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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

For the fiscal year ended September 30, 2004

For the transition period from              to             

Commission File Number: 1-9481

ARCHON CORPORATION

(Exact name of registrant as specified in its charter)

3993 Howard Hughes Parkway, Suite 630, Las Vegas, Nevada 89109

(Address of principal executive office and zip code)

(702) 732-9120

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to section 12(g) of the Act:

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

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

The aggregate market value of the common stock held by non-affiliates of the registrant was approximately $33,037,304. The market value was computed by reference to the closing price of the common stock as of December 27, 2004.

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.    x  Yes    ¨  No

APPLICABLE ONLY TO CORPORATE REGISTRANTS:

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

DOCUMENTS INCORPORATED BY REFERENCE

None

Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    ¨  Yes    x  No

Table of Contents

ARCHON CORPORATION AND SUBSIDIARIES

ANNUAL REPORT ON FORM 10-K FOR THE FISCAL

YEAR ENDED SEPTEMBER 30, 2004

TABLE OF CONTENTS

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PART I

Item 1. Business

General

Archon Corporation, (the “Company” or “Archon”), is a Nevada corporation. The Company’s primary business operations are conducted through a wholly-owned subsidiary corporation, Pioneer Hotel Inc. (“PHI”), which operates the Pioneer Hotel & Gambling Hall (the “Pioneer”) in Laughlin, Nevada. In addition, the Company owns real estate on Las Vegas Boulevard South (the “Strip”) in Las Vegas, Nevada, investment properties in Dorchester, Massachusetts and Gaithersburg, Maryland, and through a wholly-owned subsidiary, Archon Sparks Management Company, formerly operated a casino in Sparks, Nevada, which was closed in December 2003.

In December 2000, the Company entered into a series of agreements to exchange, pursuant to Sections 721 and 351 of the Internal Revenue Code of 1986, as amended (the “Code”), the real and personal property, excluding gaming equipment, and intangible assets used in the operations of the Pioneer to a third party and agreed to lease and license the assets sold for up to 20 years, during which period the Company will operate the Pioneer (collectively, the “Pioneer Transactions”). Additionally, the Company had the option to acquire the Pioneer during the period from December 29, 2003 to December 31, 2007. On November 13, 2003, the Company notified GE Capital that in accordance with Article 25 of the lease between HAHF Pioneer, LLC (“GE”) and PHI, the Company would exercise its Early Purchase Option (“EPO”) on December 29, 2003. The EPO was exercised on December 29, 2003 in the amount of $35.6 million and was paid from the following monies: a $2.5 million payment on a note receivable from PDS Gaming Corporation (“PDS Gaming”), a loan in the amount of $18.0 million, funds from the restricted cash accounts in the amount of approximately $12.6 million, and $2.5 million from marketable securities.

In March 2001, a wholly-owned subsidiary of the Company, Santa Fe Holdings, Inc. (“SFHI”) completed the acquisition of investment properties in Dorchester, Massachusetts and Gaithersburg, Maryland for an aggregate purchase price of $145.0 million plus debt issuance costs of $3.2 million, consisting of $15.5 million in cash and the assumption or issuance of an aggregate of $132.7 million of non-recourse indebtedness. The acquisitions are intended to qualify as like-kind exchanges of real property under Section 1031 of the Code and to defer a portion of the federal corporate income tax resulting from the sale of the Company’s previously owned Santa Fe Hotel and Casino (the “SFHI Asset Sale”).

The principal executive office of the Company is located at 3993 Howard Hughes Parkway, Suite 630, Las Vegas, Nevada 89109 and the telephone number is (702) 732-9120.

Recent Developments

Las Vegas Strip Property. On December 9, 2003, the Company filed certain use permit applications with Clark County, Nevada, in connection with proposed development plans for its 27-acre Las Vegas Strip property. The Company obtained a use permit on the site for a master-planned development with certain Federal Aviation Administration construction height approvals on the site up to 750 feet. The Company has not obtained any other critical approvals or permits and development of such site would require other significant regulatory approvals. There is no assurance that the Company will obtain all land use, building or other regulatory approvals necessary for development of a hotel-casino resort project or other development projects for this site.

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The Company is evaluating development and construction of a hotel-casino project on the site and remains in the predevelopment stage. There are no definitive plans or commitments for the site. The Company may elect to proceed with development, sell the site to other parties or continue to hold the site in its current state.

The Company cannot give any assurances that it will obtain financing on acceptable terms for the project. A preliminary budget has not been completed estimating the costs to develop, build, complete and open the project. There are numerous contingencies and intervening events that could occur that could impact our plans for the site.

Archon’s Strip site was leased by an operator of a water-themed amusement park. In September 2004, the lease was terminated although the tenant may remain on the property through January 2005 for the purpose of removing certain property and equipment. The Company has leased a small portion of the site as a construction staging area for a neighboring development through at least February 2006.

Acquisition of Pioneer. On December 29, 2003, the Company completed the purchase of the fee ownership of the Pioneer in Laughlin, Nevada from an affiliate of GE pursuant to an early purchase option under its existing lease agreement dated December 29, 2000. In accordance with the lease agreement, the Company purchased certain property, including (i) the real property commonly known as 2200 South Casino Drive, located in Laughlin, Nevada; (ii) the casino building, the hotel rooms, together with the meeting rooms, restaurants and associated facilities; and (iii) building equipment and other similar additions and improvements located on the real property. The purchase price for the property was approximately $35.6 million: approximately $12.6 million was paid through funds from the restricted cash accounts, approximately $2.5 million in marketable securities, approximately $2.5 million through a note from PDS Gaming that was due on December 29, 2003, and approximately $18.0 million from borrowed funds, whereby the Company acquired an $18.0 million note payable that is secured by certain land held for development in Las Vegas.

Closing of Duke’s Casino. The Company ceased operating Duke’s Casino in Sparks, Nevada on December 31, 2003. Duke’s Casino was operated through Archon Sparks Management Company, a wholly-owned subsidiary of the Company. Certain of the furniture, fixtures, gaming and non-gaming equipment and inventories have been transferred to the Pioneer. See Note 18 in the Consolidated Financial Statements.

Lone Mountain Property. The Company owned, through SFHI, an approximately 20-acre parcel of real property located next to the Company’s former hotel/casino property, the Santa Fe Hotel and Casino (the “Santa Fe”) (sold to a third party in fiscal 2001), at the intersection of Rainbow and Lone Mountain in Las Vegas, Nevada. The Company and SFHI had granted to the buyer of the SFHI Asset Sale an option to purchase the property for $5.0 million through October 2003. The buyer declined to exercise the option to purchase the property. As a result, the Company entered into an agreement on October 24, 2003 to sell the property for approximately $5.6 million and the sale of the property was completed in September 2004. $5.0 million of the net proceeds from the sale of the real property were used to reduce outstanding indebtedness to a bank.

Hotel and Casino Operations

The Pioneer

The Pioneer, built in 1982, features a classical western architecture style, and is located in Laughlin, Nevada, an unincorporated town on the Colorado River bordering Arizona. The Pioneer is located on approximately 12 acres of land, with Colorado River frontage of approximately 770 feet, and is situated near the center of Laughlin’s Casino Drive. Approximately 6 ¹/2 acres of the 12 acres are leased pursuant to a 99-year ground lease (the “Ground Lease”) which, by its terms, is scheduled to terminate in December 2078. The leased land lies between and separates the remaining two parcels of land that are held in fee simple. The Pioneer is comprised of four buildings. One of the three motel buildings together with a portion of both the Pioneer’s casino building and a second motel building are located on land subject to the Ground Lease. The casino is located in the main building, totaling approximately 50,000 square feet, of which approximately 21,500 square feet house the casino.

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The first floor includes the casino, two bars, snack bar and gift shop, as well as a twenty-four hour restaurant, kitchen, special events area, restrooms and storage areas. A partial second floor houses a gourmet restaurant, administrative offices and banquet rooms. The three motel buildings were built in 1984 and comprise approximately 66,000, 54,000 and 30,000 square feet, respectively. A total of 416 motel rooms are housed in the three buildings with improvements including a swimming pool and spa. See also Item 1., “Business – Recent Developments.”

