FLORIDA GAMING CORP - FORM 10-K

Attached files

file	filename
EX-32.1 - FLORIDA GAMING CORP	v178937_ex32-1.htm
EX-32.2 - FLORIDA GAMING CORP	v178937_ex32-2.htm
EX-31.2 - FLORIDA GAMING CORP	v178937_ex31-2.htm
EX-31.1 - FLORIDA GAMING CORP	v178937_ex31-1.htm
EX-10.22 - FLORIDA GAMING CORP	v178937_ex10-22.htm
EX-10.21 - FLORIDA GAMING CORP	v178937_ex10-21.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

x	ANNUAL REPORT UNDER SECTION 13 OR 15(d) of the SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 2009

¨	TRANSITION REPORT UNDER SECTION 13 OR 15(d) of the SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________.

Commission File Number 0-9099

FLORIDA GAMING CORPORATION

(Name of Small Business Issuer in its Charter)

Delaware		59-1670533
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

3500 N.W. 37th Avenue
Miami, Florida		33142
(Address of principal		(Zip Code)
executive offices)

Issuer's telephone number
Including area code:		(305) 633-6400

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to section 13 or 15(d) of the Act.

Yes o No x

Indicate by check mark whether the Issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated herein by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

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

Large accelerated filer o

Accelerated filer o

Non-accelerated filer o

(Do not check if a smaller reporting

company)

Smaller reporting company x

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

The aggregate market value of the common stock of the Registrant held by non-affiliates as of June 30, 2009 was approximately $13,816,062 (based on the last sale price for shares of the Registrant’s common stock). Shares of common stock held by each executive officer, director and holder of 10 percent or more of the outstanding common stock have been excluded in that such persons may be deemed affiliates.

The number of shares of the registrant's common stock outstanding as of March 29, 2010 - 3,888,959 shares.

PART I

FORWARD-LOOKING STATEMENTS

This Form 10-K and the documents incorporated by reference in this Form 10-K may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements are identified by words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “predict,” “project,” and similar expressions. When we make forward-looking statements, we are basing them on our management’s beliefs and assumptions, using information currently available to us. These forward-looking statements are subject to risks, uncertainties and assumptions, including but not limited to, risks, uncertainties and assumptions related to the following:

Changes in legislation;

Federal and state regulations;

General economic conditions;

Competitive factors and pricing pressures;

Dependence on the services of key personnel;

Interest rates;

Risks associated with acquisitions;

Uncertainties associated with possible hurricanes; and

Uncertainties related to the State of Florida negotiations with the American Indian tribes who operate casinos.

If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary materially from those anticipated. Any forward-looking statements you read in this Form 10-K or the documents incorporated herein by reference reflect our current views with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. You should specifically consider the factors identified in this Form 10-K included under the caption “Risk Factors,” or in the documents incorporated by reference in this Form 10-K which could cause actual results to differ materially from those indicated by the forward-looking statements. In light of the foregoing risks and uncertainties, you should not unduly rely on such forward-looking statements when deciding whether to buy, sell or hold any of our securities. We disclaim any intent or obligation to update or alter any of the forward-looking statements whether in response to new information, unforeseen events, changed circumstances or otherwise.

References to “we”, “us”, “our”, “the registrant”, “Florida Gaming ” and “the Company” in this annual report on Form 10K shall mean or refer to Florida Gaming Corporation, unless the context in which those words are used would indicate a different meaning.

Item 1. Description of Business

(a) Business Development

Florida Gaming Corporation (“FGC” or the “Company”), was incorporated in the state of Delaware in 1976 as Lexicon Corporation (“Lexicon”). In 1993, Lexicon sold 699,480 shares of common stock to Freedom Financial Corporation ("Freedom") and a new board of directors was elected, and present management assumed control of Lexicon. The acquisition of the Ft. Pierce Fronton (“Ft. Pierce”) was consummated in February, 1994 following receipt of the approval from the Florida Department of Business Regulation on that date. Following the purchase of Ft. Pierce the Company, changed its’ name to Florida Gaming Corporation on March 17, 1994. On January 1, 1997, the Company purchased the Jai-Alai Facilities at Ocala, Tampa, and Miami, Florida. The Company also entered into the real estate development business in 1997. The Company’s stock is traded on the over-the-counter bulletin board under the stock symbol “FGMG”. The Company’s principal place of business and executive offices are located at 3500 N.W. 37 th Avenue, Miami, FL 33142.

On September 4, 1998, the Company sold the Tampa Jai-Alai property. The sale did not include the Company's gaming permit which remains available for future use in Hillsborough County, Florida. On July 31, 2000, the Company sold the Ocala Jai-Alai. In March, 2006, the Company sold approximately 79 acres of investment real estate located adjacent to its' Jai-alai facility in Fort Pierce, Florida.

In January, 2009, Florida Gaming Corporation agreed to purchase a total of 10.982 acres of property from Miami-Dade County and sell .492 acres and a right-of-way to the county to be used by the Miami-Dade Metro Rail, an overhead light rail system. The total purchase price of the acreage (10.982) was $16,742,145. On April 6, 2009 Florida Gaming completed Phase 1 of its two-phase acquisition of the 10.982 acres of property from Miami-Dade County (“County”). As part of this transaction, the County purchased the right of way for the Metro Rail from FGMG for $1,014,300. The Company's Phase 1 acquisition consists of the closing of the purchase of land and approximately 2.283 acres from Miami-Dade County for $3,348,429. The Company paid a down payment of $334,843 and the County financed the remaining $3,013,586 for 15 years at a fixed interest rate of 7.25%. The Note is secured by the Property pursuant to a Mortgage and Security Agreement (the “Mortgage”) between the Company and Dade County. The Company also received air-rights over N.W. 37th Avenue which separates the two parcels. Upon conclusion of these actions Miami Jai-Alai’s casino footprint will effectively grow from the present 8.6 acres to approximately 20 acres, thereby accommodating any potential future build-out. This will also allow Miami Jai-Alai to virtually enclose its casino area and provide a controlled, safe and well illuminated facility. The phase two purchase of the approximately 8.7 remaining acres for $13,393,716 is to close no later than 60 days after the United States Corps of Engineers releases the property free and clear of environmental contamination or July 1, 2010, whichever is later. Prior to the second closing, a resolution will be presented to the Board of Miami-Dade County Commissioners (Board) to close part of N.W. 37th Avenue. If the Board votes to close the road and the County decides to expand N.W. 36th Avenue within 36 months of the vote, the Company shall pay the cost of design, land acquisition and construction for said N.W. 36th Avenue road expansion as well as any required utility relocations with the total paid by the Company not to exceed $5,700,000.

(b) Business of Issuer

Overview

The Company currently owns and operates two jai-alai frontons and inter-track pari-mutuel wagering facilities (each, a "Fronton", and collectively, the "Frontons") located in South and Central Florida. The Company also owns an inactive Jai-Alai pari-mutuel permit for Hillsborough County (Tampa), Florida. The Company's business at this time consists primarily of its operations at the Frontons, which include, card rooms, live jai-alai performances, inter-track pari-mutuel wagering ("ITW") on jai-alai, horse racing (both thoroughbred and harness) and dog racing, and the sale of food and alcoholic beverages. The Fort Pierce location provides inter-track wagering on interstate simulcasting of horse racing, dog racing, and jai-alai from various tracks and frontons in the United States and within the State of Florida. Jai-alai games are played live and simulcast year round from the Miami facility via satellite to a total of sixty two (62) pari-mutuel wagering locations in Florida, Connecticut, Rhode Island, as well as locations in Mexico, Central America, and Austria. Poker and dominoes are played at the Miami Jai-Alai Crystal Card Room. Ft. Pierce opened a card room on April 28, 2008 but does not operate domino tables.

The term "pari-mutuel wagering" refers to the betting by members of the public against each other, and as used in this report, and includes wagering on both live performances and inter-track pari-mutuel wagering.

In November 1997, the Company entered into the real estate development business. The Company has since sold all developed real estate except six residential (6) lots. The Company has completed its development activities and future expenses related to these properties will be expensed as incurred.

Acquisition of Frontons: On September 12, 1996, the Company acquired from the Bank of Oklahoma, N.A., Tulsa, Oklahoma secured notes of World Jai-Alai (the "WJA Notes") with balances aggregating about $20,000,000 . The WJA Notes were secured by real estate and improvements consisting of three jai-alai and ITW facilities located at Miami, Tampa and Ocala, Florida (the "WJA Frontons"). Consideration for the WJA Notes was a combination of $2,000,000 in cash, a $6,000,000 promissory note bearing interest at the prime rate, a $1,000,000 non-interest bearing promissory note, and 703,297 shares of the Company's Common Stock.

On November 25, 1996, the Company, through a wholly-owned subsidiary, Florida Gaming Centers, Inc. ("Centers") entered into an agreement with WJA pursuant to which Centers agreed to acquire title to the three (3) WJA Frontons. The acquisition was consummated as of January 1, 1997. The Fort Pierce Jai-Alai Fronton which had previously been purchased from WJA was also transferred into Centers.

SummerJai-Alai: Florida Gaming Centers, Inc. (“Centers”) held a 21% interest in Summer Jai-Alai (“SJA”), a Florida general partnership formed in 1980 with three other pari-mutuel permit holders for the purpose of conducting pari-mutuel jai-alai operations at the Miami Jai-Alai fronton. The Company's Summer partners were Hollywood Greyhound, Flagler Greyhound and Biscayne Kennel Club or their successors. Under the terms of the partnership agreement certain costs and expenses were allocated to Summer Jai-Alai Summer Operations based upon specific formulas as set forth in the agreement. Pursuant to a lease agreement which expired in 2004, Summer Jai-Alai Operations rented the Miami fronton for the time in which its season was conducted.

After June 30, 2004, the permit agreement terminated and the previous partnership agreement became the controlling document for the operation of SJA by the parties. The Company paid the three unaffiliated Summer Jai-Alai partners $306,667, all of which was previously accrued, in complete settlement of amounts due those partners under agreements resolving certain partnership disputes through June 30, 2004. The partnership’s lease for the purpose of conducting Jai-Alai operations at the Miami fronton and all related agreements terminated on October 31, 2004.

In December, 2007, a settlement was reached between the Company and its partners. The Company forgave its $255,509 receivable from the Partnership and its $98,608 receivable from its partners. The settlement stated that going forward the Partnership would be owned as follows:

Partnership Ownership

Florida Gaming	21	%
West Flagler Associates, LTD	52	%
BKCLP 2 LTD	27	%
	100	%

The Partnership owns the Permit under a Permit Use Agreement (the “PUA”) between the Company and the Partnership. The Company has the exclusive right to conduct gaming operations under the Permit. The Company will derive all revenue, and is responsible for all expenses. In addition, the Company must assure that the holder of the Permit remains authorized to conduct all activities that Florida law authorizes under the Permit, based on the law as in effect at any particular time. The Company may terminate the PUA if the requirement to keep it valid imposes a material burden on the Company. West Flagler and BKCLP may terminate the PUA if they jointly elect to do so. If the PUA is terminated (and, thus the Permit’s use reverts to the Partnership) the Partnership does not have the right to conduct activities at the Company’s fronton. The Company, West Flagler and BKCLP entered into an Amended and Restated Partnership Agreement for the Summer Jai-Alai Partnership and except for the following put/call rights, all actions of the Partnership require unanimous approval of the three Partners. The Partnership contains mandatory put/call rights which take effect if (1) the PUA is terminated by the Company, (2) the PUA is terminated by West Flagler and BKCLP, or (3) any two partners deliver to the third partner a notice of election to trigger the put/call. Under the put/call rights, the party(ies) triggering the put/call must offer to sell to the other partner(s) its interest at a stated price. The other partners may either buy the interest at that price, or sell their interests to the triggering partner at that price. Each partner must give the other partners 45 days advance notice of a “Change of Control” - which is a change of ownership of more than 40% of the partner’s equity and, in the case of the Company, a sale by its Chairman and his affiliates of more than 50% of their stock in the Company.

In accordance with the settlement, all revenues and expenses of the Summer Jai-Alai Operations are included in operating income and expenses in the accompanying statements of operations.

Development of Cardrooms On June 5, 2007, the St. Lucie county commissioners voted that Ft. Pierce Jai-Alai be allowed to operate a card room. The Company converted approximately 12,000 square feet for the card room which will host poker games and tournaments with the maximum bet of $5.00, and no pot limit. Ft. Pierce Jai-alai management believes that the card room will be an alternative to local patrons who are currently traveling about fifty (50) miles to Palm Beach and Brevard Counties to play poker. After extensive remodeling of approximately $2.0 million the card room opened on April 28, 2008.

A new Florida pari-mutuel statute was enacted July 1, 2007 allowing card rooms at licensed pari-mutuel facilities to add the game of dominoes, increase the maximum wager on poker from $2 to $5, and permit year round operation of card rooms. Card rooms are regulated by the Florida Division of Pari-Mutuel Wagering (“DPMW”). Permitted games are limited to non-banked poker games and dominoes.

There have been some positive changes in the new legislation:

Card rooms may operate on any day for a cumulative amount of 12 hours;

“Authorized games” means a game or series of games of poker or dominoes;

“Tournament” means a series of games that have more than one betting round involving one or more tables and where the winners or others receive a prize or cash award;

Card room operators may award giveaways, jackpots, and prizes to a player who holds certain combinations of cards specified by the card room operator;

Card rooms maximum bet may not exceed $5 in value. There may not be more than three raises in any round of betting;

Card rooms may conduct games of Texas Hold-Em’s with a betting limit if the required player buy-in is not more than $100.

Florida state taxes are 10% of revenue and 4% of the revenues are paid to the jai-alai players. The Company is encouraged with the recent changes to the card room rules and the addition of dominoes.

Development of Slot Machines. On January 29, 2008, residents of Miami-Dade County passed a referendum that will allow Miami Jai-Alai and two other pari-mutuel facilities in Dade County to install up to 2,000 slot machines. The Company will compete with three established racinos in adjoining Broward County north of Miami-Dade County, plus competition from Native American casinos. Upon submission of the initial application top operate slots, on the anniversary date of the issuance of the initial license, Miami Jai-Alai must pay to the division a nonrefundable license fee of $3 million for the succeeding 12 months of licensure. The current tax rate on slots is 50% of slot gross income. The 50% high tax rate makes it difficult to compete with the Indians who pay no taxes and other forms of entertainment with customers discretionary income.

On July 1, 2007, legislation passed some positive new changes which will apply to the Miami Jai-Alai slots.

Legislation permitted an additional 500 machines at the facilities , which increased from 1,500 machines to2,000 machines;

ATM machines are now allowed at the facilities;

Hours of operation increased from 16 to 18 hrs a day on weekdays and 24 hours a day on weekends.

