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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

FOR THE QUARTERLY PERIOD ENDED June 30, 2004.

OR

FOR THE TRANSITION PERIOD FROM              TO             .

Commission file number 333-87202

CIRCUS AND ELDORADO JOINT VENTURE

SILVER LEGACY CAPITAL CORP.

(Exact names of registrants as specified in their charters)

407 North Virginia Street, Reno, Nevada 89501

(Address of principal executive offices, including zip code)

(800) 687-7733

(Registrants’ telephone number, including area code)

Not Applicable

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

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

Indicate by check mark whether either of the registrants is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

The number of shares of Silver Legacy Capital Corp.’s Common Stock outstanding at August 13, 2004 was 2,500. All of these shares are owned by Circus and Eldorado Joint Venture.

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CIRCUS AND ELDORADO JOINT VENTURE

SILVER LEGACY CAPITAL CORP.

FORM 10-Q

INDEX

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

CIRCUS AND ELDORADO JOINT VENTURE

(doing business as Silver Legacy Resort Casino)

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

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

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CIRCUS AND ELDORADO JOINT VENTURE

(doing business as Silver Legacy Resort Casino)

UNAUDITED CONDENSED CONSOLIDATED INCOME STATEMENTS

(In thousands)

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

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CIRCUS AND ELDORADO JOINT VENTURE

(doing business as Silver Legacy Resort Casino)

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS’ EQUITY

(In thousands)

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

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CIRCUS AND ELDORADO JOINT VENTURE

(doing business as Silver Legacy Resort Casino)

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

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

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CIRCUS AND ELDORADO JOINT VENTURE

(doing business as Silver Legacy Resort Casino)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Summary of Significant Accounting Policies and Basis of Presentation

Principles of Consolidation/Operations

Effective March 1, 1994, Eldorado Limited Liability Company (a Nevada limited liability company owned and controlled by Eldorado Resorts, LLC) (“ELLC”) and Galleon, Inc. (a Nevada corporation owned and controlled by Mandalay Resort Group) (“Galleon” and, collectively with ELLC, the “Partners”), entered into a joint venture agreement to establish Circus and Eldorado Joint Venture (the “Partnership”), a Nevada general partnership. The Partnership owns and operates a casino and hotel located in Reno, Nevada (“Silver Legacy”), which began operations on July 28, 1995. ELLC contributed land to the Partnership with a fair value of $25,000,000 and cash of $26,900,000 for a total equity investment of $51,900,000. Galleon contributed cash to the Partnership of $51,900,000 to comprise their total equity investment. Each partner has a 50% interest in the Partnership.

The condensed consolidated financial statements include the accounts of the Partnership and its wholly owned subsidiary, Silver Legacy Capital Corp. (“Capital”). Capital was established solely for the purpose of serving as a co-issuer of $160,000,000 principal amount of 10 ¹/8% mortgage notes due 2012 issued by the Partnership and Capital and, as such, Capital does not have any operations, assets, or revenues. All significant intercompany accounts and transactions have been eliminated in consolidation.

In the opinion of Management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, all of which are normal and recurring, necessary to present fairly the financial position of the Partnership as of June 30, 2004, and the results of operations for the three and six months ended June 30, 2004 and 2003 and cash flows for the six months ended June 30, 2004 and 2003. The results of operations for such periods are not necessarily indicative of the results to be expected for a full year.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Partnership’s annual report on Form 10-K for the year ended December 31, 2003.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 could differ from these estimates.

Note 2. Certain Risks and Uncertainties

A significant portion of the Partnership’s revenues and operating income are generated from patrons who are residents of northern California. A change in general economic conditions or the extent and nature of casino gaming in California, Washington or Oregon could adversely affect the Partnership’s operating results. In March 2000, California voters approved a constitutional amendment which legalized “Nevada-style” gaming on Native American reservations. While most existing Native American gaming facilities in northern California are modest compared to Silver Legacy, numerous Native American tribes have announced that they are in the process of expanding, developing, or are considering establishing large-scale hotel and gaming facilities in northern California. In particular, a significant new Native American casino located approximately 21 miles northeast of Sacramento opened in June 2003. While this new casino does not currently have hotel rooms, its gaming facilities are comparable in size to Silver Legacy with approximately 1,900 slot machines and 100 table games.