Revenues. The primary source of revenues to the Company’s hotel-casino operations is gaming, which represented approximately 60.1%, 60.5% and 60.3% in 2004, 2003 and 2002, respectively, of total revenues. The Pioneer contributed approximately 99% in fiscal 2004 to total gaming revenues and approximately 96% and 100% in fiscal 2003 and 2002, respectively. As of September 30, 2004 the Pioneer had approximately 780 slot machines, nine blackjack tables (“21”), one craps table, one roulette wheel and three other gaming tables. In addition, the Pioneer offers keno.

Market. The Pioneer targets primarily mature, out-of-town customers residing in Central Arizona and Southern California, retirees who reside in the Northeast and Midwest United States and Canada and travel to the Southwest United States during the winter months, and local residents who reside in Laughlin, Nevada, and in Bullhead City, Kingman and Lake Havasu, Arizona. The occupancy rate at the Pioneer was approximately 70%, 77% and 75%, respectively, in fiscal years 2004, 2003 and 2002, respectively.

Business Strategy. The Pioneer attempts to attract and retain customers by offering slot and video poker machine payouts that compare favorably to the competition. A visible means used by the Pioneer to accomplish this marketing program is to offer what management believes to be a large number of quarter video poker machines with liberal theoretical pay outs, compared to other casinos in Laughlin. The Pioneer periodically sponsors detailed product research of its competitors to categorize the number and type of video poker games by payouts and monitors changes in game products to assist it in developing competitive products.

The Pioneer has a program called the “Bounty Hunter Round-Up Club” (the “Club”) established to encourage repeat business from frequent and active slot and table game customers. A member of the Club accumulates points in the member’s account for play on slot machines and table games that can be redeemed for cash, free gifts, food and beverages and additional points redeemable for free play. Pioneer management also uses the Club membership list for direct mail marketing.

Management and Personnel

As of September 30, 2004, the Company employed 14 executive and administrative personnel and the Pioneer employed approximately 500 persons.

Competition

In addition to competing with the hotel-casinos in Laughlin, the Pioneer also competes with the hotel-casinos in Las Vegas and those situated on Interstate-15 (the principal highway between Las Vegas and Southern California) near the California-Nevada state line. In March 2000, California voters approved an amendment to the California constitution which permits compacts that allow Native American tribes to operate in excess of 100,000 slot machines in addition to banked card games and lotteries. Management believes that Native American casinos in Southern California, Arizona and New Mexico have had an adverse impact on the Laughlin market, including the Pioneer, by drawing visitors away from the market.

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Investment Properties

The Company acquired investment properties in Dorchester, Massachusetts and Gaithersburg, Maryland in March 2001. The Dorchester, Massachusetts property is located on 12 acres and includes several buildings with approximately 425,000 square feet of commercial office space. The property was acquired for approximately $82.4 million plus $500,000 in debt issuance costs. The Company paid $5.6 million in cash and assumed $77.3 million in non-recourse debt associated with the property. The property is under a net lease through 2020 with a single tenant with an investment grade credit rating. Under the lease, the tenant is responsible for substantially all obligations related to the property.

The property in Gaithersburg, Maryland is located on 55 acres and includes one building with approximately 342,000 square feet of commercial office space. The property was acquired for $62.6 million, plus debt issuance costs of $2.7 million. The Company paid $9.9 million in cash and issued $55.4 million in non-recourse first mortgage indebtedness. The building is located on approximately 20 acres of the property. The property is under a net lease through 2014 with a single tenant with an investment grade credit rating. Under the lease, the tenant is responsible for substantially all obligations related to the property.

See also Item 2., “Properties.”

Land Held for Development

The Company owns, through Sahara Las Vegas Corp. (“SLVC”), an approximately 27-acre parcel of real property on the Strip. In connection with the acquisition of the property, the Company assumed an operating lease under which a water theme park operates. The lease was terminated September 30, 2004.

On December 9, 2003, the Company filed certain use permit applications with Clark County, Nevada, in connection with proposed development plans for its 27-acre Strip property. The Company obtained a use permit on the site for a master-planned development with certain FAA construction height approvals on the site up to 750 feet. The Company has not obtained any other critical approvals or permits and development of such site would require other significant regulatory approvals. There is no assurance that the Company will obtain all land use, building or other regulatory approvals necessary for development of a hotel-casino resort project or other development projects for this site.

The Company is evaluating development and construction of a hotel-casino project on the site and remains in the predevelopment stage. There are no definitive plans or commitments for the site. The Company may elect to proceed with development, sell the site to other parties or continue to hold the site in its current state.

The Company cannot give any assurances that it will obtain financing on acceptable terms for the project. A preliminary budget has not been completed estimating the costs to develop, build, complete and open the project. There are numerous contingencies and intervening events that could occur that could impact our plans for the site.

Archon’s Strip site was leased by an operator of a water-themed amusement park. In September 2004, the lease was terminated and the tenant may remain on the property through January 2005 for the purpose of removing certain property and equipment. The Company has leased to a non-related third party a small portion of the site as a construction staging area for a neighboring development at least through February 2006.

The Company owned, through SFHI, an approximately 20-acre parcel of real property located next to the Santa Fe at the intersection of Rainbow and Lone Mountain in Las Vegas, Nevada. The Company and SFHI had granted to the buyer of the SFHI assets an option to purchase the property for $5.0 million through October 2003. The buyer declined to exercise the option to purchase the property. The Company then sold the property to a third party for approximately $5.6 million. The sale was completed in September 2004 with approximately $5.0 million of the net proceeds being used to reduce outstanding bank indebtedness.

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Any future development of the Strip property is subject to, among other things, the Company’s ability to obtain necessary financing. The Company can give no assurance that it will obtain development financing or successfully develop the property.

See also Item 1. “Business—Recent Developments” and Item 2., “Properties.”

The Company has provided financial segment information in the “Notes to Consolidated Financial Statements, Note 21. Segment Information”.

Nevada Regulations and Licensing

The Company and PHI (collectively, the “Archon Group”) are subject to extensive state and local regulation by the Nevada Gaming Commission (the “Commission”), the Nevada State Gaming Control Board (the “Board”) and in the case of PHI, the Clark County Liquor and Gaming Licensing Board (collectively the “Nevada Gaming Authorities”).

The laws, regulations and supervisory procedures of the Nevada Gaming Authorities seek (i) to prevent unsavory or unsuitable persons from having any direct or indirect involvement with gaming at any time or in any capacity, (ii) to establish and maintain responsible accounting practices and procedures, (iii) to maintain effective control over the financial practices of licensees, including establishing minimum procedures for internal fiscal affairs and the safeguarding of assets and revenues, providing reliable record-keeping and making periodic reports to the Nevada Gaming Authorities, (iv) to prevent cheating and fraudulent practices and (v) to provide a source of state and local revenues through taxation and licensing fees. Changes in such laws, regulations and procedures could have an adverse effect on any or all of the members of the Archon Group. Management believes the Archon Group is in compliance with regulations promulgated by the Nevada Gaming Authorities.

Licensing and Registration. PHI holds Nevada State gaming licenses to operate the Pioneer. The Company has been approved by the Nevada Gaming Authorities to own, directly or indirectly, a beneficial interest in PHI.

The licenses held by members of the Archon Group are not transferable. Each issuing agency may at any time revoke, suspend, condition, limit or restrict licenses or approvals to own a beneficial interest in PHI for any cause deemed reasonable by such agency. Any failure to retain a valid license or approval would have a material adverse effect on all members of the Archon Group.

If it is determined that PHI or, when applicable, new members of the Archon Group, have violated the Nevada laws or regulations relating to gaming, PHI or, when applicable, new members of the Archon Group, could, under certain circumstances, be fined and the licenses of PHI or, when applicable, new members of the Archon Group, could also be limited, conditioned, revoked or suspended. A violation under any of the licenses held by the Company, or PHI or, when applicable, new members of the Archon Group, may be deemed a violation of all the other licenses held by the Company and PHI or, when applicable, new members of the Archon Group. If the Commission does petition for a supervisor to manage the affected casino and hotel facilities, the suspended or former licensees shall not receive any earnings of the gaming establishment until approved by the court, and after deductions for the costs of the supervisor’s operation and expenses and amounts necessary to establish a reserve fund to facilitate continued operation in light of any pending litigation, disputed claims, taxes, fees and other contingencies known to the supervisor which may require payment. The supervisor is authorized to offer the gaming establishment for sale if requested by the suspended or former licensee, or without such a request after six months after the date the license was suspended, revoked or not renewed.