Clean Indoor Air Act

Effective July 1, 2003, an amendment to the Clean Indoor Air Act made all of Florida's enclosed indoor workplaces smoke-free, with certain exceptions. The jai-alai facilities became smoke free on July 1, 2003. The Company has provided a smoking area to accommodate the smoking patrons.

Simulcasting

The Company generates a portion of their revenue by transmitting signals from the frontons to other (“guest”) facilities and receiving signals from other (“host”) facilities. Revenues are earned through pari-mutuel wagers on signals that the Company receives and sends as host and guest. The Fort Pierce location provides inter-track wagering on interstate simulcasting of horse racing, dog racing, and jai-alai from various tracks and frontons in the United States and within the State of Florida. Jai-Alai games are played live and simulcast year round from the Miami facility via satellite.

Distribution Methods

The Company uses radio, including live remote broadcasts, television, newspapers and magazines to promote activities at the jai-alai locations.

Competition

The gaming industry is highly competitive. Many gaming companies have substantially greater financial resources and larger management staffs than the Company. Because of the growing popularity and profitability of gaming activities, competition is significantly increasing. The Company competes for customers with other forms of legal wagering, including video poker gaming in non-casino facilities, charitable gaming, pari-mutuel wagering, state lotteries, Indian casinos, and cruise ships.

Further expansion of gaming opportunities not related to the pari-mutuel industry could also significantly and adversely affect the Company's business. In particular, the expansion of casino gaming in Miami-Dade and Broward Counties which is near the geographic areas from which the Company attracts or expects to attract a significant number of its customers could have a material adverse effect on the Company's business. The Company expects that it will experience significant competition as the emerging casino industry matures. The Company is now competing with Calder Casino, a slot facility in Florida adjacent to Calder Race Course, which opened on January 22, 2010 with approximately 1,200 slot machines. Additionally, a poker room operation opened at Calder Casino on October 23, 2009 and Flagler Dog Track reopened in October 2009 as Magic City Casino with 700 Las Vegas-style slot machines.

There has been a general decline in the number of people attending and wagering on jai-alai due to a number of factors, including Indian casinos, cruise ships to nowhere and the Florida state lottery. Any decline in the interest in jai-alai or any change may adversely impact revenues and, therefore, results of operations. Declining jai-alai attendance and increasing competition in simulcasting may have a material, adverse impact on our results of operations.

The Company also competes for patrons with other sports, entertainment and gaming operations, including land-based, cruise ships and Native American casinos and state lotteries.

The Company also faces competition from gaming companies that operate on-line and Internet-based gaming services. These services allow patrons to wager from home on a wide variety of sporting events. Unlike most on-line and Internet-based gaming, companies, the Company may require significant and ongoing capital expenditures for both its continued operation and expansion. The Company also could face increased costs in operating business compared to these gaming companies. The Company cannot offer the same number of gaming options as on-line and Internet-based gaming companies. In addition, many on-line and Internet gaming companies are based off-shore and avoid regulation under state and federal laws. These companies may divert wagering dollars from legitimate wagering venues. Competition in the gaming industry is likely to increase due to limited opportunities for growth in new markets. The Company's inability to compete successfully with these competitors could have a material, adverse affect on its business.

Dependence on one or a few major customers

The company depends on Scientific Games Corp. ("Scientific") a leading supplier of pari-mutuel wagering systems. Scientific provides the computer systems that accumulate wagers, record sales, calculate payoffs and display wagering data in a secure manner. The Company relies on the totalizator’s computer systems to ensure the integrity of the wagering process. If Scientific did not keep their technology up to date, this could affect the security of wagering, and limit our ability to serve our customers. The Company is past due on monthly payments required by its contract with Scientific which could result in termination of services to the Company.

Licenses

Each Fronton must obtain an initial pari-mutuel permit and an annually renewable pari-mutuel license specifying the number of performances authorized at the Fronton during the year with respect to which such license is issued. A permit for any new pari-mutuel must either be enacted by the Legislature, or be ratified by the electorate of the county in which it is to be located. Currently only two counties, Levy and Polk, will allow, under state law, ratification of a pari-mutuel permit. Pari-mutuel permits and licenses may be revoked or suspended by the DPMW for, in the case of licenses, willful violations of laws, rules or regulations or, as to permits, by a vote of the county electorate. Any amendment or repeal of the Pari-Mutuel Laws or suspension or revocation of the Company's permits or licenses, could be materially adverse to its business.

Occupational and Totalizator License Requirements. The DPMW requires that persons "connected with" pari-mutuels have one of two forms of occupational licenses.

One form of occupational license is the "unrestricted license" issued to persons with access to restricted areas such as the backside, racing animals, jai-alai player rooms, the mutuels, or money room, or to persons, who by virtue of the position they hold, might be granted access to such areas. Any person obtaining an unrestricted license must undergo a Federal Bureau of Investigation and Florida Department of Law Enforcement criminal records check as well as submit fingerprints with their application for a license. The category of persons qualifying for unrestricted licenses includes, but is not limited to, trainers, officials, doctors, jai-alai players, owners, members of management, officers, directors, stockholders who own 5% or greater equity interest, and other professional employees.

Another form of occupational license is the "restricted license" issued to persons who are denied access to restricted areas. Applicants for a restricted license do not usually have to undergo a criminal background check nor submit fingerprints with their application, although the DPMW may require such if it deems necessary.

The DPMW also requires all totalizator operators, including the Company's vendor, Scientific Games Corp., to possess an annual totalizator license. Among the various requirements imposed by the DPMW, the totalizator operator is required to agree in writing to pay the DPMW an amount equal to any loss of state revenue from missed or canceled performances due to acts of the totalizator owner, operator, agents, or employees, and for any failure of the totalizator system, unless such acts are beyond the control of the above-listed persons. Every licensed totalizator operator must post a performance bond issued by a surety approved by the DPMW in the amount of $250,000 insuring the state against such revenue loss.

Businesses, such as vendors and contractual concessionaires, must also obtain an occupational license from the DPMW. Minors may be employed by a pari-mutuel facility as long as their employment is not directly involved with alcoholic beverages or wagering.

Daily License Fee. During the 2008-2009 live jai-alai season, a Daily License Fee of $40 was assessed for each jai-alai game conducted at each of the Company's Frontons. The Daily License Fee regulations amendments provide, however, that should an amendment to the Florida Constitution be adopted that would permit casino gambling at pari-mutuels such as the Frontons, the fee would return to $80 per jai-alai game; no such amendment has been passed. Such fee is paid to the DPMW to defray regulatory costs.

Government Regulations

Gaming ventures are regulated by federal and state laws and regulations applicable to the gaming industry generally and to the distribution of gaming equipment. The following description of the regulatory environment in which the Company operates is intended to be a summary and is not intended to be a complete recitation of all applicable law. Moreover, because the regulatory environment is dynamic and evolving, it is impossible to predict how certain provisions will ultimately be interpreted or how they may affect the Company. Changes in such laws or regulations could have a material adverse impact on the Company's ability to finance, develop and operate.

The Company may need to secure regulatory approvals from state and local authorities for each of its prospective gaming ventures from time to time. No assurance can be given that any of these approvals will be secured in a timely fashion, or at all.

Florida Legislative Changes

On June 5, 2007 Florida Gaming received approval from the St. Lucie County Board of Commissioners to operate a card room at its’ Ft. Pierce Jai-Alai facility. The Company converted approximately 12,000 square feet for the card room which host poker games and tournaments with the maximum bet of $5.00, and no pot limit. The Company opened the card room on April 28, 2008. This will give local patrons an alternative to traveling fifty (50) miles to Palm Beach and Brevard Counties in order to play poker.

In November, 2004 voters in the state of Florida approved an amendment to the Constitution of the State of Florida to allow Broward and Dade Counties in Florida the local option to hold elections to approve Class III slot machine gaming at pari-mutuel betting facilities within Dade and Broward county. The Company's Miami fronton is located in Dade County. In March, 2005 local option elections were held in Broward and Dade Counties. The local referendum to approve slots passed in Broward County and failed in Dade County. State Law prohibited another local option referendum in Dade County for two years. On January 29, 2008, Miami-Dade County voters approved, in a local referendum with 63% voting for the operation of up to 2000 Class III Las Vegas style slot machines at Miami Jai-Alai, a pari-mutuel wagering facility owned by Florida Gaming.

On July 1, 2007 Legislation was passed by Senate Bills 134 and 135, allowing year-round operation of poker rooms, adding dominoes to card rooms, and raising the maximum wager on poker from $2 to $5. Legislation also passed permitted an additional 500 slot machines up from the current 1,500 machines in Dade and Broward, and permitting ATM machines at the facilities, and extending the hours of operation from 16 hrs to 18 hrs on weekdays, and allowing 24 hours a day on the weekends. These new rules will apply to Miami Jai-Alai.

Florida Law and Regulation

Overview. Pari-mutuel wagering in Florida must be conducted in compliance with the applicable Florida statutes and regulations of the DPMW. In the 1992 Special Session, the Florida Legislature enacted several new statutes governing pari-mutuel activities in the State of Florida and repealed many laws enacted before the 1992 Special Session regarding pari-mutuels in Florida. Certain provisions of the new pari-mutuel statute, which governs all pari-mutuel activities relating to horse racing, dog racing, and jai-alai, were amended in the 1994 Regular Session. The amendments from the 1994 Regular Session became effective July 1, 1994. In 1996, the legislature enacted statutes permitting interstate simulcasts and temporarily reduced the tax on jai-alai performances as discussed below. The new pari-mutuel statutes, as amended, are referred to herein as the "Pari-Mutuel Law."

The Role of the DPMW. The DPMW, in its administration of the Pari-Mutuel Law, is authorized to adopt reasonable rules for the control, supervision, and direction of all applicants, permittees, and licensees and for holding, conducting, and operating of all pari-mutuel activities in Florida. In addition to its taxation powers already described above, the DPMW's powers include, but are not limited to (1) testing occupational license holders officiating at or participating in any race or game at any pari-mutuel facility for a controlled substance or alcohol, and (2) excluding "certain persons" from any pari-mutuel facility in Florida, including but not limited to persons who have previously engaged in conduct that violates certain Florida laws or regulations. Certain forms of conduct are expressly prohibited at pari-mutuels and include but are not limited to, (1) conniving to prearrange the outcome of a game, (2) use of alcohol or a controlled substance by an official or participant in a jai-alai performance, and (3) bookmaking. Failure to comply with the requirements of the Pari-Mutuel Law can result in a fine imposed by the DPMW of up to $1,000 per offense, as well as a suspension or revocation of a pari-mutuel permit, pari-mutuel license, or an occupational license.

Limit on Share Accumulations. Florida law requires that before any person or Company is permitted to obtain a 5% or greater equity interest in a pari-mutuel operator and exercises control with respect to those shares, such person or company must receive the approval of the DPMW. Such person or company must submit to a background investigation equivalent to that required of permit-holders to determine that such person or company has the requisite qualifications for holding a permit. Consistent with Florida law, the Company cannot issue shares of Common Stock to a person or company who would thereby have obtained a 5% or greater equity interest, whether in a single transaction or series of integrated transactions, until the purchaser has received the approval of the DPMW.

Required Number of Live Jai-Alai Performances. In order to qualify to offer ITW, a fronton must offer a "full schedule" of live races per year. A "full schedule" of jai-alai means the operation of at least 40 live evening or matinee performances during a year. In this context, a live performance must consist of no fewer than 8 games conducted live for each of a minimum of three performances per week at the permit-holder's facility under a single admission charge. The Company anticipates it will offer at least 40 live evening or matinee performances on an annual basis at its Miami Jai-Alai and Ft. Pierce Jai-Alai.

Taxation. The pari-mutuel tax structure applicable to frontons operating in Florida provides for distribution of taxes, on a daily basis, based on the Handle. As discussed below, the pari-mutuel tax structure changed effective July 1, 1994, as a result of amendments adopted by the Florida Legislature in the 1994 Regular Session. The various taxes applicable to the Fronton are as follows:

Tax on Handle: Effective July 1, 1994, the tax rate established by the State of Florida was amended to a rate of 5% on handle in excess of $30,000 per day where the live handle for such jai-alai fronton has been less than $15 million during the preceding state fiscal year. Effective July 1, 1996, for the two-year period ending June 30, 1998, the pari-mutuel tax rate was reduced from 5% to 4.25% at the Ft. Pierce Fronton and from 5% to 3.85% at the Miami Fronton. As a result of legislation enacted July 1, 2000, Miami Jai-Alai's tax rate on live handle decreased from 3.85% to 2%. However, the Pari-Mutuel Law also provides that, should casino gaming be conducted at a jai-alai fronton (i.e., assuming an amendment to the Florida Constitution is adopted), the tax rate will return to 7.1% as it was under the pre-amended statute. When a fronton has paid a total of admissions tax, daily license fee and tax on handle for live performances in excess of the tax revenues from wagering on live jai-alai performances paid by the fronton in fiscal year 1991-1992, the tax on Handle for live jai-alai wagering drops to 2.55% with no exception.

Jai-Alai Tax Legislation. Major tax legislation which limits the amount of state handle and admission taxes went into effect July 1, 1998. The new law, (Section 2, Subsection (1b) of section 550.09511, Florida Statutes) states, in part, that ² Any jai-alai permit holder that incurred state taxes on handle and admissions in an amount that exceeds its operating earnings in a fiscal year that ends during or after the 1997-1998 state fiscal year, is entitled to credit the excess amount of the taxes against state pari-mutuel taxes due and payable after June 30, 1998, during its next ensuing meets. ²

The Company’s Tampa Jai-Alai Permit (the fronton closed in 1998) retain such tax credits carried forward totaling $1,362,265. The Company’s Ft. Pierce facility has not incurred statutory operating losses and therefore has not earned any state tax credits.

For the years 2001 through 2009, Miami had unused credits totaling $2,352,201 and Summer Jai-Alai had $1,220,208 unused Credits available for recovery.

Breaks Tax: Jai-alai permit-holders must pay a tax equal to the "breaks." The "breaks" are that portion of each pari-mutuel pool, computed by rounding down to the nearest multiple of $.10, which is not redistributed to the contributors or withheld by the permit-holder as takeout (commission). Breaks tax amounts may be retained, however, by the jai-alai permit-holder for special prize awards.

3.	Admission Tax: In addition to a sales tax of 6%, the Frontons must pay an admission tax equal to 15% of the entrance fee or 10 cents, whichever is greater, for any person attending a jai-alai game.

Daily License Fee: Effective July 1, 1994, the daily license fee of $80 per game paid by jai-alai frontons was reduced to $40 per game. The amendments adopted in the 1994 Regular Session provide, however, that should an amendment to the Florida Constitution be adopted that would permit casino gaming at pari-mutuels such as the Frontons, the fee would return to $80 per jai-alai game; no such amendment has been passed.