In June 2004, several Native American tribes, including the tribe that owns the casino discussed in the preceding paragraph, successfully negotiated new compacts with the State of California which will allow for an unlimited number of slot machines at their existing facilities and extend the term an additional 18 years to 2037. These tribes will pay annual fees to the State of California, and additional fees for any slot machines added above those currently in operation. The new compacts are subject to the approval of the United States Department of Interior, and it is uncertain as to when, or if, the new compacts will be approved.

Two ballot initiatives, Propositions 68 and 70, have qualified for the November 2004 general ballot election in California. Proposition 68 is supported by 16 racetracks and card clubs. If passed (and it receives more votes than Proposition 70), it would require all tribes that are engaged in gaming in California to pay the State of California 25% of all gaming revenue and agree to be bound by a number of state laws, specifically those relating to the environmental impact of tribal gaming projects. If any tribe fails to enter into such a compact, the 16 racetracks and card clubs would be allowed to operate up to 30,000 slot machines. Proposition 70 would allow all California tribes engaged in gaming to offer an unlimited number of slot machines and gaming facilities, expand the types of games allowed in California (to include craps and roulette) and would tax net gaming revenue at the same level as the state corporate tax rate (currently 8.8%).

We believe the

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continued growth of Native American gaming establishments could continue to place competitive pressure on our operating results. While we cannot predict the extent of any future impact, it could be significant.

Note 3. Long-Term Debt

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

On March 5, 2002, the Partnership and Capital (the “Issuers”) issued $160,000,000 principal amount of senior secured mortgage notes due 2012 (“Notes”). Concurrent with issuing the Notes, the Partnership entered into a new senior secured credit facility (the “New Credit Facility”) for $40,000,000. The proceeds from the Notes, together with $26,000,000 in borrowings under the New Credit Facility, were used to repay $150,200,000 representing all of the indebtedness outstanding under the prior bank credit facility (the “Bank Credit Facility”) and to fund $30,000,000 of distributions to the Partners. In addition, the remaining proceeds along with operating cash flows were used to pay $6,300,000 in related fees and expenses of the transactions. These fees were capitalized and are included in other assets.

The Notes are senior secured obligations which rank equally with all of the Partnership’s outstanding senior debt and senior to any subordinated debt. The Notes are secured by a security interest in the Issuers’ existing and future assets, which is junior to a security interest in such assets securing the Partnership’s obligations on the New Credit Facility and any refinancings of such facility that are permitted pursuant to the terms of the Notes. Each of the Partners executed a pledge of all of its partnership interests in the Partnership to secure the Notes, which is junior to a pledge of such partnership interests to secure the Partnership’s obligations on the New Credit Facility and any refinancings of such facility that are permitted pursuant to the terms of the Notes. The Notes mature on March 1, 2012 and bear interest at the rate of 10 ¹/8% per annum, payable semi-annually in arrears on March 1 and September 1 of each year, commencing on September 1, 2002.

The New Credit Facility originally provided for a $20,000,000 senior secured revolving credit facility and a $20,000,000 five-year term loan facility, each of which provided for the payment of interest at floating rates based on LIBOR plus a spread. The commitment under the term loan facility originally provided for periodic reductions with the then remaining balance due March 31, 2007. The term loan was paid in full as of December 31, 2003.

The Notes and New Credit Facility contain various restrictive covenants including the maintenance of certain financial ratios and limitations on additional debt, disposition of property, mergers and similar transactions. On November 4, 2003, the Partnership executed an amendment to the New Credit Facility (as amended, the “Amended Credit Facility”) which reduced the revolving facility to $10,000,000, and revised certain covenant ratios with retroactive effect to September 30, 2003, including the maximum total debt to EBITDA ratio which the Partnership had exceeded as of September 30, 2003. At June 30, 2004, there was no indebtedness outstanding under the Amended Credit Facility. As of such date, the Partnership was in compliance with all of the covenants in the Amended Credit Facility and had the ability to borrow on a revolving basis all of the $10,000,000 available under the Amended Credit Facility. The entire principal amount then outstanding under the Amended Credit Facility becomes due and payable on March 31, 2007 unless the maturity date is extended with the consent of the lenders. As of June 30, 2004, the Partnership was in compliance with the covenants in the indenture relating to the Notes.