Individual Licensing. Certain stockholders, directors, officers and key employees of corporate gaming licensees must be licensed by the Nevada Gaming Authorities. An application for licensing of an individual may be denied for any cause deemed reasonable by the issuing agency. Changes in licensed positions must be reported to Nevada Gaming Authorities. In addition to its authority to deny an application for an individual license, the Nevada

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Gaming Authorities have jurisdiction to disapprove a change in corporate position. If the Nevada Gaming Authorities were to find any such person unsuitable for licensing or unsuitable to continue to have a relationship with a corporate licensee, such licensee would have to suspend, dismiss and sever all relationships with such person. Such corporate licensee would have similar obligations with regard to any person who refuses to file appropriate applications, who is denied licensing following the filing of an application or whose license is revoked. Each gaming employee must obtain a work permit which may be revoked upon the occurrence of certain specified events.

Any individual who is found to have a material relationship or a material involvement with a gaming licensee may be investigated to be found suitable or to be licensed. The finding of suitability is comparable to licensing and requires submission of detailed financial information and a full investigation. Key employees, controlling persons or others who exercise significant influence upon the management or affairs of a gaming licensee may be deemed to have such a relationship or involvement.

Beneficial owners of more than 10% of the voting securities of a corporation or partner interests of a partnership registered with the Nevada Gaming Authorities that is “publicly traded” (a “Registered Entity”) must be found suitable by the Nevada Gaming Authorities, and any person who acquires more than 5% of the voting securities or partner interests, as the case may be, of a Registered Entity must report the acquisition to the Nevada Gaming Authorities in a filing similar to the beneficial ownership filings required by the Federal securities laws. Under certain circumstances an institutional investor, as such term is defined in the Gaming Control Act and the regulations of the Commission and Board (collectively, the “Nevada Gaming Regulations”), that acquires more than 10% of the Company’s voting securities may apply to the Commission for a waiver of such finding of suitability requirement. If the stockholder who must be found suitable is a corporation, partnership or trust, it must submit detailed business and financial information including a list of beneficial owners. Any beneficial owner of equity or debt securities of a Registered Entity (whether or not a controlling stockholder) may be required to be found suitable if the relevant Nevada Gaming Authorities have reason to believe that such ownership would be inconsistent with the declared policy of the State of Nevada. If the beneficial owner who must be found suitable is a corporation, partnership or trust, it must submit detailed business and financial information, including a list of its securities.

Any stockholder found unsuitable and who beneficially owns, directly or indirectly, any securities or partner interests of a Registered Entity beyond such period of time as may be prescribed by the Nevada Gaming Authorities may be guilty of a gross misdemeanor. Any person who fails or refuses to apply for a finding of suitability or a license within 30 days after being ordered to do so may be found unsuitable. A Registered Entity is subject to disciplinary action if, after it receives notice that a person is unsuitable to be a security holder or partner, as the case may be, or to have any other relationship with it, such Registered Entity (a) pays the unsuitable person any dividends or property upon any voting securities or partner interests or makes any payments or distributions of any kind whatsoever to such person, (b) recognizes the exercise, directly or indirectly, of any voting rights in its securities or partner interests by the unsuitable person, (c) pays the unsuitable person any remuneration in any form for services rendered or otherwise, except in certain and specific circumstances or (d) fails to pursue all lawful efforts to require the unsuitable person to divest himself of his voting securities, including, if necessary, the immediate purchase of the voting securities for cash at fair market value.

Registered Entities must maintain current stock ledgers in the State of Nevada that may be examined by the Nevada Gaming Authorities at any time. If any securities or partner interests are held in trust by an agent or by a nominee, the record holder may be required to disclose the identity of the beneficial owner to the Nevada Gaming Authorities. A failure to make such disclosure may be grounds for finding the record owner unsuitable. Record owners are required to conform to all applicable rules and regulations of the Nevada Gaming Authorities. Licensees also are required to render maximum assistance in determining the identity of a beneficial owner.

The Nevada Gaming Authorities have the power to require that certificates representing voting securities of a corporate licensee bear a legend to the effect that such voting securities or partner interests are subject to the Nevada Gaming Regulations. The Nevada Gaming Authorities, through the power to regulate licensees, have the power to impose additional restrictions on the holders of such voting securities at any time.

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Financial Responsibility. The Company and PHI are required to submit detailed financial and operating reports to the Nevada Gaming Authorities. Substantially all loans, leases, sales of securities and other financial transactions entered into by the Company or PHI must be reported to and, in some cases, approved by the Nevada Gaming Authorities.

Certain Transactions. None of the Archon Group may make a public offering of its securities without the approval of the Commission if the proceeds therefrom are intended to be used to construct, acquire or finance gaming facilities in Nevada, or retire or extend obligations incurred for such purposes. Such approval, if given, will not constitute a recommendation or approval of the investment merits of the securities offered. Any public offering requires the approval of the Commission.

Changes in control of the Company through merger, consolidation, acquisition of assets, management or consulting agreements or any form of takeover cannot occur without the prior investigation of the Board and approval of the Commission. The Commission may require controlling stockholders, partners, officers, directors and other persons who have a material relationship or involvement in the transaction to be licensed.

The Nevada legislature has declared that some corporate acquisitions opposed by management, repurchases of voting securities and other corporate defense tactics that affect corporate gaming licensees in Nevada, and corporations whose securities are publicly traded that are affiliated with those operations, may be injurious to stable and productive corporate gaming. The Commission has established a regulatory scheme to ameliorate the potentially adverse effects of these business practices upon Nevada’s gaming industry and to further Nevada’s policy to (i) assure the financial stability of corporate or partnership gaming operators and their affiliates; (ii) preserve the beneficial aspects of conducting business in the corporate form; and (iii) promote a neutral environment for the orderly governance of corporate or partnership affairs. Approvals are, in certain circumstances, required from the Commission before the Company can make exceptional repurchases of voting securities above the current market price thereof (commonly referred to as “greenmail”) and before an acquisition opposed by management can be consummated. Nevada’s gaming regulations also require prior approval by the Commission if the Company were to adopt a plan of recapitalization proposed by the Company’s Board of Directors in opposition to a tender offer made directly to the stockholders for the purpose of acquiring control of the Company.

Miscellaneous. The Company and its Nevada-based affiliates, including subsidiaries, may engage in gaming activities outside the State of Nevada without seeking the approval of the Nevada Gaming Authorities provided that such activities are lawful in the jurisdiction where they are to be conducted and that certain information regarding the foreign operation is provided to the Board on a periodic basis. The Company and its Nevada-based affiliates may be disciplined by the Commission if any of them violates any laws of the foreign jurisdiction pertaining to the foreign gaming operation, fails to conduct the foreign gaming operation in accordance with the standards of honesty and integrity required of Nevada gaming operations, engages in activities that are harmful to the State of Nevada or its ability to collect gaming taxes and fees, or employs a person in the foreign operation who had been denied a license or finding of suitability in Nevada on the ground of personal unsuitability.

License fees and taxes, computed in various ways depending on the type of gaming involved, are payable to the State of Nevada and to the counties and cities in which the Company and PHI conduct their respective operations. Depending upon the particular fee or tax involved, these fees and taxes are payable either monthly, quarterly or annually and are based upon: (i) a percentage of the gross gaming revenues received by the casino operation; (ii) the number of slot machines operated by the casino; or (iii) the number of table games operated by the casino. A casino entertainment tax is also paid by the licensee where entertainment is furnished in connection with the selling of food or refreshments.

Finally, the Nevada Gaming Authorities may require that lenders to licensees be investigated to determine if they are suitable and, if found unsuitable, may require that they dispose of their loans.

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Item 2. Properties

The Pioneer is located on approximately 12 acres of land, with Colorado River frontage of approximately 770 feet, and is situated near the center of Laughlin’s Casino Drive. The Company previously leased the Pioneer under a lease that expired in December 2020, subject to two five-year options to extend the term. However, the Company exercised an early purchase option in December 2003 and no longer has a significant capital lease obligation at this property. See Item 1., “Business – Hotel and Casino Operations” and “– Recent Developments,” for more detailed information regarding the Pioneer.

