with management and with the external auditors significant financial reporting issues arising during the most recent fiscal period and the resolution or proposed resolution of such issues; iv. review any problems experienced or concerns expressed by the external auditors in performing an audit, including any restrictions imposed by management or significant accounting issues on which there was a disagreement with management; v. review with senior management the process of identifying, monitoring and reporting the principal risks affecting financial reporting;

B-2 vi. review audited annual financial statements and related documents in conjunction with the report of the external auditors and obtain an explanation from management of all significant variances between comparative reporting periods; vii. consider and review with management, the internal control memorandum or management letter containing the recommendations of the external auditors and management’s response, if any, including an evaluation of the adequacy and effectiveness of the internal financial controls of the Company and subsequent follow-up to any identified weaknesses; viii. review with financial management and the external auditors the quarterly unaudited financial statements and management’s discussion and analysis before release to the public; ix. before release, review and if appropriate, recommend for approval by the Board, all public disclosure documents containing audited or unaudited financial information, including any prospectuses, annual reports, annual information forms, management’s discussion and analysis and press releases containing financial information; x. oversee any of the financial affairs of the Company, its subsidiaries or affiliates, and, if deemed appropriate, make recommendations to the Board, external auditors or management; xi. evaluate the independence and performance of the external auditors and annually recommend to the Board the appointment of the external auditors or the discharge of the external auditors when circumstances are warranted; xii. consider the recommendations of management in respect of the appointment of the external auditors; xiii. pre-approve all non-audit services to be provided to the Company or its subsidiary entities by its external auditors, or the external auditors of the Company’s subsidiary entities (if any); xiv. approve the engagement letter for non-audit services to be provided by the external auditors or affiliates, together with estimated fees, and consider the potential impact of such services on the independence of the external auditors; xv. when there is to be a change of external auditors, review all issues and provide documentation related to the change, including the information to be included in the Notice of Change of Auditors and documentation required pursuant to National Instrument 51-102 – Disclosure Standards (or any successor instrument) of the Canadian Securities Administrators and the planned steps for an orderly transition period; xvi. establish and maintain procedures for: i. the receipt, retention and treatment of complaints received by the Company regarding accounting controls, or auditing matters; and ii. the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters; xvii. review and approve the Company’s hiring policies regarding employees and former employees of the present and former external auditors or auditing matters; xviii. review all reportable events, including disagreements, unresolved issues and consultations, as defined by applicable securities policies, on a routine basis, whether or not there is to be a change of external auditors; xix. review with management at least annually, the financing strategy and plans of the Company; and xx. review all securities offering documents (including documents incorporated therein by reference) of the Company. B. The Committee has the authority to: i. inspect any and all of the books and records of the Company, its subsidiaries and affiliates (to the extent necessary); ii. discuss with the management of the Company, its subsidiaries and affiliates and senior staff of the Company, any affected party and the external auditors, such accounts, records and other matters as any member of the Committee considers necessary and appropriate;

B-3 iii. engage independent counsel and other advisors as it determines necessary to carry out its duties; iv. to set and pay the compensation for any advisors employed by the Committee; and v. at any meeting, request the presence of the auditor, a member of senior management or any other person who could contribute to the subject of the meeting. C. The Committee shall, at the earliest opportunity after each meeting, report to the Board the results of its activities and any reviews undertaken and make recommendations to the Board as deemed appropriate.

6. CHAIR OF THE COMMITTEE The Board will appoint one member who is qualified for such purpose to be Chair, to serve until the next annual election of directors or otherwise until his or her successor is duly appointed. If, following the election of directors, in any year, the Board does not appoint a Chair, the incumbent Chair will continue in office until a successor is appointed.

7. REMOVAL AND VACANCIES Any member of the Committee may be removed and replaced at any time by the Board, and will automatically cease to be a member as soon as he or she resigns or ceases to meet the qualifications set out above. The Board will fill vacancies on the Committee by appointment from among qualified members of the Board on the recommendation of the Committee. If a vacancy exists on the Committee, the remaining members will exercise all of its powers so long as a quorum remains in office.

8. ASSESSMENT At least annually, the Committee will assess its effectiveness in fulfilling its responsibilities and duties as set out in this Mandate and in a manner consistent with the Board mandate to be adopted by the Board.

9. REVIEW AND DISCLOSURE The Committee will review this Mandate at least annually and submit it to the Board for approval with such further proposed amendments as it deems necessary and appropriate.

10. ACCESS TO OUTSIDE ADVISORS The Committee may retain any outside advisor, including an executive search firm, at the expense of the Company at any time and has the authority to determine any such advisor’s fees and other retention terms. The Committee, and any outside advisors retained by it, will have access to all records and information relating to the Company and its subsidiaries which it deems relevant to the performance of its duties.

B-4 INDEX TO FINANCIAL STATEMENTS All amounts disclosed in the consolidated financial statements do not give effect to the Share Consolidation.

Consolidated Financial Statements of Gateway Casinos & Entertainment Limited Independent auditor’s report ...... F-3 Consolidated balance sheets as at March 31, 2012 and December 31, 2011 and 2010 ...... F-4 Consolidated statements of operations and comprehensive income (loss) for the three months ended March 31, 2012 and 2011, the year ended December 31, 2011 and the period from May 18, 2010 (date of incorporation) to December 31, 2010 ...... F-5 Consolidated statements of changes in shareholders’ equity for the three months ended March 31, 2012 and 2011, the year ended December 31, 2011 and the period from May 18, 2010 (date of incorporation) to December 31, 2010 ...... F-6 Consolidated statements of cash flows for the three months ended March 31, 2012 and 2011, the year ended December 31, 2011 and the period from May 18, 2010 (date of incorporation) to December 31, 2010 ...... F-7 Notes to consolidated financial statements ...... F-8

Financial Statements of 7588674 Canada Inc. Independent auditor’s report ...... F-41 Balance sheets as at December 31, 2010 and 2009 ...... F-42 Statements of changes in shareholders’ deficiency for the years ended December 31, 2010 and December 31, 2009 ...... F-43 Statements of loss and comprehensive loss for the years ended December 31, 2010 and December 31, 2009 .... F-44 Statements of cash flows for the years ended December 31, 2010 and December 31, 2009 ...... F-45 Notes to financial statements ...... F-46

F-1 Gateway Casinos & Entertainment Limited

Consolidated Financial Statements March 31, 2012 (Unaudited), December 31, 2011 and 2010 (expressed in thousands of Canadian dollars)

F-2 Independent Auditor’s Report

To the Directors of Gateway Casinos & Entertainment Limited

We have audited the accompanying consolidated financial statements of Gateway Casinos & Entertainment Limited and its subsidiaries, which comprise the consolidated balance sheets as at December 31, 2011 and 2010 and the consolidated statements of operations and comprehensive income (loss), changes in shareholders’ equity and cash flows for the year ended December 31, 2011 and for the period from May 18, 2010 (date of incorporation) to December 31, 2010, and the related notes, which comprise a summary of significant accounting policies and other explanatory information.

Management’s responsibility for the consolidated financial statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Gateway Casinos & Entertainment Limited and its subsidiaries as at December 31, 2011 and 2010 and its financial performance and its cash flows for the year ended December 31, 2011 and for the period from May 18, 2010 (date of incorporation) to December 31, 2010 in accordance with International Financial Reporting Standards.

Chartered Accountants Vancouver, British Columbia Š , 2012

F-3 Gateway Casinos & Entertainment Limited Consolidated Balance Sheets

(expressed in thousands of Canadian dollars)

March 31, December 31, December 31, 2012 2011 2010 $ $ $ (Unaudited) Assets Current assets Cash and cash equivalents (note 8) ...... 31,203 63,363 59,043 Amounts receivable ...... 3,640 3,684 3,631 Inventory (note 9) ...... 832 901 875 Prepaid expenses and deposits ...... 2,193 2,510 8,123 37,868 70,458 71,672

Non-current assets Restricted cash (note 22) ...... — 322 17,475 Property and equipment (note 10) ...... 424,797 406,000 399,075 Intangible assets (note 11) ...... 437,349 449,019 463,165 Other asset (note 13) ...... 1,521 2,730 4,264 Deferred costs ...... 42 — — 863,709 858,071 883,979 Total assets ...... 901,577 928,529 955,651

Liabilities Current liabilities Gaming revenue payable to BCLC and AGLC ...... 5,437 6,262 5,258 Accounts payable and accrued liabilities (note 12) ...... 20,293 15,571 20,426 Current portion of long-term debt (note 13) ...... 26,943 25,015 16,775 52,673 46,848 42,459

Non-current liabilities Deferred income taxes (note 15) ...... 4,691 6,059 4,767 Long-term debt (note 13) ...... 437,113 463,180 487,627 441,804 469,239 492,394 Total liabilities ...... 494,477 516,087 534,853

Shareholders’ Equity Share capital (note 14) ...... 416,751 416,751 411,800 Contributed surplus ...... 1,074 — — (Deficit) retained earnings ...... (10,725) (4,309) 8,998 Total shareholders’ equity ...... 407,100 412,442 420,798 Total liabilities and shareholders’ equity ...... 901,577 928,529 955,651

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

F-4 Gateway Casinos & Entertainment Limited Consolidated Statements of Operations and Comprehensive Income (Loss)

(expressed in thousands of Canadian dollars)

Period from May 18, 2010 (date of Three months Three months incorporation) ended ended Year ended to March 31, March 31, December 31, December 31, 2012 2011 2011 2010 $ $ $ $ (Unaudited) (Unaudited) Revenue Slot machine, bingo and other electronic games ...... 29,667 28,186 121,223 35,112 Table games ...... 16,359 15,370 62,221 20,792 Food and beverage ...... 6,682 6,162 26,891 8,282 Facility development commissions ...... 6,373 5,964 25,584 7,573 Hotel ...... 1,690 1,617 8,358 2,273 Automated teller machines ...... 1,680 1,451 6,351 1,554 Other ...... 469 510 3,370 618 62,920 59,260 253,998 76,204 Expenses (note 21) Human resources ...... 25,806 24,730 101,032 29,977 Operating ...... 5,520 4,788 19,436 6,385 Marketing and promotion ...... 4,515 3,442 16,834 4,664 Occupancy ...... 3,645 3,155 12,430 3,576 Cost of food and beverage service ...... 2,718 2,527 10,807 3,537 Share-based compensation (note 14) ...... 1,074——— Amortization of intangible assets ...... 11,779 10,660 45,087 9,179 Depreciation of property and equipment ...... 5,019 4,768 19,377 5,562 Restructuring and acquisition costs ...... 74 44 3,685 — Impairment of non-financial assets (note 10) ...... — — 1,243 — 60,150 54,114 229,931 62,880 Income before other expenses (income) and income taxes ...... 2,770 5,146 24,067 13,324 Other expenses (income) Interest expense (note 16) ...... 9,369 9,824 39,000 14,239 Interest income ...... (24) (13) (83) (7) Foreign exchange gain on long-term debt ...... ———(12,319) Change in fair value of embedded derivatives (note 13) . . . 1,209 1,293 1,534 960 Loss on debt extinguishment (note 13) ...... — — 1,373 — 10,554 11,104 41,824 2,873 (Loss) income before income taxes ...... (7,784) (5,958) (17,757) 10,451 Recovery of (provision for) income taxes (note 15) ..... 1,368 1,315 4,450 (1,453) (Loss) income and comprehensive (loss) income for the period ...... (6,416) (4,643) (13,307) 8,998 (Loss) earnings per share (expressed in $ per share) Basic and diluted ...... (0.02) (0.01) (0.03) 0.05 Weighted average number of shares ...... 404,951,246 399,999,995 402,519,769 185,966,753

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

F-5 Gateway Casinos & Entertainment Limited Consolidated Statements of Changes in Shareholders’ Equity

(expressed in thousands of Canadian dollars)

Retained Share capital Contributed earnings Amount surplus (deficit) Total Number(1) $ $ $ $ Balance – May 18, 2010 (date of incorporation) ...... — — — — — Issuance of share capital (notes 3 and 14) ...... 400,000 411,800 — — 411,800 Income for the period ended December 31, 2010 ...... — — — 8,998 8,998 Balance – December 31, 2010 ...... 400,000 411,800 — 8,998 420,798 Issuance of share capital ...... — — — — — Loss for the three months ended March 31, 2011 ...... — — — (4,643) (4,643) Balance – March 31, 2011 (unaudited) ...... 400,000 411,800 — 4,355 416,155 Issuance of share capital (notes 4 and 14) ...... 4,951 4,951 — — 4,951 Loss for the nine months ended December 31, 2011 ..... — — — (8,664) (8,664) Balance – December 31, 2011 ...... 404,951 416,751 — (4,309) 412,442 Issuance of share capital (note 14) ...... — — — — — Loss for the three months ended March 31, 2012 ...... — — — (6,416) (6,416) Share-based compensation (note 14) ...... — — 1,074 — 1,074 Balance – March 31, 2012 (unaudited) ...... 404,951 416,751 1,074 (10,725) 407,100

(1) presented in thousands of common shares

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

F-6 Gateway Casinos & Entertainment Limited Consolidated Statements of Cash Flows (expressed in thousands of Canadian dollars)

Period from May 18, 2010 (date of Three months Three months incorporation) ended ended Year ended to March 31, March 31, December 31, December 31, 2012 2011 2011 2010 $ $ $ $ (Unaudited) (Unaudited) Cash flows from operating activities (Loss) income for the period ...... (6,416) (4,643) (13,307) 8,998 Items not affecting cash Share-based compensation ...... 1,074 — — — Depreciation of property and equipment ...... 5,019 4,768 19,377 5,562 Amortization of intangible assets ...... 11,779 10,660 45,087 9,179 Amortization of deferred transaction costs and premium on long-term debt ...... 1,419 746 4,256 562 Foreign exchange gain on long-term debt ...... — — — (12,319) Deferred income taxes ...... (1,368) (1,315) (4,450) 1,409 Change in fair value of embedded derivatives ...... 1,209 1,293 1,534 960 Net interest expense ...... 7,926 9,065 34,661 13,670 Loss on debt extinguishment ...... — — 1,373 — Impairment of non-financial assets ...... — — 1,243 — Other ...... — — 101 — 20,642 20,574 89,875 28,021 Changes in non-cash working capital items (note 20) ...... 473 643 1,311 6,148 Net cash generated from operating activities ...... 21,115 21,217 91,186 34,169 Cash flows from investing activities Gaming development costs and purchase of property and equipment ...... (23,816) (2,238) (12,363) (1,274) Purchase of intangible assets ...... (109) (59) (407) (40) Decrease in restricted cash ...... 322 17,450 17,153 — Acquisition of casino and community gaming operations (notes 3 and 4) ...... — — (34,582) (69,544) Interest received ...... 24 13 83 7 Net cash (used for) generated from investing activities ..... (23,579) 15,166 (30,116) (70,851) Cash flows from financing activities Repayment of First Lien debt ...... — — — (500,881) Transaction costs ...... (42) (219) (3,255) (26,384) Proceeds from issuance of Second Priority Senior Secured Notes ...... — — — 170,000 Proceeds from issuance of Term Loans ...... — — — 355,000 Issuance of common shares ...... — — — 109,713 Interest paid ...... (4,175) (6,885) (35,624) (11,723) Repayment of long-term debt ...... (25,479) (4,194) (17,871) — Net cash (used for) generated from financing activities ..... (29,696) (11,298) (56,750) 95,725 (Decrease) increase in cash and cash equivalents ...... (32,160) 25,085 4,320 59,043 Cash and cash equivalents – Beginning of period ...... 63,363 59,043 59,043 — Cash and cash equivalents – End of period ...... 31,203 84,128 63,363 59,043 Non-cash transactions Acquisition of casino and community gaming operations – common share consolidation ...... — — 4,850 302,087 Acquisition of casino operations – First Lien debt consideration ...... — — — 513,200 The accompanying notes are an integral part of these consolidated financial statements.

F-7 Gateway Casinos & Entertainment Limited Notes to Consolidated Financial Statements March 31, 2012 (Unaudited), December 31, 2011 and 2010 (expressed in thousands of Canadian dollars)

1 Formation and nature of operations Gateway Casinos & Entertainment Limited (the “Company”) was incorporated on May 18, 2010 under the Canada Business Corporations Act (“CBCA”) and was inactive prior to September 16, 2010. On September 16, 2010, the Company participated in the restructuring (the “Restructuring”) of New World Gaming Partners Holdings British Columbia Ltd. (“New World”) pursuant to a Plan of Arrangement under the provision of the CBCA. The Company’s executive office is located at 4621 Canada Way, Suite 300, Burnaby, British Columbia.

On June 30, 2011, the Company acquired all the outstanding shares of Boardwalk Gaming Mission Inc., Boardwalk Gaming Squamish Inc. and 427967 BC Ltd. (collectively, the “Boardwalk Group”). Subsequent to the acquisitions, Boardwalk Gaming Mission Inc. and 427967 BC Ltd. were amalgamated to form 427967 BC Ltd. Both 427967 BC Ltd. and Boardwalk Gaming Squamish Inc. are wholly owned subsidiaries of the Company.

Effective September 16, 2010, the Company operates the Grand Villa Casino, Hotel and Convention Centre (“Villa”), Cascades Casino, Hotel and Convention Centre (“Cascades”) and Starlight Casino (“Starlight”) in Greater Vancouver, British Columbia, the four Lake City Casinos (“Lake City”) in the Thompson/Okanagan region of British Columbia, and the Palace Casino (“Palace”) and Baccarat Casino (“Baccarat”) in Edmonton, Alberta. Effective June 30, 2011, the Company operates the Chances Mission Community Gaming Centre (“Mission”), the Chances Squamish Community Gaming Centre (“Squamish”) and the Newton Bingo Country Bingo Hall (“Newton”). The Boardwalk Group also includes an additional community gaming centre license.