Note 4. Related Parties

Each of our Partners operates a casino attached and adjacent to Silver Legacy. Our Partners may be deemed to be in a conflict of interest position with respect to decisions they make relating to the Partnership, the Eldorado Hotel & Casino and Circus Circus Hotel & Casino-Reno.

Note 5. Supplemental Executive Retirement Plan

Effective January 1, 2002, the Partnership adopted a Supplemental Executive Retirement Plan (“SERP”) for a select group of highly compensated management employees. The SERP provides for a lifetime benefit at age 65, based on a formula which takes into account a participant’s highest annual compensation, years of service, and executive

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level. The SERP also provides an early retirement benefit at age 55 with at least four years of service, a disability provision, and a lump sum death benefit. While the SERP is an unfunded plan, the Partnership is informally funding the plan through life insurance contracts on the participants. The Partnership anticipates that its periodic pension cost for the year ending December 31, 2004 will be approximately $885,800, of which $438,300 had been accrued as of June 30, 2004.

Note 6. Partnership Agreement

Concurrent with the issuance of the Notes on March 5, 2002, the Partnership’s partnership agreement was amended and restated in its entirety and was further amended in April 2002 (the “Partnership Agreement”). The Partnership Agreement provides for, among other things, profits and losses to be allocated to the Partners in proportion to their percentage interests, separate capital accounts to be maintained for each Partner, provisions for management of the Partnership and payment of distributions and bankruptcy and/or dissolution of the Partnership. The April 2002 amendments were principally (i) to provide equal voting rights for ELLC and Galleon with respect to approval of the Partnership’s annual business plan and the appointment and compensation of the general manager, and (ii) to give each Partner the right to terminate the general manager.

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

Overview

Effective March 1, 1994, Eldorado Limited Liability Company (“ELLC”), a Nevada limited liability company owned and controlled by Eldorado Resorts LLC, and Galleon, Inc. (“Galleon”), a Nevada corporation owned and controlled by Mandalay Resort Group, formerly known as Circus Circus Enterprises, Inc., entered into a joint venture agreement to establish Circus and Eldorado Joint Venture (the “Partnership”) for the purpose of constructing, owning and operating Silver Legacy. Silver legacy Capital Corp. (“Capital”), a wholly owned subsidiary of the Partnership, was incorporated for the sole purpose of serving as a co-issuer of the $160 million principal amount of 10 ¹/8% mortgage notes due 2012 issued by the Partnership and Capital (the “Notes”), and does not have any operations, assets or revenues.

On July 28, 1995, Silver Legacy commenced operations as a hotel-casino in downtown Reno, Nevada. Silver Legacy is a leader within the Reno market, offering the largest number of table games and slot machines and the second largest number of hotel rooms of any property in the Reno market. Silver Legacy’s net operating revenues and income are derived largely from our gaming activities. In an effort to enhance our gaming revenues, we attempt to maximize the use of our gaming facilities at Silver Legacy by providing a well-balanced casino environment that contains a mix of games attractive to multiple market segments. Rooms, food and beverage also contribute a large portion of our net revenues.

Our operating results are highly dependent on the volume of customers visiting and staying at our resort. Key volume indicators include table games drop and slot handle, which refer to amounts wagered by our customers. The amount of volume we retain, which is not fully controllable by us, is recognized as casino revenues and is referred to as our win or hold. In addition, hotel occupancy and price per room designated by average daily rate (“ADR”) are key indicators for our hotel business.

Significant Factors Affecting Results of Operations

A significant portion of Silver Legacy’s revenues and operating income are generated from patrons who are residents of northern California, and as such, our results of operations have been adversely impacted by the growth in Native American gaming in northern California over the past few years. While most existing Native American gaming facilities in northern California are modest compared to Silver Legacy, numerous Native American tribes have announced that they are in the process of expanding, developing, or are considering establishing, large-scale hotel and gaming facilities in northern California. In particular, a significant new Native American casino located approximately 21 miles northeast of Sacramento opened in June 2003. While this new casino does not currently have hotel rooms, its gaming facilities are comparable in size to Silver Legacy with approximately 1,900 slot machines and 100 table games. During the six months following its opening date in June 2003, we experienced a moderate decrease in our weekend casino volume resulting in a negative impact on our operating results during that period. Despite this increased competition, we were able to achieve higher casino volume during the first quarter in 2004 compared to the same prior year period when this facility was not operating. However, our slot handle declined during the second quarter in 2004 compared to the same prior year period. This decline in slot volume was partially attributed to competition generated by this new facility which we believe has produced the largest negative impact on drive-in, day-trip visitor traffic from our main feeder markets in northern California.