The Company’s investment property in Dorchester, Massachusetts is located on 12 acres and includes several buildings with approximately 425,000 square feet of commercial office space. The property was acquired for approximately $82.4 million plus $0.5 million in debt issuance costs. The Company paid $5.6 million in cash and assumed $77.3 million in non-recourse debt associated with the property. The property is under a net lease through 2020 with a single tenant with an investment grade credit rating. Under the lease, the tenant is responsible for substantially all obligations related to the property.

The Company’s investment property in Gaithersburg, Maryland is located on 55 acres and includes one building with approximately 342,000 square feet of commercial office space. The property was acquired for $62.6 million, plus debt issuance costs of $2.7 million. The Company paid $9.9 million in cash and issued $55.4 million in non-recourse first mortgage indebtedness. The building is located on approximately 20 acres of the property. The property is under a net lease through 2014 with a single tenant with an investment grade credit rating. Under the lease, the tenant is responsible for substantially all obligations related to the property.

The Company owns approximately 27 acres of real property located on the Strip. See Item 1. Business - Recent Developments and Land Held for Development.

Item 3. Legal Proceedings

Poulos v. Caesar’s World, Inc., et al. and Ahern v. Caesar’s World, Inc., et al.

The Company is a defendant in a class action lawsuit originally filed in the United States District Court of Florida, Orlando Division in 1994, entitled Poulos v. Caesar’s World, Inc., et al., Ahern v. Caesar’s World, Inc., et al. and Schrier v. Caesar’s World, Inc., et al., along with a fourth action against cruise ship gaming operators and which have been consolidated in a single action now pending in the United States District Court, District of Nevada (the “Court”). Also named as defendants in these actions are many of the largest gaming companies in the United States and certain gaming equipment manufacturers. Each complaint is identical in its material allegations. The actions allege that the defendants have engaged in fraudulent and misleading conduct by inducing people to play video poker machines and electronic slot machines based on false beliefs concerning how the machines operate and the extent to which there is actually an opportunity to win on a given play. The complaints allege that the defendants’ acts constitute violations of the Racketeer Influenced and Corrupt Organizations Act and also give rise to claims for common law fraud and unjust enrichment, and seek compensatory, special consequential, incidental and punitive damages of several billion dollars.

In response to the complaints, all of the defendants, including the Company, filed motions attacking the pleadings for failure to state a claim, seeking to dismiss the complaints for lack of personal jurisdiction and venue. As a result of those motions, the Court has required the Plaintiffs in the four consolidated cases to file a single consolidated amended complaint. Subsequent to Plaintiffs’ filing of their consolidated amended complaint, the defendants refiled numerous motions attacking the amended complaint upon many of the bases as the prior motions. The Court heard the arguments on those motions and ultimately denied the motions. Plaintiffs then filed their motion to certify a class. Defendants vigorously opposed the motion. On June 26, 2002, the court denied the motion to

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certify the class. Plaintiffs then sought discretionary review by the Ninth Circuit of the order denying class certification. On August 15, 2002, the Ninth Circuit granted review. The briefing is complete, an oral hearing took place on January 15, 2004 and the defendants are waiting for a court ruling.

In addition, the Company is subject to various lawsuits relating to routine matters incidental to its business. The Company does not believe that the outcome of such litigation, in the aggregate, will have a material adverse effect on the Company.

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

There were no matters submitted to a vote of the Company’s security holders during the fourth quarter of fiscal 2004.

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PART II

Item 5. Market for the Registrant’s Common Stock and Related Security Holders Matters

The Company’s common stock is traded on the Over the Counter Bulletin Board (the “OTCBB”) under the symbol “ARHN”.

The closing price of the Common Stock on December 27, 2004 was $20.70 per share. The tables below set forth the high and low closing prices by quarter for the fiscal years ended September 30, 2004 and 2003 of the common stock, as reported by the OTCBB.

The Company has never paid cash dividends on its Common Stock, nor does it anticipate paying such dividends in the foreseeable future. There were approximately 700 common stockholders of record as of December 27, 2004.

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Item 6. Selected Financial Data

The table below sets forth a summary of selected financial data of the Company for the years ended September 30, 2004, 2003, 2002, 2001 and 2000:

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

General

Overview of Business Operations and Trends

The Company historically has owned, managed and operated hotel/casino properties through a number of acquisitions or developments, and it has subsequently divested certain of these properties. Presently, the Company operates the Pioneer in Laughlin, Nevada. The Company also owns Strip property that it may develop. Management believes that the trend of continued development in Las Vegas, Nevada of themed resorts intended to attract visitors will continue in the foreseeable future.

Its property in Laughlin, Nevada has experienced a flattening of its revenues over the last few years after experiencing strong revenue and profit growth in the early 1990’s. Management believes the growth of casino properties on Native American lands in such locations as California and Arizona within the last several years caused revenue declines and caused the Company to focus on market definition and development in Laughlin to maintain profitability. Management believes Laughlin has now become a mature market with marginal growth forecasted for the next few years based on its current plans.

The Company also owns investment properties on the East Coast but these investment properties do not contribute significant profitability or net cash flow to the Company.

Management believes the recent revenue and expense trends in its Laughlin hotel/casino property may not change significantly over the next few years, but believes the opportunity to develop the Strip property could greatly enhance the Company’s ability to generate future profitability, although the Company has no definitive plans to develop the property.

Critical Accounting Policies and Estimates

Management’s Discussion and Analysis of Financial Condition and Results of Operations discuss Archon’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the 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. On an ongoing basis, management evaluates its estimates and judgments, including those related to customer incentives, bad debts, inventories, investments, estimated useful lives for depreciable and amortizable assets, valuation reserves and estimated cash flows in assessing the recoverability of long-lived assets, estimated liabilities for slot club bonus point programs, income taxes, contingencies and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Management believes the following critical accounting policies, among others, affects its more significant judgments and estimates used in the preparation of its consolidated financial statements:

Allowance for Doubtful Accounts. We allow for an estimated amount of receivables that may not be collected. We estimate our allowance for doubtful accounts using a specific formula applied to aged receivables as well as a specific review of large balances. Historical experience is considered, as are customer relationships, in determining specific reserves.

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Long-Lived Assets. We have a significant investment in long-lived property and equipment. We estimate that the undiscounted future cash flows expected to result from the use of these assets exceeds the current carrying value of these assets. Any adverse change in the estimate of these undiscounted future cash flows could necessitate an impairment charge that would adversely affect operating results. We estimate useful lives for our assets based on historical experience, estimates of assets’ commercial lives, and the likelihood of technological obsolescence. Should the actual useful life of a class of assets differ from the estimated useful life, we would record an impairment charge. We review useful lives and obsolescence and we assess commercial viability of these assets periodically.

Income Taxes. The Company has recorded a valuation allowance to reduce its deferred tax assets to the balance the Company believes can be recovered based on forecasted taxable income. Realization of the net deferred tax assets is dependent on the Company’s ability to generate profits from operations or from the sale of long-lived assets. There can be no assurance that the Company will generate profits from operations or sell those assets or will generate profits from sales if they were to occur in the future. In the event the Company does generate profits from sales of long-lived assets in the future, an adjustment to the valuation allowance would increase income in the period in which the profit is realized.

Results of Operations – Fiscal 2004 Compared to Fiscal 2003

General

During fiscal 2004, the Company experienced a marginal decline in net operating revenues of 1%. However, due to certain reductions of personnel costs primarily at the Pioneer and due to the closure of Duke’s Casino, the Company reduced its operating expenses, before provisions for receivable and investment, by approximately $1.0 million. Additionally, the Company incurred less operating expenses in fiscal 2004 as compared to fiscal 2003 as an income statement provision, principally because a receivable from and investment in Duke’s LLC, of approximately $1.7 million, was recorded. Similar charges of approximately $0.2 million in 2004 were recorded. Overall, the Company’s operating income improved in fiscal 2004 as compared to fiscal 2003 by approximately $2.0 million.

As previously noted, the Company purchased and retired certain lease obligations of approximately $37 million in December 2003. As a result of this transaction, interest expense declined significantly for the Company resulting in decreased interest expense in fiscal 2004 as compared to fiscal 2003 of approximately $3.5 million. This improvement in reduced interest expense was offset, in part, by a decrease in interest income from marketable securities in fiscal 2004 compared to fiscal 2003 of approximately $0.6 million. A significant portion of marketable securities was sold to assist in the purchase of the Pioneer assets in December 2003.