The Villa, Cascades, Starlight and Lake City Casinos are operated pursuant to an Amended and Restated Multiple Casino Operational Services Agreement (“MCOSA”) between the Company and the British Columbia Lottery Corporation (“BCLC”). The Mission, Squamish and Newton community gaming centres are operated pursuant to Operational Service Agreements (“OSAs”) between the Company and the BCLC. The Palace and Baccarat Casinos are operated pursuant to Casino Facility Licenses, Casino Gaming Retailer Agreements, and Video Lottery Retailer Agreements between the Company and the Alberta Gaming and Liquor Commission (“AGLC”). The MCOSA provides a term for the Villa Casino expiring on November 4, 2018, terms for the Lake City Casinos expiring between June 9, 2019 and February 28, 2021, a term for the Cascades Casino expiring on May 3, 2015, and a term for the Starlight Casino expiring on December 9, 2017. The MCOSA provides the Company with an option to extend the term for each casino covered by the MCOSA for an additional 10 years, subject to certain conditions. Each of the Penticton, Kelowna and Kamloops Casinos are currently operating under such extended terms. The Casino Facility Licenses from the AGLC for the Palace and the Baccarat Casinos expire on August 31, 2013. The other agreements with the AGLC have no specified term and are effective until terminated, at the AGLC’s discretion or for certain specified reasons. The OSAs provide a term for Mission that expires on August 22, 2017, a term for Squamish that expires on January 30, 2020, and an extension term for Newton that expires on May 31, 2016. The Mission and Squamish agreements provide the Company with an option to extend for an additional 10 years, subject to certain conditions.

The Company earns gaming revenues based on an agreed percentage of the gross win from table games, slot machines, bingo and other electronic games as consideration for providing operational services to the BCLC and AGLC. The operating agreements related to the Company’s casinos and community gaming centres provide that the applicable governing body may suspend or terminate the rights of the Company to provide services under the agreements for certain specified reasons. The future operations of the casinos and community gaming centres depend upon the continued compliance with the operating agreements.

2 Basis of preparation using International Financial Reporting Standards The Company prepares its financial statements in accordance with Canadian generally accepted accounting principles as defined in the Handbook of the Canadian Institute of Chartered Accountants (“CICA Handbook”). In 2010, the CICA Handbook was revised to incorporate International Financial Reporting Standards (“IFRS”) as

F-8 Gateway Casinos & Entertainment Limited Notes to Consolidated Financial Statements March 31, 2012 (Unaudited), December 31, 2011 and 2010 (expressed in thousands of Canadian dollars)

issued by the International Accounting Standards Board (“IASB”) and to require publicly accountable enterprises to apply these standards effective for years beginning on or after January 1, 2011. The Company chose to adopt IFRS in 2010. Accordingly, the consolidated financial statements have been prepared in accordance with IFRS since the date of the Company’s incorporation, May 18, 2010.

The interim consolidated financial statements for the three months ended March 31, 2012 and 2011 have been prepared in accordance with IFRS applicable to the preparation of interim financial statements, including International Accounting Standard (“IAS”) 34, Interim Financial Reporting.

The interim consolidated financial statements for the three months ended March 31, 2012 were approved by the Board of Directors on Š , 2012. The annual consolidated financial statements for the year ended December 31, 2011 were approved by the Board of Directors on Š , 2012.

3 Acquisition of casino operations On September 16, 2010, the Company participated in the Restructuring of New World which included the following: a) The continuance of New World as a CBCA company and the subsequent amalgamation with New World’s subsidiary, Gateway Casinos & Entertainment Inc., to form 7588674 Canada Inc. (“7588674”). All references to 7588674 in these consolidated financial statements refer collectively to 7588674 Canada Inc. after completion of the Restructuring and New World prior to the Restructuring. b) The First Lien Credit Facility lenders of 7588674 assigning and transferring the First Lien Credit Facility to the Company in exchange for U.S.$151,600, 116.4 million common shares of the Company and U.S.$500,000 of new First Lien debt of the Company. c) The Second Lien Credit Facility lenders of 7588674 assigning and transferring the Second Lien Credit Facility to the Company in exchange for 125.6 million common shares of the Company. d) Certain Second Lien lenders subscribing for 130 million common shares of the Company for U.S.$100,000. e) Certain shareholders of 7588674 assigning and transferring $8,000 of shareholder loans (the “Shareholder Loans”) to the Company in exchange for 8 million common shares. All other shareholder loans and accrued interest of 7588674 were settled for no consideration. f) Certain First Lien lenders receiving 20 million common shares of the Company. g) 7588674 selling, transferring and conveying, free and clear of all encumbrances, all of its property and assets to the Company, other than certain real estate with a carrying value of $325,925 (the “Real Estate”), in consideration for the settlement of the First Lien Credit Facility, settlement of the Shareholder Loans, settlement of all but U.S.$230,433 (the “Subordinate Portion”) of the Second Lien Credit Facility and assumption by the Company of 7588674’s liabilities.

Upon completion of the Restructuring, the Company took over the operations of 7588674, has 400 million common shares outstanding and recognized U.S.$500,000 of First Lien debt.

Upon completion of the Restructuring, 7588674 is an inactive company with no employees. 7588674 holds title to the Real Estate, as nominee and bare trustee for and on behalf of the Company, and owes the Subordinate Portion to the Company. The Subordinate Portion is non-interest bearing and is repayable on March 15, 2015.

The Restructuring has been accounted for as the acquisition of the business of 7588674 by the Company. The operations acquired include the Villa, Cascades, Starlight, Lake City, Palace and Baccarat Casinos. The acquisition was accounted for using the acquisition method of accounting in accordance with IFRS 3, Business Combinations. Under the acquisition method, the assets acquired and liabilities assumed were recognized at their fair value on the acquisition date.

F-9 Gateway Casinos & Entertainment Limited Notes to Consolidated Financial Statements March 31, 2012 (Unaudited), December 31, 2011 and 2010 (expressed in thousands of Canadian dollars)

The following table summarizes the fair value of the identifiable assets and liabilities: $ Cash and cash equivalents ...... 93,340 Non-cash working capital ...... (4,953) Restricted cash ...... 17,475 Property and equipment ...... 403,363 Intangible assets ...... 472,304 Deferred income tax liability ...... (3,358) 978,171

The fair value of the consideration includes the following: $ First Lien debt (U.S.$500,000) ...... 513,200 270 million common shares ...... 302,087 Payment to First Lien Credit Facility lenders (U.S.$151,600) ..... 162,884 978,171

The value assigned to the common share consideration is based on the estimated business enterprise value.

The fair value of acquired amounts receivable is $3,389. This amount is expected to be fully collected.

Upon completion of the Restructuring, the Company had cash and cash equivalents of $40,169, comprising the following: $ Issuance of 130 million common shares for U.S.$100,000 ...... 109,713 Cash and cash equivalents acquired from 7588674 ...... 93,340 Payment of U.S.$151,600 to First Lien Credit Facility lenders .... (162,884) 40,169

4 Acquisition of community gaming centres On June 30, 2011, the Company acquired all the outstanding shares of the Boardwalk Group, which includes the Mission, Squamish and Newton community gaming centres.

The total purchase price of $39,850 consisted of $35,000 and 4,850,000 common shares of the Company. Additionally, the Company incurred transaction costs of $1,019. The Company has accounted for the acquisition using the acquisition method in accordance with IFRS 3, Business Combinations, and the results of the businesses acquired have been included in the consolidated financial statements from the date of acquisition.

The following table summarizes the fair value of the identifiable assets and liabilities: $ Cash and cash equivalents ...... 418 Non-cash working capital ...... (542) Property and equipment ...... 15,182 Intangible assets ...... 30,534 Deferred income tax liability ...... (5,742) 39,850

F-10 Gateway Casinos & Entertainment Limited Notes to Consolidated Financial Statements March 31, 2012 (Unaudited), December 31, 2011 and 2010 (expressed in thousands of Canadian dollars)

The fair value of the consideration includes the following:

$ Cash ...... 35,000 4,850,000 common shares ...... 4,850 39,850

The value assigned to the common share consideration of $1 per share was based on a price negotiated between the Company and the third party vendor.

The fair value of acquired amounts receivable is $439. This amount is expected to be fully collected.

Included in the consolidated statement of operations and comprehensive income (loss) for the year ended December 31, 2011 is revenue of $4,157 and loss and comprehensive loss of $2,403 contributed by the Boardwalk Group.

Had the Boardwalk Group been consolidated from January 1, 2011, the consolidated statement of operations and comprehensive income (loss) would include revenue of $9,028 and loss and comprehensive loss of $3,459 in respect of the acquired operations.

5 Significant accounting policies The significant accounting policies used in the preparation of these consolidated financial statements are as follows:

Basis of measurement The consolidated financial statements have been prepared under the historical cost convention except for the derivative instruments which are measured at fair value.

Consolidation The financial statements consolidate the accounts of the Company and its subsidiaries: 7588674, 427967 BC Ltd. and Boardwalk Gaming Squamish Inc. Subsidiaries are those entities (including “Special Purpose Entities”) which the Company controls by having the power to govern the financial and operating policies. Subsidiaries are fully consolidated from the date on which control is obtained by the Company and are de-consolidated from the date that control ceases. Intercompany transactions, balances, income and expenses, and profits and losses are eliminated.

Management has concluded that upon completion of the Restructuring, 7588674 meets the definition of a Special Purpose Entity, which the Company controls in accordance with Standing Interpretations Committee (“SIC”) Interpretation 12, Consolidation – Special Purpose Entities. Accordingly, in accordance with IAS 27, Consolidated and Separate Financial Statements, the Company’s financial statements consolidate the financial position and results of operations of 7588674 commencing September 16, 2010.

Revenue recognition Revenues from table games, slot machines, bingo and other electronic games consist of the Company’s share of the gaming win pursuant to its operating agreements with the BCLC and the AGLC and are recognized daily based on the gaming win at each of the Company’s casinos and community gaming centres for that day. Revenues from Automated Teller Machines, food and beverage and hotel operations and other revenue sources are recognized as the related goods and services are provided or sold.

F-11 Gateway Casinos & Entertainment Limited Notes to Consolidated Financial Statements March 31, 2012 (Unaudited), December 31, 2011 and 2010 (expressed in thousands of Canadian dollars)

Facility development commissions The facility development commissions and accelerated facility development commissions (collectively, “FDC”) are a compensation component of the Company’s MCOSA and OSAs. FDC is recorded as part of revenue on the consolidated statement of operations and comprehensive income (loss) when earned, limited to the extent that sufficient Approved Amounts (a defined term in the MCOSA and OSAs), which generally consist of approved capital and operating expenditures related to the development or improvement of gaming properties, have previously been made by the Company. FDC is earned by the Company as a fixed percentage (3% – 5%) of the gross gaming win at its British Columbia casinos and a fixed percentage (5% – 15%) of the gross gaming win at its British Columbia community gaming centres. Approved Amounts are reduced by the FDC receipts.

Leases Leases are classified as either finance or operating. Leases that transfer substantially all of the benefits and risks of ownership of property to the Company are accounted for as finance leases. Property acquired under finance leases is recorded as an asset on the consolidated balance sheet with a corresponding increase to the finance lease obligation and the asset is depreciated over the life of the lease.

Leases in which a significant portion of the risk and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to operations on a straight-line basis over the term of the lease. The benefits of lease inducements provided to the Company are recognized on a straight-line basis over the term of the operating lease agreement.

Cash and cash equivalents Cash and cash equivalents include highly liquid investments with a maturity, at the date of purchase, of three months or less.

Inventory Inventory is valued at the lesser of cost and the net realizable value. Cost is determined using the first-in, first-out method. Net realizable value is the estimated selling price less applicable selling expense.

Property and equipment Property and equipment are recorded at cost less accumulated depreciation. Cost includes expenditures that are directly attributable to the acquisition of the asset. Land is not depreciated. Depreciation on other property and equipment is provided for over the estimated useful lives on a straight-line basis as follows:

Buildings 15 - 50 years Furniture and fixtures 5 years Computer hardware 1 - 3 years Equipment 1 - 30 years Leasehold improvements term of the related lease

The Company allocates the amounts initially recognized in respect of an item of property and equipment to its significant components and depreciates each component separately.

Gaming development costs include expenditures incurred in connection with the development of new gaming and related facilities and the redevelopment of existing gaming facilities, including direct construction and development costs, and interest directly attributable to the development activities. When a new gaming facility is substantially complete and ready for use, development costs are transferred to the respective asset categories of property and equipment and depreciated over the assets’ estimated useful lives.

F-12 Gateway Casinos & Entertainment Limited Notes to Consolidated Financial Statements March 31, 2012 (Unaudited), December 31, 2011 and 2010 (expressed in thousands of Canadian dollars)

The depreciation method and useful life are assessed at least annually.

Borrowing costs attributable to the construction of property and equipment are added to the costs of those assets, until such time as the assets are substantially ready for their intended use. All other borrowing costs are recognized as interest expense in income using the effective interest method. For the three months ended March 31, 2012 (unaudited), the year ended December 31, 2011 and the period from May 18, 2010 to December 31, 2010, no borrowing costs were capitalized to property and equipment.

Intangible assets Intangible assets consist of gaming operating agreements, below market lease agreements and software, which are recorded at cost less accumulated amortization. Intangible assets are amortized on a straight-line basis over their estimated useful lives as follows:

British Columbia MCOSA and OSAs operating term as provided in the MCOSA and OSAs plus one 10-year extension if available(i) Alberta Casino Facility Licenses 20 years, commencing September 16, 2010 Below market lease agreements term of related lease Software 1 - 3 years

(i) Note 1 provides the operating term of the Company’s MCOSA and OSAs. Effective January 1, 2011, the portion of the MCOSA and OSAs that relates to Approved Amounts of FDC is amortized on an accelerated basis over the estimated eight year recovery period of the Approved Amounts. This change in estimate resulted in $10,779 of additional amortization being recognized during the year ended December 31, 2011.

Impairment of non-financial assets Property and equipment and intangible assets are tested for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable. For the purpose of measuring recoverable amounts, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generated units or “CGUs”). The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use (being the present value of the expected future cash flows of the relevant asset or CGU). An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. Corporate assets are allocated to the respective CGUs where an allocation can be done on a reasonable basis.

Share capital Incremental costs directly attributable to the issuance of shares are recognized as a deduction from equity.

Earnings per share Basic earnings per share (“EPS”) is calculated by dividing the income for the period attributable to equity owners of the Company by the weighted average number of common shares outstanding during the period.

Diluted EPS is calculated by adjusting the weighted average number of common shares outstanding for dilutive instruments.

Contingently issuable common shares for share-based payments with performance conditions are treated as outstanding and included in the calculation of diluted EPS, from the beginning of the period or the date of the contingent share agreement, only if the performance conditions have been met. If the performance conditions have not been met, only the number of contingently issuable shares that would be issuable if the end of the reporting period was the end of the contingency period are included.

F-13 Gateway Casinos & Entertainment Limited Notes to Consolidated Financial Statements March 31, 2012 (Unaudited), December 31, 2011 and 2010 (expressed in thousands of Canadian dollars)

Under a share-based payment arrangement, the Company may issue additional common shares to an officer if a liquidity event occurs. As at March 31, 2012 and 2011 (unaudited) and December 31, 2011 and 2010, the conditions for issuing these shares had not been met and the diluted EPS does not reflect this potential dilution. Issuance of these shares could result in dilution and such dilution may be material.

Share-based payments The Company provides certain employees with equity settled share-based compensation awards. The cost of these share-based compensation awards is recognized as an expense as the employees provide services to the Company with a corresponding increase in contributed surplus in shareholders’ equity. The cost of the share-based payments is measured by reference to the fair value of the awards at the grant date.

The total cost is recognized over the vesting period, which may be fixed or variable, based on the number of awards expected to vest. At the end of each reporting period, the Company revises, if necessary, its estimates of the service period and the number of awards that are expected to vest based on its best estimate of the most likely outcomes and recognizes the impact of the revisions on its estimates, if any, in the consolidated statement of operations and comprehensive income (loss).

When the vesting conditions are met, the Company issues new shares from treasury.

Marketing fund Under the MCOSA, the Company is required to pay the BCLC an amount for BCLC marketing programs related to the operations of the Villa, Cascades and Starlight Casinos equal to 0.6% of the gross gaming win from the casinos. These amounts are treated as an expense in the period incurred.

Income taxes Income tax comprises current and deferred tax. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted, at the end of the reporting period, and any adjustment to tax payable in respect of previous periods.

Deferred income tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using tax rates and laws that will be in effect when the differences are expected to reverse. The effect on deferred income tax assets and liabilities of a change in tax rates is included in income in the period in which the change is enacted or substantively enacted. Deferred income tax assets are recognized only to the extent that, in the opinion of management, it is probable that the assets will be realized.

The Company has estimated the income tax recovery/provision in accordance with its interpretation of the various income tax laws and regulations. It is possible, due to the complexity inherent in estimating income tax provisions, that the amount of the recovery/provision recognized in the consolidated financial statements could change.

Deferred income tax assets and liabilities are presented as non-current.

Income tax on income in interim periods is accrued using the tax rate that would be applicable to the expected annual earnings.

Foreign currency translation The Canadian dollar is the functional and reporting currency of the Company and its subsidiaries. Transactions completed in foreign currencies are translated into Canadian dollars at the exchange rates prevailing at the time of

F-14 Gateway Casinos & Entertainment Limited Notes to Consolidated Financial Statements March 31, 2012 (Unaudited), December 31, 2011 and 2010 (expressed in thousands of Canadian dollars)

the transactions. Monetary assets and liabilities denominated in foreign currencies are reflected in the consolidated financial statements at the exchange rates prevailing at the balance sheet date, with the resulting gain or loss included in the consolidated statement of operations and comprehensive income (loss) in the period in which it occurs.

Operating segments The internal reporting provided to the Chief Executive Officer, the Company’s chief operating decision maker, comprises the following operating segments: Villa, Starlight, Cascades, Kelowna, Kamloops, Penticton, Vernon, Palace, Baccarat, Newton, Squamish, Mission and Corporate. Based on the aggregation criteria in IFRS 8, Operating Segments, the four Lake City Casinos (Kelowna, Kamloops, Penticton and Vernon) are treated as one reporting segment and the three community gaming centres (Newton, Squamish and Mission) are treated as one reporting segment.

Financial instruments Financial instruments are recognized when the Company becomes a party to the contractual provisions of the instrument. Financial assets are derecognized when the rights to receive cash flows from the assets have expired or have been transferred and the Company has transferred substantially all of the risks and rewards of ownership.