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In June 2004, several Native American tribes, including the tribe that owns the casino discussed in the preceding paragraph, successfully negotiated new compacts with the State of California which will allow for an unlimited number of slot machines at their existing facilities and extend the term an additional 18 years to 2037. These tribes will pay annual fees to the State of California, and additional fees for any slot machines added above those currently in operation. The new compacts are subject to the approval of the United States Department of Interior, and it is uncertain as to when, or if, the new compacts will be approved.

Two ballot initiatives, Propositions 68 and 70, have qualified for the November 2004 general ballot election in California. Proposition 68 is supported by 16 racetracks and card clubs. If passed (and it receives more votes than Proposition 70), it would require all tribes that are engaged in gaming in California to pay the State of California 25% of all gaming revenue and agree to be bound by a number of state laws, specifically those relating to the environmental impact of tribal gaming projects. If any tribe fails to enter into such a compact, the 16 racetracks and card clubs would be allowed to operate up to 30,000 slot machines. Proposition 70 would allow all California tribes engaged in gaming to offer an unlimited number of slot machines and gaming facilities, expand the types of games allowed in California (to include craps and roulette) and would tax net gaming revenue at the same level as the state corporate tax rate (currently 8.8%).

We believe the continued growth of Native American gaming establishments could continue to place competitive pressure on our operating results. While we cannot predict the extent of any future impact, it could be significant.

Other Factors Affecting Results of Operations

Two public works projects are underway in the downtown area of Reno. The first project will lower the train tracks that traverse Reno’s downtown district and separate the Silver Legacy and the two adjoining properties from the rest of the downtown gaming facilities. Construction on this project is expected to be completed in 2006. The second project involves the construction of a downtown special events center next to the National Bowling Stadium. Construction of this project began in January 2004 with an expected completion date in December 2004. To date, the impact of these projects on our operations has been minimal; however, we cannot determine the effect of either of the projects on our future operations.

Summary Financial Results

The following table highlights the results of our operations (dollars in thousands):

Net Revenues. During the second quarter compared to the same prior year period, net revenues increased primarily due to growth in room revenues, and to a lesser extent, food and beverage revenues. Room revenues benefited from volume generated by the American Bowling Congress Tournament (“ABC Tournament”), which attracted men bowlers to the Reno market throughout the second quarter, combined with increased convention business throughout the Reno market. The increases in food and beverage revenues were attributable to selective menu price increases in our food and beverage outlets.

For the six months ended June 30, 2004 compared to the six months ended June 30, 2003, net revenues grew due to increases in room, food and beverage, and other revenues. We believe the drivers of our current year revenues were improvements in the national economy, increased spending by our customers in non-gaming areas, and traffic generated by the aforementioned ABC Tournament, which began in mid-February 2004. The Women’s International Bowling Congress Tournament held in 2003 did not commence until mid-March, and brought approximately 20,000 fewer bowlers to the Reno market than the ABC Tournament did in 2004. A national championship bowling tournament is not scheduled to be held in Reno in 2005, but is scheduled to be held two out of every three years through 2009 and one of every three years from 2010 through 2016. Finally, the war with Iraq, including the events leading up to its onset, was a negative factor affecting tourism in general during the first quarter of 2003.

Operating Income. The increases in operating income for the three and six months ended June 30, 2004 compared to the same prior year periods were attributable to increased net revenues combined with a decrease in overall operating expenses, as a percentage of revenues, resulting from cost control efforts. Savings in payroll, advertising, and various other variable expenses were offset by increases in general liability insurance premiums, state gaming taxes, utilities and building repairs and maintenance. In addition, casino marketing and customer acquisition costs, specifically promotional offers and special events expenses, increased during both periods as the result of our efforts to generate new casino customers and drive visitation.