The Company does not anticipate significant changes to its operating results or recourse debt structure in the near term, although no assurances to such can be given.

Consolidated

Net Operating Revenues. Consolidated net operating revenues for the year ended September 30, 2004 were $45.7 million, a $0.5 million, or 1%, decrease from $46.2 million for the year ended September 30, 2003. Income from investment properties was $12.4 million in each of the fiscal years. Revenues increased approximately $0.3 million to $32.2 million during fiscal 2004 at the Pioneer compared to $31.9 million for the 2003 fiscal year. Archon Sparks Management Company (“ASMC”), which began operating Duke’s Casino in February 2003, had revenues of $0.4 million in the 2004 fiscal year compared to $1.3 million for the 2003 fiscal year.

In fiscal 2004, 70% of the Company’s net revenues were derived from the Pioneer and 27% from investment properties. The Company’s business strategy at the Pioneer emphasizes slot and video poker machine play. For fiscal 2004, approximately 84% of the Pioneer’s net revenues were derived from casino operations. Approximately 88% of gaming revenues at the Pioneer were derived from slot and video poker machines, while 10% of such revenues were from table games and 2% was from other gaming activities such as keno.

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Operating Expenses. Total operating expenses decreased approximately $2.5 million, or 6%, to $40.7 million for the year ended September 30, 2004 from $43.2 million for the year ended September 30, 2003. Total operating expenses as a percentage of net revenues decreased to 89% for the year ended September 30, 2004 from 94% for the year ended September 30, 2003. The decline of approximately $2.5 million in operating expenses was principally attributable to i) a reserve for receivables and investment in fiscal 2003 related principally to Duke’s casino of approximately $1.7 million compared to approximately $0.2 million in fiscal 2004, ii) the inclusion in fiscal 2003 of approximately $2.2 million of additional operating expenses at Duke’s casino compared to approximately $0.7 million in fiscal 2004, iii) a decrease in operating expenses of approximately $0.4 million, or approximately 1%, at the Pioneer, in fiscal 2004 and iv) an increase in general corporate expenses in fiscal 2004 of approximately $1.0 million, principally the result of increased legal, accounting/auditing and payroll expenses.

Operating Income. Consolidated operating income for the year ended September 30, 2004 was $5.0 million, a $2.1 million, or 70%, increase from $2.9 million for the year ended September 30, 2003. Operating income improved by $0.7 million at the Pioneer. Including a charge in fiscal 2003 principally for a receivable and investment of approximately $1.7 million, ASMC had an operating loss of $0.5 million and $2.7 million for the fiscal years ended September 30, 2004 and 2003, respectively.

Gain on Sale of Assets. The gain on sale of assets of approximately $4.0 million represents primarily a gain from the sale of certain land held for development during the year ended September 30, 2004 partially offset by a loss on disposal of assets by ASMC.

Interest Expense. Consolidated interest expense for the year ended September 30, 2004 was $12.9 million, a $3.5 million decrease compared to $16.4 million for the year ended September 30, 2003. Interest expense decreased $2.6 million at the Pioneer due to the purchase of the Pioneer assets of approximately $36 million in December 2003, and the resulting termination of capital leases, which bore interest at approximately 14%. The capital lease obligations of approximately $37 million were replaced by the acquisition of certain debt in December 2003 of approximately $18 million, bearing interest at prime plus 1%.

Interest Income. Interest income for the year ended September 30, 2004 was $0.9 million, a decrease of $0.6 million from $1.5 million for the year ended September 30, 2003 due to a decrease in marketable equity securities in the 2004 fiscal year. A significant portion of marketable securities was sold in December 2003, the proceeds of which were used for the purchase of the Pioneer assets.

Other Income. Other income was $0.3 million in fiscal 2004 and is comprised primarily of $0.1 million from net gains on sales of marketable securities and $0.2 million of income from other investments. In fiscal 2003, the Company reported no similar income from these sources.

Loss Before Income Tax. Consolidated loss before income tax for the year ended September 30, 2004 was $2.8 million, a $9.2 million improvement compared to a consolidated loss before income taxes of $12.0 million for the year ended September 30, 2003. This improvement is principally attributable to the aforementioned improvements in operating losses, other income of approximately $4.0 million from a gain on sale of certain assets and a decline in interest expense due to the retirement of certain obligations under capital leases.

Federal Income Tax. The Company recorded a federal income tax benefit of approximately $0.9 million (an approximate 33% effective tax rate) for the year ended September 30, 2004 compared to $4.2 million (an approximate 35% tax rate) for the year ended September 30, 2003.

Preferred Share Dividends. Undeclared preferred share dividends are not recorded in the stockholders’ equity section of the balance sheet as the Company may elect at its sole discretion whether to redeem its preferred stock. However, dividends of approximately $1.6 million and $1.5 million for fiscal years 2004 and 2003, respectively, accrued on the preferred stock for purposes of calculating net loss applicable to common shares. The dividend rate increased to 16.0% effective October 1, 2003 from 15.5% beginning on April 1, 2003. The accrued dividend rate increases 50 basis points at each semi-annual dividend payment date, subject to a maximum of 16.0%.

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Net Loss. Consolidated net loss applicable to common shares was $3.4 million, or $0.55 per common share, for the year ended September 30, 2004 compared to net loss applicable to common shares of $9.4 million, or $1.51 per common share, for the year ended September 30, 2003.

Pioneer

General. Casino, hotel and food/beverage revenues and expenses at the Pioneer comprise the majority of consolidated casino, hotel and food/beverage revenues and expenses included in the Company’s consolidated statements of operations and are discussed separately below. There are other insignificant casino and food/beverage revenues and expenses in 2004 and 2003 from ASMC which are not discussed separately below.

Net Operating Revenues. Revenues at the Pioneer increased $0.3 million, or 1%, to $32.2 million for the year ended September 30, 2004 from $31.9 million for the year ended September 30, 2003.

Gross casino revenues increased approximately $0.3 million, or 1%, to $27.1 million for the year ended September 30, 2004 from $26.8 million for the year ended September 30, 2003. Slot and video poker revenues increased approximately $0.7 million, or 3%, to $23.9 million for the year ended September 30, 2004 from $23.2 million for the year ended September 30, 2003. Management believes that the increase resulted from an upgrade of certain slot machines during fiscal 2004. Other gross gaming revenues, including table games, decreased approximately $0.4 million, or 12%, due primarily to decreased table game win. Management believes fewer table game casino and hotel patrons contributed to this decline. Casino promotional allowances increased to approximately $7.8 million in the fiscal year 2004 compared to $6.7 million for the year ended September 30, 2003 due to marketing promotions and system enhancements implemented to increase business volume.

Hotel revenues increased approximately $0.4 million, or 16%, to approximately $3.1 million for the year ended September 30, 2004 from approximately $2.7 million in fiscal 2003, as a decrease in occupancy rate from 77.3% in 2003 to 69.8% in 2004 was offset by an increase in the average daily room rate of approximately 30%. Management believes its efforts to improve the quality and condition of many of its rooms through repairs attributed greatly to its ability to raise room rates. Food and beverage revenues increased approximately $1.2 million, or 17%, to $8.3 million for the year ended September 30, 2004 from $7.1 million for the year ended September 30, 2003, due principally to the renovations during the fourth quarter of 2003 to the Pioneer’s main food outlet. Other revenues decreased approximately $0.5 million, or 26%, to approximately $1.5 million for the year ended September 30, 2004 from $2.0 million for the year ended September 30, 2003, due to decreased sales in the Pioneer’s retail outlets caused by fewer patrons and competition from retail establishments in other casinos in Laughlin.

Operating Expenses. Operating expenses decreased approximately $0.4 million, or 1%, to $32.5 million for the year ended September 30, 2004 from $32.9 million for the year ended September 30, 2003. Operating expenses as a percentage of net revenues decreased to 101% in fiscal 2004 from 103% in fiscal 2003.