Financial assets and liabilities are offset and the net amount reported in the consolidated balance sheet when there is a legally enforceable right to offset amounts and the intention is to settle on a net basis, or realize the asset and settle the liability simultaneously.

Financial instruments are measured at fair value on initial recognition. The fair value of a financial instrument is the amount which could be exchanged, or for a liability settled, between knowledgeable willing parties in an arm’s length transaction. Fair values of financial instruments that are traded in an active market are obtained from independent quoted prices. In the absence of an active market, fair values are determined based on an appropriate valuation model, for example, discounted cash flows, which requires the use of assumptions concerning the amount and timing of estimated future cash flows and discount rates. The valuation models make maximum use of market observable inputs but the use of unobservable inputs may also be necessary in some instances. Subsequent measurement depends on management’s classification of the financial instrument. The classification of financial instruments depends on the nature and purpose of the financial instruments, management’s choice and, in some circumstances, management’s intentions.

The classification and related measurement of the Company’s significant financial instruments are as follows:

Fair value through profit or loss Financial instruments are classified as fair value through profit or loss if they are acquired principally for sale or repurchase in the near term. Derivatives are also required to be included in this category as held-for-trading instruments unless they are designated as hedges. Embedded derivatives that are not closely related to the host instrument are classified as held-for-trading instruments.

Financial instruments in this category are measured at fair value with the changes in fair value recognized immediately in the consolidated statement of operations and comprehensive income (loss).

Loans and receivables Loans and receivables are initially recognized at the amount expected to be received, less a discount, when significant, to reduce the loans and receivables to fair value. Subsequently, loans and receivables are measured at amortized cost using the effective interest method less provisions where an impairment is identified.

F-15 Gateway Casinos & Entertainment Limited Notes to Consolidated Financial Statements March 31, 2012 (Unaudited), December 31, 2011 and 2010 (expressed in thousands of Canadian dollars)

Other liabilities Other liabilities are initially recognized at the amount expected to be paid, less a discount, when significant, to reduce the payable to fair value. Subsequently, other liabilities are measured at amortized cost using the effective interest method.

The following table summarizes the Company’s selected financial instrument classifications:

Financial instruments Classification Cash and cash equivalents Loans and receivables Amounts receivable Loans and receivables Embedded derivatives (other asset) Fair value through profit or loss Gaming revenue payable to BCLC and AGLC Other liabilities Accounts payable and accrued liabilities Other liabilities Long-term debt Other liabilities

Impairment of financial assets At each reporting date, the Company assesses whether there is objective evidence that loans and receivables are impaired.

If such objective evidence of impairment is identified, which occurs after the initial recognition of the loan or receivable, and the loss event has an impact on the cash flows, the amount of the impairment is estimated as the difference between the amortized cost of the loan or receivable and the present value of the estimated future cash flows, discounted using the instrument’s original effective interest rate. The carrying amount of the asset is reduced by this amount either directly or indirectly through the use of an allowance account.

Impairment losses on financial assets carried at amortized cost are reversed in subsequent periods if the amount of the loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized.

Transaction costs and debt premiums or discounts Transaction costs and debt premiums or discounts are deferred and amortized over the estimated term of the related financial liability using the effective interest method. Transaction costs on revolving credit facilities are initially deferred and recognized as interest expense using the effective interest method when the facility is drawn upon to the extent that a draw down of the facility is probable. Transaction costs on credit facilities that represent a prepayment for liquidity services are amortized over the term of the facility. Transaction costs incurred in connection with a business combination are expensed as incurred in the consolidated statement of operations and comprehensive income (loss).

Embedded derivatives Derivatives embedded in other financial instruments, such as a prepayment option on long-term debt, or other executory contracts are accounted for as separate derivatives when their risks and characteristics are not closely related to their host financial instrument or contract.

Provisions Provisions represent liabilities of the Company for which the amount or timing is uncertain. Provisions are recognized when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and the amount can be reliably

F-16 Gateway Casinos & Entertainment Limited Notes to Consolidated Financial Statements March 31, 2012 (Unaudited), December 31, 2011 and 2010 (expressed in thousands of Canadian dollars)

estimated. Provisions are measured at management’s best estimate of the present value of the expected expenditures required to settle the obligation using a discount rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in provisions due to the passage of time is recognized in interest expense in the consolidated statement of operations and comprehensive income (loss).

Seasonality The Company is subject to seasonality in the first quarter primarily at its Lake City Casinos due to lower tourism compared to summer months in the Thompson/Okanagan region of British Columbia.

Comparative information As the Company commenced active operations on September 16, 2010, the comparative results reported for the period from May 18, 2010 to December 31, 2010 may not be comparable to the results reported for the year ended December 31, 2011.

Accounting standards adopted IFRS 7 – Financial Instruments: Disclosures In October 2010, the IASB issued amendments to IFRS 7, Financial Instruments: Disclosures. These amendments increased the disclosure requirements in connection with the transfer of financial assets to a third party that are not derecognized from the Company’s consolidated financial statements. The amendments to IFRS 7 were effective for annual periods beginning on or after July 1, 2011. The Company adopted the standard on January 1, 2012. The adoption did not have an impact on the Company’s consolidated financial statements.

Accounting standards issued but not yet applied IFRS 9 – Financial Instruments In October 2010, the IASB issued IFRS 9, Financial Instruments, which is the result of the first phase of the IASB’s project to replace IAS 39, Financial Instruments: Recognition and Measurement. IFRS 9 addresses classification and measurement of financial assets and replaces the multiple category and measurement models in IAS 39 for debt instruments with a new mixed measurement model having only two categories: amortized cost and fair value through profit or loss. IFRS 9 also replaces the models for measuring equity instruments, and such instruments are either recognized at fair value through profit or loss or at fair value through other comprehensive income. IFRS 9 is effective for interim and annual financial statements for fiscal years beginning on or after January 1, 2015, and is not expected to have a material impact on the Company’s consolidated financial statements.

In May 2011, the IASB issued the following standards which have not yet been adopted by the Company: IFRS 10, Consolidated Financial Statements; IFRS 11, Joint Arrangements; IFRS 12, Disclosure of Interests in Other Entities; IFRS 13, Fair Value Measurement; amended IAS 27, Consolidated and Separate Financial Statements; and amended IAS 28, Investments in Associates and Joint Ventures. Each of the new standards is effective for annual periods beginning on or after January 1, 2013 with early adoption permitted. The Company has not yet begun the process of assessing the impact that the new and amended standards will have on its consolidated financial statements or whether to early adopt any of the new requirements.

The following is a brief summary of the new standards:

F-17 Gateway Casinos & Entertainment Limited Notes to Consolidated Financial Statements March 31, 2012 (Unaudited), December 31, 2011 and 2010 (expressed in thousands of Canadian dollars)

existing IFRS, consolidation is required when an entity has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. IFRS 10 replaces SIC-12, Consolidation – Special Purpose Entities, and parts of IAS 27, Consolidated and Separate Financial Statements.

6 Critical accounting estimates and judgments The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates.

The estimates and judgments used in determining the recorded amounts in these consolidated financial statements include the following: a) Impairment of non-financial assets The determination of a long-lived asset impairment requires significant estimates and assumptions to determine the recoverable amount of a CGU, the recoverable amount being the higher of fair value less costs to sell and value in use. The value in use method involves estimating the net present value of future cash

F-18 Gateway Casinos & Entertainment Limited Notes to Consolidated Financial Statements March 31, 2012 (Unaudited), December 31, 2011 and 2010 (expressed in thousands of Canadian dollars)

flows derived from the use of the CGU, discounted at an appropriate rate. The Company does not have any goodwill or intangible assets with an indefinite useful life; therefore, no annual impairment test was performed.

b) Estimated useful lives of non-financial assets

Judgment is used to estimate each component of a tangible and intangible asset’s useful life and is based on an analysis of all pertinent factors including, but not limited to, the expected use of the asset and, in the case of an intangible asset, contractual provisions that enable renewal or extension of the asset’s legal or contractual life without substantial cost, and renewal history. If the estimated useful lives were incorrect, this could result in an increase or decrease in the annual amortization and depreciation expense, and future impairment charges.

See note 5 for a change in the amortization period of gaming operating agreements.

c) Fair value of net assets acquired in business combinations

The identifiable tangible and intangible assets purchased and liabilities assumed in a business combination are recognized at their estimated fair values at the date of acquisition with the exception of deferred income tax which is recognized and measured in accordance with IAS 12, Income Taxes. The identification of assets purchased and liabilities assumed and their valuation is specialized and judgmental. Where appropriate, the Company engages business valuators to assist in the valuation of tangible and intangible assets acquired. Any excess of the fair value of consideration payable over the fair value of the identifiable tangible and intangible assets recognized in the business combination and liabilities assumed is allocated to goodwill.

d) Income taxes

Deferred tax assets and liabilities are due to temporary differences between the carrying amount for accounting purposes and the tax basis of certain assets and liabilities, as well as undeducted tax losses. Estimation is required for the timing of the reversal of these temporary differences and the tax rate applied. The carrying amounts of assets and liabilities are based on amounts recorded in the financial statements and are subject to the accounting estimates inherent in those balances. The tax basis of assets and liabilities and the amount of undeducted tax losses are based on the applicable income tax legislation, regulations and interpretations. The timing of the reversal of the temporary differences and the timing of deduction of tax losses are based on estimations of the Company’s future financial results.

e) Fair value of embedded derivatives

The Company is required to determine the fair value of embedded derivatives, such as prepayment options, separate from its long-term debt. Fair values for embedded derivatives are determined using valuation techniques and require estimates of redemption dates and forward interest rates existing at the balance sheet date as the financial instruments are not traded in an active market.

F-19 Gateway Casinos & Entertainment Limited Notes to Consolidated Financial Statements March 31, 2012 (Unaudited), December 31, 2011 and 2010 (expressed in thousands of Canadian dollars)

f) Fair value of long-term debt

The Company makes estimates and assumptions relating to fair value disclosure of the long-term debt. The critical assumptions underlying the fair value disclosure include the credit spread. The Company reviews various comparable debt securities and determines a reasonable credit spread applicable to the debt securities.

7 Trust funds and liabilities Cash floats Under the terms of the MCOSA and OSAs, cash floats of $17,002 (unaudited) are provided as at March 31, 2012 (December 31, 2011 – $17,002; December 31, 2010 – $nil) by the BCLC for the casinos and community gaming centres located in British Columbia. These funds are used in the operations of the Company but are not reflected in these consolidated financial statements. The Company has provided the BCLC with letters of credit totalling $21,977 (unaudited) as at March 31, 2012 (December 31, 2011 – $21,977; December 31, 2010 – $nil) as security for the cash floats provided.

Prior to cash floats being provided by the BCLC, the Company used its own funds for the floats and presented those funds as restricted cash (note 22).

Facility development commissions Approved Amounts have not been recorded as amounts receivable on the Company’s consolidated balance sheet and will not be recognized until FDC trust funds become available through future gaming operations.

The Company has unrecognized Approved Amounts to be reimbursed from future FDC funds as follows:

March 31, December 31, December 31, 2012 2011 2010 $ $ $ (Unaudited) Villa ...... 7 1,495 9,484 Cascades ...... 13,478 14,816 20,295 Starlight ...... 64,218 66,658 72,168 Lake City ...... 4,364 5,219 10,422 Community gaming centres ...... 14,051 10,501 — 96,118 98,689 112,369

In addition to the amounts in the above table, the Company has incurred other eligible costs at its British Columbia casinos and community gaming centres that will be submitted to the BCLC to become Approved Amounts. As at March 31, 2012, the Company has submitted a total of $98,853 (unaudited) (December 31, 2011 – $98,853; December 31, 2010 – $90,300) to the BCLC to become Approved Amounts.

Progressive jackpot funds Progressive jackpot funds are held in trust by the Company and have not been reflected in these consolidated financial statements. The progressive jackpot liability represents the potential payout to progressive jackpot winners. Revenues in these consolidated financial statements are recorded net of amounts related to the progressive jackpot. The progressive jackpot funds held in trust by the Company at March 31, 2012 are $53 (unaudited) (December 31, 2011 – $48; December 31, 2010 – $177).

F-20 Gateway Casinos & Entertainment Limited Notes to Consolidated Financial Statements March 31, 2012 (Unaudited), December 31, 2011 and 2010 (expressed in thousands of Canadian dollars)

Patron gaming funds Patron gaming funds are held in trust by the Company and have not been reflected in these consolidated financial statements. These are funds that patrons have deposited in trust for gaming purposes. The patron gaming funds held in trust by the Company at March 31, 2012 are $80 (unaudited) (December 31, 2011 – $54; December 31, 2010 – $54).

8 Cash and cash equivalents

March 31, December 31, December 31, 2012 2011 2010 $ $ $ (Unaudited) Cash at bank ...... 25,130 50,920 50,243 Cash floats ...... 6,073 12,443 8,800 31,203 63,363 59,043

9 Inventory The Company’s inventory consists of food and beverages. For the three months ended March 31, 2012, $2,697 (unaudited) (three months ended March 31, 2011 – $2,505 (unaudited); year ended December 31, 2011 – $10,734; period from May 18, 2010 to December 31, 2010 – $3,228) of inventory was expensed as cost of food and beverage service. For the three months ended March 31, 2012 and 2011 (unaudited), the year ended December 31, 2011 and the period from May 18, 2010 to December 31, 2010, no inventory writedowns were recognized.

F-21 Gateway Casinos & Entertainment Limited Notes to Consolidated Financial Statements March 31, 2012 (Unaudited), December 31, 2011 and 2010 (expressed in thousands of Canadian dollars)

10 Property and equipment

Furniture Gaming and Computer Leasehold development Land Buildings fixtures hardware Equipment improvements costs Total $ $ $ $ $ $ $ $ Period from May 18, 2010 to December 31, 2010 Acquisition of casino business ..... 59,550 295,795 8,955 1,436 17,866 19,761 — 403,363 Gaming development costs and purchase of property and equipment ...... — 492 70 96 80 101 435 1,274 Depreciation for the period ...... — (3,472) (436) (233) (649) (772) — (5,562) Net book value – December 31, 2010 ...... 59,550 292,815 8,589 1,299 17,297 19,090 435 399,075 At December 31, 2010 Cost ...... 59,550 296,287 9,025 1,532 17,946 19,862 435 404,637 Accumulated depreciation ...... — 3,472 436 233 649 772 — 5,562 Net book value ...... 59,550 292,815 8,589 1,299 17,297 19,090 435 399,075 Year ended December 31, 2011 Net book value – December 31, 2010 ...... 59,550 292,815 8,589 1,299 17,297 19,090 435 399,075 Acquisition of community gaming centres (note 4) ...... 6,500 5,000 — 2 78 3,602 — 15,182 Gaming development costs and purchase of property and equipment ...... — 1,733 1,313 174 2,058 6,067 1,018 12,363 Depreciation for the year ...... — (11,603) (1,503) (724) (2,272) (3,275) — (19,377) Impairment loss(1) ...... — — — — — (1,243) — (1,243) Net book value – December 31, 2011 ...... 66,050 287,945 8,399 751 17,161 24,241 1,453 406,000 At December 31, 2011 Cost ...... 66,050 303,020 10,338 1,708 20,082 28,288 1,453 430,939 Accumulated depreciation ...... — 15,075 1,939 957 2,921 4,047 — 24,939 Net book value ...... 66,050 287,945 8,399 751 17,161 24,241 1,453 406,000 Three months ended March 31, 2012 Net book value – December 31, 2011 ...... 66,050 287,945 8,399 751 17,161 24,241 1,453 406,000 Gaming development costs and purchase of property and equipment ...... 22,325 76 172 12 433 291 507 23,816 Depreciation for the period ...... — (2,947) (368) (117) (627) (960) — (5,019) Net book value – March 31, 2012 (unaudited) ...... 88,375 285,074 8,203 646 16,967 23,572 1,960 424,797 At March 31, 2012 Cost ...... 88,375 303,096 10,510 1,720 20,515 28,579 1,960 454,755 Accumulated depreciation ...... — 18,022 2,307 1,074 3,548 5,007 — 29,958 Net book value (unaudited) ...... 88,375 285,074 8,203 646 16,967 23,572 1,960 424,797

(1) Since its acquisition on June 30, 2011, the Squamish community gaming centre has not performed as well as projected. As a result, an impairment assessment was performed as at December 31, 2011 and, based on value in use, leasehold improvements have been written down by $1,243. An 11.5% discount rate has been used for the value in use calculation.

F-22 Gateway Casinos & Entertainment Limited Notes to Consolidated Financial Statements March 31, 2012 (Unaudited), December 31, 2011 and 2010 (expressed in thousands of Canadian dollars)

The MCOSA for the Villa, Cascades, Starlight and Lake City Casinos and the OSAs for the Mission, Squamish and Newton community gaming centres provide that certain gaming equipment is the property of the BCLC. The Casino Facility Licenses for the Palace and Baccarat Casinos provide that certain gaming equipment is the property of the AGLC. Accordingly, any costs related to gaming equipment provided by and owned by the BCLC and AGLC have not been included in these consolidated financial statements.

11 Intangible assets

Gaming Below operating market lease agreements agreements Software Total $ $ $ $ Period from May 18, 2010 to December 31, 2010 Acquisition of casino business ...... 470,337 1,424 543 472,304 Additions ...... — — 40 40 Amortization for the period ...... (9,022) (156) (1) (9,179) Net book value – December 31, 2010 ...... 461,315 1,268 582 463,165 At December 31, 2010 Cost ...... 470,337 1,424 583 472,344 Accumulated amortization ...... 9,022 156 1 9,179 Net book value ...... 461,315 1,268 582 463,165 Year ended December 31, 2011 Net book value – December 31, 2010 ...... 461,315 1,268 582 463,165 Acquisition of community gaming centres (note 4) ...... 30,894 (360) — 30,534 Additions ...... — — 407 407 Amortization for the year ...... (44,177) (523) (387) (45,087) Net book value – December 31, 2011 ...... 448,032 385 602 449,019 At December 31, 2011 Cost ...... 501,231 1,064 990 503,285 Accumulated amortization ...... 53,199 679 388 54,266 Net book value ...... 448,032 385 602 449,019 Three months ended March 31, 2012 Net book value – December 31, 2011 ...... 448,032 385 602 449,019 Additions ...... — — 109 109 Amortization for the period ...... (11,566) (128) (85) (11,779) Net book value – March 31, 2012 (unaudited) ...... 436,466 257 626 437,349 At March 31, 2012 Cost ...... 501,231 1,064 1,099 503,394 Accumulated amortization ...... 64,765 807 473 66,045 Net book value (unaudited) ...... 436,466 257 626 437,349

The remaining useful lives for the intangible assets are between one and 19 years.