Net Income. During the three and six months ended June 30, 2004 compared to the same prior year periods, net income increased as a result of the aforementioned factors affecting net revenues and operating income combined with a slight decline in interest expense. However, the percentage increase in net income compared to the same prior year periods, specifically during the second quarter, was adversely impacted by interest rate swap income of $1.0 million recorded in June 2003.

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Revenues

The following table highlights our sources of net operating revenues (dollars in thousands):

Casino Revenues. During the three months ended June 30, 2004 compared to the same prior year period, casino revenues declined primarily due to a decrease in slot handle combined with a lower table games hold percentage. We believe the decrease in slot handle was associated with increasingly greater competition from Native American gaming combined with rising gasoline prices. Both of these factors have negatively impacted drive-in visitor volume from our main feeder markets in northern California.

For the six months ended June 30, 2004 compared to the six months ended June 30, 2003, casino revenues declined slightly. Increased casino revenues during our first quarter and April 2004 were offset by declines in May and June 2004 in comparison to the same prior year periods. While May and June were affected by the aforementioned economic factors, our prior year casino volume was adversely affected by the disruption caused by carpet replacement and other remodeling in the casino area during the months of January and February 2003 along with poor weather conditions in April 2003.

Room Revenues. The majority of our customer room segments experienced growth during the three and six months ended June 30, 2004 compared to the same prior year periods resulting in increased room revenues. Our ADR and occupancy percentages were $70.97 and 91.9%, respectively, for the three months ended June 30, 2004 compared to $65.66 and 87.1%, respectively, for the three months ended June 30, 2003. Our ADR and occupancy percentages were $67.41 and 85.6%, respectively, for the six months ended June 30, 2004 compared to $63.12 and 80.7%, respectively, for the six months ended June 30, 2003.

Food and Beverage Revenues. During the three and six months ended June 30, 2004 compared to the same prior year periods, food and beverage revenues increased primarily due to selective menu price increases throughout our food and beverage outlets.

Other Revenues. Other revenues are comprised of revenues generated by our retail outlets, arcade, entertainment, events pavilion, and other miscellaneous items. The slight decline in other revenues during the three months ended June 30, 2004 compared to the same prior year period was mainly due to declines in concert and event pavilion revenues associated with one less concert date in the current period.

Other revenues increased during the six months ended June 30, 2004 compared to the six months ended June 30, 2003 primarily due to increased retail and entertainment revenues associated with greater volume in these areas.

Promotional Allowances. For the three months ended June 30, 2004 compared to the same prior year period, promotional allowances, in absolute dollars, remained flat. Promotional allowances, expressed as a percentage of gross revenues, declined slightly to 8.0% for the three months ended June 30, 2004 compared to 8.1% for the three months ended June 30, 2003, and declined to 8.4% for the six months ended June 30, 2004 compared to 8.6% for the six months ended June 30, 2003.

Operating Expenses

The following table highlights our operating expenses (dollars in thousands):

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Casino Expenses. Casino expenses during the three and six months ended June 30, 2004 compared to the same prior year periods declined in conjunction with the aforementioned casino revenue decreases. Significant savings in casino payroll expenses and other variable expenses were partially offset by increases in the amount of state gaming taxes and slot license fees paid and casino marketing costs.

Room Expenses. During the three and six months ended June 30, 2004, room expenses increased over the same prior year periods. However, the increases in our ADR during both current year periods combined with reductions in certain specific room expenses, including departmental payroll, supplies, travel agent commissions, and laundry expense, as a percentage of room revenues, resulted in increased departmental profit during both periods.

Food and Beverage Expenses. During the three and six months ended June 30, 2004 compared to the same prior year periods, food and beverage expenses increased due to increased food and beverage cost of sales, both as a percentage of revenues and absolute dollars. Despite the rise in cost of sales, declines in departmental payroll combined with the aforementioned menu price increases, produced increased profit margins for the three and six months ended June 30, 2004.

Other Operating Expenses. Other operating expenses are comprised of expenses associated with the operation of our retail outlets, arcade and events pavilion along with the entertainment department’s production costs and professional fees. Other expenses decreased during the three months ended June 30, 2004 primarily due to a decrease in entertainment expenses, principally for professional entertainer fees during the second quarter of 2004.