Casino expenses decreased approximately $0.5 million, or 3%, to $14.8 million for the year ended September 30, 2004 from $15.3 million for the year ended September 30, 2003, primarily related to reductions in payroll. Casino expenses as a percentage of casino revenues decreased to 55% for the year ended September 30, 2004 from 57% for the year ended September 30, 2003. Hotel expenses were relatively unchanged at $0.7 million for the years ended September 30, 2004 and 2003. Food and beverage expenses increased approximately $1.0 million, or 31%, to $4.3 million in fiscal 2004 from $3.3 million in fiscal 2003. Management believes this increase was due principally to the closure, for several months, of the main food outlet in fiscal 2003 for renovations. Food and beverage expenses as a percentage of food and beverage revenues increased to 52% for the year ended September 30, 2004 from 46% for the year ended September 30, 2003. Management believes an increase in the quality of food product contributed to this increase. Other expenses decreased approximately $0.7 million, or 39%, to $1.1 million for the year ended September 30, 2004 compared to $1.8 million for the year ended September 30, 2003, due to the decrease in retail sales. Other expenses as a percentage of other revenues decreased to 75% for the year ended September 30, 2003 from 90% for the year ended September 30, 2003.

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Selling, general and administrative expenses decreased $0.4 million, or 6%, to $4.8 million for the year ended September 30, 2004 compared to $5.2 million for the year ended September 30, 2003, primarily due to reductions in payroll, supplies and outside services. Selling, general and administrative expenses as a percentage of revenues decreased to 15% for the year ended September 30, 2004 from 16% for the year ended September 30, 2003. Pioneer’s selling, general and administrative expenses are greater than the consolidated total due to the elimination of intercompany transactions in consolidation. Utilities and property expenses remained materially unchanged at approximately $4.3 million for the year ended September 30, 2004 and $4.2 million for the year ended September 30, 2003. Utilities and property expenses as a percentage of revenues remained unchanged at 13% for the years ended September 30, 2004 and 2003.

Interest Expense. Interest expense decreased $2.6 million, or 53%, to $2.3 million for the year ended September 30, 2004 from $4.9 million for the year ended September 30, 2003, due to the purchase of the Pioneer assets and elimination of the $33.5 million lease obligation. The $33.5 million interest-bearing lease obligation had an effective interest rate of approximately 14% and was replaced with approximately $18 million of debt bearing interest annually at the rate of prime plus 1%.

Results of Operations – Fiscal 2003 Compared to Fiscal 2002

Consolidated

Net Operating Revenues. Consolidated net operating revenues for the year ended September 30, 2003 were $46.2 million, a $2.6 million, or 5.3%, decrease from $48.8 million for the year ended September 30, 2002. Income from investment properties was $12.4 million in each of the fiscal years. Revenues decreased $3.6 million to $31.9 million in fiscal 2003 at the Pioneer compared to $35.5 million in fiscal 2002. ASMC, which began operating Duke’s Casino in February 2003, had revenues of $1.3 million.

In fiscal 2003, 69.1% of the Company’s net revenues were derived from the Pioneer and 26.9% from investment properties. For fiscal 2003, 84.1% of the Pioneer’s net revenues were derived from casino operations. Approximately 86.4% of gaming revenues at the Pioneer were derived from slot and video poker machines, while 11.9% of such revenues were from table games and 1.7% was from other gaming activities such as keno.

Operating Expenses. Total operating expenses increased approximately $1.0 million, or 2.3%, to $43.2 million for the year ended September 30, 2003 from $42.2 million for the year ended September 30, 2002. Total operating expenses as a percentage of revenue increased to 93.7% for the year ended September 30, 2003 from 86.6% for the year ended September 30, 2002. Operating expenses decreased $2.3 million, or 6.5%, at the Pioneer, by $0.3 million at the investment properties and by $0.1 million at corporate. The decrease in operating expenses at the investment properties was due to an adjustment to depreciation and amortization expenses in the prior year period. The decrease at corporate was due to development costs associated with the development of certain gaming technology which was incurred in the prior year period. ASMC had operating expenses of $2.2 million. The Company recorded a $1.5 million reserve for its receivable from and investment in Duke’s Casino and $0.2 million for impairment of other assets in the current year.

Operating Income. Consolidated operating income for the year ended September 30, 2003 was $2.9 million, a $3.6 million, or 55.1%, decrease from $6.5 million for the year ended September 30, 2002. Operating income decreased by $1.3 million at the Pioneer and increased $0.3 million at the investment properties. ASMC had an operating loss of approximately $2.7 million, which includes a charge of approximately $1.7 million for a receivable from and investment in Duke’s.

Interest Expense. Consolidated interest expense for the year ended September 30, 2003 was $16.4 million, a $0.2 million decrease compared to $16.6 million for the year ended September 30, 2002. Interest expense from the investment properties decreased $0.5 million due to a reduction through principal payments of outstanding debt. Interest expense increased $0.1 million at the Pioneer due to an increase in outstanding debt through negative amortization of debt. ASMC had $0.1 million in interest expense.

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Interest Income. Interest income for the year ended September 30, 2003 was $1.5 million, an increase of $0.2 million from $1.3 million for the year ended September 30, 2002 due to a higher return on investments.

Loss Before Income Tax. Consolidated loss before income tax for the year ended September 30, 2003 was $12.0 million, a $3.2 million increase compared to $8.8 million for the year ended September 30, 2002. The loss increased at the Pioneer by $1.4 million to $5.9 million. ASMC had a loss of $1.0 million.

Federal Income Tax. The Company recorded a federal income tax benefit of $4.2 million (an approximate 35% effective tax rate) for the year ended September 30, 2003 compared to $1.1 million (an approximate 13% tax rate) for the year ended September 30, 2002. The effective tax rate for 2002 was less than the statutory tax rate as the Company recorded a reserve in the form of a valuation adjustment to its deferred tax accounts.

Preferred Share Dividends. Undeclared preferred share dividends are not recorded in the stockholders’ equity section of the balance sheet as the Company may elect at its sole discretion whether to redeem its preferred stock. However, dividends of approximately $1.5 million and $1.6 million for fiscal years 2003 and 2002, respectively, accrued on the preferred stock for purposes of calculating net loss applicable to common shares. The dividend rate increased to 15.5% effective April 1, 2003 from 15.0% beginning on October 1, 2002. The accrued dividend rate increases 50 basis points at each semi-annual dividend payment date, subject to a maximum of 16.0%, and is 16.0% as of October 1, 2003. Covenants in financing agreements for the Pioneer have prohibited the Company from paying dividends on the preferred stock.

Net Loss. Consolidated net loss applicable to common shares was $9.4 million, or $1.51 per common share, for the year ended September 30, 2003 compared to net loss applicable to common shares of $9.3 million, or $1.50 per common share, for the year ended September 30, 2002.

Pioneer

General. Casino, hotel and food/beverage revenues and expenses at the Pioneer comprised the majority of consolidated casino, hotel and food/beverage revenues and expenses included in the Company’s consolidated statements of operations during the year ended September 30, 2003 and are discussed separately below. There were other insignificant casino and food/beverage revenues and expenses in 2003 from ASMC which are not discussed separately below.

Net Operating Revenues. Revenues at the Pioneer decreased $3.6 million, or 10.0%, to $31.9 million for the year ended September 30, 2003 from $35.5 million for the year ended September 30, 2002, due to a decrease in the number of casino patrons, which management believes is due primarily to expansion of Native American gaming facilities in Southern California, Arizona and New Mexico and a loss of market share in the Laughlin market.

Casino revenues decreased $2.6 million, or 8.8%, to $26.8 million for the year ended September 30, 2003 from $29.4 million for the year ended September 30, 2002. Slot and video poker revenues decreased $2.3 million, or 9.0%, to $23.2 million for the year ended September 30, 2003 from $25.5 million for the year ended September 30, 2002. Management believes that the decrease resulted from fewer casino patrons. Other gaming revenues, including table games, decreased $0.3 million, or 7.2%, due primarily to decreased table game win of $0.2 million, or 5.9%. Casino promotional allowances were unchanged at $6.7 million for the years ended September 30, 2003 and 2002, despite the decrease in revenues due to marketing promotions developed to increase business volume.

Hotel revenues were unchanged at $2.7 million for the years ended September 30, 2003 and 2002, as an increase in occupancy rate to 77.3% from 75.0% was offset by a decrease in the average daily room rate. Food and beverage revenues decreased $0.7 million, or 9.1%, to $7.1 million for the year ended September 30, 2003 from $7.8 million for the year ended September 30, 2002, due to the decrease in the number of casino patrons and the closure of the Pioneer’s main food outlet for renovations during the fourth quarter of 2003. Other revenues decreased $0.3 million, or 13.7%, to $2.0 million for the year ended September 30, 2003 from $2.3 million for the year ended September 30, 2002, due to decreased sales in the Pioneer’s retail outlets caused by fewer patrons and competition from retail establishments in other casinos in Laughlin.