F-23 Gateway Casinos & Entertainment Limited Notes to Consolidated Financial Statements March 31, 2012 (Unaudited), December 31, 2011 and 2010 (expressed in thousands of Canadian dollars)

12 Accounts payable and accrued liabilities

March 31, December 31, December 31, 2012 2011 2010 $ $ $ (Unaudited) Trade accounts payable ...... 6,098 4,086 5,490 Salaries, wages and benefits ...... 7,473 8,321 9,656 Construction holdback ...... 104 366 37 Interest on long-term debt ...... 6,206 2,431 3,311 Other ...... 412 367 1,932 20,293 15,571 20,426

13 Long-term debt

March 31, December 31, December 31, 2012 2011 2010 $ $ $ (Unaudited) Term Loans (a) Term Loan A ...... 135,271 149,399 115,000 Term Loan B-1 ...... 176,379 187,730 200,000 Term Loan B-2 ...... — — 40,000 311,650 337,129 355,000 Second Priority Senior Secured Notes (b) ...... 170,000 170,000 170,000 481,650 507,129 525,000 Less Unamortized portion of deferred transaction costs and debt premium related to embedded derivatives ...... (17,594) (18,934) (20,598) Current portion ...... (26,943) (25,015) (16,775) 437,113 463,180 487,627

As part of the Restructuring (note 3), the Company issued U.S.$500,000 of First Lien debt for $513,200. The debt bore interest at 10.5%. On November 12, 2010, the Company raised $355,000 of term loans (the “Term Loans”), completed the placement of $170,000 of Second Priority Senior Secured Notes (the “Notes”), repaid the U.S.$500,000 of First Lien debt for $500,881 and recognized an exchange gain of $12,319.

a) Term Loans On November 12, 2010, the Company entered into a credit agreement to borrow up to the following:

$ Term Loan Facilities ...... 355,000 Revolving Credit Facility ...... 35,000

The Company borrowed the full amounts under the Term Loan Facilities. Advances under the Term Loan Facilities are available as U.S. Base Rate Advances, LIBOR Advances, Canadian Prime Rate Advances, Banker’s Acceptances (“BAs”) and BA Equivalent Advances. Advances under Term Loan A at March 31, 2012 were BA Advances bearing interest at 4.0% (unaudited) (December 31, 2011 – BA Advances bearing

F-24 Gateway Casinos & Entertainment Limited Notes to Consolidated Financial Statements March 31, 2012 (Unaudited), December 31, 2011 and 2010 (expressed in thousands of Canadian dollars)

interest at 4.2%; December 31, 2010 – BA Advances bearing interest at 4.9%). Advances under Term Loan B-1 at March 31, 2012 were LIBOR Advances bearing interest at 5.3% (unaudited) (December 31, 2011 – LIBOR Advances bearing interest at 5.3%; December 31, 2010 – LIBOR Advances bearing interest at 6.5%). Advances under Term Loan B-2 at December 31, 2010 were BA Advances bearing interest at 6.5%. The Company can issue letters of credit under the Revolving Credit Facility. As at March 31, 2012, the Company has issued letters of credit totalling $22,923 (unaudited) (December 31, 2011 – $22,923; December 31, 2010 – $nil) and has not borrowed any funds on the Revolving Credit Facility.

On August 11, 2011, the Company amended the credit agreement relating to its Term Loans. The effect of this amendment was to decrease the interest rate spreads applicable to its Term Loans by 0.75% and additionally decrease the LIBOR floor applicable to its Term Loan B-1 from 1.75% to 1.25%. Further, the amount of Term Loan A increased by $50,000 with a corresponding decrease to Term Loan B-1 of $10,300 and Term Loan B-2 of $39,700. Term Loan B-2 was repaid in full. The increase of $50,000 in Term Loan A was considered additional debt. The decrease in Term Loan B-1 resulted in a partial extinguishment with a loss on extinguishment of $137 and the decrease in Term Loan B-2 resulted in a full extinguishment with a loss on extinguishment of $526. An additional $710 relating to prepaid interest paid before the credit agreement was amended was written off and recognized as a loss on extinguishment. Transaction costs directly related to the credit agreement amendment of $2,913 were capitalized and are being amortized using the effective interest rate method over the life of the loans.

The Term Loan Facilities have repayment terms as follows:

i) Term Loan A matures on November 12, 2015 and the Company is required to make quarterly principal instalments equal to (i) 3.125% of the original principal amount of the loan for each repayment date occurring before October 31, 2011, (ii) 3.75% of the original principal amount of the loan for each repayment date occurring after October 31, 2011, but before October 31, 2012, (iii) 5% of the original principal amount of the loan for each repayment date occurring after October 31, 2012, but before October 31, 2014, and (iv) 8.125% of the original principal amount of the loan for each repayment date occurring after October 31, 2014, but prior to maturity.

ii) Term Loan B-1 matures on May 12, 2016 and the Company is required to make quarterly instalments equal to 0.25% of the original principal amount of the loan.

iii) On the earlier of delivery of audited financial statements and the 95th day following the end of each fiscal year, beginning with the fiscal year ending December 31, 2012, the Company is required to make an aggregate principal payment (“Excess Cash Payment”) equal to:

• where the total leverage ratio at the end of the applicable fiscal year is greater than 3.75:1.0, 75% of the excess cash flow for such fiscal year;

• where the total leverage ratio at the end of the applicable fiscal year is equal to or less than 3.75:1.0 but greater than 2.75:1.0, 50% of the excess cash flow for such fiscal year;

• where the total leverage ratio at the end of the applicable fiscal year is equal to or less than 2.75:1.0 but greater than or equal to 1.0:1.0, 25% of the excess cash flow for such fiscal year; and

• where the total leverage ratio at the end of the applicable fiscal year is less than 1.0:1.0, $nil;

minus the aggregate principal amount of all prepayments during such fiscal year.

A first charge on all assets of the Company and 7588674 is provided as security for the Term Loan Facilities and Revolving Credit Facility.

F-25 Gateway Casinos & Entertainment Limited Notes to Consolidated Financial Statements March 31, 2012 (Unaudited), December 31, 2011 and 2010 (expressed in thousands of Canadian dollars)

Aggregate minimum payments, prior to Excess Cash Payments, for each of the next five years ending December 31 for the Term Loan Facilities are as follows:

$ 2012 ...... 25,015 2013 ...... 32,726 2014 ...... 32,726 2015 ...... 66,461 2016 ...... 180,202

b) Second Priority Senior Secured Notes

On November 12, 2010, the Company issued $170,000 of the Notes. The Notes mature on November 15, 2017 and bear interest at 8.875% per annum. Interest is payable semi-annually on November 15 and May 15 of each year, commencing on May 15, 2011.

A second charge on all assets of the Company and 7588674 is provided as security for the Notes.

The Company’s Notes agreement has provisions for early redemption during defined periods prior to maturity with the payment of defined premiums, some of which require separation under the embedded derivatives accounting rules. On issuance on November 12, 2010, the fair value of the embedded derivatives was $5,224 and was recorded as a derivative asset in other asset and as a premium on the long-term debt on the consolidated balance sheet. The fair value of the embedded derivatives included in other asset as at March 31, 2012 was $1,521 (unaudited) (December 31, 2011 – $2,730; December 31, 2010 – $4,264). Accordingly, a change in fair value of embedded derivatives of $1,209 (unaudited) has been recognized during the three months ended March 31, 2012 (three months ended March 31, 2011 – $1,293 (unaudited); year ended December 31, 2011 – $1,534; period from May 18, 2010 to December 31, 2010 – $960). The premium is amortized over the term of the Notes using the effective interest rate method.

In the event of a Change of Control (as defined in the Notes agreement), the holders of the Notes will have the right to require the Company to repay all or a portion of the outstanding Notes at a purchase price equal to 101% of the principal amounts of the Notes plus accrued and unpaid interest.

F-26 Gateway Casinos & Entertainment Limited Notes to Consolidated Financial Statements March 31, 2012 (Unaudited), December 31, 2011 and 2010 (expressed in thousands of Canadian dollars)

14 Share capital Authorized Unlimited number of voting common shares without par value

Issued and outstanding

Number Amount of shares $ Period from May 18, 2010 to December 31, 2010 (note 3) Partial consideration for the First Lien Credit Facility of 7588674 ..... 116,400,000 Consideration for the Second Lien Credit Facility of 7588674 ...... 125,599,995 Consideration for the Shareholder Loans of 7588674 ...... 8,000,000 Issued to certain First Lien lenders of 7588674 ...... 20,000,000 269,999,995 302,087 Issued for cash to Second Lien lenders of 7588674 ...... 130,000,000 109,713 Balance – December 31, 2010 ...... 399,999,995 411,800 Year ended December 31, 2011 Consideration for the acquisition of the Boardwalk Group (note 4) .... 4,850,000 4,850 Issued to a director for services rendered ...... 101,250 101 Balance – December 31, 2011 ...... 404,951,245 416,751 Three months ended March 31, 2012 Consideration for acquisition of land ...... 1 — Balance – March 31, 2012 (unaudited) ...... 404,951,246 416,751

Share-based compensation

The Company has entered into arrangements to provide share-based payments to selected employees.

The most significant arrangement provides for an officer to receive a number of shares based on a monetary value determined at a future date based on liquidity events, provided the officer is employed by the Company within six months of the date of the liquidity events. Potential liquidity events include the sale of the common shares of the Company by the original shareholders as at completion of the Restructuring. The monetary value is determined based on the price of the common shares and the number of common shares sold at the future event.

The number of potential shares issuable under the share-based payment arrangements as at March 31, 2012 and 2011 is 10,000,000 (unaudited) (December 31, 2011 – 10,000,000 shares; December 31, 2010 – 10,000,000 shares) if all of the common shares issued and outstanding are sold. The award under the arrangements is considered to be granted and the weighted average fair value of the award is $1.00 per award. The fair value was based on the Company’s estimate of the fair value of its common shares at the award date based on a valuation of the Company’s enterprise value using a discounted cash flow method. Future expected dividends were not explicitly incorporated into the measurement of fair value of the common shares. The Company has estimated the expected number of shares to vest based on its estimate of the most likely possible outcome of a sale of some or all common shares by existing shareholders and the possible service periods of the officer. The number of shares expected to vest as at March 31, 2012 was 1,781,250 shares (unaudited) (March 31, 2011 – 1,593,750 shares (unaudited); December 31, 2011 – 1,656,250 shares; December 31, 2010 – 1,593,750 shares).

F-27 Gateway Casinos & Entertainment Limited Notes to Consolidated Financial Statements March 31, 2012 (Unaudited), December 31, 2011 and 2010 (expressed in thousands of Canadian dollars)

The length of the vesting period is dependent on the achievement of a liquidity event and the Company has estimated the expected vesting period based on the most likely outcome of the performance condition. The Company revises its estimate of the length of the vesting period, if necessary, if subsequent information indicates that the period has changed.

It is reasonably possible, based on the information available at the date of the preparation of these consolidated financial statements, that the estimates of or the actual outcomes and timing of a liquidity event within the next financial year may be different from the assumptions used and a material change in the share-based compensation reflected in the consolidated statement of operations and comprehensive income (loss) may occur. Management has not been able to determine the range of possible outcomes as the ultimate outcomes will be determined by the market and economic factors.

15 Income taxes Deferred income taxes

March 31, December 31, December 31, 2012 2011 2010 $ $ $ (Unaudited) Net deferred tax liabilities Net deferred tax liabilities to be recovered after more than 12 months ...... (4,691) (6,059) (4,767) Net deferred tax liabilities to be recovered within 12 months ...... — — — Deferred tax liabilities – net ...... (4,691) (6,059) (4,767)

F-28 Gateway Casinos & Entertainment Limited Notes to Consolidated Financial Statements March 31, 2012 (Unaudited), December 31, 2011 and 2010 (expressed in thousands of Canadian dollars)

The components of the net deferred income tax liabilities are as follows: March 31, December 31, December 31, 2012 2011 2010 $ $ $ (Unaudited) Deferred tax assets Non-capital losses ...... 13,050 11,079 1,819 Deferred tax liabilities Property and equipment ...... (10,526) (8,887) (2,470) Intangible assets ...... (6,590) (7,621) (3,423) Transactions costs ...... (625) (630) (693) (17,741) (17,138) (6,586) (4,691) (6,059) (4,767)

At December 31, 2011, the Company has non-capital losses carried forward for federal income tax purposes of $44,317 (December 31, 2010 – $7,277) and unrealized net capital losses of $828. The non-capital losses expire from 2015 to 2031 and the net capital losses do not expire.

In addition to the Company’s net deferred tax liability of $4,691 (unaudited) at March 31, 2012, 7588674 has $8,240 of deferred income tax assets relating to transaction costs and non-capital losses that expire in 2030 which have not been recognized in these consolidated financial statements.

Income tax expense Period from May 18, 2010 (date of Three months Three months incorporation) ended ended Year ended to March 31, March 31, December 31, December 31, 2012 2011 2011 2010 $ $ $ $ (Unaudited) (Unaudited) Current tax Current tax on profits for the period ...... — — — (44) Deferred tax Origination and reversal of temporary differences ...... 1,368 1,315 4,450 (1,409) Recovery of income taxes ...... 1,368 1,315 4,450 (1,453)

F-29 Gateway Casinos & Entertainment Limited Notes to Consolidated Financial Statements March 31, 2012 (Unaudited), December 31, 2011 and 2010 (expressed in thousands of Canadian dollars)

The reconciliation of income taxes calculated at statutory tax rates to the actual income tax (recovery) provision is as follows: Period from May 18, 2010 (date of Three months Three months incorporation) ended ended Year ended to March 31, March 31, December 31, December 31, 2012 2011 2011 2010 $ $ $ $ (Unaudited) (Unaudited) (Loss) income before income taxes ...... (7,784) (5,958) (17,757) 10,451 Statutory tax rates ...... 25.0% 26.5% 26.5% 28.4% (Recovery of) provision for income taxes at statutory tax rates ...... (1,946) (1,579) (4,706) 2,968 Tax effects of Non-deductible share-based payments ..... 268 — — — Non-taxable portion of net capital loss (gain) ...... 127 127 (340) (1,599) Non-deductible transaction costs ...... 18 — 379 — Difference between current and future tax rates ...... — (20) 166 (136) Tax losses for which no deferred income tax asset was recognized ...... 127 127 87 120 Other ...... 38 30 (36) 100 (Recovery of) provision for income taxes .... (1,368) (1,315) (4,450) 1,453

The (recovery of) provision for income taxes for the three months ended March 31, 2012, is recognized based on the weighted average annual income tax rate expected for the full financial year of 25% (unaudited) (March 31, 2011 – 26.5% (unaudited); December 31, 2011 – 26.5%; December 31, 2010 – 28.4%).

16 Interest expense Period from May 18, 2010 (date of Three months Three months incorporation) ended ended Year ended to March 31, March 31, December 31, December 31, 2012 2011 2011 2010 $ $ $ $ (Unaudited) (Unaudited) Interest on long-term debt ...... 7,950 9,078 34,744 13,677 Amortization of deferred transaction costs and premium on long-term debt ...... 1,419 746 4,256 562 9,369 9,824 39,000 14,239

17 Financial instruments Financial risk management The Company’s activities expose it to a variety of financial risks, which periodically include credit risk, liquidity risk, interest rate risk and foreign exchange rate risk. The Company’s risk management activities are designed to

F-30 Gateway Casinos & Entertainment Limited Notes to Consolidated Financial Statements March 31, 2012 (Unaudited), December 31, 2011 and 2010 (expressed in thousands of Canadian dollars)

mitigate possible adverse effects on the Company’s performance. Risk management activities are managed by the finance and accounting department. The Company’s risk management policies and procedures have not changed from 2010.

The Company’s significant financial instruments and the types of risks to which their carrying values are exposed are as follows:

Risks Market risks Foreign Interest exchange Credit Liquidity rate rate Cash and cash equivalents ...... X X Amounts receivable ...... X Embedded derivatives (other asset) ...... X Gaming revenue payable to BCLC and AGLC ...... X Accounts payable and accrued liabilities ...... X X Long-term debt ...... X X

Credit risk Credit risk is the risk that a party to one of the Company’s financial instruments will cause a financial loss to the Company by failing to discharge an obligation. The carrying values of the Company’s financial assets represent the maximum exposure to credit risk and are as follows:

March 31, December 31, December 31, 2012 2011 2010 $ $ $ (Unaudited) Cash and cash equivalents ...... 31,203 63,363 59,043 Amounts receivable ...... 3,640 3,684 3,631 34,843 67,047 62,674

Cash and cash equivalents: Credit risk associated with these assets is minimized by ensuring that cash and cash equivalents are held by high-quality financial institutions.

Amounts receivable: Due to the nature of the Company’s business, there is insignificant exposure to any one party relating to amounts receivable. As at March 31, 2012, the Company had a provision for bad debts of $nil (unaudited) (December 31, 2011 – $nil; December 31, 2010 – $nil) and no amounts receivable were past due or impaired.

Liquidity risk Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with its financial liabilities that are settled by delivery of cash or another financial asset. The Company settles its financial obligations out of cash and cash equivalents. The ability to do this relies on the Company generating sufficient revenue, collecting amounts receivable in a timely manner, and maintaining sufficient cash and cash equivalents in excess of anticipated needs.