Other expenses during the six months ended June 30, 2004 compared to the six months ended June 30, 2003 increased primarily due to an increase in entertainment expenses, principally for professional entertainer fees, associated with our enhanced concert schedule, both in terms of quality and the number of dates, throughout the first quarter of 2004.

Selling, General and Administrative Expenses. During the three and six months ended June 30, 2004 compared to the same prior year periods, selling, general and administrative expenses increased due to increased credit card discounts, building repairs and maintenance, computer hardware and software maintenance contracts, and general liability insurance premiums. These increases were partially offset by declines in advertising media expenditures throughout the six months ended June 30, 2004.

Depreciation Expense. Depreciation expense decreased during the three months ended June 30, 2004 compared to the three months ended June 30, 2003 primarily due to several assets becoming fully depreciated during the current quarter.

During the six months ended June 30, 2004 compared to the same prior year period, depreciation expense increased principally due to depreciation associated with new capital purchases.

Other (Income) Expense

Other (income) expense is comprised of interest expense, interest rate swap income, and other, net. During the three and six months ended June 30, 2004 compared to the same prior year periods, interest expense decreased $0.1 million and $0.2 million, respectively, as a result of lower average outstanding borrowings. Other, net in both periods was related to the change in market value of the funded portion of our supplemental executive retirement plan. In addition, an interest rate swap agreement was terminated prior to its scheduled termination date and a cash receipt of $1.0 million was recorded as interest rate swap income in June 2003.

Liquidity and Capital Resources

During the six months ended June 30, 2004, we generated cash flows from operating activities of $14.9 million compared to $12.7 million during the same prior year period. The $2.1 million increase in cash provided by operations was primarily due to the $1.7 million increase in net income and various changes in balance sheet accounts. The changes in these balance sheet accounts represented changes which occurred in the normal course of business. As of June 30, 2004, cash and cash equivalents were $27.5 million, sufficient for normal operating requirements.

Cash used in investing activities for the six months ended June 30, 2004 was $2.4 million compared to $2.5 million for the six months ended June 30, 2003, and related primarily to capital expenditures for various renovation projects and equipment purchases. During the third quarter of 2004, we expect to begin a hotel room renovation project. The budget for this project is approximately $7.2 million, of which half will be completed in 2004, with the remainder to be completed in 2005. Including $3.6 million for the aforementioned room renovation project, our executive committee has approved $7.1 million in capital expenditures for 2004.

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Cash used in financing activities during the six months ended June 30, 2004 was $4.3 million representing tax distributions to our partners for the current year in addition to taxes owed related to our fiscal 1995 and 1996 Internal Revenue Service audits. During the six months ended June 30, 2003, tax distributions of $1.8 million were made to our partners. In addition, during the six months ended June 30, 2003, prepayments in the aggregate principal amount of $7.0 million were made on the term portion of our credit facility, permanently reducing the amount of the term loan by the amount of such payments. During the same period, $3.0 million was borrowed and subsequently paid on the revolving portion of our credit facility.

In July 2004, we renewed our general and liability insurance policies. Under the new policies, the Partnership and the owner of the adjacent property, Eldorado Resorts LLC (which is an affiliate of ELLC), have combined earthquake coverage of $320 million and combined flood coverage of $245 million. In the event that an earthquake causes damage only to the Partnership’s property, the Partnership is eligible to receive up to $320 million in coverage depending on the replacement cost. However, in the event that both properties are damaged, the Partnership is entitled to receive, to the extent of any replacement cost incurred, up to $220 million of the coverage amount (based on our percentage of the earthquake coverage) and up to the portion of the other $100 million, if any, remaining after satisfaction of a claim of Eldorado Resorts LLC. In the event that a flood causes damage only to the Partnership’s property, the Partnership is eligible to receive up to $245 million in coverage depending on the replacement cost. However, in the event that both properties are damaged, the Partnership is entitled to receive, to the extent of any replacement cost incurred, up to $220 million of the coverage amount (based on our percentage of the earthquake coverage) and up to the portion of the other $25 million, if any, remaining after satisfaction of a claim of Eldorado Resorts LLC.