Jai-Alai Tournament of Champions: The amendments adopted in the 1994 Regular Session create a special jai-alai meet called the "Jai-Alai Tournament of Champions Meet" (the "Tournament"). The Tournament, which may be held only once a year and for no longer than four performances over four days, permits permit-holders selected to participate in the Tournament to do so even though they would not otherwise be authorized to conduct a meet at such time. In addition, the participants do not have to pay any taxes on Handle for performances during the Tournament and may apply any credit they receive, up to $150,000 aggregated between all participants, to supplement awards for the performance conducted during the Tournament as well as to taxes otherwise due and payable by them to the State of Florida.

Research & Development

The Company has had no charges for research and development.

Costs to be compliant with environmental laws

It is not anticipated that the Company will have any environmental costs as a result of non-compliance with environmental laws at any of our properties.

Employees

As of December 31, 2009, the company had approximately 45 jai-alai players under contract. The Company believes that its present employee relations with its jai-alai players, some of whom belong to the International Jai-Alai Players Association/U.A.W., and the Company's relations with other employees are satisfactory.

The Company has approximately 253 part-time employees and 104 full-time employees.

Item 1A. Risks Related to the Company

In addition to risks and uncertainties in the ordinary course of business that are common to all businesses, important factors that are specific to our industry and company could materially impact our future performance and results. The factors described below are the most significant risks that could materially impact our business, financial condition and results of operations. Additional risks and uncertainties that are not presently known to management, that are currently deemed immaterial or that are similar to those faced by other companies in the gaming industry or business in general may also impair the Company's business and operations. Should any risks or uncertainties develop into actual events, these developments could have a material, adverse impact on our business, financial condition and results of operations.

Potential Changes in Legislation and Regulation of Operations. In 2008, Florida Governor Charlie Crist approved a compact with the Seminole tribe which would permit the tribe to operate certain table games and Class III slot machines in return for specified revenue to the State of Florida. The compact was voided by the Florida Supreme Court. The Florida legislature subsequently enacted legislation permitting Governor Crist to enter into a compact (the “Compact”) with the tribe. The legislation provided for a reduction in the tax rate for racetracks operating slot facilities in Miami-Dade and Broward Counties from fifty percent to thirty-five percent as well as a reduction in the annual license fee from $3 million to $2 million effective upon the Florida legislature’s final ratification of the tribal compact. The Governor negotiated a compact, but the Florida legislature did not ratify it. The House Select Committee introduced a Proposed Committee Bill (“PCB”) and passed it out of committee on January 14, 2010. The purpose of the PCB was to make effective the slot machine tax reduction and license fee reduction, along with other provisions affecting pari-mutuel wagering. We cannot predict if or when the PCB will pass the Legislature.

Gaming operations exist at the discretion of the state of Florida. Certain aspects of the gaming operations are also subject to federal statutes or regulations. All pari-mutuel wagering operations are contingent upon continued governmental approval of those operations as forms of legalized gaming. Legislation to limit or prohibit gaming (pari-mutuel or non-pari-mutuel) may be introduced in the future. Any restriction on or prohibition of gaming operations could have a material, adverse impact on the results of operations. In addition, the approval process for any expansion of gaming operations into alternative gaming, such as video lottery terminals can be time-consuming and costly, and there is no assurance of success. The Company will continue to seek legal authority to offer alternative gaming at our frontons where alternative gaming is not currently permitted.

The passage of legislation permitting alternative gaming at the frontons can be a long and uncertain process. As a result, there can be no assurance that (1) jurisdictions in which the Company owns or operates frontons will pass legislation permitting alternative gaming, (2) if jurisdictions pass such legislation, it will be permitted at the frontons, and (3) if alternative gaming is permitted at the Company owned frontons, it will be on economically viable terms. If alternative gaming legislation is enacted in the areas where a Company-owned front is located, the Company plans to conduct alternative gaming. There may be significant costs and there may be other significant risks.

Inclement Weather and Other Conditions. In September 2004, the Ft. Pierce fronton was struck by two hurricanes and the fronton could not open for the live jai-alai season in 2005. On October 24, 2005 a hurricane caused disruption to operations at the Miami Jai-Alai and the Miami fronton was closed for 18 days during 2005. Any severe weather conditions that could lead to the loss of use of Company facilities for an extended period could have a material, adverse impact on our results of operations.

Dependence on Key Personnel. The success of the Company is dependent, in part, on its executive officers. The loss of any of their services could have a material adverse effect on the Company. There is no assurance that the Company will be able to hire qualified individuals to replace these persons if necessary. The Company does not have any employment contracts with its' executives, nor does the Company have any key man life insurance policies on their lives.

Jai-Alai Players. The Company strives to continue to draw the best jai-alai players from around the world. The Company has written agreements with our players. The failure to maintain agreements with the players or if the players should strike, this could negatively impact the results of operations.

Risks Associated with Acquisitions. There may be liabilities which the Company fails or is unable to discover in the course of performing due diligence investigations on any company or business it seeks to acquire or has acquired, including liabilities arising from non-compliance with certain federal, state or local laws by prior owners, and for which the Company, as a successor owner, may be responsible. The Company will seek to minimize its exposure to such liabilities by obtaining indemnification from former owners, which may be supported by deferring payment of a portion of the purchase price. However, there is no assurance that such indemnification's, even if obtainable, enforceable and collectible (as to which there also is no assurance), will be sufficient in amount, scope or duration to fully offset the possible liabilities arising from the acquisitions. The success of the Company in the gaming industry is dependent on a number of factors including, but not limited to, economic conditions, competitive environment, adequate capital, accurate site selection, construction schedules, and the availability of trained personnel. There can be no assurance that the Company will be successful in the pari-mutuel and gaming industry or in any related industries which it enters.

Other Risks. Many other risks beyond the control could seriously disrupt operations, including:

·	The effect of global economic conditions;

·	The effect (including possible increases in the cost of doing business) resulting from future war and terrorist activities or political uncertainties;

·	The economic environment;

·	The financial performance of the jai-alai operations;

·	Costs associated with the efforts in support of alternative gaming initiatives.

Item 2. Description of Property.

Set forth below is a brief description of the Frontons:

	Number		Size of		Number of
	Of		Building		Gaming
Location	Acres		Sq.Ft.		Seats

Ft. Pierce		37.00		80,000		2,150
Miami		10.5		185,000		4,389
Totals		47.5		265,000		6,539

The Company's Miami fronton, near Miami International Airport, was built in 1926 and most recently remodeled in 1982. In addition to its jai-alai auditorium, the fronton has a restaurant overlooking the jai-alai court, a banquet room, four television lounges and a 12,000 square foot low-stakes card room that can accommodate 80 poker tables. Parking facilities at the Miami fronton (including on-street parking) accommodate about 2,000 cars.

Fort Pierce is a coastal community in St. Lucie County, Florida approximately 110 miles north of Miami. The Fort Pierce fronton, completed in 1974, is located approximately one mile from an exit on the Florida Turnpike, two miles from an exit on Interstate Highway 95 and five miles west of U.S. Highway 1. The Florida Turnpike is the primary route between South Florida and Orlando. The Fort Pierce fronton is situated on a thirty seven acre site and its parking facilities accommodate approximately 1,500 cars.

Both of the Company's frontons have pari-mutuel windows, liquor bars and concession stands.

Investment in Real Estate

In November, 1997, the Company entered into a new business — residential real estate development. These Properties consisted of over 100 fully-developed, and 163 partially-developed, single-family residential home sites, a swim and tennis club facility, and 27 acres of partially-developed commercial property. As of December 31, 2009, the Company has six (6) residential lots remaining to be sold with a mortgage of $38,368 on one of the lots. The six (6) lots have a book value of $234,000. The Note on the lot with the Mortgage was due November 17, 2009, and was not extended. The Note has not been paid at March 31, 2010. The Properties are located on the east side of Georgia Highway 81, approximately one (1) mile south of U.S. Highway 78, inside the Loganville, Georgia city limits, in Walton County.

Item 3. Legal Proceedings.

Isle of Capri

On March 1, 2010, the Company and its subsidiary, Florida Gaming Centers, Inc. (“Centers”), were served with a complaint (the “Complaint”) by Isle of Capri Casinos, Inc. (“Isle”). Centers comprises 100% of Registrant’s operations. The Complaint filed in the 15th Circuit Court of Palm Beach County, FL on February 18, 2010, alleges: (1) that Registrant breached its duties under an Amended and Restated Secured Promissory Note (the “Note”) made to Isle; (2) that Centers breached its guaranty under the Note; (3) that the Company and Centers breached their duties under a Simulcast Wagering Agreement with Isle; and, (4) that the Company and Centers were unjustly enriched through Isle’s broadcasts of horse racing events. Under the Complaint, Isle is demanding (1) foreclosure of a security interest Isle holds in all of the shares of outstanding stock of Centers, and (2) damages of $358,823.32 plus interest, costs and such further relief as the court deems proper.

As reported in the Company’s Form 8-K filed on January 7, 2010, the Company is indebted to Isle in the principal amount of Three Million Dollars ($3,000,000) pursuant to the Note and related instruments, dated December 31, 2008 (collectively, the “Isle Documents”). The Isle Documents include a Pledge Agreement under which Registrant granted to Isle a security interest in all of the outstanding shares of capital stock of Centers. The Isle Documents were filed as Exhibit 10.1 on the Registrant’s Form 10-K dated March 31, 2009, which is incorporated herein. Under the Isle Documents, the Registrant was required to pay to Isle the $3,000,000 principal amount, plus any accrued but unpaid interest, on December 31, 2009. The Company did not make the required December 31, 2009 payment to Isle. That failure constituted an Event of Default under the Isle Documents. Under the Isle Documents, after an Event of Default the outstanding principal and interest accrues interest at an annual default rate of 18%, payable on demand. On December 23, 2009, Isle’s counsel made the requisite demand for payment under the Note.

On March 19, 2010, the Florida Gaming Corporation (the “Company”), a Delaware corporation, and Florida Gaming Centers, Inc., a Florida corporation 100% of the stock of which is owned by the Company, were served with a complaint (the "Complaint") by Isle of Capri Casinos, Inc. ("Isle"). The Complaint seeks to foreclose on a mortgage granted to Isle in connection with a Note and related instruments dated December 31, 2008. As reported in the Company's Current Report on Form 8-K filed on January 7, 2010, the Company is indebted to Isle in the principal amount of Three Million Dollars ($3,000,000) pursuant to the Note and related instruments dated December 31, 2008. Under the Note and the related instruments, the Company was required to pay to Isle the $3,000,000 principal amount, plus any accrued but unpaid interest, on December 31, 2009. The Company did not make the required December 31, 2009 payment to Isle. The mortgage granted to Isle in connection with the Note affects Center's real property located at 1750 S. King's Highway, Ft. Pierce, Florida, and all buildings, structures, fixtures and improvements located thereon. The Company has engaged counsel to respond to the Complaint and intends to vigorously defend itself against Isle’s lawsuit.

West Flagler Associated LTD and Calder Race Course

On December 23, 2009, Florida Gaming Centers, Inc. (“Centers”) was served with a summons and complaint (the “Complaint”) from West Flagler Associated, Ltd. and Calder Race Course, Inc. (“Plaintiffs”). The Complaint filed in the 11th Circuit Court in and for Miami-Dade County, Florida on December 21, 2009 alleges that Centers executed a Promissory Note on January 31, 2005 in favor of the Plaintiffs and that Centers has breached the terms of the Promissory Note by failing to make the payments required there under, which Plaintiffs allege were to commence in February 2008. Plaintiffs allege that Centers made monthly payments under the Promissory Note in the amount of $23,148.14 per month from February 2008 to July 2009 but have failed to make payments thereafter. Plaintiffs allege that the entire debt is now due and owing and allege to be owed the principal amount of $416,666.48 plus interest since July 1, 2009, the date of the alleged last payment made under the Promissory Note. Plaintiffs also seek default interest and late penalties of undisclosed amounts. Centers filed an answer and affirmative defenses to the Complaint on March 2, 2010 and intends to vigorously defend the Complaint.

State of Florida

By letters dated June 30, 2000 and September 8, 2000 the State of Florida took a contradictory position to the Company's interpretation for the determination of the ITW tax rate on handle and asserted a tax liability of $170,172 as of April 30, 2000. Further, the State's computation included only credits approved through 1998. Based on the Company's interpretation, as of April 30, 2000, the Company would have utilized only $2,293,373 of the $2,936,915 available for recovery from taxes incurred in 1997 and 1998. On October 6, 2000 and in response to a letter from the Division of Pari-Mutuel Wagering of the State of Florida, the Company filed suit for declaratory relief against the Division/State of Florida contesting the Division's interpretation of the statute. In response to the Company's action, the Division/State of Florida filed a motion to dismiss and requested that Florida Gaming Corporation post bond.

The court did not grant the motion to dismiss and did not require the Company to post bond requested by the Division/State of Florida. As of December 31, 2005, the suit concluded due to expiration of the statute of limitations. However, the Company received letters dated July 15, 2008 and November 4, 2008 from the Division/State of Florida which reflected a computation of tax credits for Miami and Summer Jai-Alai that agreed with the Company’s records. The Company believes it will prevail should litigation be required to resolve this issue.

Affiliated

The Company was a Plaintiff in the United States District Court Southern District of Florida, Case No. 07-20897-CIV-UNGARO against Affiliated FM Insurance Company (“Affiliated”). The Company brought this action to compel appraisal of losses incurred when Hurricane Wilma damaged its facilities on October 24, 2005. Affiliated issued an insurance policy to the Company, with a term from December 1, 2004 until December 1, 2005. Affiliated argues that the Company has failed to fulfill its obligations under the policy by refusing to submit certain persons to examinations under oath and by failing to turn over documents, in particular the contract with Professional Construction Analysts (PCA), and documents related to PCA’s licensing status in Florida. The Defendant filed a motion to dismiss the Company’s claims on June 1, 2007, and requested a summary judgment with respect to post-loss obligations under the policy. On August 2, 2007, the Court denied Defendants Motion for Summary Judgment. The Company and Affiliated have agreed on a party to serve as umpire in the dispute. On August 31, 2007 the parties stipulated “to have the Appraisal Umpire issue an Itemized Appraisal Award per the policy’s terms.” The Appraisal Umpire entertained both oral and written evidence concerning the losses and issued an award based on that evidence. On September 19, 2008, the lawsuit was settled, the Company received a check for $8,500,000 from Affiliated. The Company had net proceeds of $7,134,956, after professional and consulting fees incurred amounted to $1,238,852 and bonuses of $126,192 to Mr. Licciardi and Mr. Collett, Jr.