F-31 Gateway Casinos & Entertainment Limited Notes to Consolidated Financial Statements March 31, 2012 (Unaudited), December 31, 2011 and 2010 (expressed in thousands of Canadian dollars)

The contractual maturity of the Company’s financial liabilities (including interest) on an undiscounted basis is as follows:

Expected payments by period as at March 31, 2012 (unaudited) Expected More than within 1 year 2 – 3 years 4 – 5 years 5 years Total $ $ $ $ $ Gaming revenue payable to BCLC and AGLC ...... 5,437 — — — 5,437 Accounts payable and accrued liabilities . . . 20,293 — — — 20,293 Long-term debt ...... 56,184 129,540 264,489 185,170 635,383

Expected payments by period as at December 31, 2011 Expected More than within 1 year 2 – 3 years 4 – 5 years 5 years Total $ $ $ $ $ Gaming revenue payable to BCLC and AGLC ...... 6,262 — — — 6,262 Accounts payable and accrued liabilities . . . 15,571 — — — 15,571 Long-term debt ...... 55,154 126,650 302,220 185,170 669,194

Market risk Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in interest rates and/or foreign currency exchange rates or other price risk.

Interest rate risk Interest rate risk is the risk that the fair value or cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s variable rate long-term debt is subject to significant cash flow interest rate risk.

If interest rates on the Company’s variable rate long-term debt had been 1% higher or 1% lower, with all other variables held constant, the effect on the Company’s interest expense for the three months ended March 31, 2012 would have been $811 (unaudited) (year ended December 31, 2011 – $3,461; period from May 18, 2010 to December 31, 2010 – $486).

Foreign exchange rate risk Foreign exchange rate risk is the risk that the fair value or cash flows of a financial instrument will fluctuate due to changes in foreign exchange rates.

The Company periodically has accounts payable and accrued liabilities denominated in U.S. dollars. As at March 31, 2012, U.S. dollar denominated accounts payable and accrued liabilities totalled U.S.$216 (unaudited) (December 31, 2011 – U.S.$151; December 31, 2010 – U.S.$327).

F-32 Gateway Casinos & Entertainment Limited Notes to Consolidated Financial Statements March 31, 2012 (Unaudited), December 31, 2011 and 2010 (expressed in thousands of Canadian dollars)

Fair values of financial instruments March 31, 2012 December 31, 2011 December 31, 2010 Carrying Carrying Fair Carrying Fair amount Fair value amount value amount value $ $ $ $ $ $ (Unaudited) (Unaudited) Financial instruments Cash and cash equivalents ...... 31,203 31,203 63,363 63,363 59,043 59,043 Amounts receivable ...... 3,640 3,640 3,684 3,684 3,631 3,631 Embedded derivatives (other asset) ...... 1,521 1,521 2,730 2,730 4,264 4,264 Gaming revenue payable to BCLC and AGLC ...... 5,437 5,937 6,262 6,262 5,258 5,258 Accounts payable and accrued liabilities ..... 20,293 20,293 15,571 15,571 20,426 20,426 Long-term debt ...... 464,056 484,362 488,195 502,457 504,402 551,405 As the Company’s cash and cash equivalents are held at its casinos or community gaming centres or with financial institutions with a high credit rating, they do not have a significant credit risk. The Company’s cash equivalents consist of variable rate cash equivalents which re-price to market rates frequently or are fixed rate instruments with a short term until maturity; therefore, the carrying value is approximately equivalent to fair value. The carrying amounts of the Company’s amounts receivable, gaming revenue payable to BCLC and AGLC, and accounts payable and accrued liabilities are considered to be reasonable approximations of fair values because of the short-term nature of these instruments. The Company’s long-term debt is not traded in an active market. Therefore, the fair value of the Company’s long- term debt has been estimated using a discounted cash flow model taking into account current market rates of interest and the Company’s credit risk. The future estimated cash flows of long-term debt were initially discounted using a discount rate derived from an appropriate risk-free interest rate yield curve commensurate with the timing of the contractual maturity of the future cash flows. A credit spread was added to the risk-free rate to derive the total rate. As the Company does not have a market observable credit rating, the Company obtained a range of potential credit spreads available from market observable information on entities with a comparable credit risk and debt maturity to the Company. In determining the appropriate credit spread input to the discounted cash flow model at the reporting date, the Company selected its best estimate of the credit spread which was within the Company’s estimate of a reasonably possible range of credit spreads based upon observable market information. The Term Loans were fair valued separately, using a total rate of 6.7% (unaudited) as at March 31, 2012 (December 31, 2011 – 6.4%; December 31, 2010 – 6.2%) and 6.4% (unaudited) as at March 31, 2012 (December 31, 2011 – 6.6%; December 31, 2010 – 6.5%) for Term Loans A and B-1, respectively. The Notes were fair valued using a total rate of 7.2% (unaudited) as at March 31, 2012 (December 31, 2011 – 6.9%; December 31, 2010 – 6.7%). The embedded prepayment options which have been separated from the Notes are valued using the Hull-White model for which the key inputs are the mean-reversion constant of 1.0% (unaudited) as at March 31, 2012 (December 31, 2011 – 2.5%; December 31, 2010 – 0%) and interest rate volatility of 0.90% (unaudited) as at March 31, 2012 (December 31, 2011 – 0.89%; December 31, 2010 – 0.89%).

Fair value hierarchy Certain of the Company’s financial assets and liabilities are accounted for at fair value on a recurring basis. These financial instruments are classified within a fair value hierarchy that reflects the significance of the inputs used in determining fair value. There are three levels of the fair value hierarchy, as follows: Level 1 – Quoted prices in active markets for identical assets Instruments that have unadjusted quoted prices available in an active market for identical assets or liabilities

F-33 Gateway Casinos & Entertainment Limited Notes to Consolidated Financial Statements March 31, 2012 (Unaudited), December 31, 2011 and 2010 (expressed in thousands of Canadian dollars)

Level 2 – Significant other observable inputs

Instruments that do not have quoted prices in active markets but for which market observable inputs are used as the inputs in the determination of fair value

Level 3 – Unobservable inputs

Instruments that have a significant input into the fair value measurement that is derived from management’s best estimates and market observable information is not available

The Company’s only financial instrument accounted for at fair value subsequent to initial recognition is the embedded derivatives, which are classified as held-for-trading. The embedded derivatives’ fair value is a Level 2 measurement.

18 Capital management The Company’s capital structure comprises shareholders’ equity, long-term debt, cash and cash equivalents, and outstanding letters of credit.

The Company’s objective when managing capital is to safeguard its ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital.

The Company’s strategy is to ensure it remains compliant with all of its existing debt covenants, so as to ensure continuous access to debt capital markets. Management reviews results and forecasts regularly to monitor the Company’s compliance.

As at March 31, 2012 (unaudited), December 31, 2011 and December 31, 2010, the Company is in compliance with the financial covenants of its long-term debt, which consist of a total leverage ratio, fixed charge coverage ratio, maximum capital expenditures and excess cash flow test as defined in the long-term debt agreements covering the Term Loans and the Notes.

19 Commitments and contingencies Operating lease commitments The Company leases office space and equipment as well as certain of its casino and community gaming centre locations. The lease terms are between three and 20 years, and the majority of lease agreements are renewable at the end of the lease period at market rate. At March 31, 2012, future minimum operating lease payments (excluding variable rent based on revenue and additional rent for operating expenses) are as follows: $ (Unaudited) No later than 1 year ...... 5,514 Later than 1 year and no later than 5 years ...... 18,162 Later than 5 years ...... 32,932 56,608

During the three months ended March 31, 2012, the Company recognized operating lease expense of $1,381 (unaudited) (three months ended March 31, 2011 – $1,360 (unaudited); year ended December 31, 2011 – $5,621; period from May 18, 2010 to December 31, 2010 – $1,582).

F-34 Gateway Casinos & Entertainment Limited Notes to Consolidated Financial Statements March 31, 2012 (Unaudited), December 31, 2011 and 2010 (expressed in thousands of Canadian dollars)

Contingencies

Various claims and litigation arise in the course of the Company’s business. The Company has accounted for sufficient provisions in relation to such claims and litigation, and remaining contingencies should not have a material effect on the financial position or operating results of the Company.

20 Changes in non-cash working capital items

Period from May 18, 2010 (date of Three months Three months incorporation) ended ended Year ended to March 31, March 31, December 31, December 31, 2012 2011 2011 2010 $ $ $ $ (Unaudited) (Unaudited) Amounts receivable ...... 44 1,021 386 (242) Inventory ...... 69 95 35 (150) Prepaid expenses and deposits ...... 317 4,685 4,991 1,563 Gaming revenue payable to BCLC and AGLC ...... (825) (3,502) (31) 2,467 Accounts payable and accrued liabilities ..... 868 (1,656) (4,070) 2,510 473 643 1,311 6,148

21 Expenses breakdown by nature

Period from May 18, 2010 (date of Three months Three months incorporation) ended ended Year ended to March 31, March 31, December 31, December 31, 2012 2011 2011 2010 $ $ $ $ (Unaudited) (Unaudited) Wages and salaries ...... 25,806 24,730 101,032 29,977 Amortization and depreciation ...... 16,798 15,428 64,464 14,741 Marketing and promotion ...... 4,515 3,442 16,834 4,664 Raw materials and consumables ...... 2,939 2,709 11,746 4,256 Repairs, maintenance and office ...... 2,851 2,583 10,518 3,020 Rent and operating ...... 1,959 1,818 7,274 1,994 Occupancy ...... 2,084 1,720 6,734 2,039 Restructuring and acquisition ...... 74 44 3,685 — Professional and services ...... 987 1,015 3,353 1,463 Share-based compensation ...... 1,074 — — — Other ...... 1,063 625 4,291 726 60,150 54,114 229,931 62,880

F-35 Gateway Casinos & Entertainment Limited Notes to Consolidated Financial Statements March 31, 2012 (Unaudited), December 31, 2011 and 2010 (expressed in thousands of Canadian dollars)

22 Restricted cash

March 31, December 31, December 31, 2012 2011 2010 $ $ $ (Unaudited) Minimum gaming float required by the BCLC for the Company’s British Columbia casinos (note 7) ...... — — 17,450 Other ...... — 322 25 — 322 17,475

23 Related party transactions The Company is controlled by The Catalyst Capital Group Inc. (incorporated in Canada), which owns 68% of the Company’s shares and is the Company’s ultimate controlling party.

During the three months ended March 31, 2012 and 2011 (unaudited), the year ended December 31, 2011 and the period from May 18, 2010 to December 31, 2010, shareholders of the Company provided consulting and advisory services without charge.

During the three months ended March 31, 2012, the Company provided a loan of $125 (unaudited) to an officer of the Company (December 31, 2011 – $nil; December 31, 2010 – $nil). The loan is non-interest bearing and payable upon demand.

Compensation of key management Key management includes the Company’s Board of Directors and executive officers. Compensation awarded to key management is as follows:

24 Employee future benefits The Company maintains an RRSP contribution plan for its employees. Under this plan, the Company makes a contribution equal to its employees’ contributions, subject to a maximum limit. Contributions made by the Company during the three months ended March 31, 2012 totalled $184 (unaudited) (three months ended March 31, 2011 – $175 (unaudited); year ended December 31, 2011 – $678; period from May 18, 2010 to December 31, 2010 – $176).

F-36 Gateway Casinos & Entertainment Limited Notes to Consolidated Financial Statements March 31, 2012 (Unaudited), December 31, 2011 and 2010 (expressed in thousands of Canadian dollars)

25 Segmented information The Company has eight reporting segments based on its casinos, community gaming centres and corporate headquarters: Villa, Starlight, Cascades, Palace, Baccarat, Lake City, community gaming centres and Corporate. The accounting policies for the segments are as described in note 5. Although Palace, Baccarat, the community gaming centres and Corporate did not meet the quantitative thresholds required by IFRS 8, Operating Segments, for reportable segments, management concluded that these segments should be reported, as they are closely monitored by the chief operating decision maker. All business of the Company is conducted in Canada.

Period from May 18, 2010 (date of Three months Three months incorporation) ended ended Year ended to March 31, March 31, December 31, December 31, 2012 2011 2011 2010 $ $ $ $ (Unaudited) (Unaudited) Segment revenue Villa ...... 20,088 19,835 81,601 24,378 Starlight ...... 10,770 10,367 44,775 15,694 Cascades ...... 11,343 11,609 46,511 13,825 Palace ...... 4,588 3,884 16,553 4,821 Baccarat ...... 3,400 3,246 13,491 4,196 Lake City ...... 10,790 10,319 46,756 13,093 Community gaming centres ...... 2,075 — 4,157 — Corporate ...... (134) — 154 197 62,920 59,260 253,998 76,204 Segment earnings Villa ...... 8,467 8,969 36,237 10,831 Starlight ...... 3,567 3,543 16,574 7,005 Cascades ...... 4,814 5,280 20,294 5,725 Palace ...... 1,666 1,076 5,399 1,601 Baccarat ...... 681 630 3,157 1,149 Lake City ...... 3,236 3,852 18,628 5,115 Community gaming centres ...... 622 — 1,291 — Corporate ...... (2,337) (2,732) (8,121) (3,361) 20,716 20,618 93,459 28,065 Segment depreciation of property and equipment Villa ...... 1,807 1,883 7,232 2,204 Starlight ...... 1,122 1,122 4,496 1,307 Cascades ...... 662 732 2,701 846 Palace ...... 298 345 1,329 404 Baccarat ...... 73 79 315 91 Lake City ...... 663 537 2,324 663 Community gaming centres ...... 327 — 691 — Corporate ...... 67 70 289 47 5,019 4,768 19,377 5,562

F-37 Gateway Casinos & Entertainment Limited Notes to Consolidated Financial Statements March 31, 2012 (Unaudited), December 31, 2011 and 2010 (expressed in thousands of Canadian dollars)

Period from May 18, 2010 (date of Three months Three months incorporation) ended ended Year ended to March 31, March 31, December 31, December 31, 2012 2011 2011 2010 $ $ $ $ (Unaudited) (Unaudited) Segment amortization of intangible assets Villa ...... 3,461 3,470 13,918 2,545 Starlight ...... 2,010 2,007 8,080 1,442 Cascades ...... 1,596 1,595 6,408 1,459 Palace ...... 287 287 1,153 335 Baccarat ...... 203 204 817 235 Lake City ...... 3,033 3,017 12,181 3,163 Community gaming centres ...... 1,146 — 2,329 — Corporate ...... 43 80 201 — 11,779 10,660 45,087 9,179 Share-based compensation ...... 1,074 — — — Restructuring and acquisition costs ...... 74 44 3,685 — Impairment of non-financial assets ...... — — 1,243 — Income before other expenses (income) and income taxes ...... 2,770 5,146 24,067 13,324 Other expenses (income) Interest expense ...... 9,369 9,824 39,000 14,239 Interest income ...... (24) (13) (83) (7) Foreign exchange gain on long-term debt .... — — — (12,319) Change in fair value of embedded derivatives ...... 1,209 1,293 1,534 960 Loss on debt extinguishment ...... — — 1,373 — 10,554 11,104 41,824 2,873 (Loss) income before income taxes ...... (7,784) (5,958) (17,757) 10,451 Gaming development costs and purchase of property and equipment Villa ...... 265 231 1,228 534 Starlight ...... 307 425 2,154 19 Cascades ...... 149 20 455 105 Palace ...... 91 10 235 52 Baccarat ...... 9 9 315 21 Lake City ...... 454 1,436 7,529 347 Community gaming centres ...... 22 — 350 — Corporate ...... 22,519 107 97 196 23,816 2,238 12,363 1,274

F-38 Gateway Casinos & Entertainment Limited Notes to Consolidated Financial Statements March 31, 2012 (Unaudited), December 31, 2011 and 2010 (expressed in thousands of Canadian dollars)

26 Land acquisition On February 9, 2012, the Company acquired land in Surrey, British Columbia for future development. The purchase price of $32,000 consisted of $22,000 paid on closing and 10 million common shares of the Company to be paid in the future contingent upon rezoning of the property and certain regulatory approvals. For accounting purposes, the cash payment of $22,000 has been recorded during the three months ended March 31, 2012 as initial consideration for the acquisition of the land. To the extent the Company issues common shares in the future as contingent consideration, they will be recorded at fair value at the time of issuance and added to the land cost.

27 Subsequent events The Company’s Board of Directors approved the filing of an Amended and Restated Preliminary Prospectus dated June 12, 2012 in relation to the Initial Public Offering (“IPO”) and Secondary Offering of the Company’s common shares. The Company’s Board of Directors also declared the payment of a dividend of $25.0 million, subject to lender approval, to be paid prior to the completion of the IPO and Secondary Offering.

F-39 7588674 Canada Inc. (formerly New World Gaming Partners Holdings British Columbia Ltd.) Financial Statements December 31, 2010 and 2009

(expressed in thousands of Canadian dollars)

F-40 Independent Auditor’s Report

To the Directors of 7588674 Canada Inc.

We have audited the accompanying financial statements of 7588674 Canada Inc. (formerly New World Gaming Partners Holdings British Columbia Ltd.) (the “Company”), which comprise the balance sheets as at December 31, 2010 and 2009 and the statements of loss and comprehensive loss, changes in shareholders’ deficiency and cash flows for the years then ended, and the related notes including a summary of significant accounting policies.

Management’s responsibility for the financial statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian generally accepted accounting principles, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2010 and 2009 and the results of its operations and its cash flows for the years then ended in accordance with Canadian generally accepted accounting principles.