Our new insurance policy also includes combined terrorism coverage up to $425 million for a certified act of terrorism and up to $250 million for a non-certified act of terrorism. In the event that a certified, or non-certified act, of terrorism causes damage only to the Partnership’s property, the Partnership is eligible to receive up to $425 million, or $250 million, respectively, in coverage depending on the replacement cost. However, in the event that both properties are damaged, the Partnership is entitled to receive, to the extent of any replacement cost incurred, up to $235 million for a certified act, or up to $138 million for a non-certified act, of the coverage amount (based on our percentage of the total property value) and up to the portion of the other $190 million, or $112 million, respectively, if any, remaining after satisfaction of a claim of Eldorado Resorts LLC.

The Partnership’s partnership agreement, as currently in effect, provides that, subject to any contractual restrictions to which the Partnership is subject, including the indenture relating to the Notes, and prior to the occurrence of a “Liquidating Event,” the Partnership will be required to make distributions to its partners as follows:

(i) The estimated taxable income of the Partnership allocable to each partner multiplied by the greater of the maximum marginal federal income tax rate applicable to individuals for such period or the maximum marginal federal income tax rate applicable to corporations for such period (as of the date hereof both rates were 35%); provided, however, that if the State of Nevada enacts an income tax (including any franchise tax based on income), the applicable tax rate for any tax distributions subsequent to the effective date of such income tax shall be increased by the higher of the maximum marginal individual tax rate or corporate income tax rate imposed by such tax (after reduction for the federal tax benefit for the deduction of state taxes, using the maximum marginal federal individual or corporate rate, respectively).

(ii) Annual distributions of remaining “Net Cash From Operations” in proportion to the percentage interests of the partners.

(iii) Distributions of “Net Cash From Operations” in amounts or at times that differ from those described in (i) and (ii) above, provided in each case that both partners agree in writing to the distribution in advance thereof.

As defined in the partnership agreement, the term “Net Cash From Operations” means the gross cash proceeds received by the Partnership, less the following amounts: (i) cash operating expenses and payments of other expenses and obligations of the Partnership, including interest and scheduled principal payments on Partnership indebtedness, including indebtedness owed to the partners, if any, (ii) all capital expenditures made by the Partnership, and (iii) such reasonable reserves as the partners deem necessary in good faith and in the best interests of the Partnership to meet its anticipated future obligations and liabilities (less any release of reserves previously established, as similarly determined).

The Partnership’s partnership agreement provides that the partners shall not be permitted or required to contribute additional capital to the Partnership without the consent of the partners, which consent may be given or withheld in each partner’s sole and absolute discretion.

We believe we have sufficient capital resources to meet all of our obligations. These obligations include existing cash obligations, funding of capital commitments and servicing our debt. Our future sources of liquidity are anticipated to be from our operating cash flow and borrowings available under our senior secured credit facility. See “Senior Secured Credit Facility” below.

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Senior Secured Credit Facility

On November 4, 2003, we executed an amendment to our credit facility (as amended, the “Credit Facility”) which originally included a term facility (which was paid in full in 2003) and a revolving facility. The amendment reduced the revolving facility to $10.0 million, none of which was outstanding at June 30, 2004, and revised certain covenant ratios with retroactive effect to September 30, 2003, including the maximum total debt to EBITDA ratio which we had exceeded as of September 30, 2003. Under the Credit Facility, we must maintain a maximum ratio of total debt to EBITDA of 5.00 to 1.00 for the quarters ending September 30, 2003 through March 31, 2006 and 4.75 to 1.00 for the quarter ending June 30, 2006 and thereafter. Under the Credit Facility, we are also required to maintain a minimum ratio of EBITDA to fixed charges of 1.20 to 1.00 at all times. The Credit Facility is secured by a first priority security interest in substantially all of our existing and future assets, other than certain licenses which may not be pledged under applicable law, and a first priority pledge of and security interest in all of the partnership interests in the Partnership held by its partners. The Credit Facility ranks equal in right of payment to our existing and future senior indebtedness, including the Notes, but the security interests securing our obligations under the Credit Facility are senior to the security interests securing our obligations on the Notes. The Credit Facility contains customary events of default and covenants, including covenants that limit or restrict our ability to incur additional debt, create liens or other encumbrances, pay dividends or make other restricted payments, prepay subordinated indebtedness, make investments, loans or other guarantees, sell or otherwise dispose of a portion of our assets, or make acquisitions or merge or consolidate with another entity.