Floridians against Expanded Gambling vs Floridians for a Level Playing Field

On August 8, 2006, the District Court of Appeals, First District, State of Florida rendered a decision in the case of Floridians Against Expanded Gambling (“FAEG”), et.al versus Floridians for a Level Playing Field, et. al. FAEG challenged the process by which signatures were collected in order to place a constitutional amendment on the ballot in 2004 allowing Miami-Dade and Broward County voters to approve slot machines in pari-mutuel facilities. The District Court of Appeals reversed a decision of the Florida trial court, which granted summary judgment and dismissed the challenge, and remanded the case back to the trial court for an evidentiary hearing to determine whether sufficient signatures were collected in the petition process. A motion for rehearing by the entire Court of Appeals or in the alternative a motion for certification to the Florida Supreme Court was filed. The case was re-heard by the entire Court of Appeals and the panel’s decision was upheld. However, after oral arguments were made on September 17, 2007, the District Court of Appeals issued an opinion on September 27, 2007, which held the case was not properly put before the District Court of Appeals, and therefore upheld the lower court’s decision to remand the case back to the trial court for an evidentiary hearing to determine whether sufficient signatures were collected in the petition process. On February 22, ,2009 the lawsuit was settled and the liability was recorded in the 2008 Statement of Operations.

Other Suits

The Company is a defendant in certain other suits which are deemed to be routine litigation in the ordinary course of business. The Company believes that the ultimate resolution of the suits will not have a material adverse impact on the Company's financial position or its results of operations.

PART II

Item 5. Market for Common Equity and Related Stockholder Matters.

The Common Stock was traded on the NASDAQ SmallCap Market under the trading symbol "BETS" until August 21, 1998, at which time it was delisted. The Common Stock traded on the pink sheets from August 22, 1998 until July 28, 1999. On July 29, 1999 the Common Stock began trading on the Over the Counter - Bulletin Board under the trading symbol “BETS”. On January 28, 2003, the trading symbol was changed to “FGMG”.

The bid prices reflect inter dealer prices, without retail mark-up, markdown or commissions and may not represent actual transactions. The table shows the high and low bid prices for the years 2008 and 2009.

2009	High		Low

For the Quarter Ended:
March 31		5.99		2.01
June 30		10.02		3.75
September 30		8.25		5.25
December 31		7.50		3.50

2008	High		Low

For the Quarter Ended:
March 31		23.45		13.80
June 30		17.00		10.05
September 30		10.01		3.50
December 31		3.75		2.06

*************************

As of December 31, 2009, the Company had approximately 1,553 holders of record of its Common Stock.

The Company has never paid any cash dividends on its Common Stock and currently anticipates that earnings will be retained for use in its operations. The Company is not contractually restricted from paying dividends on its Common Stock, however, it does not anticipate paying any cash dividends on its Common Stock in the foreseeable future. Any future determination as to cash dividends will depend on the earnings and financial position of the Company, as well as any legal restrictions and such other factors as the Board of Directors many deem appropriate.

Persons who may be deemed “affiliates” of the Company or who acquired the shares in a transaction exempt from registration under the U. S. Securities and Exchange Act (“the “Securities Act”) hold approximately 1,763,369 shares (“Restricted Shares”) of the 3,888,959 shares of Common Stock outstanding as of March 29, 2010, which may only be sold in the public market if such shares are registered under the Securities Act or sold in accordance with Rule 144 promulgated under the Securities Act. Holding, the holder of 1,325,869 Restricted Shares, has demand registration rights for its shares. Holding has pledged 760,000 shares of common stock to secure a loan. All of the restricted shares have been held for over six months and are thus available for sale in the public market, subject to the volume and other limitations of Rule 144.

In general, under Rule 144 a person (or person whose shares are aggregated) who has beneficially owned Restricted Shares for at least six months, including a person who may be deemed an affiliate of the Company, is entitled to sell within any three-month period up to that number of shares of Common Stock that does not exceed the greater of 1% of the then-outstanding shares (approximately 38,889 shares) of Common Stock of the Company or up to the number of shares equal to the average weekly trading volume of the Common Stock on the Over-the-Counter Market during the four calendar weeks preceding such sale. Sales under Rule 144 are also subject to certain restrictions relating to manner of sale, notice, and the availability of current public information about the Company. A person who has not been an affiliate of the Company at any time during the 90 days preceding a sale and who has beneficially owned shares for at least two years could be entitled to sell such shares without regard to the volume limitations, manner of sale provisions and other requirements of Rule 144.

Sales of a substantial number of shares of Common Stock, including following conversion of shares of the Company's preferred stock or pursuant to Rule 144, or a registered offering, could adversely affect the market price of the Common Stock, increase significantly the number of shares of Common Stock issuable upon the conversion of the Company's preferred stock, the conversion rates which are related to the prevailing market price, may make it more difficult for the Company to sell equity securities in the future at a time and price that it deems appropriate.

The Company has four issues of Convertible Preferred Stock outstanding as of December 31, 2009. A complete description and summary of the Convertible Preferred Stock is set forth in the financial statements Note B - Preferred Stock.

The Company did not issue any new stock options during the years ended December 31, 2009, and December 31, 2008. The Company did extend 362,500 options that were to expire July 11, 2009 (see 2006 Stock Incentive Plan below). At December 31, 2009 the Company had a total of 835,625 stock options outstanding to directors and officers and to certain key employees to purchase common stock of the Company, 20,000 in advisors and consultant plans, and 130,000 options in warrants in connection with financing .

Equity Compensation Plan Information

Equity compensation plans not approved by security holders

Master Stock Option Plan:

On July 31, 2006, the Registrants Board of Directors adopted the Registrant’s 2006 Third Amended and Restated Master Stock Option Plan, which consists of the Registrant’s (i) 2006 Stock Incentive Plan adopted by the Board of Directors on June 28, 2006, (ii) Second Amended and Restated Officers and Directors Stock Option Plan adopted by the Board of Directors on July 31, 2006, and (iii) Second Amended and Restated Advisors and Consultants Stock Option Plan adopted by the Board of Directors on July 31, 2006.

2006 Stock Incentive Plan

The Company's 2006 Stock Incentive Plan (the "2006 Plan") provides for the grant of non-qualified stock options to purchase shares of the Company's $.20 par value common stock to compensate and induce (a) certain key employees to (i) increase the profitability and growth of the Company; (ii) provide competitive compensation while obtaining the benefits of tax deferral; (iii) attract and retain exceptional personnel and encourage excellence in the performance of individual responsibilities; and (iv) to motivate key employees to the Company’s success; and (b) non-employee directors to, among other things, attract and retain persons of outstanding ability to serve as directors of the Company.

The 2006 Plan may be administered by the Board of Directors or by a committee appointed by the Board of Directors (In either case, referred to herein as the “Committee”.) All stock options granted under the 2006 Plan must be approved by the Committee, and the Committee has full power to construe and interpret the plan subject to the plan's express provisions. If the Stock is listed on a national securities exchange, the closing price of the Stock on the composite tape as of the most recent date on which the Stock was traded prior to the Grant Date. If the Stock is quoted on NASDAQ, the mean high and low market prices for which the Stock is quoted as of the most recent date on which the Stock was quoted prior to the Grant Date. If the Stock is not listed on a national securities exchange or quoted on NASDAQ, but is traded over the counter, the last sales price of the Stock on the most recent date on which the Stock was sold in the over-the-counter market prior to the Grant Date. On October 9, 2007, the Board of Directors amended the 2006 Stock Incentive Plan to make the options cashless and transferable. There are 395,500 options outstanding under the 2006 stock incentive plan. During 2008, the Company re-priced these options from $17 to $8.25. On July 11, 2009, the Company extended 362,500 options of these options that were issued in July 2006. These options were due to expire July 11, 2009, with an exercise price of $8.25 per share. The Company extended these options for one year, with an expiration date of July 11, 2010, and an exercise price of $8.25 per share. The Company recorded a $231,257 expense for the extension of these options during the year 2009 (See Note C). The expense was calculated using the following assumptions:

	July 11, 2009
Risk Free Rate of Return		4.5	%
Expected Forfeiture		56.06	%
Expected Volatility		67.3	%
Expected Dividends	None

Second Amended and Restated Officers and Directors Stock Option Plan

The Company's Second Amended and Restated Directors and Officers Stock Option Plan (the "Directors and Officers Plan") provides for the grant of stock options to the directors and executive officers of the Company and its subsidiaries to purchase shares of the Company's $.20 par value common stock to motivate them to contribute to the success of the Company. The Directors and Officers Plan may be administered by the Board of Directors or by a committee appointed by the Board of Directors (In either case, referred to herein as the “Committee”). All stock options granted under the Directors and Officers Plan must be approved by the Committee, and the Committee has full power to construe and interpret the plan subject to the plan's express provisions. The exercise price per share for an option granted under the Directors and Officers Plan shall not be less than the fair market value of the stock on the date the option is granted. If the Stock is listed on a national securities exchange, the closing price of the Stock on the composite tape as of the most recent date on which the Stock was traded prior to the Grant Date. If the Stock is quoted on NASDAQ, the mean high and low market prices for which the Stock is quoted as of the most recent date on which the Stock was quoted prior to the Grant Date. If the Stock is not listed on a national securities exchange or quoted on NASDAQ, but is traded over the counter, the last sales price of the Stock on the most recent date on which the Stock was sold in the over-the-counter market prior to the Grant Date. If the Stock is not listed on a national securities exchange, quoted on NASDAQ or traded in the over-the-counter market, the book value per share of the Stock determined in accordance with generally accepted accounting principles as of the last day of the fiscal quarter immediately preceding the Grant Date. On October 9, 2007, the Board of Directors amended the plan to make the options cashless and transferable. During 2008, the Company re-priced these options from $17 per share to $8.25 per share. There are 115,125 options outstanding under the second amended and restated officers and directors stock option plan. (See Note C)

Second Amended and Restated Advisors and Consultants Stock Option Plan

The Company's Second Amended and Restated Advisors and Consultants Stock Option Plan (the "Advisors and Consultants Plan") provides for the grant of options to purchase shares of the Company's $.20 par value common stock to natural persons who provide bona fide valuable services to the Company that are not in connection with the offer of sale of securities in a capital-raising transaction, and do not directly or indirectly promote or maintain a market for the Company's securities. The Board of Directors administers the Advisors and Consultants Plan. All stock options granted under the Advisors and Consultants Plan must be approved by the Board of Directors, which has full power to construe and interpret the plan subject to the plan's express provisions. The exercise price per share for an option granted under the Advisors and Consultants Plan is the greater of three (3) times the book value per share as of the last day of the fiscal quarter immediately proceeding the date the option is granted as determined in accordance with generally accepted accounting principles, or the market value determined. If the Stock is listed on a national securities exchange, the closing price of the Stock on the composite tape as of the most recent date on which the Stock was traded prior to the Grant Date. If the Stock is quoted on NASDAQ, the mean high and low market prices for which the Stock is quoted as of the most recent date on which the Stock was quoted prior to the Grant Date. If the Stock is not listed on a national securities exchange or quoted on NASDAQ, but is traded over the counter, the last sales price of the Stock on the most recent date on which the Stock was sold in the over-the-counter market prior to the Grant Date. Options granted under the Advisors and Consultants Plan cannot be assigned or transferred except by will or the laws of descent and distribution, and cannot otherwise be pledged or hypothecated in any way. Any attempted assignment, transfer, pledge hypothecation or other disposition of an option, or the levy of any process upon an option, will render the option null, void and without effect. There are 20,000 options outstanding under this plan. (See Note C)

Non-Plan Options

On October 9, 2007, the Board of Directors amended the plan to make the options cashless and transferable. To exercise an Option, the Optionee or the other person(s) entitled to exercise the Option shall give written notice of exercise to the Treasurer of the Company, specifying the number of full shares to be purchased. Such notice shall be accompanied by (1) payment in full for the Stock being purchased; or (2) payment in full or in part may be made in the form of Stock owned by the Optionee for at least 6 months (based on the Fair Market Value of the Stock on the date the Option is exercised) evidenced by negotiable Stock certificates registered either in the sole name of the Optionee or the names of the Optionee and the Optionee’s spouse or the sole name of the transferee or the names of the transferee and the transferee’s spouse, or (3) by electing that the Company withhold shares that would otherwise be issued on exercise of the Option in payment of the purchase price; or (4) in any combination of the forgoing permitted methods with respect to a particular Option. If required by the Company the required withholding tax shall be paid to the Company in any manner specified in this section.” The Option is transferable but only if in the opinion of counsel acceptable to the Company the transfer of the Option will not violate the Securities Act of 1933 or any applicable state securities laws. The Stock Option Agreement shall remain in full force and effect except as expressly amended herein. There are 325,000 options outstanding under this plan and 130,00 warrants outstanding. During the year ended December 31, 2009, 70,000 warrants were issued as an inducement for financing. All 70,000 warrants were issued at $6.00 per share. On October 7, 2009, Mr. James Stuckert and Mr. Solomon Howell were each issued warrants for 20,000 shares at $6.00 per share for financing up to a $1,000,000. The Company recorded an expense of $39,451 for the issuance of the warrants and amortized the expense over the life of the loan, which expired December 31, 2009 (See Note C ). The Company used the following assumptions:

	October 7, 2009
Risk Free Rate of Return		.87	%
Expected Forfeiture		56.06	%
Expected Volatility		66.7	%
Expected Dividends	None

On December 11, 2009, the Company borrowed $500,000 from Nurmi Properties, and Mr. Steve Craig was issued 30,000 warrants at $6.00 per share in connection with the financing. The Company capitalized an expense of $14,726 for the warrants and the expense will be recorded straight line amortization over the period of the note which is one year (See Note C ). The Company used the following assumptions for the warrants:

	December 11, 2009
Risk Free Rate of Return		.83	%
Expected Forfeiture		56.06	%
Expected Volatility		66.7	%
Expected Dividends	None

At December 31, 2009, the Company had the following options and warrants outstanding.

Grantee	Number of Options or Warrants		Expiration	Grant Price		Fair Value of Stock on Grant Date
Key Employees		33,000	7/10/2012		8.25		6.25
Freedom Holding		315,000	7/10/2012		8.25		6.25
Executive Employees		115,125	7/10/2012		8.25		6.25
Key Employee		10,000	7/10/2012		8.25		6.25
Freedom Holding		325,000	7/11/2011		8.25		7.00
Officer & Director		37,500	7/11/2011		8.25		7.00
James Stuckert		20,000	6/26/2013		8.25		4.50
Solomon Howell		20,000	10/6/2012		6.00		6.05
James Stuckert		20,000	10/6/2012		6.00		6.05
Pride Capital		20,000	6/15/2012		30.00		26.15
Steve Craig		30,000	12/11/2011		6.00		4.25
Freedom Holding		20,000	11/1/2011		8.25		3.80
Florida Market Ventures		20,000	1/29/2010		30.00		17.00

The Board may, from time to time, alter or amend the Plan or stock option agreements issued under it, provided, that no amendment may

(a)

Impair or adversely affect the rights of a Participant under an outstanding Option; or

(b)

Decrease the exercise price of an Option, extend the period for exercise of an Option, or otherwise provide a participant with an enhancement or additional material benefit or right under such Option, including by exercise of existing discretion, if such amendment or change in the Option would be a “material modification” of the Option that would cause Code Section 409A to become applicable to the Option. Under this rule, any adjustment of an Option under Section 5(h) shall be done in a manner consistent with Code Section 424(h) even though that section is not otherwise applicable (if all fractional shares would be rounded down).