(Signed) PricewaterhouseCoopers LLP Chartered Accountants Vancouver, British Columbia May 18, 2012

F-41 7588674 Canada Inc. (formerly New World Gaming Partners Holdings British Columbia Ltd.) Balance Sheets As at December 31, 2010 and 2009 (expressed in thousands of Canadian dollars)

2010 2009 $ $

Assets Current assets Cash and cash equivalents ...... — 77,014 Amounts receivable ...... — 2,149 Inventory ...... — 733 Prepaid expenses and deposits ...... — 5,623 — 85,519 Restricted cash (note 18) ...... — 17,576 Property and equipment (note 5) ...... — 376,595 Intangible assets (note 6) ...... — 804,064 Cross currency swap contracts (note 14) ...... — 52,871 — 1,336,625

Liabilities Current liabilities Gaming revenue payable to BCLC and AGLC ...... — 7,169 Accounts payable and accrued liabilities (note 7) ...... — 16,674 Current portion of long-term debt (notes 1 and 8) ...... — 1,163,419 Current portion of accrued interest on shareholder loans (note 13) ...... — 24,937 Redeemable shares (note 9) ...... 5 5 5 1,212,204 Future income taxes (note 11) ...... — 152,513 Shareholder loans and accrued interest (note 13) ...... — 318,381 Long-term debt (notes 1 and 8) ...... 229,189 — Interest rate swap contracts (note 14) ...... — 69,490 229,194 1,752,588

Shareholders’ Deficiency Share capital (note 10) ...... 149,545 149,545 Contributed surplus (note 1) ...... 331,805 — Deficit ...... (710,544) (565,508) (229,194) (415,963) — 1,336,625 Restructuring of the Company, liquidity risk, and nature of operations prior to restructuring of the Company (note 1) Commitments and contingencies (note 16)

The accompanying notes form an integral part of these financial statements.

F-42 7588674 Canada Inc. (formerly New World Gaming Partners Holdings British Columbia Ltd.) Statements of Changes in Shareholders’ Deficiency For the years ended December 31, 2010 and 2009

(expressed in thousands of Canadian dollars)

Share Contributed Capital Surplus Deficit Total $ $ $ $ Balance – December 31, 2008 ...... 144,545 — (442,075) (297,530) Issuance of share capital ...... 5,000 — — 5,000 Loss for the year ended December 31, 2009 ...... — — (123,433) (123,433) Balance – December 31, 2009 ...... 149,545 — (565,508) (415,963) Loss for the year ended December 31, 2010 ...... — — (145,036) (145,036) Settlement of shareholder loans and accrued interest – net of income taxes (note 1) ...... — 331,805 — 331,805 Balance – December 31, 2010 ...... 149,545 331,805 (710,544) (229,194)

The accompanying notes form an integral part of these financial statements.

F-43 7588674 Canada Inc. (formerly New World Gaming Partners Holdings British Columbia Ltd.) Statements of Loss and Comprehensive Loss For the years ended December 31, 2010 and 2009

(expressed in thousands of Canadian dollars)

2010 2009 $ $

Revenue Table games ...... 47,186 65,819 Slot machine and other electronic games ...... 87,410 122,262 Food and beverage ...... 17,069 23,192 Hotel ...... 6,317 4,826 Facility development commissions ...... 18,638 25,863 Other ...... 4,742 6,183 181,362 248,145 Expenses Cost of food and beverage service ...... 7,610 11,449 Human resources ...... 71,251 98,209 Marketing and promotion ...... 10,601 11,330 Occupancy ...... 8,586 12,674 Operating ...... 14,873 20,057 Amortization of property and equipment ...... 16,192 20,825 Amortization of intangible assets ...... 35,081 48,465 164,194 223,009 Earnings before other expenses (income) and income taxes ...... 17,168 25,136

Other expenses (income) (Gain) loss on sale of property and equipment (notes 4 and 5) ...... (5) 25,742 Impairment of goodwill (note 19) ...... — 111,260 Interest expense – net (note 12) ...... 50,644 85,144 Foreign exchange gain on long-term debt ...... (34,357) (184,155) Loss on swap contracts (note 14) ...... 47,168 143,024 Restructuring, transaction and financing costs ...... 21,773 3,602 Loss on restructuring (note 1) ...... 248,194 — 333,417 184,617 Loss before income taxes ...... (316,249) (159,481) Recovery of income taxes (note 11) ...... 171,213 36,048 Loss and comprehensive loss for the year ...... (145,036) (123,433)

The accompanying notes form an integral part of these financial statements.

F-44 7588674 Canada Inc. (formerly New World Gaming Partners Holdings British Columbia Ltd.) Statements of Cash Flows For the years ended December 31, 2010 and 2009

(expressed in thousands of Canadian dollars)

2010 2009 $ $

Cash flows from operating activities Loss for the year ...... (145,036) (123,433) Items not affecting cash Impairment of goodwill ...... — 111,260 Foreign exchange gain on long-term debt ...... (34,357) (184,155) Loss on swap contracts ...... 43,228 134,269 Loss on restructuring ...... 248,194 — (Gain) loss on sale of property and equipment ...... (5) 25,742 Amortization of property and equipment ...... 16,192 20,825 Amortization of intangible assets ...... 35,081 48,465 Future income taxes ...... (171,213) (36,043) (7,916) (3,070) Unpaid accrued interest on shareholder loans ...... 17,386 28,193 Changes in accrued interest on long-term debt ...... 33,040 (14,608) Changes in non-cash working capital items (note 17) ...... (10,385) (16,857) 32,125 (6,342)

Cash flows from investing activities Casino development costs and purchase of property and equipment ...... (5,333) (32,065) Proceeds on sale of property and equipment ...... 16 29,979 Decrease in restricted cash ...... 101 681 (5,216) (1,405)

Cash flows from financing activities Transfer of cash to Newco (note 1) ...... (93,340) — Repayment of long-term debt ...... (384) (5,546) Issuance of share capital ...... — 5,000 (Decrease) increase in shareholder loans ...... (10,199) 10,016 (103,923) 9,470 (Decrease) increase in cash and cash equivalents ...... (77,014) 1,723 Cash and cash equivalents – Beginning of year ...... 77,014 75,291 Cash and cash equivalents – End of year ...... — 77,014

Supplemental information Interest paid ...... 205 72,664 Income taxes paid ...... — — Settlement of swap contracts for debt (note 14) ...... 59,847 —

The accompanying notes form an integral part of these financial statements.

F-45 7588674 Canada Inc. (formerly New World Gaming Partners Holdings British Columbia Ltd.) Notes to Financial Statements December 31, 2010 and 2009 (expressed in thousands of Canadian dollars)

1 Restructuring of the Company, liquidity risk, and nature of operations prior to restructuring of the Company Restructuring of the Company During the year ended December 31, 2009, the Company incurred a loss of $123,433 and, as at December 31, 2009, had a deficit and shareholders’ deficiency of $565,508 and $415,963, respectively. Due to the Company’s financial performance, the required financial covenants for the First Lien and Second Lien Credit Facilities (collectively, the “Credit Facilities”) (note 8) were not met for the quarter ended December 31, 2009 and subsequent quarters. A covenant breach, if unremedied, would have resulted in the Credit Facilities being in default. Additionally, an event of default would have permitted the British Columbia Lottery Corporation (“BCLC”) and the Alberta Gaming and Liquor Commission (“AGLC”), at their discretion, to terminate the Amended and Restated Multiple Casino Operational Services Agreement (“MCOSA”) and the Casino Facility Licenses, Casino Gaming Retailer Agreements and Video Lottery Retailer Agreements, respectively. During 2009, the Company approached its First Lien and Second Lien Credit Facility lenders (collectively, the “Creditors”) to renegotiate the Credit Facilities. Commencing on January 4, 2010, the Company entered into a series of forbearance agreements with its Creditors. On June 23, 2010, the Company and its shareholders entered into a Plan Facilitation Agreement (the “PFA”) with the Creditors and, on September 16, 2010, the Company completed a restructuring (the “Restructuring”) pursuant to a Plan of Arrangement (the “Arrangement”) under the provisions of the Canada Business Corporations Act (“CBCA”). The Arrangement required shareholder, Creditor and court approval as well as prior regulatory approval from the BCLC, the British Columbia Gaming Policy and Enforcement Branch and the AGLC.

The key terms of the Restructuring included: a) The continuance of New World Gaming Partners Holdings British Columbia Ltd. (“New World”) as a CBCA company and the subsequent amalgamation with the company’s subsidiary, Gateway Casino & Entertainment Inc., to form 7588674 Canada Inc. (the “Company”). All references to the “Company” in these financial statements refer collectively to 7588674 Canada Inc. after completion of the Restructuring and New World prior to the Restructuring. b) The incorporation of Gateway Casinos & Entertainment Limited (“Newco”). c) Certain Creditors subscribing for common shares of Newco and the Creditors assigning and transferring their First Lien and Second Lien Credit Facilities to Newco in exchange for a combination of cash, new First Lien debt of Newco and common shares of Newco. d) Certain shareholders of the Company assigning and transferring $8,000 of shareholder loans (the “Amalco Priority Debt”) to Newco in exchange for common shares of Newco. All shareholder loans and accrued interest of the Company (note 13) were settled for no consideration. e) The Company selling, transferring and conveying (collectively, “Transferring”), free and clear of all encumbrances, all of its property and assets to Newco, other than title to certain real estate with a carrying value of $325,925 (the “Real Estate”), in consideration for settlement of the First Lien Credit Facility, settlement of the Amalco Priority Debt and settlement of all but U.S.$230,433 (the “Subordinate Portion”) of the Second Lien Credit Facility and the assumption by Newco of the Company’s liabilities.

Upon completion of the Restructuring, the Company is an inactive company with no employees. The Company holds title to the Real Estate, as nominee and bare trustee for and on behalf of Newco, and owes the Subordinate Portion to Newco. As at December 31, 2010, the Real Estate forms part of the security for the long-term debt of Newco. The Subordinate Portion is non-interest bearing and is repayable on March 15, 2015.

F-46 7588674 Canada Inc. (formerly New World Gaming Partners Holdings British Columbia Ltd.) Notes to Financial Statements December 31, 2010 and 2009 (expressed in thousands of Canadian dollars)

The Transferring of the Company’s assets to Newco, assumption of the Company’s liabilities by Newco and settlement of the Credit Facilities other than the Subordinate Portion resulted in the Company recognizing a loss comprising the following:

$ Cash and cash equivalents ...... (93,340) Non-cash working capital ...... 4,953 Restricted cash ...... (17,475) Property and equipment ...... (365,725) Intangible assets ...... (768,983) Long-term debt ...... 992,376 Loss on restructuring ...... (248,194)

The settlement of the Company’s shareholder loans and accrued interest of $350,505 has been recognized as contributed surplus, net of related income taxes of $18,700.

Liquidity risk While the Company holds title to the Real Estate as nominee and bare trustee for and on behalf of Newco, as at December 31, 2010 the Company is inactive, has no operating assets or revenue sources and owes the Subordinate Portion to Newco which is repayable on March 15, 2015. The Company does not currently have the ability to repay the Subordinate Portion nor does it have a plan as to how to raise the necessary funds. This creates significant liquidity risk in respect of the repayment of the Subordinate Portion in 2015. The Company’s ability to manage its liquidity risk depends on the support of the Company’s shareholders, who are also shareholders of Newco, and the willingness of Newco to defer or amend the repayment terms of the Subordinate Portion or otherwise not demand payment by the Company in 2015.

Nature of operations prior to restructuring of the Company Prior to completion of the Restructuring on September 16, 2010, the Company operated the Grand Villa Casino, Hotel and Convention Centre (“Villa”), Cascades Casino, Hotel and Convention Centre (“Cascades”) and Starlight Casino (“Starlight”) in Greater Vancouver, British Columbia, the four Lake City Casinos (“Lake City”) in the Thompson/Okanagan region of British Columbia, and the Palace Casino (“Palace”) and Baccarat Casino (“Baccarat”) in Edmonton, Alberta. The Villa, Cascades, Starlight and Lake City Casinos were operated pursuant to the MCOSA between the Company and the BCLC. The Palace and Baccarat Casinos were operated pursuant to Casino Facility Licenses, Casino Gaming Retailer Agreements, and Video Lottery Retailer Agreements between the Company and the AGLC. Prior to September 16, 2010, the Company earned gaming revenues based on an agreed percentage of the gross win from table games, slot machines and other electronic games as consideration for providing operational services to the BCLC and AGLC.

2 Significant accounting policies These financial statements have been prepared in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”) as set out in Part V, Pre-changeover Accounting Standards, of the Canadian Institute of Chartered Accountants (“CICA”) Handbook, and reflect the following significant accounting policies:

Revenue recognition Revenues from table games, slot machines and other electronic games consist of the Company’s share of the gaming win pursuant to its operating agreements with the BCLC and the AGLC and are recognized daily based on

F-47 7588674 Canada Inc. (formerly New World Gaming Partners Holdings British Columbia Ltd.) Notes to Financial Statements December 31, 2010 and 2009 (expressed in thousands of Canadian dollars)

the gaming win at each of the Company’s casinos for that day. Revenues from food and beverage and hotel operations and other revenue sources are recognized as the related goods and services are provided or sold.

Facility development commissions The facility development commissions and accelerated facility development commissions (collectively, “FDC”) are a compensation component of the MCOSA and are recorded as part of revenue on the statement of loss and comprehensive loss. FDC is earned by the Company as a fixed percentage (3% – 5%) of the gross gaming win at its British Columbia casinos, subject to the Company incurring sufficient Approved Amounts (a defined term in the MCOSA), which generally consist of approved capital and operating expenditures related to the development or improvement of gaming properties. Approved Amounts are reduced by the FDC receipts.

Leases The Company, as landlord, leased space at the Starlight Casino to tenants. Rental revenue from these operating leases is recognized on a straight-line basis over the term of the related leases.

Tenant inducements provided by the Company in the form of reimbursement of costs for the design and development of leased premises are recognized as part of property and equipment and amortized over the term of the related lease agreement.

Uncertainty in management estimates The preparation of financial statements in conformity with Canadian GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year. Estimates are used for, but not limited to, the fair value of net assets acquired in business combinations, impairment of goodwill and long-lived assets, estimated useful lives of property and equipment and intangible assets, determination of fair value of long-term debt and derivatives, income taxes and contingencies. Actual results may differ from those estimates.

Cash and cash equivalents Cash and cash equivalents include highly liquid investments with a maturity, at the date of purchase, of three months or less.

Inventory Inventory is valued at the lesser of average cost and the net realizable value.

Property and equipment Property and equipment are recorded at cost less accumulated amortization and development assistance compensation. Management reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Recoverability is assessed by comparing the carrying value to the estimated undiscounted future net cash flows that the assets are expected to generate. Where the carrying value exceeds estimated net cash flows, the assets are written down to fair value.

Amortization is provided for over the estimated useful lives of the assets on a straight-line basis as follows:

Buildings ...... 25years Furniture and equipment ...... 1-5years Leasehold improvements ...... term of the related lease Tenant inducements ...... term of the related lease

F-48 7588674 Canada Inc. (formerly New World Gaming Partners Holdings British Columbia Ltd.) Notes to Financial Statements December 31, 2010 and 2009 (expressed in thousands of Canadian dollars)

Casino development costs include expenditures incurred in connection with the development of new casino and related facilities and the redevelopment of existing casino facilities, including direct construction and development costs, and interest and overhead charges directly attributable to the development activities. When a new casino is substantially complete and ready for use, development costs are transferred to the respective asset categories of property and equipment and amortized over the assets’ estimated useful lives.

Intangible assets Intangible assets consist of casino operating agreements and below market lease agreements, which are recorded at cost less accumulated amortization. Intangible assets are amortized on a straight-line basis over their estimated useful lives as follows:

British Columbia MCOSA operating term as provided in the MCOSA plus one 10-year extension if available Alberta Casino Facility Licenses 20 years, commencing November 16, 2007 Below market lease agreements term of related lease

Judgment is used to estimate an intangible asset’s useful life which is based on an analysis of all pertinent factors, including expected use of the intangible asset, contractual provisions that enable renewal or extension of the intangible asset’s legal or contractual life without substantial cost, and renewal history. Changes in the estimate of an intangible asset’s useful life are treated as a change in accounting estimate and are applied prospectively.

Management reviews intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Recoverability is assessed by comparing the carrying value to the estimated undiscounted future net cash flows that the assets are expected to generate. Where the carrying value exceeds estimated future net cash flows, the assets are written down to fair value.

Goodwill Goodwill represents the difference between the cost of an acquired business and the fair value of its underlying net identifiable assets at the time of acquisition. Goodwill is not amortized and is tested for impairment annually, or more frequently if events or changes in circumstances indicate that the asset might be impaired. Goodwill impairment is assessed based on a comparison of the fair value of a reporting unit to the underlying carrying value of the reporting unit’s net assets, including goodwill (“step 1”). When the carrying value of the reporting unit exceeds its fair value, the fair value of the reporting unit’s goodwill is compared with its carrying value to measure the amount of impairment loss, if any (“step 2”).

Marketing fund Under the MCOSA, the Company was required to pay the BCLC an amount for future BCLC marketing programs related to the operations of the Villa, Cascades and Starlight Casinos equal to 0.6% of the gross gaming win from the casinos. These amounts are treated as an expense in the period incurred.

Income taxes The Company uses the liability method of accounting for income taxes. Under this method, future income tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using tax rates and laws that will be in effect when the differences are expected to reverse. The effect on future income tax assets and liabilities of a change in tax rates is included in income in the period in which the change is enacted or substantively enacted. Future income tax assets are recognized only to the extent that, in the opinion of management, it is more likely than not that the assets will be realized.

F-49 7588674 Canada Inc. (formerly New World Gaming Partners Holdings British Columbia Ltd.) Notes to Financial Statements December 31, 2010 and 2009 (expressed in thousands of Canadian dollars)

The Company has estimated the income tax provision/recovery in accordance with its interpretation of the various income tax laws and regulations. It is possible, due to the complexity inherent in estimating income tax provisions, that the amount of the provision recognized in the financial statements could change.

Foreign currency translation Transactions completed in foreign currencies are translated into Canadian dollars at the exchange rates prevailing at the time of the transactions. Monetary assets and liabilities denominated in foreign currencies are reflected in the financial statements at the exchange rates prevailing at the balance sheet date, with the resulting gain or loss included in the statement of loss and comprehensive loss in the period in which it occurs.

Financial instruments CICA Handbook Section 3855 establishes standards for the recognition and measurement of financial instruments. Financial instruments are measured at fair value on initial recognition. The fair value of a financial instrument is the amount of consideration that would be agreed upon in an arm’s-length transaction between knowledgeable, willing parties who are under no compulsion to act. Fair values of financial instruments that are traded in an active market are obtained from independent quoted prices. In the absence of an active market, fair values are determined based on an appropriate valuation model, for example, discounted cash flows, which requires the use of assumptions concerning the amount and timing of estimated future cash flows and discount rates. The valuation models make maximum use of market observable inputs but the use of unobservable inputs may also be necessary in some instances. Subsequent measurement depends on management’s classification of the financial assets as held-for-trading, available-for-sale, held-to-maturity or loans and receivables, and financial liabilities as held-for-trading or other liabilities. The classification of financial instruments depends on the nature and purpose of the financial instruments, management’s choice and, in some circumstances, management’s intentions.