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Operating Expenses. Operating expenses decreased $2.3 million, or 6.5%, to $32.9 million for the year ended September 30, 2003 from $35.2 million for the year ended September 30, 2002. Operating expenses as a percentage of revenues increased to 103.2% in fiscal 2003 from 99.3% in fiscal 2002.

Casino expenses decreased $0.7 million, or 4.4%, to $15.3 million for the year ended September 30, 2003 from $16.0 million for the year ended September 30, 2002, primarily related to reductions in payroll and supplies. Casino expenses as a percentage of casino revenues increased to 56.9% for the year ended September 30, 2003 from 54.3% for the year ended September 30, 2002. Hotel expenses were relatively unchanged at $0.7 million for the year ended September 30, 2003 and $0.8 million for the year ended September 30, 2002. Food and beverage expenses decreased $0.8 million, or 19.9%, to $3.3 million from $4.1 million, due to the decrease in food and beverage revenues. Food and beverage expenses as a percentage of food and beverage revenues decreased to 45.9% for the year ended September 30, 2003 from 52.1% for the year ended September 30, 2002. Other expenses decreased $0.2 million, or 9.2%, to $1.8 million for the year ended September 30, 2003 compared to $2.0 million for the year ended September 30, 2002, due to the decrease in retail sales. Other expenses as a percentage of other revenues increased to 89.7% for the year ended September 30, 2003 from 85.2% for the year ended September 30, 2002.

Selling, general and administrative expenses decreased $0.3 million, or 5.3%, to $5.2 million for the year ended September 30, 2003 compared to $5.5 million for the year ended September 30, 2002, primarily due to reductions in payroll, supplies and outside services. Selling, general and administrative expenses as a percentage of revenues increased to 16.2% for the year ended September 30, 2003 from 15.4% for the year ended September 30, 2002. Pioneer’s selling, general and administrative expenses are greater than the consolidated total due to the elimination of intercompany transactions in consolidation. Utilities and property expenses decreased $0.7 million, or 14.0%, to $4.2 million for the year ended September 30, 2003 from $4.9 million for the year ended September 30, 2002, due to a decrease in rent expense resulting from the purchase in May 2002 of gaming equipment that was leased in the prior year period. Utilities and property expenses as a percentage of revenues decreased to 13.3% for the year ended September 30, 2003 from 13.9% for the year ended September 30, 2002. Depreciation and amortization expenses increased $0.5 million, or 24.0%, to $2.5 million for the year ended September 30, 2003 from $2.0 million for the year ended September 30, 2002, due to the purchase of gaming equipment in May 2002.

Interest Expense. Interest expense increased $0.1 million, or 2.9%, to $4.9 million for the year ended September 30, 2003 from $4.8 million for the year ended September 30, 2002, due to the interest expense component of the $33.5 million obligation under lease incurred on December 29, 2000 in connection with the Pioneer sale/leaseback transactions.

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Liquidity and Capital Resources; Trends and Factors Relevant to Future Operations

Contractual Obligations and Commitments

The following table summarizes the Company’s fiscal year contractual obligations and commitments as of September 30, 2004 for the fiscal years ending September 30, 2005, 2006, 2007, 2008, 2009, 2010 and thereafter:

The Company is required to make the following cash interest payments related to the above debt obligations: (i) Non-recourse debt - $10.2 million (2005), $7.3 million (2006), $7.1 million (2007), $7.0 million (2008), $6.8 million (2009), and $52.8 million (2010 and thereafter), and (ii) Long-term debt - $0.8 million (2005), $0.7 million (2006), $0.2 million (2007), $0 (2008), $0 (2009) and $0 (2010 and thereafter).

Our ability to service our contractual obligations and commitments will be dependent on the future performance of the Pioneer, which will be affected by, among other things, prevailing economic conditions and financial, business and other factors, including competitive pressure from the expansion of Native American gaming facilities in the southwest United States, certain of which are beyond our control. In addition, we will be dependent on the continued ability of the tenants in the investment properties in Gaithersburg, Maryland and Dorchester, Massachusetts to make payments pursuant to the leases with the Company. The payments under the leases are contractually committed to be used to make payments on the Company’s non-recourse debt obligations related to the properties.

A non-recourse obligation related to the Massachusetts property of approximately $25.7 million matures during the three months ending June 30, 2005. The tenant of the property is required to make this payment subject to a lease agreement, and the payment is also guaranteed by another company. Based upon the financial condition of the tenant, management does not foresee any problems in the timely satisfaction of this obligation by third parties.

Liquidity and Capital Resources

As of September 30, 2004, the Company held cash and cash equivalents of $3.4 million compared to $5.9 million at September 30, 2003. In addition, the Company had $5.4 million in investment in marketable securities at September 30, 2004 compared to $7.3 million at September 30, 2003. Management believes that through cash flow generated from its casino operations and its long-term investments, the Company will have sufficient available cash and cash resources to meet its cash requirements through the twelve-month period ending September 30, 2005. The investment properties were structured such that future tenants payments cover future required mortgage payments.

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Cash Flows from Operating Activities. The Company’s cash provided by operations was approximately $4.7 million for the year ended September 30, 2004 as compared to approximately $2.4 million for the year ended September 30, 2003. This increase was primarily due to an improvement in the net loss, (before a gain on the sale of assets of approximately $4.0 million), of approximately $2.0 million, and an increase in cash provided by changes in operating assets and liabilities of approximately $1.3 million offset, in part, by a decrease in depreciation and the negative amortization of debt in 2004 of approximately $1.2 million.

Cash Flows from Investing Activities. Cash provided by investing activities was $21.2 million during the year ended September 30, 2004, compared to cash provided by investing activities of $3.0 million during the year ended September 30, 2003. The primary components of cash provided by investing activities were a decrease in restricted cash balances of approximately $13.9 million, proceeds from the sale of certain land and assets of approximately $5.8 million and proceeds from net marketable securities transactions of approximately $2.5 million. Capital expenditures for the current year were $1.0 million. In the prior year, the Company generated $5.5 million, net, in marketable securities transactions and expended $2.0 million in capital expenditures.

Cash Flows from Financing Activities. Cash used in financing activities was $28.4 million in the year ended September 30, 2004 compared to $8.1 million during the prior year. During fiscal 2004, the Company paid approximately $36 million to purchase the Pioneer assets. Additionally, principal payments of over $6 million were made on non-recourse debt, the Company paid in excess of $5 million of its $18 million of debt acquired in December 2003 and certain other debt obligations of approximately $4 million were made. The Company also collected approximately $4.9 million of notes receivable included in other assets within its consolidated balance sheets.

The Company’s primary source of operating cash is from the Pioneer’s operations and from interest income on available cash and cash equivalents and investments in marketable securities. From time to time, transactions involving the sale of certain land or other assets also contribute to the Company’s cash balances. Rental income from the Company’s two investment properties is contractually committed to reducing the non-recourse indebtedness issued or assumed in connection with the acquisition of the investment properties. Under the two leases, the tenants are responsible for substantially all obligations related to the property. The Company’s 27-acre parcel of real property on the Strip was previously subject to a lease with a water theme park operator. The Company generates minimal cash from the lease agreement after payment of property costs. This lease was terminated in September 2004, although a third party has agreed to a short-term lease for less than 10% of the property which will generate approximately the same amount of net cash generated from the terminated lease.

The Company’s primary use of funds is for operations of Archon, which includes costs of executive and administrative personnel, administrative functions and costs to explore development opportunities. As previously noted, the Company had the option to acquire the Pioneer during the period from December 29, 2003 to December 31, 2007. In December 2003, the Company exercised the Early Purchase Option (the “EPO”). The EPO was in the amount of $35.6 million and was paid from the following monies: a $2.5 million payment on a note receivable from PDS Gaming, a loan in the amount of $18.0 million, funds from the restricted cash accounts in the amount of approximately $12.6 million, and $2.5 million from marketable securities. Obligations under lease of approximately $37.0 million were retired upon the exercise of the EPO. Accordingly, the Company recorded a reduction of its carrying value of property and equipment at the Pioneer of approximately $1.4 million in connection with this transaction.