Item 6. Select Financial Data.

Under SEC regulations, the information called for by this item is not required because the Company is a smaller reporting Company.

Item 7. Management's Discussion and Analysis or Plan of Operation.

You should read the following discussion together with the financial statements, including the related notes and the other financial information in this Form 10-K.

On January 20, 2005, the Miami-Dade Board of County Commissioners called a countywide special election to be held by Miami-Dade County on March 8, 2005, (the “Special Election”) for the purpose of submitting to the qualified electors of Miami-Dade County the question of whether to authorize slot machines in certain existing, licensed pari-mutuel facilities. Florida Gaming agreed to enter into certain agreements with Miami-Dade County, which mandated a prepayment of $1,333,333 by Florida Gaming to Miami-Dade. Florida Gaming paid $500,000 of this prepayment in 2005 and signed a note payable to CalderRace Course, Inc. and West Flagler Associated, LTD, who paid the remaining $833,333 on Florida Gaming’s behalf. Payment of neither the note’s principal nor interest was due until the authorization by the qualified electors of Miami-Dade County of the operation of slot machines at Miami Jai-Alai (the “Event”). The Event failed to occur on March 8, 2005 but did occur in a subsequent election on January 29, 2008. Florida Gaming made its first payment on the note within ten days following the Event. The note bears interest at the prime lending rate plus 4% and is due in thirty-six installments of $23,145 plus all interest accrued.Payments were made until July 1, 2009. On December 23, 2009, Centers was served with a summons and complaint from West Flagler Associated, Ltd. And Calder Race Course,Inc. (See Item 3. Legal Proceedings and Note H).

On November 1, 2008, Florida Gaming Centers, Inc. borrowed One Million Three Hundred Twenty-Two Thousand Five Hundred and Seventy-Three Dollars and Seventy-Three Cents ($1,322,573.73) (the “Principal Amount”) from Freedom Holding, Inc. (“Freedom”), which was evidenced by FGC’s Promissory Note in favor of Freedom dated November 1, 2008 (the “Original Note”). The Original Note had a stated maturity date of May 1, 2009. The Note has subsequently been renewed through September 1, 2010 (see Form 8-K dated May 1, 2009, September 1, 2009, and March 1, 2010)

On December 31, 2008, the Company entered into a new financing arrangement with Isle of Capri Casinos, Inc. (“Isle”) relative to the $5,000,000 note which was due December 31, 2008. On December 31, 2008, the Company paid $2,000,000 on the original note and issued a new note and mortgage for $3,000,000 to Isle. The new Note for $3,000,000 was due December 31, 2009, bears interest at the rate of ten percent (10%) per annum, and is secured by a first mortgage on the Ft. Pierce Jai-Alai facility which is located on 37 acres owned by the Company. The Company failed to make the payment on the Note and the Company is currently in default. The default interest accrues at 18%. On March 1, 2010 the Company and Centers was served with a complaint by Isle (“See Item 3. Legal Proceedings” and Form 8-K dated March 1, 2010). On March 19, 2010 the Company and Centers were served with a second complaint by Isle seeking foreclosure on the mortgage granted to Isle on the property located in Ft. Pierce, FL, and all buildings, structures, and fixtures and improvements thereon (See Item 3. Legal Proceedings, Form 8-K dated March 19, 2010, -and Note H).

In January, 2009 the Company retained Morowitz Gaming Advisors, LLC and Insight Casino Research, LLC to conduct a market study of Miami Dade County as well as the southern portion of Broward County. The study determined the size and demographic composition of the gaming market, current gaming patterns and preferences of the Hispanic and Non-Hispanic populations within the aforementioned area. In addition the study will target specific segments to determine what amenities will allow Miami Jai-Alai to compete effectively. The amenities studied will be food and beverage entertainment options, and preferred promotions and incentives among others all with the purpose of providing the most likely combination to drive visitation to the Miami Jai-Alai venue. The Company seeks to determine what slot players are satisfied with at the venues they now patronize and how to enhance the overall gaming/dining experience in order to make Miami Jai-Alai an effective competitor in the South Florida market.

On January 6, 2009, the Company agreed to acquire a total of 10.982 acres of property from Miami-Dade County and sell .492 acres and a right-of-way to the county to be used by the Miami-Dade Metro Rail, an overhead light rail system. The total purchase price of the 10.982 acres was $16,742,145. The Company agreed to exchange the .492 acres and easement valued at $1,014,300, plus cash of $1,572,785, and a 15-year, 7 ¼% fixed rate interest note in the amount of $14,155,060 for the 10.982 acres of land. The Company also received air-rights from Miami-Dade County over N.W. 37th Avenue which separates the two parcels. . The phase two purchase of the approximately 8.7 remaining acres for $13,393,716 is to close no later than 60 days after the United States Corps of Engineers releases the property free and clear of environmental contamination or July 1, 2010, whichever is later. Prior to the second closing, a resolution will be presented to the Board of Miami-Dade County Commissioners (Board) to close part of N.W. 37th Avenue. If the Board votes to close the road and the County decides to expand N.W. 36th Avenue within 36 months of the vote, the Company shall pay the cost of design, land acquisition and construction for said N.W. 36th Avenue road expansion as well as any required utility relocations with the total paid by the Company not to exceed $5,700,000. Upon conclusion of these actions Miami Jai-Alai’s casino footprint will effectively grow from the present 8.9 acres to approximately 20 acres, thereby accommodating any potential future build-out. This will also allow Miami Jai-Alai to virtually enclose its casino area and provide a controlled, safe and well illuminated facility. Miami Jai-Alai has the right to operate 2,000 slot machines as well as wager on live jai-alai, simulcast horses and jai-alai and operates poker and domino tables. The Company made the payments through December 31, 2009, and the Company has not made any payments during 2010. As of March 31, 2010 the County has not informed the Company of default on this loan. (See Note H)

On August 14, 2009, Florida Gaming Corporation (the “Registrant”) entered into a Memorandum of Agreement (the “Agreement”) with Solomon O. Howell (“Howell”) and James W. Stuckert (“Stuckert,” and collectively with Howell, the “Lenders”) pursuant to which the Lenders may advance cash (each an “Advance”, and collectively the “Advances”) to the Registrant up to a maximum aggregate amount of one million dollars ($1,000,000). The advances to the Company were $1,000,000 evidenced by eight separate notes. On October 7, 2009, the Registrant and the Lenders amended the Agreement to require the Registrant to issue to each of the Lenders warrants to acquire up to 20,000 shares of the Registrant’s common stock at a price of $6.00 per share. Such warrants expire on October 7, 2012. The Company incurred $39,451 of cost related to the issuance of the warrants. These costs were amortized into expense over the remaining term of the related Notes from October 7, 2009 through December 31, 2009. The Notes also included a convertible feature allowing the lenders, at their option ,to convert outstanding principal and any accrued but unpaid interest into the Company’s $0.20 par value common stock. The value of this conversion feature to the Company was $138,204, this value was initially recorded as a discount on notes payable and then amortized over the life of the Notes, which ended December 31, 2009. The Company is currently in default on this Note. As of March 31, 2010, Mr. Stuckert and Mr. Howell have not informed the Company of any default. (See Note H) Refer to Form 8-K dated December 31, 2009.

On December 11, 2009, Florida Gaming Corporation borrowed Five Hundred Thousand Dollars ($500,000) from Nurmi Properties and Robinette Investments, LLC (“Lenders”), pursuant to a Note among the Company and the Lenders dated December 11, 2009 (the “Note”). The outstanding principal balance of the Note bears interest at an annual rate of 13% . For more information see Form 8-K dated December 11, 2009.

On February 4, 2010, the Company borrowed One Hundred Fifty Thousand Dollars ($150,000) from Nurmi Properties, LLC, and Robinette Investments, LLC (“Lenders”), pursuant to a Note and Mortgage Modification among the Company and the Lenders dated February 4, 2010 (the “Modification”). The Modification modifies the Note and the Mortgage and Security Agreement, both dated December 11, 2009, between the Company and the Lenders (pursuant to which Lenders loaned the Company $500,000) so that the total amount due the Lenders under the Note and the Mortgage and Security Agreement is $650,000 rather than $500,000. For further information refer to Form 8-K filed February 10, 2010.

On February 4, 2010, the Company borrowed Ninety Thousand Dollars ($90,000) from H2C, Inc. (“H2C”) pursuant to a Promissory Note between the Company and H2C dated February 4, 2010 (the “H2C Note”). The original outstanding principal amount, plus accrued but unpaid interest thereon, is payable in ten equal monthly installments commencing March 1, 2010. Interest on the outstanding amounts due under the H2C Note is calculated at an annual rate of 10%. The H2C Note contains other standard terms and conditions. For further information refer to Form 8-K filed February 10, 2010.

On March 10, 2010, the Company borrowed an additional One Hundred Fifty Thousand Dollars ($150,000) from Nurmi Properties, LLC, and Robinette Investments, LLC (“Lenders”) pursuant to a Note and Mortgage Modification (the “Second Modification”) among the Company and the Lenders. Under the Second Modification, the Original Note and Mortgage were modified such that the total amount due to the Lenders under the Original Note and Mortgage became $800,000 rather than $650,000.

On March 25, 2010, the Company borrowed an additional Thirty Five Thousand Dollars ($35,000) from the Nurmi Properties, LLC, and Robinette Investments, LLC (“Lenders”) pursuant to a Note and Mortgage Modification (the “Third Modification”) among the Company and the Lenders, dated March 23, 2010. Under the Third Modification, the Original Note and Mortgage were modified such that the total amount due to the Lenders under the Original Note and Mortgage became $835,000 rather than $800,000.

Fiscal Year 2009 Compared with Fiscal Year 2008

During the twelve months ended December 31, 2009 and December 31, 2008, the Company's operations reflect twelve months operation of live jai-alai performances at the Miami facility, and three months of live jai-alai performances at Ft. Pierce, along with a year round schedule of ITW. There were no operations at the real estate development in Loganville, GA.

COMPARISON DEFINITION

The following analysis of handle, revenues, real estate sales, attendance, operating expenses and general & administrative expenses in this part of the report compares figures for the twelve months ended December 31, 2009 to figures for the twelve months ended December 31, 2008, for the Miami and Ft. Pierce pari-mutuel facilities, and the real estate development.

Handle Analysis

Total Handle for the twelve months ended December 31,2009 was $58,908,940 of which $12,712,386 was wagered on live jai-alai, $13,546,357 was wagered on the Miami jai-alai signal as a host site via inter-track simulcasting, and $32,650,197 was wagered on inter-track guest signals carried at the Company's two frontons.

Total Handle for the twelve months ended December 31,2008 was $69,438,505 of which $15,220,308 was wagered on live jai-alai, $17,291,894 was wagered on the Miami jai-alai signal as a host site via inter-track simulcasting, and $36,926,303 was wagered on inter-track guest signals carried at the Company's two frontons.

Handle Increases and Decreases

All areas of the handle saw a decrease during 2009. Total handle for the twelve months ended December 31, 2009 decreased $10,529,565 or 15.2% from the twelve months ended December 31, 2008.

Live handle decreased from $15,220,308 for the twelve months ended December 31, 2008 to $12,712,386 for the twelve months ended December 31, 2009, a decrease of $2,507,922 or 16.5%.

ITW host signal for the twelve-months ended December 31, 2009 was $17,291,894 compared to $13,546,357 for the same period in 2009, a decrease of $3,745,537 or 21.7%.

ITW guest handle decreased from $36,926,303 in 2008 to $32,650,197 for the same period in 2008, —a decrease of $4,276,106 (11.6%).

A reduction in the number of performances at Miami, the increased competition in Miami, and the overall economy has impacted the overall handle.

Revenue

Net Pari-Mutuel Revenues

Pari-mutuel revenues, net of state taxes and guest commissions, for the year ended December 31, 2009 were $6,694,981 compared to net pari-mutuel revenues of $7,966,971 for the same period in 2008, a decrease of $1,271,990 (16%). Revenues for the twelve months ended December 31, 2009, consisted of $4,000,249 from live and simulcast jai-alai wagering and $2,694,732 from inter-track guest commission. This compares to revenues for the twelve months ended December 31, 2008 of $4,925,709 from live and simulcast jai-alai wagering and $3,041,262 from inter-track guest commission. The Company had fewer performances and scheduling changes which impacted handle and revenue.

Admissions Income

Admissions Income, net of state taxes, for the year ended December 31, 2009, was $26,947, net of state taxes, compared to $30,013 for the year ended December 31, 2008, a decrease of $3,066 or 10.2%.

Program Revenue

Program Revenue for the year ended December 31, 2009, was $135,218 compared to $118,376 for the year ended December 31, 2008, a $16,842 increase.

Food and Beverage

Food and beverage income increased $89,177 (10%) to $989,087 for the year ended December 31, 2009, compared to $899,910 for the year ended December 31, 2008. Food and beverage income is revenue from the bar and concession stand. Food and Beverage income has substantially increased due to Ft. Pierce Jai-Alai opening the card room on April 28, 2008. There has been an increase in sales at the bar and concession stands at Ft. Pierce.

Card room revenue

Card Room revenue for the Miami & Ft. Pierce Crystal Card Room for the twelve months ended December 31, 2009 was $5,998,668 compared to $4,847,231 for the same period in 2008, an increase of $1,151,437. Ft. Pierce opened their card room on April 28, 2008. The 2008 revenue includes eight months of operation at Ft. Pierce compared to twelve months of operating figures during 2009.

Other Revenue

Other Revenue for the year ended December 31, 2009 was $151,038 compared to $138,462 for the year ended December 31, 2008. Other Revenue primarily consists of souvenirs, parking, vending machines, lottery commission and misc. income.

Real Estate Sales

The Company had no real estate sales for the years 2009 and 2008.

Operating Expenses

The Company's operating expenses for the year ended December 31, 2009 were $15,553,657 compared to $16,142,160 for the same period in 2008, a $588,503 decrease.

Advertising and Promotions

Advertising and promotional costs were $404,137 for December 31, 2009, compared to $712,104 for the year ended December 31, 2008. A total decrease of $307,967 or 43.2%. In 2008, the Company spent a lot more on advertising due to the opening of the Card Room in Ft. Pierce.