Held-for-trading Financial instruments classified as held-for-trading are measured at fair value with the changes in fair value recognized immediately in the statement of loss and comprehensive loss.

Available-for-sale Financial assets classified as available-for-sale are measured at fair value with the unrealized changes in fair value recorded each reporting period in other comprehensive earnings until realized through sale or the recognition of an other than temporary impairment.

Held-to-maturity, loans and receivables, and other liabilities Financial instruments classified as held-to-maturity, loans and receivables, and other liabilities are measured at amortized cost using the effective interest method. The following table summarizes the Company’s selected financial instrument classifications:

Financial instruments Classification Cash and cash equivalents ...... Loans and receivables Amounts receivable ...... Loans and receivables Restricted cash ...... Held-for-trading Gaming revenue payable to BCLC and AGLC ...... Other liabilities Accounts payable and accrued liabilities ...... Other liabilities Long-term debt ...... Other liabilities Shareholder loans and accrued interest ...... Other liabilities Cross currency swap contracts ...... Held-for-trading Interest rate swap contracts ...... Held-for-trading

F-50 7588674 Canada Inc. (formerly New World Gaming Partners Holdings British Columbia Ltd.) Notes to Financial Statements December 31, 2010 and 2009 (expressed in thousands of Canadian dollars)

Hedging CICA Handbook Section 3865 specifies the criteria under which hedge accounting can be applied and how hedge accounting can be executed for each of the permitted hedging strategies: fair-value hedges, cash-flow hedges and hedges of a foreign currency exposure of a net investment in a self-sustaining foreign operation. The Company has not designated any hedging relationships.

Financing costs Financing costs are expensed as incurred.

Generally accepted accounting principles In February 2008, the Canadian Accounting Standards Board (“AcSB”) confirmed that use of International Financial Reporting Standards (“IFRS”) will be required in 2011 for publicly accountable profit-oriented enterprises. Private enterprises are not required, but are permitted, to adopt IFRS in 2011. The AcSB has issued a set of generally accepted accounting standards for private enterprises (“ASPE”). These standards for private enterprises are effective for annual financial statements relating to fiscal years beginning on or after January 1, 2011.

3 Trust funds and liabilities Cash floats Prior to October 2009, under the terms of the MCOSA, cash floats were provided by the BCLC for the casinos located in British Columbia. While these funds were used in the operations of the Company, they were not reflected in these financial statements. Concurrently, the Company provided the BCLC with letters of credit as security for the cash floats. In October 2009, the MCOSA was amended to allow the Company to supply and maintain the cash floats from its own cash. As a result, the funds advanced by the BCLC were returned, the related letters of credit were cancelled, and the Company’s cash floats totalling $17,450 have been reflected as restricted cash (note 18) as at December 31, 2009 and prior to completion of the Company’s Restructuring on September 16, 2010, as they are not available for other uses.

Facility development commissions FDC funds held in trust by the Company are not reflected in these financial statements.

The balance of FDC cash held in trust is as follows:

2010 2009 $ $ FDC cash held in trust ...... — 145

As at December 31, 2010, the Company has recorded $nil (2009 – $145) as receivable from the FDC trust funds. The December 31, 2009 amount represents FDC funds held in trust where related Approved Amounts had been incurred.

Progressive jackpot funds Progressive jackpot funds were held in trust by the Company and have not been reflected in these financial statements. The progressive jackpot liability represents the potential payout to progressive jackpot winners. Revenues in these financial statements are recorded net of amounts related to the progressive jackpot. The progressive jackpot funds held in trust by the Company at December 31, 2010 are $nil (2009 – $329).

F-51 7588674 Canada Inc. (formerly New World Gaming Partners Holdings British Columbia Ltd.) Notes to Financial Statements December 31, 2010 and 2009 (expressed in thousands of Canadian dollars)

4 Asset held for sale On December 8, 2007, the Company closed the Royal City Star Casino aboard the M.V. Royal City Star located at the Quay in New Westminster, British Columbia, and two days later commenced operations at the nearby Starlight Casino. As the Company had no further plans to operate the M.V. Royal City Star, the vessel was listed for sale. On December 3, 2009, the vessel was sold, resulting in a loss on sale of $719.

5 Property and equipment

2010 Accumulated Cost amortization Net $ $ $ Land ...... — — — Buildings ...... — — — Furniture and equipment ...... — — — Leasehold improvements ...... — — — Tenant inducements ...... — — — Casino development costs ...... — — — ———

2009 Accumulated Cost amortization Net $ $ $ Land ...... 50,587 — 50,587 Buildings ...... 301,327 17,940 283,387 Furniture and equipment ...... 39,324 12,369 26,955 Leasehold improvements ...... 14,483 2,746 11,737 Tenant inducements ...... 1,588 724 864 Casino development costs ...... 3,065 — 3,065 410,374 33,779 376,595

The MCOSA for the Villa, Cascades, Starlight and Lake City Casinos and the Casino Facility Licenses for the Palace and Baccarat Casinos provide that certain gaming equipment is the property of the BCLC and AGLC, respectively. Accordingly, any costs related to gaming equipment provided by and owned by the BCLC and AGLC have not been included in these financial statements.

On June 24, 2009, the Company sold the land and building occupied by the Baccarat Casino for $29,551, resulting in a loss on sale of $24,909.

F-52 7588674 Canada Inc. (formerly New World Gaming Partners Holdings British Columbia Ltd.) Notes to Financial Statements December 31, 2010 and 2009 (expressed in thousands of Canadian dollars)

6 Intangible assets

2010 Accumulated Cost amortization Net $ $ $ Casino operating agreements ...... — — — Below market lease agreements ...... — — — ———

2009 Accumulated Cost amortization Net $ $ $ Casino operating agreements ...... 909,879 114,547 795,332 Below market lease agreements ...... 11,081 2,349 8,732 920,960 116,896 804,064

7 Accounts payable and accrued liabilities

2010 2009 $ $ Trade accounts payable ...... — 6,280 Salaries, wages and benefits ...... — 7,111 Construction holdback ...... — 223 Other ...... — 3,060 — 16,674

8 Long-term debt

2010 2009 $ $ First Lien Credit Facility (a) and (b) Term Facility (U.S.$nil; 2009 – U.S.$573,541) ...... — 602,791 Delayed Draw Term Facility (U.S.$nil; 2009 – U.S.$116,168) ...... — 122,092 Second Lien Credit Facility (U.S.$230,433; 2009 – U.S.$406,091) (c) ...... 229,189 426,802 Other ...... — 384 Accrued interest on Credit Facilities ...... — 11,350 229,189 1,163,419 Less: Current portion ...... — (1,163,419) 229,189 —

F-53 7588674 Canada Inc. (formerly New World Gaming Partners Holdings British Columbia Ltd.) Notes to Financial Statements December 31, 2010 and 2009 (expressed in thousands of Canadian dollars)

a) First Lien Credit Facility

On November 16, 2007, the Company entered into a First Lien Credit Agreement to borrow up to the following:

$ Term Facility ...... 575,000 Delayed Draw Term Facility ...... 115,000 Revolving Credit Facility ...... 15,000 Letter of Credit B Facility ...... 20,000

The Company borrowed the full amounts, in U.S. dollar equivalents, under the Term Facility and the Delayed Draw Term Facility.

Advances under the Term Facility and the Delayed Draw Term Facility were available as ABR Rate Advances or Eurodollar Rate Advances. All advances at December 31, 2009 were Eurodollar Rate Advances (bearing interest at LIBOR plus 2.5%).

The Company could issue letters of credit under the Revolving Credit Facility. Additionally, up to $5,000 of the Revolving Credit Facility was available to the Company as an overdraft facility.

As at December 31, 2010, the Company issued letters of credit totalling $nil (2009 – $4,641), of which $nil (2009 – $4,010) was issued under the Letter of Credit B Facility and the remainder under the Revolving Credit Facility.

The First Lien Credit Facility had a maturity date of September 30, 2014 and the Company was required to make quarterly mandatory principal payments.

The First Lien Credit Facility was secured by a first charge on all assets of the Company, including a $1,000,000 first mortgage over all real property and leaseholds.

b) During the year ended December 31, 2010, the Company terminated its outstanding cross currency and interest rate swap contracts at a cost of $63,787 including expenses. The Company paid $3,940 of the settlement amount and the remainder was paid by certain of the Company’s First Lien Creditors in exchange for U.S.$57,916 of new First Lien debt. The swap termination loans formed part of the First Lien Credit Facility and were subject to the same terms including the forbearance as described in d) below.

c) Second Lien Credit Facility

On November 16, 2007, the Company entered into a Second Lien Credit Agreement to borrow up to the U.S. dollar equivalent of $400,000 and borrowed the full amount.

Advances under the Second Lien Credit Facility were available as ABR Rate Advances or Eurodollar Rate Advances. All advances at December 31, 2009 were Eurodollar Rate Advances (bearing interest at LIBOR plus 5.5%).

The Second Lien Credit Facility has a maturity date of March 15, 2015.

The Second Lien Credit Facility was secured by a second charge on all assets of the Company, including a $500,000 second mortgage over all real property and leaseholds.

F-54 7588674 Canada Inc. (formerly New World Gaming Partners Holdings British Columbia Ltd.) Notes to Financial Statements December 31, 2010 and 2009 (expressed in thousands of Canadian dollars)

d) Restructuring of the Company The terms of the First Lien and Second Lien Credit Agreements required the Company to comply with certain quarterly covenants. For 2008 and 2009, the covenants included the requirement for trailing 12-month adjusted EBITDA (“Adjusted EBITDA”), as defined in the Credit Agreements, to exceed a specified level each quarter. The specified level for the Adjusted EBITDA covenant increased during each quarter of 2008 and 2009. Subsequent to 2009, the Company was required to exceed a specified Leverage Ratio covenant, as defined in the Credit Agreements. If the Company was unable to comply with these covenants, the Company could remedy a breach in a particular quarter through the issuance of equity. This remedy was available to the Company for up to a maximum of two quarters in a year. In the event the Company breached a covenant and it was not remedied, the Creditors had the right to demand repayment of the Credit Facilities.

Due to the Company’s financial performance, management anticipated that the required financial covenants for the Credit Facilities would not be met for the quarter ended December 31, 2009 and quarterly in 2010 and would result in covenant breaches, which if unremedied, would result in the Credit Facilities being in default. During 2009, the Company approached its Creditors to renegotiate the Credit Facilities and, commencing on January 4, 2010, entered into a series of forbearance agreements with its Creditors which provided that the Creditors would not exercise their rights or remedies resulting from specific defaults, as set out in the original Credit Agreements, including the right to demand repayment of their Credit Facilities. On June 23, 2010, the Company and its shareholders entered into the PFA with the Creditors and, on September 16, 2010, the Company completed the Restructuring pursuant to the Arrangement.

The key terms of the Restructuring are described in note 1.

In anticipation of entering into the forbearance agreements, the Company, with the agreement of its Creditors, did not make its interest and principal payments on the Credit Facilities due on December 31, 2009 and subsequently. The unpaid interest and principal amounts were treated as additional advances and accrued interest at the rates otherwise applicable.

Upon completion of the Restructuring, the Company’s outstanding debt consists of the Subordinate Portion of U.S.$230,433, which is non-interest bearing and repayable on March 15, 2015.

9 Redeemable shares Authorized Unlimited number of Class A shares Issued

2010 2009 $ $ 1,495,452 (2009 – 1,495,452) Class A shares ...... 5 5

The Class A shares are non-participating and are redeemable, at the option of the Company or the shareholder, at any time at a price of $0.001 per share. The Class A shares are voting but do not pay dividends.

10 Share capital Authorized Unlimited number of Class B shares without par value

F-55 7588674 Canada Inc. (formerly New World Gaming Partners Holdings British Columbia Ltd.) Notes to Financial Statements December 31, 2010 and 2009 (expressed in thousands of Canadian dollars)

Issued 2010 2009 $ $ 1,495,452 (2009 – 1,495,452) Class B shares ...... 149,545 149,545

The Class B shares are non-voting and pay dividends at the discretion of the board of directors of the Company. In the event of a liquidation, dissolution or windup of the Company, any payments made or property distributed to Class A shareholders will be limited to the redemption amount of the Class A shares (note 9), paid in priority to holders of Class B shares, with Class B shareholders to receive the balance of the assets of the Company.

11 Income taxes The recovery of income taxes comprises: 2010 2009 $ $ Current income taxes ...... — 5 Future income taxes ...... 171,213 36,043 171,213 36,048

The reconciliation of income taxes calculated at statutory tax rates to the actual income tax recovery is as follows: 2010 2009 $ $ Loss before income taxes ...... (316,249) (159,481) Statutory tax rates ...... 28.4% 29.8% Income tax recovery at statutory tax rates ...... 89,815 47,525 Increase (decrease) in recovery resulting from: Non-taxable portion of net capital gain ...... 76,939 6,545 Net capital loss ...... 19,931 — Non-deductible goodwill impairment ...... — (33,200) Change in estimate of tax rates ...... (19,577) 7,067 Change in valuation allowance ...... (1,887) 7,341 Other ...... 5,992 770 Recovery of income taxes 171,213 36,048

The components of the future income tax liability are as follows: 2010 2009 $ $ Non-capital losses ...... 935 48,999 Capital losses ...... — 290 Property and equipment ...... — (23,177) Intangible assets ...... — (199,710) Swap contracts ...... — 12,451 Unrealized foreign exchange losses ...... 277 9,072 Transaction costs ...... 7,028 4,478 Other ...... — 1,437 8,240 (146,160) Valuation allowance ...... (8,240) (6,353) — (152,513)

F-56 7588674 Canada Inc. (formerly New World Gaming Partners Holdings British Columbia Ltd.) Notes to Financial Statements December 31, 2010 and 2009 (expressed in thousands of Canadian dollars)

As at December 31, 2010, the Company had non-capital losses carried forward for federal income tax purposes of $3,738 (2009 – $195,995) and net capital losses carried forward of $nil (2009 – $2,323). The non-capital losses expire in 2030.

12 Interest expense – net

2010 2009 $ $ Interest on long-term debt 33,040 57,731 Interest on shareholder loans 17,386 28,193 Other 218 657 50,644 86,581 Less: Amounts capitalized to casino development costs — (1,437) 50,644 85,144

13 Related party balances and transactions Shareholder loans and accrued interest The shareholder loans of $nil (2009 – $298,300) were in the form of promissory notes and were unsecured. The loans bore interest at a rate equal to the Canadian three month LIBOR plus 7.75% per annum and the interest was payable in arrears semi-annually. During the year ended December 31, 2010, the Company incurred $17,386 (2009 – $28,193) of interest on the loans. As at December 31, 2010, $nil (2009 – $44,980) of interest was accrued.

As part of the Restructuring of the Company (note 1), the outstanding shareholder loans and accrued interest were settled for no consideration.

Other transactions Prior to the Restructuring, the Company’s shareholders and related entities provided ongoing advisory and consulting services without charge.

Subsequent to the Restructuring, Newco provides administrative services to the Company without charge.

Included in outstanding letters of credit (note 16) prior to September 16, 2010 was $40,000 that was secured directly by the Company’s shareholders at no charge to the Company.

The above transactions were recorded at the exchange amount, which is the amount of consideration established and agreed to by the related parties.

14 Financial instruments Financial risk management The Company’s activities expose it to a variety of financial risks, which periodically include credit risk, liquidity risk, interest rate risk and foreign exchange rate risk. The Company used cross currency and interest rate swap contracts to manage exposure to fluctuations in foreign exchange and interest rates.

F-57 7588674 Canada Inc. (formerly New World Gaming Partners Holdings British Columbia Ltd.) Notes to Financial Statements December 31, 2010 and 2009 (expressed in thousands of Canadian dollars)

The Company’s financial instruments and the types of risks to which their carrying values are exposed are as follows:

Risks Market risks Foreign Interest exchange Credit Liquidity rate rate Cash and cash equivalents ...... X X Amounts receivable ...... X Restricted cash ...... Gaming revenue payable to BCLC and AGLC ...... X Accounts payable and accrued liabilities ...... X X Long-term debt ...... X X X Shareholder loans and accrued interest ...... X X Cross currency swap contracts ...... X Interest rate swap contracts ...... X

Credit risk Credit risk is the risk that a party to one of the Company’s financial instruments will cause a financial loss to the Company by failing to discharge an obligation. The carrying values of the Company’s financial assets, which represent the maximum exposure to credit risk, are as follows:

2010 2009 $ $ Cash and cash equivalents ...... — 77,014 Amounts receivable ...... — 2,149 Cross currency swap contracts ...... — 52,871 — 132,034

Cash and cash equivalents: Credit risk associated with these assets is minimized by ensuring that cash and cash equivalents are held by high-quality financial institutions.

Amounts receivable: Due to the nature of the Company’s business, there is insignificant exposure to any one party relating to receivables.

Liquidity risk Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with its financial liabilities that are settled by delivery of cash or another financial asset. As at December 31, 2009, the Company breached certain loan covenants of its Credit Facilities, which resulted in the long-term debt being reclassified as a current liability. Accordingly, the Company had significant liquidity risk. As a consequence, the Company’s normal liquidity management involving a combination of cash facilities, cash resources, shareholder loans, long-term debt and equity funding was supplemented by negotiations with the Creditors to obtain forbearance on the Credit Facilities in advance of the Restructuring of the Company’s Credit Facilities, as described in notes 1 and 8.

As at December 31, 2010, the Company’s only financial liability is the U.S.$230,433 Subordinate Portion due to Newco with a maturity date of March 15, 2015 (note 1).