At June 30, 2004, there was no indebtedness outstanding under the Credit Facility. As of such date, we were in compliance with all of the covenants in the Credit Facility and we had the ability to borrow all of the $10.0 million available under the Credit Facility. The entire principal amount then outstanding under the Credit Facility becomes due and payable on March 31, 2007 unless the maturity date is extended with the consent of the lenders. At June 30, 2004, we were also in compliance with all of the covenants in the indenture relating to the Notes.

Critical Accounting Policies

A description of our critical accounting policies can be found in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2003. There were no material changes to these policies as of June 30, 2004.

Forward-Looking Statements

Certain information included in this report and other materials filed or to be filed by the Issuers with the Securities and Exchange Commission (as well as information included in oral statements or written statements made or to be made by the Issuers) contains statements that are forward-looking within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements can be identified by the fact that they do not relate strictly to historical or current facts. We have based these forward-looking statements on our current expectations about future events. These forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, intentions, financial condition, results of operations, future performance and business, including, current and future operations and statements that include the words “may”, “could”, “should”, “would”, “believe”, “expect”, “anticipate”, “estimate”, “intend”, “plan” or similar expressions. Such statements include information relating to capital spending, financing sources and the effects of regulation (including gaming and tax regulation) and competition. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results may differ from those expressed in any forward-looking statements made by us or on our behalf. These risks and uncertainties include, but are not limited to dependence on existing management, leverage and debt service (including sensitivity to fluctuations in interest rates), domestic or global economic conditions, changes in Federal or state tax laws or the administration of such laws, changes in gaming laws or regulations (including the legalization of gaming in certain jurisdictions), expansion of gaming on Native American lands (including such lands in California), risks and uncertainties relating to any applications for licenses and approvals under applicable laws and regulations (including gaming laws and regulations) and any further terrorist attacks similar to those that occurred September 11, 2001. Additional information concerning potential factors that we think could cause our actual results to differ materially from expected and historical results is included under the caption “Factors that May Affect Our Future Results” in Item 1 of our annual report on Form 10-K for the fiscal year ended December 31, 2003. If one or more of the assumptions underlying our forward-looking statements proves incorrect, then our actual results, performance or achievements could differ materially from those expressed in, or implied by, the forward-looking statements contained in this report. Therefore, we caution you not to place undue reliance on our forward-looking statements. This statement is provided as permitted by the Private Securities Litigation Reform Act of 1995.

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Item 3. Quantitative and Qualitative Disclosures About Market Risks

We are potentially exposed to market risk in the form of fluctuations in interest rates and their potential impact upon our variable rate debt outstanding, if any. We evaluate our exposure to this market risk by monitoring interest rates in the marketplace and we have, on occasion, utilized derivative financial instruments to help manage this risk. To manage our exposure to counterparty credit risk in interest rate swaps, we enter into agreements with highly rated institutions. As of June 30, 2004, we had no variable rate debt outstanding. However, under our $10.0 million revolving credit facility, we may have outstanding from time to time up to $10.0 million of variable rate debt.

Item 4. Controls and Procedures

An evaluation was performed by management, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, 2004, our disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms of the Securities and Exchange Commission.

There have been no changes in our internal controls over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, these internal controls over financial reporting.

Part II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

During the period covered by this report, the Partnership filed one current report on Form 8-K. This current report, which was filed with the Securities Exchange Commission on June 18, 2004, reported information under Items 5 and 7, relating to an announcement by Mandalay Resort Group (“Mandalay”), MGM MIRAGE (“MGM”) and MGM Mirage Acquisition Co. #61, a wholly owned subsidiary of MGM, that they have entered into a merger agreement pursuant to which MGM will acquire Mandalay for $71.00 in cash for each share of common stock of Mandalay. The transaction is structured as a merger of MGM MIRAGE Acquisition Co. #61 with and into Mandalay and is subject to the approval of Mandalay stockholders as well as regulatory and other customary conditions. Galleon, Inc. (which is the managing partner of, and owns a 50% partnership interest in, the Partnership) is wholly owned by Mandalay.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized.

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