Operating and Mutuel Payroll and related costs

Total operating and mutual payroll costs were $4,828,975 for the year 2009, compared to $4,986,358 for the year 2008, a $157,383 decrease. Mutuels payroll for the year ended December 31, 2009 was $840,832, compared to $937,052 for the same period in 2008. Payroll has decreased due to staff reductions due to the decline in wagering. Admission payroll for 2009 was $35,511 compared to $63,402 during the same period in 2008. Maintenance and janitorial payroll was $661,054 for the year ended 2009 compared to $709,668 for the same period in 2008. Security payroll for 2009 was $867,071 compared to $949,063 for the same period in 2008. Employee benefits were $1,038,758 for the year 2009, compared to $959,222 for the same period in 2008, an increase of $79,536. Employee benefits consists of insurance for health care for the players and employees. Office payroll remained relatively the same with $335,081 for the year ended 2009, compared to $335,021 for the same period in 2008. Related costs consisting of payroll taxes were $980,251 for year 2009 compared to $958,697 for the year 2008.

Player payroll and related costs

Player payroll and related costs for the year ended December 31, 2009 were $3,020,738 compared to $3,237,222 for the year ended December 31, 2008, a 6.7% decrease. The largest portion of the players decrease was due to a decrease in Players payroll of $71,448 and the players prize money decreased $43,505, due to scheduling changes at Miami Jai-Alai.

Food and beverage costs

Food and beverage costs for the period ended December 31, 2009, were $784,651 compared to $916,841 for the same period in 2008. Food and Beverage costs are from the bar and concession stand. Bar payroll was $75,596 for period ended December 31, 2009, compared to $93,687 in 2008. Bar purchases were $146,809 for the year ended December 31, 2009, compared to $166,514 for the same period in 2008, a $19,705 decrease or 11.8%. Concession payroll was $277,756 for the year ended December 31, 2009, compared to $344,965 for the same period in 2008, a decrease of $67,209.

Repairs and Maintenance

Total Repairs and Maintenance for the year ended December 31, 2009, was $228,576 compared to $336,230 for the same period in 2008.

Totalizator/teleview rental

The Company leases totalizator equipment at each fronton. The cost was $385,591 for the year ended December 31, 2009 compared to $387,901 for the year ended December 31, 2008.

ITW and television costs

Total ITW and television costs were the year ended December 31, 2009 were $844,969 compared to $776,756 for the same period in 2008, an increase of $68,213. Of the total costs for 2009, TV Camera rental costs increased from $389,823 in 2008 to $461,391 in 2009, and ITW tote and telecom costs decreased $3,354 to $383,579. Both Miami and Ft. Pierce had additional charges for cardroom surveillance equipment.

Programs

Total Program costs were $175,108 for 2009, compared to $164,779 for the same period in 2008, an increase of $10,329. Out of the total program costs, payroll totaled $24,323 for the year ended December 31, 2009, compared to $12,905 for the same period in 2008. Program expenses totaled $150,786 for the year ended December 31, 2009, compared to $151,874 for the same period in 2008.

Cardroom payroll and related costs

Cardroom payroll totaled $1,427,075 for 2009 compared to $1,225,170 for the same period in 2008. The reason for the large increase in costs is due to the opening of the Ft. Pierce Card Room on April 28, 2008. These figures compare twelve months in 2009 to eight months of 2008.

Other card room operating costs

Depreciation and amortization

Depreciation and Amortization expense amounted to $490,918 for the year ended December 31, 2009 compared to $417,794 for the same period in 2008. Of that total, depreciation expense for the year ended December 31, 2009, was $479,585 and amortization was $11,333, compared to Deprecation expense of $406,461 and amortization of $11,333 for the same period in 2008.

Utilites

Utility costs decreased $28,161 (4.7%) from $602,959 for the year ended December 31, 2008 to $574,798 for the same period in 2009. There has been reduced electrical consumption at Miami.

Cost of Real Estate Sales

The Company had no real estate sales for the years ended December 31, 2009 and 2008.

Provision for loss on real estate

The Company had provision for loss of $63,500 for the year ended December 31, 2009, compared to -0- in 2008. The Company had a provision for loss on the six (6) lots during 2009.

Misc. net

Misc. expenses were $1,086,646 for the year 2009, compared to $1,275,138 for the same year in 2008, a $188,497 decrease. One of the more significant decreases consisted of rent expense which decreased $110,787 for the year ended December 31, 2009 compared to the year ended December 31, 2008.

General and Administrative Expenses

The Company's general and administrative expenses decreased $19,323 to $4,923,908 for the twelve months ended December 31, 2009, compared to $4,943,234 for the twelve-months ended December 31, 2008.

Comparisons of significant categories of general and administrative expense for 2009 versus 2008 are as follows:

Executive payroll and related costs

Executive payroll and related costs were $579,467 in 2009, compared to $542,059 in 2008.

Stock Options

The Company did not issue any new stock options in 2009. The Company did extend $362,500 option from July 11, 2009 to July 11, 2010 and the Company had stock option expense of $231,257. This compares to the Company re-pricing stock options during 2008, which led to a stock option expense of $664,291 in 2008.

Director Fees

The Company has three non-employee directors and they each receive $2,000 per month The Board of Directors increased the fees from $1,500 to $2,000 effective June 1, 2008. Director Fees for the periods ended December 31, 2009 were $72,000 compared to $63,000 for the year ended December 31, 2008.

Management consulting

Total management consulting fees for the year ended December 31, 2009, were $780,000 compared to $765,000 during 2008. The $15,000 increase is due to the Board of Directors authorizing an increase of $5,000 per month effective April 1, 2008. Management fees consist of fees paid to Freedom Financial Corporation for services provided by W. B. Collett, Chairman and CEO. (See Note F)

Telephone and Travel

Total fees for telephone and travel were $443,324 for the year ended December 31, 2009, compared to $521,982 for the same period in 2008. Of the $443,234, travel expense was $350,584 and telephone was $92,740. This compares to travel expense of $422,307 for the same period in 2008, and telephone of $99,675. Travel expenses decreased 17% during 2009. W. Bennett Collett, Chairman and CEO oversaw the card room construction at Ft. Pierce Jai-Alai during 2008.

Professional fees

Professional fees were $728,919 in 2009 compared to $549,913 in 2008, an increase of $179,006 or 32%. Included in professional fees are lawyers, accountants, and consultants.

Interest and Financing Costs

The Company had total interest and financing costs of $903,280 for the twelve month period ended December 31, 2009 compared to $617,044 during the same period in 2008. Of the total $903,280, interest costs totaled $671,277 for the twelve month period ended December 31, 2009 and financing costs were $232,003. This compares to interest costs of $495,749, and warrant costs of $65,858 for the twelve month period ended December 31, 2008.

During 2009, the Company incurred financing costs relating to the convertible promissory notes. The Notes include a convertible feature allowing the Lenders, at their option, to convert outstanding principal and any accrued interest into the Company’s $.20 par value common stock at $6.00 per share. The conversion rights of the Stuckert/Howell Notes were valued at $138,204. The Company also issued Mr. Stuckert and Mr. Howell each 20,000 warrants and incurred financing costs of $39,451. On December 11, 2009, the Company issued Mr. Steve Craig 30,000 warrants at $6.00 per share and had financing costs of $14, 727. Some of the larger interest expense is Isle of Capri, $300,000, interest on the Miami-Dade County Note of $162,557, and Flagler $45,587. This compares to 2008, the Company incurred financing costs related to the Isle of Capri note and the Freedom Holding note which matured in 2008. (See Note H and Note C)

Property Taxes

Property taxes were $398,623 for the year ended December 31, 2009, compared to $403,467 for the same period in 2008.

Insurance Costs

The Company had insurance expense of $787,038 for the twelve months ended December 31, 2009, compared to insurance expense of $816,478 for the same period in 2008. A decrease of $29,440. Insurance rates are substantial in the state of Florida. Ft. Pierce was damaged by two (2) hurricanes in 2004, and Miami was damaged by a hurricane in 2005.

Other Income and Expense

Other income for the year ended December 31, 2009, was $1,621,434 compared to $6,977,385 for the same period in 2008. There was interest income of $7,866 for the twelve months ended December 31, 2009, compared to $53,696 for the same period in 2008 a decrease of $45,830. There was additional income of $703,511 in State Tax credits on handle and admissions in 2009, compared to $853,892 for the same period in 2008. The Company had insurance recoveries, net of losses, of $7,134,956 in 2008 compared to -0- in 2009. On September 19, 2008, the Company settled a lawsuit against Affiliated FM Insurance Company for a total of $8,500,000. The claim resulted from damages caused by Hurricane Wilma in October, 2005. Also in other income for 2008 was legislative expenses of $1,083,333 for the year ended December 31, 2008 compared to -0- for the same period in 2009. Included in the legislative expense is a $833,333 legislative Initiative Note that was triggered on January 29, 2008 by the state authorizing slot machines at the Miami Jai-Alai facility (See Note M). During 2009, the Company sold a piece of property to the county and recorded a gain on sale of right-of-way of $870,185 (See Note H)

Liquidity and Capital Resources

The Company had cash and cash equivalents of $819,256 at December 31, 2009, compared to $1,512,719 at December 31, 2008. The Company had negative working capital of approximately $11,926,189 compared to negative working capital of $6,912,117 during the year ended December 31, 2008. The large increase in negative working capital is due to the current liabilities increasing $4,266,133 during 2009. The accrued expense and accrued payables, saw an increase of $2,636,148. The Company borrowed an additional $1,500,000 in 2009, that is included in current liabilities. A few of the larger accrued expenses included interest expense to Isle of $225,000, accrued dividends of $655,294, accrued management fees of $780,000, and an accrued payable to Freedom Financial Corp of $493,430.

Net cash used in operating activities was $2,416,703 in 2009, and $5,130,125 in 2008. During 2009, the Company extended 362,500 options and had stock option expense of $231,257 compared to $664,291 for the year ended December 31, 2008. During 2009, the Company extended 362,500 options and had option expense of $231,257 and during 2008 the Company re-priced stock options that were issued in 2006 and had stock option expense of $664,291. During 2009, the Company issued warrants to Mr, James Stuckert, Mr. Solomon Howell, and Mr. Steve Craig for a warrant expense of $54,178. The Company issued warrants during 2008 to Mr. Jim Stuckert and Freedom Holding and had warrant expense of $52,129. On April 6, 2009, the Company completed Phase 1 of its two-phase acquisition of the 10.982 acres of property from the County. Phase 1 included the closing of the purchase of approximately 2.283 acres from the County for $3,348,429, including a down payment of $334,843 and a County financed note payable of $3,013,586 for 15 years with final payment due April 1, 2024, with a fixed interest rate of 7.25%. The Note is secured by the purchased property pursuant to a mortgage and security agreement between the Company and the County. The Company also received air-rights over N.W. 37th Avenue, a street separating the two properties. The phase two purchase of the approximately 8.7 remaining acres for $13,393,716 is to close no later than 60 days after the United States Corps of Engineers releases the property free and clear of environmental contamination or July 1, 2010, whichever is later. Prior to the second closing, a resolution will be presented to the Board of Miami-Dade County Commissioners (Board) to close part of N.W. 37th Avenue. If the Board votes to close the road and the County decides to expand N.W. 36th Avenue within 36 months of the vote, the Company shall pay the cost of design, land acquisition and construction for said N.W. 36th Avenue road expansion as well as any required utility relocations with the total paid by the Company not to exceed $5,700,000. Phase 1 also included the County’s purchase of the right-of-way of .492 acres from the Company for $1,185,345. The Company’s basis in the right-of-way was $65,160, costs to sell totaled $250,000; therefore, the net gain on the sale totaled $870,185. This compares to no gains on sale of property in 2008. On September 19, 2008, the Company settled a lawsuit against Affiliated FM Insurance Company for a total of $8,500,000. The claim resulted from damages caused by Hurricane Wilma in October, 2005. As a result, the Company had insurance recoveries net of loss of $7,134,956 for the year ended December 31, 2008, compared to -0- for the same period in 2009. Also, in 2008, the Company had an expense that consisted of $1,083,333 legislative initiatives. A $833,333 note was triggered on January 29, 2008 by the state authorizing slot machines at the Miami Jai-Alai facility (See Note H).

Net cash provided by investing totaled $426,815 for 2009, compared to $5,188,244 in 2008. The Company had purchases of property and equipment of $508,350 during 2009, compared to $1,946,712 for 2008. On January 6, 2009, the Company agreed to acquire a total of 10.982 acres of property from Miami-Dade County in exchange for an easement of .492 acres to be used by the Miami-Dade Metro Rail, an overhead light rail system. The Company’s basis in the right of way was $65,160, expenses of $250,000; therefore net proceeds on the sale of .492 acres totaled $935,345. The Company also received $7,134,956, net, from insurance proceeds for the Wilma Hurricane settlement in 2008.

During 2009, net cash provided by financing activities totaled $1,296,425 compared to cash used in financing activities of $1,969,095 for the year ending December 31, 2008. During the year ended December 31, 2009, the Company issued notes for $1,500,000, compared to $1,602,500 for the year ended December 31, 2008. During 2009, the Company received $98,750 from the exercising of 25,000 options @ $3.50 per share, and 5,000 options at $2.25 per share compared to the Company receiving $933,750 from the exercise of 415,000 options at $2.25 per share in 2008. During the year ended December 31, 2009, the Company repaid short term debt of $239,036 compared to the year ended December 31, 2008, the Company paid Isle of Capri $2,000,000 on its’ note, $93,598 on the note with Freedom Financial, and $254,630 on the legislative note. During 2009, the Company paid dividends of $63,289 compared to paying dividends of $551,322 during the same period in 2008.

The Company leased totalizator equipment from Scientific Games Corp. at each fronton under leases which expired October 31, 2008, but subsequently being leased on a month- to- month basis. The leases required minimum annual rental at the Miami and Ft. Pierce locations. Transmission of the Miami Jai-Alai signal requires the use of a satellite uplink simulcasting service which requires a fee of $500 per performance. Total totalizator rental expense and other equipment rental under operating leases for the year ended December 31, 2009 and 2008 was approximately $386,000 and $388,000, respectively.

The Company also leased parking facilities adjacent to the Miami fronton. This lease was dated February 17, 2003, and during 2008 there was a required annual payment of $130,000. Lease payments totaled $34,000 in 2009, with the lease concluding with the purchase of the additional property from the County.