F-58 7588674 Canada Inc. (formerly New World Gaming Partners Holdings British Columbia Ltd.) Notes to Financial Statements December 31, 2010 and 2009 (expressed in thousands of Canadian dollars)

Market risk Market risk is the risk that fair value or future cash flows of a financial instrument will fluctuate because of changes in interest rates and/or foreign currency exchange rates or other price risk.

Interest rate risk Interest rate risk is the risk that the fair values or cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s variable rate shareholder loans and long-term debt were subject to significant cash flow interest rate risk. As a result of the Restructuring of the Company (note 1), the Subordinate Portion is non-interest bearing.

Foreign exchange rate risk Foreign exchange rate risk is the risk that the fair value or cash flows of a financial instrument will fluctuate due to changes in foreign exchange rates.

As at December 31, 2010, the U.S. dollar denominated Subordinate Portion totalled U.S.$230,433.

Long-term debt As noted above, the Company was subject to cash flow risk on its variable interest rate long-term debt, for which principal and interest were payable in U.S. dollars. The Company managed the variability of future cash flows on the debt through the use of interest rate swap and cross currency swap contracts, which had the effect of converting variable interest rate debt to fixed interest rate debt and a variable foreign exchange rate to a fixed foreign exchange rate. During the year ended December 31, 2010, the Company settled all outstanding cross currency and interest rate swap contracts at a cost of $63,787 including expenses. As at December 31, 2010, the Company is subject to unmitigated foreign exchange rate risk on its U.S. dollar denominated Subordinate Portion.

Fair values of financial instruments

2010 2009 Carrying Fair Carrying Fair amount value amount value $ $ $ $ Financial instruments Cash and cash equivalents ...... — — 77,014 77,014 Amounts receivable ...... — — 2,149 2,149 Restricted cash ...... — — 17,576 17,576 Gaming revenue payable to BCLC and AGLC ...... — — 7,169 7,169 Accounts payable and accrued liabilities ...... — — 16,674 16,429 Long-term debt ...... 229,189 — 1,163,419 822,955 Cross currency swap contracts ...... — — 52,871 52,871 Interest rate swap contracts ...... — — 69,490 69,490

As the Company’s cash equivalents and restricted cash were held at its casinos or with financial institutions with a high credit rating, they did not have a significant credit risk adjustment. The Company’s cash equivalents consisted of variable rate cash equivalents which re-price to market rates frequently or were fixed rate instruments with a short term until maturity; therefore, the carrying value was approximately equivalent to fair value. The carrying amounts of the Company’s amounts receivable and gaming revenue payable to BCLC and AGLC were considered to be reasonable approximations of fair values because of the short-term nature of these instruments.

F-59 7588674 Canada Inc. (formerly New World Gaming Partners Holdings British Columbia Ltd.) Notes to Financial Statements December 31, 2010 and 2009 (expressed in thousands of Canadian dollars)

The fair values of the Company’s long-term debt and accounts payable and accrued liabilities were estimated using a discounted cash flow model taking into account market rates of interest and the conditions in credit markets and through reference to proxy credit spreads of entities in a similar operating position as the Company. The 2009 decline in fair value of the Company’s long-term debt and accounts payable and accrued liabilities reflects the deterioration in the Company’s trading position and the eventual Restructuring that took place on September 16, 2010 (notes 1 and 8).

The Company periodically used over-the-counter derivative financial instruments for risk management purposes, which consisted of cross currency swap contracts and interest rate swap contracts. The derivatives were fair valued using a discounted cash flow technique that incorporated available market observable information. The Company also incorporated an adjustment to the discount rate for entity level credit risk or counterparty credit risk if a derivative position with a counterparty was in a liability or asset position, respectively.

The future estimated cash flows of long-term debt as at December 31, 2009 were initially discounted using a discount rate derived from an appropriate risk-free interest rate yield curve commensurate with the timing of the expected realization of the future cash flows. The cash flows were then further discounted through the use of a credit-adjusted discount rate. In estimating the credit spread, the Company reviewed various comparable debt securities and determined that the reasonably possible range of spreads applicable to the debt securities was 8.61% to 11.45%. The Company has adjusted for the effect of entity level credit risk through the use of the following credit spreads:

2009 % Discount rate ...... 8.61 – 11.45

As at December 31, 2010, the Company is inactive, has no operating assets and has no revenue sources. As a result, the Company does not have the ability to repay the U.S.$230,433 Subordinate Portion nor does it have a plan as to how to raise the necessary funds in respect of the repayment of the Subordinate Portion on its due date in 2015. Consequently, the fair value of the Subordinate Portion is considered to be $nil.

Fair value hierarchy

Certain of the Company’s financial assets and liabilities are accounted for at fair value on a recurring basis. These financial instruments are classified within a fair value hierarchy that reflects the significance of the inputs used in determining fair value. There are three levels of the fair value hierarchy, as follows:

Level 1 – Quoted prices in active markets for identical assets

This consists of instruments that have unadjusted quoted prices available in an active market for identical assets or liabilities.

Level 2 – Significant other observable inputs

This consists of instruments that do not have quoted prices in active markets but for which market observable inputs are used as the inputs in the determination of fair value.

F-60 7588674 Canada Inc. (formerly New World Gaming Partners Holdings British Columbia Ltd.) Notes to Financial Statements December 31, 2010 and 2009 (expressed in thousands of Canadian dollars)

Level 3 – Unobservable inputs This consists of instruments that have a significant input into the fair value measurement that is derived from management’s best estimates and is not based upon market observable inputs as market available information is not available.

The Company’s only financial instruments that are accounted for at fair value subsequent to initial recognition consist of its derivative financial instruments and restricted cash, which were designated as held-for-trading. The restricted cash fair value was a Level 1 measurement, as it is on hand at the casinos. The fair value of the Company’s cross currency and interest rate swap contracts at December 31, 2010 was $nil (2009 – net liability position of $16,619). The held-for-trading cross currency and interest rate swap contracts have been classified as Level 2 until settled during the year ended December 31, 2010.

Cross currency and interest rate swap contracts On November 16, 2007, the Company entered into cross currency and interest rate swap contracts to manage the currency and interest rate risks on U.S.$1,101,000 of debt. As at June 30, 2008, the Company restructured its interest rate swap contracts.

On December 31, 2009, the Company terminated a cross currency swap contract for a payment to the Company of $3,504. On January 7 and 8, 2010, the Company terminated the remainder of its cross currency and interest rate swap contracts as follows: Notional Settlement amount value $ $ Cross currency swap contracts ...... 940,659 35,937 Interest rate swap contracts ...... 1,006,593 (99,613)

Of the settlement amounts above, $3,940 was paid in cash and U.S.$57,916 was settled as a loan payable, having the same terms and conditions as the First Lien Credit Facility (note 8(b)).

The fair value of the cross currency and interest rate swap contracts at December 31, 2009 was as follows:

Notional amount Fair value $ Maturity date $ Cross currency swap contracts ...... 940,659 September 30, 2014 – March 31, 2015 52,871 Interest rate swap contracts ...... 1,006,593 November 16, 2011 – March 30, 2015 (69,490) (16,619)

F-61 7588674 Canada Inc. (formerly New World Gaming Partners Holdings British Columbia Ltd.) Notes to Financial Statements December 31, 2010 and 2009 (expressed in thousands of Canadian dollars)

The fair value of the cross currency and interest rate swap contracts reflects the estimated amount the Company would recover (have to pay) if it were to unwind all of the contracts on the respective dates.

The loss on swap contracts comprises:

2010 2009 $ $ Unrealized gain (loss) on swap contracts ...... 23,076 (116,461) Credit value adjustment ...... (6,457) (17,808) Realized losses on accounting swap interest payments ...... — (25,532) Realized gains on swap principal payments ...... — 13,273 Cash (payment) receipt on swap termination ...... (3,940) 3,504 Issuance of debt for swap terminations ...... (59,847) — (47,168) (143,024)

15 Capital disclosures The Company’s capital consists of shareholders’ deficiency. The Company’s overall objective when managing capital is to safeguard the Company’s ability to continue as a going concern while providing returns to shareholders and benefits for other stakeholders.

The Company manages its capital through monitoring the amount of issued equity and debt taking into account capital plans and objectives. The Company’s capital management was altered to take account of the breach of financial covenants of its Credit Facilities during the year ended December 31, 2009. As a result, the Company entered into a PFA with its Creditors and completed the Restructuring on September 16, 2010, as described in notes 1 and 8.

16 Commitments and contingencies Operating lease commitments As a result of the Restructuring of the Company (note 1), as at December 31, 2010, the Company does not have any operating lease commitments.

The Company recognized operating lease expense as follows:

2010 2009 $ $ Operating lease expense ...... 3,841 4,288

F-62 7588674 Canada Inc. (formerly New World Gaming Partners Holdings British Columbia Ltd.) Notes to Financial Statements December 31, 2010 and 2009 (expressed in thousands of Canadian dollars)

Letters of credit As at December 31, 2010, the Company has $nil (2009 – $44,641) of outstanding letters of credit to the BCLC, AGLC and others related to the operations of the Company and development/redevelopment of casinos. Concurrent with the Restructuring of the Company (note 1), the letters of credit were terminated.

17 Changes in non-cash working capital items

2010 2009 $ $ Amounts receivable ...... (1,240) 5,921 Inventory ...... 8 154 Prepaid expenses and deposits ...... (2,706) (3,964) Gaming revenue payable to BCLC and AGLC ...... (4,378) 1,115 Accounts payable and accrued liabilities ...... (2,069) (20,083) (10,385) (16,857)

18 Restricted cash

2010 2009 $ $ Gaming float (note 3) ...... — 17,450 Other ...... — 126 — 17,576

19 Impairment of goodwill During the year ended December 31, 2009, the Company recognized goodwill impairment of $111,260, of which $1,682 related to the finalization of step 2 of the Company’s annual impairment test for the year ended December 31, 2008.

20 Employee future benefits The Company maintained an RRSP contribution plan for its employees. Under this plan, the Company made a contribution equal to its employees’ contributions, subject to a maximum limit. Contributions made by the Company during the year ended December 31, 2010 totalled $488 (2009 – $641).

F-63 7588674 Canada Inc. (formerly New World Gaming Partners Holdings British Columbia Ltd.) Notes to Financial Statements December 31, 2010 and 2009 (expressed in thousands of Canadian dollars)

21 Segmented information Prior to the Restructuring of the Company (note 1), the Company had six reportable segments based on its casinos: Villa, Starlight, Cascades, Palace, Baccarat and Lake City. The accounting policies for the segments are as described in note 2. All business of the Company is conducted in Canada.

2010 2009 $ $ Revenue Villa ...... 52,652 70,999 Starlight ...... 30,718 38,500 Cascades ...... 29,478 43,710 Palace ...... 10,902 15,158 Baccarat ...... 9,509 14,556 Lake City ...... 29,534 40,135 Facility development commissions ...... 18,638 25,863 Corporate ...... (69) (776) 181,362 248,145

F-64 7588674 Canada Inc. (formerly New World Gaming Partners Holdings British Columbia Ltd.) Notes to Financial Statements December 31, 2010 and 2009 (expressed in thousands of Canadian dollars)

2010 2009 $ $ Segment earnings Villa ...... 20,776 25,946 Starlight ...... 10,037 11,878 Cascades ...... 11,569 18,164 Palace ...... 3,295 4,270 Baccarat ...... 2,153 4,357 Lake City ...... 9,935 13,569 Facility development commissions ...... 18,638 25,863 76,403 104,047 Corporate and administrative expenses 7,962 9,621 Amortization of property and equipment Villa ...... 6,645 8,442 Starlight ...... 4,482 5,734 Cascades ...... 2,224 3,101 Palace ...... 414 570 Baccarat ...... 196 353 Lake City ...... 1,989 2,377 Corporate ...... 242 248 16,192 20,825 Amortization of intangible assets Villa ...... 10,395 13,068 Starlight ...... 7,951 11,249 Cascades ...... 5,021 7,102 Palace ...... 1,677 2,372 Baccarat ...... 1,050 1,485 Lake City ...... 8,987 13,189 35,081 48,465 Earnings before other expenses (income) and income taxes 17,168 25,136 Other expenses (income) (Gain) loss on sale of property and equipment ...... (5) 25,742 Impairment of goodwill ...... — 111,260 Interest expense – net ...... 50,644 85,144 Foreign exchange gain on long-term debt ...... (34,357) (184,155) Loss on swap contracts ...... 47,168 143,024 Restructuring, transaction and financing costs ...... 21,773 3,602 Loss on restructuring ...... 248,194 — 333,417 184,617 Loss before income taxes ...... (316,249) (159,481)

F-65 7588674 Canada Inc. (formerly New World Gaming Partners Holdings British Columbia Ltd.) Notes to Financial Statements December 31, 2010 and 2009 (expressed in thousands of Canadian dollars)

2010 2009 $ $ Casino development costs and purchase of property and equipment Villa ...... 1,465 19,891 Starlight ...... 436 1,824 Cascades ...... 339 399 Palace ...... 117 193 Baccarat ...... 57 487 Lake City ...... 2,276 8,572 Corporate ...... 643 699 5,333 32,065

2010 2009 $ $ Segment assets Villa ...... — 470,602 Starlight ...... — 324,427 Cascades ...... — 175,438 Palace ...... — 42,769 Baccarat ...... — 31,423 Lake City ...... — 180,813 Cross currency swap contracts ...... — 52,871 Other ...... — 58,282 — 1,336,625

22 Change in estimate During 2009, management cancelled $1,779 of 2008 bonus payments that were included in accounts payable and accrued liabilities as at December 31, 2008. The reversal of this estimate was recorded in 2009.

F-66 CERTIFICATE OF ISSUER Date: June 12, 2012

This amended and restated prospectus constitutes full, true and plain disclosure of all material facts relating to the securities offered by this amended and restated prospectus as required by the securities legislation of each of the provinces and territories of Canada.

By: (Signed) “Lorenzo Creighton” By: (Signed) “Rehana Din” Chief Executive Officer Chief Financial Officer

On Behalf of the Board of Directors

By: (Signed) “Gabriel de Alba” By: (Signed) “Todd Gerch” Director (Executive Chairman) Director

C-1 CERTIFICATE OF THE SELLING SHAREHOLDERS Date: June 12, 2012

On Behalf of the Selling On Behalf of the Selling On Behalf of the Selling On Behalf of the Selling Shareholder Shareholder Shareholder Shareholder Catalyst Fund Limited Catalyst Fund II Parallel Catalyst Fund Limited TOP V New World Partnership II Limited Partnership Partnership III Holding LLC

By: (Signed) “Gabriel de By: (Signed) “Gabriel de By: (Signed) “Gabriel de By: (Signed) “Todd Gerch” Alba” Alba” Alba” Managing Member Managing Director and Managing Director and Managing Director and Partner, The Catalyst Partner, The Catalyst Partner, The Catalyst Capital Group Inc. Capital Group Inc. Capital Group Inc.

On Behalf of the Selling On Behalf of the Selling On Behalf of the Selling On Behalf of the Selling Shareholder Shareholder Shareholder Shareholder Royal Bank of Canada Babson CLO Ltd 2007-I U.S. Bank, NA as Trustee fbo Babson CLO Ltd 2006-II By: Babson Capital Babson CLO Ltd 2005-III By: Babson Capital Management LLC as Custodial Account Management LLC as Collateral Manager Collateral Manager

By: (Signed) “Steve Kampers” By: (Signed) “Scott D. Vice President By: (Signed) “Thomas DeRoss” By: (Signed) “Thomas McDonnell” Vice President McDonnell” Managing Director Managing Director

On Behalf of the Selling On Behalf of the Selling On Behalf of the Selling On Behalf of the Selling Shareholder Shareholder Shareholder Shareholder U.S. Bank, NA as Trustee fbo Babson Capital Loan Babson CLO Ltd 2005-I Babson CLO 2005-II Babson CLO Ltd 2004-I Strategies Master Fund, L.P. By: Babson Capital By: Babson Capital Custodial Account By: Babson Capital Management LLC as Management LLC as Management LLC as Collateral Manager Collateral Manager Investment Manager By: (Signed) “Scott D. DeRoss” By: (Signed) “Thomas By: (Signed) “Thomas By: (Signed) “Thomas Vice President McDonnell” McDonnell” McDonnell” Managing Director Managing Director Managing Director

On Behalf of the Selling On Behalf of the Selling On Behalf of the Selling On Behalf of the Selling Shareholder Shareholder Shareholder Shareholder Babson Mid-Market CLO Ltd Sapphire Valley Massachusetts Mutual Life C.M. Life Insurance Company 2007-II CDO I, Ltd. Insurance Company By: Babson Capital By: Babson Capital By: Babson Capital By: Babson Capital Management LLC as Management LLC as Management LLC as Management LLC as Investment Adviser Collateral Manager Collateral Manager Investment Adviser

By: (Signed) “Arthur By: (Signed) “Thomas By: (Signed) “Thomas By: (Signed) “Arthur McMahon” McDonnell” McDonnell” McMahon” Managing Director Managing Director Managing Director Managing Director

C-2 CERTIFICATE OF THE UNDERWRITERS Date: June 12, 2012

To the best of our knowledge, information and belief, this amended and restated prospectus constitutes full, true and plain disclosure of all material facts relating to the securities offered by this amended and restated prospectus as required by the securities legislation of each of the provinces and territories of Canada.

TD SECURITIES INC. BMO NESBITT J.P. MORGAN SCOTIA CAPITAL INC. BURNS INC. SECURITIES CANADA INC.

By: (Signed) “John Mishra” By: (Signed) “Jamie Rogers” By: (Signed) “David Rawlings” By: (Signed) “Chris Blackwell”

CIBC WORLD MARKETS INC.

By: (Signed) “Ryan Voegeli”

GMP GOLDMAN SACHS MACQUARIE MORGAN STANLEY RAYMOND SECURITIES LP CANADA INC. CAPITAL MARKETS CANADA LIMITED JAMES LTD. CANADA LTD.

By: (Signed) By: (Signed) By: (Signed) By: (Signed) By: (Signed) “Andrew Kiguel” “Steve Mayer” “Mike Mackasey” “Dougal Macdonald” “Jeremy Rakusin”

CANACCORD GENUITY CORP.

By: (Signed) “James Merkur”

C-3