Pioneer

Pioneer’s principal uses of cash are for payments of, rent and capital expenditures to maintain the facility and administrative expenses incurred in operating a casino. The Company has implemented changes in personnel and promotional programs and installed new slot equipment to address the decreases in revenues and operating income. One of management’s main focuses is to recapture market share in the Laughlin market. Management believes this will be partially achieved by capital improvements to the Pioneer’s food and beverage and other retail outlets, certain of which were completed in October 2003. The capital expenditures totaled approximately $0.9 million and were mainly funded with cash from Pioneer’s restricted cash accounts. As a result of the Company’s exercise of the EPO to retire the leases, there are no longer any restrictions on the use of the Pioneer’s cash nor are there any other operational restrictions or requirements which otherwise existed prior to the exercise.

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Payments of obligations under lease were $0.9 million and $3.4 million, for the fiscal years ended September 30, 2004 and 2003, respectively, and rent expense was approximately $0.7 million and $0.8 million for fiscal years ended September 30, 2004 and 2003, respectively. Capital expenditures to maintain the facility in fiscal 2004 were approximately $0.9 million.

As a consequence of the exercise of the EPO, payments of obligations under lease, which would have increased in January 2004 from $280,000 per month to $340,000 per month, ceased after December 2003. Instead, as of February 2004, the Company is making principal and interest payments of approximately $120,000 per month on a new mortgage loan, which is secured by land held for investment in Las Vegas and by a personal guaranty from the Company’s Chief Executive Officer.

Duke’s Casino

The Company had previously loaned approximately $1.4 million to Duke’s – Sparks (“Duke’s”), a Nevada limited-liability company. The Company, through its wholly-owned subsidiary ASMC, operated Duke’s casino. Chris Lowden, son of Paul W. Lowden, is a limited partner in the company which is a managing member of Duke’s. The Company also acquired a $100,000 Class B member interest in Duke’s.

In December 2003, Duke’s closed its casino operations. The Company has written-off its investment in Duke’s and has recorded a reserve for its receivable from Duke’s of approximately $1.4 million during its fiscal year ended September 30, 2003 and has no further asset exposure from Duke’s.

Preferred Stock

The Company’s preferred stock provides that dividends accrue on a semi-annual basis, to the extent not declared. Prior to fiscal 1997, the Company satisfied the semi-annual dividend payments on its preferred stock through the issuance of paid-in-kind dividends. The Company has not declared the semi-annual preferred stock dividends since October 1, 1996. The dividend rate per annum was equal to 8% of $2.14 for each share of preferred stock until September 30, 1998, at which date the dividend rate increased to 11%; the dividend rate continued to increase by an additional 50 basis points on each succeeding semi-annual dividend payment date up to a maximum of 16% per annum. In October 2003, the dividend rate increased to 16.0%. The accrued stock dividends have not been recorded as an increase to the preferred stock account. As of September 30, 2004, the aggregate liquidation preference of the preferred stock was approximately $19.2 million, or $4.24 per share.

Pursuant to the Certificate of Designation of Preferred Stock, dividends are payable only when, as and if declared by the Board of Directors and the liquidation preference is payable only upon a liquidation, dissolution or winding up of the Company. Because dividends in an amount equal to dividend payments for one dividend period have accrued and remain unpaid for at least two years, the preferred stockholders, voting as a separate class, are entitled to elect two directors. Accordingly, two of the Company’s current six board members have been elected by the preferred shareholders.

The Board of Directors of the Company authorized an increase in the amount of cash that may be used to purchase preferred stock to $2.5 million. As of December 27, 2004, the Company had purchased 879,559 shares of preferred stock for $1,406,399 under this program. During the year ended September 30, 2004, the Company purchased 118,069 preferred shares at a cost of approximately $249,000.

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Recently Issued Accounting Standards

FIN 46. In January 2003, the Financial Accounting Standards Board (the “FASB”) issued FASB Interpretation No. (“FIN”) 46, Consolidation of Variable Interest Entities (“VIEs”). In December 2003, the FASB reissued Interpretation No. 46 (“FIN 46R”) with certain modifications and clarifications. Application of FIN 46R is effective for interests in certain variable interest entities for periods ending after March 15, 2004 unless FIN 46 was previously applied. FIN 46R establishes standards for determining under what circumstances VIEs should be consolidated with their primary beneficiary, including those in which the usual condition for consolidation does not apply. FIN 46R also requires disclosures about unconsolidated VIEs in which the Company has a significant variable interest. The consolidation requirements of FIN 46R apply immediately to VIEs created after January 31, 2003 and were effective beginning in the Company’s second quarter ended March 31, 2004. The Company has evaluated its relationships and does not believe it has any significant, consolidatable VIEs. As such, the adoption of this Interpretation had no impact on the Company’s results of operations and financial position.

Effects of Inflation

The Company has been generally successful in recovering costs associated with inflation through price adjustments in its hotel room rates. Expenses of operating the Company’s investment properties are generally borne by the tenants. Any such future increases in costs associated with casino operations and maintenance of properties may not be completely recovered by the Company.

Private Securities Litigation Reform Act

Certain statements in this Annual Report on Form 10-K which are not historical facts are forward-looking statements, such as statements relating to future operating results, existing and expected competition, financing and refinancing sources and availability and plans for future development or expansion activities, capital expenditures and expansion of business operations into new areas. Such forward-looking statements involve a number of risks and uncertainties that may significantly affect the Company’s liquidity and results in the future and, accordingly, actual results may differ materially from those expressed in any forward-looking statements. Such risks and uncertainties include, but are not limited to, those related to effects of competition, leverage and debt service, general economic conditions, changes in gaming laws or regulations (including the legalization of gaming in various jurisdictions) and risks related to development activities and the startup of non-gaming operations.

Item 7A. Market Risk Disclosure

Market risk is the risk of loss arising from changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity process. Excluding its non-recourse debt, the Company has total interest-bearing debt of approximately $15 million, of which approximately $13 million bears interest at a variable rate (approximately 5.75% on September 30, 2004). Therefore, the Company maintains certain market rate risk related to this debt. A change in the interest rates of 1% would cause an approximate $130,000 change in the amount of interest the Company would incur based on the amount of variable debt outstanding for the year ended September 30, 2004. Any future borrowings related to this debt will be exposed to this same market rate risk.

The Company holds investments in various available-for-sale securities; however, exposure to price risk arising from the ownership of these investments is not material to the Company’s consolidated financial position, results of operations or cash flow as historically price fluctuations of these securities have not been material.

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Item 8. Financial Statements

INDEX

TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2004, 2003 and 2002

Financial Statement Schedules are omitted because of the absence of conditions under which they are required or because the information is included in the financial statements or the notes thereto.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders of Archon Corporation:

We have audited the accompanying consolidated balance sheets of Archon Corporation and subsidiaries (the “Company”) as of September 30, 2004 and 2003, and the related consolidated statements of operations, stockholders’ equity and cash flows for each of the three years in the period ended September 30, 2004. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

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

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Archon Corporation and subsidiaries as of September 30, 2004 and 2003, and the results of their operations and their cash flows for each of the three years in the period ended September 30, 2004, in conformity with accounting principles generally accepted in the United States of America.

DELOITTE & TOUCHE LLP

Las Vegas, Nevada

December 23, 2004

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Archon Corporation and Subsidiaries

Consolidated Balance Sheets

as of September 30, 2004 and 2003

See the accompanying Notes to Consolidated Financial Statements.

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Archon Corporation and Subsidiaries

Consolidated Balance Sheets – (continued)

as of September 30, 2004 and 2003

See the accompanying Notes to Consolidated Financial Statements.

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Archon Corporation and Subsidiaries

Consolidated Statements of Operations

For the Years Ended September 30, 2004, 2003 and 2002

See the accompanying Notes to Consolidated Financial Statements.

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Archon Corporation and Subsidiaries

Consolidated Statements of Stockholders’ Equity

For the Years Ended September 30, 2004, 2003 and 2002

See the accompanying Notes to Consolidated Financial Statements.

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Archon Corporation and Subsidiaries

Consolidated Statements of Cash Flows

For the Years Ended September 30, 2004, 2003 and 2002