At December 31, 2009, the Company had two notes mature, Isle of Capri for $3,000,000 plus interest, and the Stuckert/Howell Note of $1,000,000 plus interest. The Company failed to pay these amounts on December 31, 2009 at maturity. For more information reference Form 8-K dated December 31, 2009. On March 1, 2010 the Company was served with a complaint by Isle of Capri Casinos, Inc. (See Item 3. Legal Proceedings) . At December 31, 2009 the Company owed West Flagler/Calder $416,666 principal balance plus interest. The Company failed to make the required payments to West Flagler/ Calder since July 2009, and on December 23, 2009, Centers was served with a summons and complaint (See Item 3. Legal Proceedings). The Company has a $2,937,951 Note to Miami-Dade County. The Company made all required payments through December 31, 2009 to Miami-Dade County, but no payments have been made in 2010. The Company borrowed $500,000 from Nurmi Properties, LLC on December 11, 2009, and additional borrowings from Nurmi total $335,000 through March 31, 2010 (See Form 8-K’s dated December 11, 2009, and February 4, 2010). On February 5, 2010, the Company borrowed $90,000 from H2C (refer to Form 8-K filed February 4, 2010) Freedom Holding renewed their $1,322,574 Note through September 1, 2010. The Company intends to refinance its debts or sell the Fort Pierce Jai-Alai Property and Tampa Jai-Alai permit. The proceeds received from the sale of Ft. Pierce would be used to pay past-due obligations and to initiate efforts to install slot machines at the Miami Jai-Alai Fronton. There is no assurance that the Company will be successful in any of these efforts. The Company has received two verbal offers.

(a) Off -Balance Sheet Arrangements

None.

Critical Accounting Estimates

The Company's Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires the Company to make estimates and judgments, and select from a range of possible 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 amount of revenues and expenses during the reported period.

On an on-going basis, the Company evaluates its estimates, including those related to allowances for doubtful accounts, accounts receivable, inventory allowances, asset lives, the recoverability of other long-lived assets, including property and equipment, goodwill and other intangible assets, the realization of deferred income tax assets, remediation, litigation, income tax and other contingencies. The Company bases its estimates and judgments, to varying degrees, on historical experience, advice of external specialists and various other factors it believes to be prudent under the circumstances. Actual results may differ from previously estimated amounts and such estimates, assumptions and judgments are regularly subject to revision.

The policies and estimates discussed below are considered by management to be critical to an understanding of the Company's financial statements because their application requires the most significant judgments from management in estimating matters for financial reporting that are inherently uncertain. See Note A - "Summary of Significant Accounting Policies" to our financial statements for additional information on these policies and estimates, as well as discussion of additional accounting policies and estimates.

The Company presents accounts receivable, net of allowances for doubtful accounts, to ensure accounts receivable are not overstated due to uncollectibility. The allowances are calculated based on detailed review of certain individual customer accounts, historical rates and an estimation of the overall economic conditions as well as the aging of the accounts receivable. In the event that the receivables became uncollectible after exhausting all available means of collection, the company would be forced to record additional adjustments to receivables to reflect the amounts at net realizable value. The effect of this entry would be a charge to income, thereby reducing its net profit. Although the company considers the likelihood of this occurrence to be remote based on past history and the current status of our accounts, there is a possibility of this occurrence.

The Company provides an allowance for doubtful accounts equal to estimated uncollectible amounts. The Company's estimate is based on a review of the current status of receivables. Allowance for doubtful accounts totaled -0- for the years ended December 31, 2009 and 2008.

In connection with losses incurred from natural disasters, insurance proceeds are collected on existing business interruption and property and casualty insurance policies. When losses are sustained in one period and the amounts to be recovered are collected in a subsequent period, management uses estimates and judgment to determine the amounts that are probable of recovery.

The Company estimates the useful lives of property and equipment in order to determine the amount of depreciation and amortization expense to be recorded during any reporting period. The majority of its equipment is depreciated over five to seven years. The estimated useful lives are based on historical experience with similar assets as well as taking into account anticipated technological or other changes. If technological changes were to occur more rapidly than anticipated or in a different form than anticipated, the useful lives assigned to these assets may need to be shortened, resulting in the recognition of increased depreciation in future periods. The Company reviews for impairment annually or when events or circumstances indicate that the carrying amount may not be recoverable over the remaining lives of the assets. In assessing impairments, it follows the provisions of ASC Topic 360-10-05 “Impairment or Disposal of Long-Lived Assets".

In accordance with ASC Topic 360-10-05, the Company periodically provides for losses on its property held for sale. Generally, when events or changes in circumstances indicate that the carrying amount of long-lived assets, including property and equipment and intangible assets, may not be recoverable, the Company undertakes an evaluation of the assets or asset group. If this evaluation indicates that the carrying amount of the asset or asset group is not recoverable, the amount of the impairment would typically be calculated using appraised values of the property. All relevant factors are considered in determining whether an impairment exists. The Company reviews for impairment annually and has found this to be very effective. Provisions for losses totaled $63,500 on property held for sale, for the years ended December 31, 2009 and 2008.

The Company recognizes revenue from gaming operations in accordance with ASC Topic 605, “Revenue Recognition,” which requires revenues to be recognized when realized or realizable and earned. Jai-Alai and inter track mutual commissions are recognized immediately upon completion of the event upon which the related wagers are placed. In general, wagers are placed immediately prior to the event and are made in cash or other good funds so collectability is not an issue. Revenues derived from admission, program sales, food and beverage sales, card room activities, and other revenues are recognized at the time of the transaction. Revenues from the Company’s real estate operations are recognized in accordance with ASC Topic 360-20, “Real Estate Sales”, which generally allows the Company to record all profit on real estate sales at closing unless the down payment is insufficient to accrue the revenue.

The Company's policy for unclaimed winning tickets follows the requirements as set forth by the State of Florida. Abandoned tickets are winning tickets that remain uncashed for a period of one year. The value of the abandoned tickets escheat to the state. These funds are deposited into the State School Fund for support and maintenance of Florida's public schools. During 2009, unclaimed winning totaled $162,350 compared to $261,800 for the same period in 2008.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk.

Under SEC regulations, the information called for by this item is not required because the Company is a smaller reporting Company.

Item 8. Financial Statements

List of Financial Statements Filed.

	See accompanying Financial Statements:
	Balance Sheets as of December 31, 2009 and 2008.
	Statements of Income for the years ended December 31, 2009 and 2008.
	Statement of Changes in Stockholders' Equity for the two years ended December 31, 2009 and 2008.
	Statements of Cash Flows for the years ended December 31, 2009 and 2008.
	Notes to Financial Statements.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None

Item 9A(T). Controls and Procedures.

As of December 31, 2009, an evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act")). Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the design and operation of these disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms.

(a) Management’s annual report on internal control over financial reporting. Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15f under the Exchange Act. Our internal control system is designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:

Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2009. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework. Based on management's assessment and those criteria, management believes that, as of December 31, 2009, the Company maintained effective internal control over financial reporting.

This annual report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report of the effectiveness on the design and operation of internal control over financial reporting was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this annual report.

b) Changes in internal control over financial reporting. There was no change in the Company's internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and Rule 15d-15(d) of the Exchange Act that occurred during the period covered by this report and that has materially affected, or is reasonable likely to materially affect, the Company's internal control over financial reporting.

ITEM 9B. Other Information

On August 15, 2009 the Company filed a Current Report on Form 8-K (the "August 8-K") to report its execution of a Memorandum of Agreement pursuant to which the Company could borrow up to an aggregate of$1,000,000 from two individuals in increments of $150,000 upon the agreement of the lenders and the Company to each advance. The Memorandum of Agreement provided that the outstanding principal balance plus accrued interest on the advances could be converted by the lenders into the Company's common stock at a conversion price of $6.00 per share. Before October 6, 2009, the Company and the lenders agreed to advances of $600,000. On October 13, 2009, the Company filed a Current Report on Form 8-K (the "October 8-K") reporting an October 7, 2009 amendment to the Memorandum of Agreement eliminating the conversion feature and providing for the issuance of warrants to each of the lenders to purchase up to 20,000 shares of the Company's common stock at a purchase price of $6.00 per share, such warrants expiring on October 7, 2012 (the "Warrants"). The Company and the lenders have agreed that the amendment reported in the October 8-K was not executed. Rather, the Company agreed to issue the Warrants to each of the lenders to induce them to advance an additional $400,000 under the Memorandum of Agreement upon the terms and conditions reported in the August 8-K. As of December 31, 2009, an aggregate of $1,000,000 in principal amount had been advanced under the Memorandum of Agreement and an aggregate of 40,000 warrants had been issued to the lenders.

West Flagler Associated LTD and Calder Race Course

Nurmi Properties, LLC

As previously disclosed in the Registrant’s Form 8-K filed December 17, 2009, on December 11, 2009, Florida Gaming Corporation, a Delaware corporation, and its wholly-owned subsidiary Florida Gaming Centers, Inc., a Florida corporation (collectively, the “Company”), borrowed Five Hundred Thousand Dollars ($500,000) from Nurmi Properties, LLC, a Delaware limited liability company, and Robinette Investments, LLC, a Florida limited liability company (collectively, the “Lenders”) pursuant to a Promissory Note and a Mortgage and Security Agreement (the “Original Note and Mortgage”).

As disclosed in the Company’s Current Report on Form 8-K filed February 10, 2010, on February 4, 2010, the Company borrowed an additional One Hundred Fifty Thousand Dollars ($150,000) from the Lenders pursuant to a Note and Mortgage Modification (the “First Modification”) among the Company and the Lenders. Under the First Modification, the Original Note and Mortgage were modified such that the total amount due to the Lenders under the Original Note and Mortgage became $650,000 rather than $500,000.

On March 10, 2010, the Company borrowed an additional One Hundred Fifty Thousand Dollars ($150,000) from the Lenders pursuant to a Note and Mortgage Modification (the “Second Modification”) among the Company and the Lenders. Under the Second Modification, the Original Note and Mortgage were modified such that the total amount due to the Lenders under the Original Note and Mortgage became $800,000 rather than $650,000. See attached Exhibit 10.21.

On March 25, 2010, the Company borrowed an additional Thirty Five Thousand Dollars ($35,000) from the Lenders pursuant to a Note and Mortgage Modification (the “Third Modification”) among the Company and the Lenders, dated March 23, 2010. Under the Third Modification, the Original Note and Mortgage were modified such that the total amount due to the Lenders under the Original Note and Mortgage became $835,000 rather than $800,000. See attached Exhibit 10.22.

Item 10.

Directors, Executive Officers, Promoters and Control Persons; Compliance With Section 16(a) of the Exchange Act.

Directors and Executive Officers

The following table sets forth certain information concerning the Company's executive officers and directors at December 31, 2009:

Name	Age	Position with the Company	Director or Executive Officer Since

W. Bennett Collett	77	Chief Executive Officer, Director and Chairman	1993

W. Bennett Collett, Jr.	54	President , Director, and Chief Operating Officer	1993

Kimberly R. Tharp	52	Chief Financial Officer, Secretary and Treasurer	2002

Daniel Licciardi	53	Executive Vice-President and Pari-Mutuels Manager	1998

Jennifer Chong	53	Controller	2003

George Galloway, Jr.	76	Director	1994

Roland M. Howell	94	Director	1995

William Haddon	79	Director	2001

W. Bennett Collett has served as Chairman of the Board, Chief Executive Officer and a director of Freedom Financial Corporation (“Freedom”) since its formation in 1985. Freedom was a registered bank holding company until January, 1988 when it sold its banking subsidiaries. Mr. Collett has served as Chairman and director of Freedom Holding, Inc. (“Holding”) since its formation in December 1992. Holding's sole business currently is to hold shares of Florida Gaming Corporation. Collett was involved in the ownership and management of banking and financial service companies for over 30 years, having been a principal officer, and director of ten commercial banks. For 14 years Mr. Collett was a principal shareholder and chief executive officer of various banks and finance companies in Alabama, Arkansas, Georgia, Indiana and Missouri ranging in asset size from $1,000,000 to $500,000,000.

W. Bennett Collett Jr. served as President of Freedom from 1988 to 1989. Since August 1989, Mr. Collett has served as Executive Vice President of Freedom. He has been a director of Freedom since its formation in 1985 and a director of Holding since April, 1998. He presently serves as Secretary and Treasurer of Holding. Mr. Collett is responsible for directing the Company's gaming operations (live jai-alai performances and inter track wagering). Mr. Collett currently serves as President and Chief Operating Officer and was appointed to the Company's Board of Directors on August 9, 1994. W. Bennett Collett Jr. is the son of W. Bennett Collett.

Kimberly R. Tharp was elected Chief Financial Officer of the Company in 2002 and still serves in that capacity. She has served Freedom since 1995 to present, in various capacities, including Chief Financial Officer, Controller and Secretary.

Daniel Licciardi was elected Exec. Vice-President and Pari-Mutuels Manager in 1998 of Florida Gaming Centers. Mr. Licciardi was employed at the Miami Jai-Alai when present management took over in 1997. He has overseen the operations at the Miami Jai-Alai for over 20 years.

Jennifer Chong has worked in various positions at the Miami Jai-Alai and was elected Controller in 2003. She had previously served Centers as Asst. Controller.

George W. Galloway, Jr., M.D. a physician since 1958, served as the medical director of the emergency room at Kennestone Hospital in Marietta, Georgia from 1983 until his retirement in March 1999.

Roland M. Howell was a principal in several hotels in South Florida and was active in various positions in hotel management for over thirty years. He owned and operated hotels in Florida for approximately twenty years before his retirement in 1969. He is currently a private investor with interests primarily in municipal bonds, stocks, and real estate.

William Haddon an attorney and certified public accountant, has been engaged in the private practice of law in Atlanta, Georgia since 1962.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's directors and executive officers, and persons who own more than 10 per Cent of the Company's Common stock to file with the Securities and Exchange Commission (the “SEC”) initial reports of ownership and reports of changes in ownership of common stock. Officers, directors and greater than 10 percent shareholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file.

To the Company's knowledge, based solely on a review of the copies of such reports and certain representations furnished to the Company, during the fiscal year ended December 31, 2009, all Section 16(a) filing requirements applicable to its officers, directors and greater than ten percent beneficial owners were satisfied.

Information Relating to Our Audit Committee of the Board of Directors

The purpose of the Audit Committee is to oversee the accounting and financial reporting processes of our company and the audits of our financial statements. The Audit Committee provides assistance to our Board of Directors with respect to its oversight of (a) the integrity of our financial statements, (b) our compliance with legal and regulatory requirements, (c) the independent registered public accountant’s qualifications and independence, and (d) the performance of our independent registered public accountants. The primary responsibilities of the Audit Committee are set forth in its charter, which is reviewed annually, and includes various matters with respect to the oversight of our company’s accounting and financial reporting process and audits of the financial statements of the Company on behalf of our Board of Directors.

The Audit Committee also selects the independent registered public accountants to conduct the annual audit of the financial statements of the Company; reviews the proposed scope of such audit, reviews accounting and financial controls of the Company with the independent registered public accountants and our financial accounting staff; and reviews and approves transactions between us and our directors, officers, and their affiliates.

The Audit Committee currently consists of Messrs. Haddon, Howell and Galloway, each of whom is an independent director of our company under OTCBB rules as well as under rules adopted by the Securities and Exchange Commission pursuant to the Sarbanes-Oxley Act of 2002. The Board of Directors has determined that Mr. Haddon qualifies as an “audit committee financial expert” in accordance with applicable rules and regulations of the SEC. Mr. Haddon serves as Chair of the Audit Committee.

Code of Ethics

The Code of Ethics can be viewed on the Company's website @ www.fla-gaming.com

Item 11. Executive Compensation

Cash Compensation.

The following table sets forth all cash compensation paid by the Company for the fiscal years ended December 31, 2009 and 2008 for W. Bennett Collett, W. B. Collett, Jr., and Daniel Licciardi. W. Bennett Collett received no cash compensation from the Company from the time he began service as an executive officer on March 31, 1993 through December 31, 1995.

SUMMARY COMPENSATION TABLE

Name of Executive Officer	Year	Salary		Bonus		Stock Awards	Option Awards		Non-Equity Incentive Plan Compen- sation	Non- Qualified Deferred Compen- sation Earnings	All Other Compen- sation		Total
		($)		($)		($)	($)		($)	($)	($)		($)
(a)	(b)	(c)		(d)		(e)	(f)		(g)	(h)	(i)		(j)

W. B. Collett	2009	$	780,000					-				25,018		805,018
Chairman and CEO	2008	$	765,000					-				39,983		804,983

W. B. Collett, Jr.	2009		263,000					-				51,925		314,925
President	2008		263,000		63,086			-				23,562		349,648

Daniel Licciardi	2009		141,300					-				6,000		147,300
Exec. Vice President	2008		141,300		63,086			-				448,500		652,056

Salary (c)

In September, 1997, the Company discontinued the salary payments to Mr. Collett and began paying a consulting fee of $30,000 per month to Freedom Financial Corporation (“Freedom”) in lieu of paying a salary to Mr. Collett. The payments to Freedom totaled $360,000 in each year from 1998 to 2002. Beginning in 2003, the payments were increased to $40,000 a month to Mr. Collett. The Board of Directors elected to give Mr. Collett an increase of $10,000 per month to $50,000 per month effective May 1, 2005. On May 1, 2007 the Board of Directors gave Mr. Collett an increase of $10,000 per month which increased his consulting fee to $60,000 per month. On April 1, 2008, the Board of Directors authorized an increase of $5,000 per month which increased his consulting fee to $65,000 per month. Mr. Collett is Chairman of the Board and Chief Executive Officer of Freedom. As of December 31, 2009, there was no written employment or consulting agreement between the Company and Freedom Financial Corporation. The Company has no employment agreements with any of the officers.

Bonus (d)

The Company did not issue any bonuses during 2009. During 2008, Mr. Collett, Jr. and Mr. Licciardi each received a bonus of $63,086 for their efforts in obtaining an insurance settlement from Affiliated Insurance Company.

Option Awards (f)

The Company did not issue any options during 2009 or 2008. During 2009, the Company did extend 362,500 options from July 11, 2009 to July 11, 2010. The company recognized stock option expense of $231,257. During 2008, the Company did re-price the options that were issued in July 2006 from $17.00 per share to $8.25 per share.

W. B. Collett was issued 298,000 options in July 2006 for $17.00 a share with a fair value of $13.30 a share. Half the options, or 149,000 shares vested on December 31, 2006, and the remaining 149,000 vested on July 1, 2007. These options were re-priced during 2008, to $8.25 per share. On March 11, 2008, W. B. Collett transferred his 528,000 options to Freedom Holding, Inc. W. B. Collett owns 85.09% of Freedom Holding, Inc.

W. B. Collett, Jr. was issued 93,000 options in July 2006 for $17.00 a share with a fair value of $13.30 a share. Half the options, or 46,500 shares vested on December 31, 2006, and the remaining 46,500 vested on July 1, 2007. These options were re-priced during 2008, to $8.25 per share. On March 11, 2008, W. B. Collett Jr. transferred 198,000 options to Freedom Holding, Inc. W. B. Collett, Jr. owns 9.21% of Freedom Holding, Inc.

Daniel Licciardi was issued 24,625 options in July 2006 for $17.00 a share with a fair value of $13.30 a share. Half the options, or 12,312.5 shares vested on December 31, 2006, and the remaining 12,312.5 vested on July 1, 2007. These options were re-priced during 2008, to $8.25 per share.

Other Compensation (I)

W. B. Collett had other compensation of $25,018 for the year ended 2009, $9,418 included reimbursements for medical payments, insurance and auto repairs on personal cars used for company business. The remaining $15,600 was discretionary expense allowance of $300 a week. This compares to $39,983 during the same period in 2008. During 2008, $24,383 included reimbursements for medical payments, insurance and auto repairs made on personal cars used for company business, and maintenance at residence for 2008. The remaining $15,600 was for $300 a week discretionary expense allowance.

W. B. Collett, Jr. had other compensation of $51,925 for the year ended December, 31, 2009, which included $18,619 in car payments and repairs made by the Company for personal autos used in Company business. In an effort to reduce travel expenses, the Company rented a fully furnished house near the Ft. Pierce Jai-Alai Fronton for W. B. Collett, Jr. in lieu of paying hotel accommodations. The cost for the house in 2009 was $33, 306. For the year ended December 31, 2008, W.B. Collett, Jr. had other compensation of $22,109 in car payments and repairs made by the Company for personal autos used in Company business, and personal travel expenses of $1,453.

Dan Licciardi had other compensation of $6,000 for auto allowance during the year 2009, compared to other compensation of $448,500 for 2008. Mr. Licciardi exercised 30,000 stock options on March 17, 2008 for $2.25 and the stock had a fair value of $17.20. Mr. Licciardi recognized an option spread of $442,500 and he received $6,000 for auto allowance during the years 2008.

OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2009

Equity

Incentive

Equity

Plan

Equity

Incentive

Awards:

Incentive

Plan

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Plan

Awards:

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Awards:

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Number

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Unearned

Securities

Number

Value of

Shares,

Securities

Underlying

of Shares

Shares of

Units or

Underlying

Unexercised

Unexer-

or units of

Units of

Other

Unexercised

Options

Cised

Option

Stock That

Rights That

Rights

Options

(#)

Unearned

Exercise

Expira-

Have Not

That Have

(#)

Unexercis-

Options

Price

tion

Vested

Not Vested

Name

Exercisable

Able

(#)

($)

Date

($)

(#)

($)

(a)

(b)

(d)

(e)

(f)

(g)

(h)

(i)

(j)

Freedom Holding*

W. B. Collett

250,000

(1)

8.25

7/11/2010

Chairman & CEO

48,000

(1)

8.25

7/10/2012

Freedom Holding**

W. B. Collett, Jr.

75,000

(1)

8.25

7/11/2010

President & COO

18,000

(1)

8.25

7/10/2012

Kimberly Tharp

4,125

8.25

7/10/2012

CFO,Treas & Sec

Daniel Licciardi

17,500

8.25

7/11/2010

Ex Vice-Pres.

7,125

8.25

7/12/2012

& Pari Mutels Mgr

Jennifer Chong

2,250

8.25

7/10/2012

Controller

(1) W.B. Collett and W.B. Collett, Jr. transferred their 726,000 options to Freedom Holding, Inc. on March 11, 2008. W. B. Collett transferred 528,000 options, and W.B. Collett, Jr. transferred 198,000 options. On March 14, 2008 Freedom Holding, Inc. exercised 335,000 options at $2.25 per share and the stock had a fair market value of $17.20. Freedom Holding, Inc. recognized an option spread of $5,008,250. Of the 335,000 options exercised, 230,000 were options Mr. Collett had transferred, and 105,000 were options that W. B. Collett, Jr. transferred. W. B. Collett owns 85.09% of Freedom Holding, Inc. and W. B. Collett, Jr. owns 9.21% of Freedom Holding, Inc. (See Item 12.)

*There were no new options issued during the years ended December 31, 2009, and December 31, 2008. On July 11, 2009, the Company extended 362,500 options that were to expire on July 11, 2009 for one year to July 11, 2010. Of the 362,500 options Freedom Holding holds 325,000 options that were extended until July 11, 2010. The Company recorded a cost of $231,357 for the extension. On March 11, 2008, Mr. Collett transferred all his options (528,000) to Freedom Holding, Inc. On March 14, 2008, Freedom Holding, Inc. exercised 230,000 of the 528,000 options Mr. Collett at $2.25 per share. Mr. Collett own 85.09% of Freedom Holding, Inc (See Item 12). On July 3, 2008, the Board of Directors authorized the options issued on July 10, 2006 that had an exercise price of $17.00 per share to be re-priced at $12.00 per share. On August 26, 2008, the Board authorized the options that had an exercise price of $12.00 per share price to be re-priced at $8.25 per share.

**W. B. Collett, Jr. was issued 75,000 options on July 10, 2006, for $17.00 per share of which 1/2 vested on December 31, 2006, and the remaining 1/2 vested on July 1, 2007. He was also issued 18,000 options on July 11, 2006, of which 1/2 vested on December 31, 2006, and the remainder vested on July 1, 2007. On March 11, 2008, W, B. Collett, Jr. transferred all his options (198,000) to Freedom Holding, Inc. On March 14, 2008, Freedom Holding, Inc. exercised 105,000 of the 198,000 options W. B. Collett, Jr. transferred at $2.25 per share. W. B. Collett, Jr. owns 9.21% of Freedom Holding, Inc. (See Item 12). On July 3, 2008, the Board of Directors authorized the options that were issued on July 10, 2006 and had an exercise price of $17.00 per share to be re-priced at $12.00 per share. On August 26, 2008, the Board authorized the options that had an exercise price of $12.00 per share price to be re-priced at $8.25 per share.

Daniel Licciardi was issued 17,500 options on July 10, 2006, for $17.00 per share of which 1/2 vested on December 31, 2006, and the remaining 1/2 vested on July 1, 2007. Mr. Licciardi was also issued 7,125 options on July 11, 2006, of which 1/2 vested on December 31, 2006, and the remainder vested on July 1, 2007. On March 14, 2008, Mr. Licciardi exercised 30,000 options at $2.25 per share. On July 3, 2008, the Board of Directors authorized the options that were issued on July 10, 2006 and had an exercise price of $17.00 per share to be re-priced at $12.00 per share. On August 26, 2008, the Board authorized the options that had an exercise price of $12.00 per share price to be re-priced at $8.25 per share. The Company extended 17,500 options from July 11, 2009 to July 11, 2010.

Kimberly Tharp was issued 4,125 options on July 10, 2006, for $17.00 per share of which 1/2 vested on December 31, 2006, and the remainder vested on July 1, 2007. On January 29, 2008, Ms. Tharp exercised 10,000 options @ $2.25. On July 3, 2008, the Board of Directors authorized the options that were issued on July 10, 2006, and had an exercise price of $17.00 per share to be re-priced at $12.00 per share. On August 26, 2008, the Board authorized the options that had an exercise price of $12.00 per share price to be re-priced at $8.25 per share. On February 11, 2009 Ms. Tharp exercised 5,000 options at $2.25 per share.

Jennifer Chong was issued 2,250 options on July 10, 2006, for $17.00 per share of which 1/2 vested on December 31, 2006, and the remainder vested on July 1, 2007. On March 18, 2008, Ms. Chong exercised 10,000 options at $2.25. On July 3, 2008, the Board of Directors authorized the options that were issued on July 10, 2006 that had an exercise price of $17.00 per share to be re-priced at $12.00 per share. On August 26, 2008, the Board authorized the options that had an exercise price of $12.00 per share price to be re-priced at $8.25 per share.

Director Compensation

The Company currently pays its non-management directors, Dr. George W. Galloway, Jr., William C. Haddon, and Roland M. Howell a monthly fee of $2,000. On June 1, 2008 the Board of Directors were given an increase in compensation from $1,500 to $2,000 a month. W. Bennett Collett, and W. B. Collett, Jr. are also directors, but receive no directors fees.

DIRECTOR COMPENSATION

Change in

Pension

Non-Equity

Value and

incentive

Nonqualified

All other

Fees Earned or

Option

Plan Com-

Deferred

Compensa-

Paid in

Stock Awards

Awards

pensation

Compensation

Tion

Total

Name

Cash ($)

($)

Earnings

($)

(a)

(b)

( c)

(d)

(e)

(f)

(g)

(h)

Roland Howell

24,000

William Haddon

24,000

George Galloway

24,000

Option Awards (d)

The directors did not receive any stock options during 2009 or 2008. George Galloway had 20,000 options that were to expire on July 11, 2009, and the Company extended the options for one year until July 11, 2010. During 2008, the Company did re-price the directors options that were vested in 2006 and 2007 from $17.00 to $8.25. Mr. William Haddon exercised 25,000 shares at $3.50 per share on March 16, 2009.

Indemnification

Under Section 145 of the Delaware General Corporation Law (“DGCL”), the Company has the power to indemnify directors and officers under certain prescribed circumstances and subject to certain limitations against certain costs and expenses, including attorney's fees, actually and reasonably incurred in connection with any action, suit or proceeding, whether civil, criminal, administrative, or investigative, to which any of them is a party by reason of his being a director or officer of the Company if it is determined that the officer or director acted in accordance with the applicable standard of conduct set forth in such statutory provisions. The Company's Bylaws provide that the Company shall indemnify each person who may be indemnified pursuant to Section 145, as amended from time to time (or any successor provision thereto), to the fullest extent permitted by Section 145. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Company pursuant to the foregoing provisions, or otherwise, the Company has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.

Item 12. Security Ownership of Certain Beneficial Owners and Management

The following table sets forth certain information as of March 29, 2010 concerning each stockholder known to the Company to own beneficially more than five percent of the outstanding Common Stock of the Company and information regarding beneficial ownership of Common Stock, and the Common Stock of Freedom Holding (“Holding”) by each director and executive officer, and all directors and executive officers as a group. Holding each may be deemed to be a “parent” of the Company as such term is defined in the rules promulgated under the Securities Exchange Act of 1934. Holding's sole business currently is to hold shares of Florida Gaming Corporation. On March 11, 2008 and on March 17, 2008, W. B. Collett, W. B. Collett, Jr. and Freedom Financial Corporation transferred 1,041,000 options, 200 shares of Class E Preferred Stock, 1000 shares of Class F Preferred Stock, 886,157 shares of common stock, and 20,000 warrants to Freedom Holding, Inc. (“Holding”). On March 14, 2008, Holding exercised 335,000 options at a price of $2.25. On March 16, 2009, Holding converted all 200 shares of Series E Preferred stock to 104,712 shares of the Company’s $.20 par value common stock. The reason for the transfer was to centralize the Florida Gaming Corporation holdings. Before the transfer Freedom Holding owned 100% of Freedom Financial Corp. Freedom Holding is owned by three individuals, two of which are executive officers in Florida Gaming, W. B. Collett, and W. B. Collett, Jr. Their option shares were transferred to Freedom Holding representing capital contributions by the officers to a controlled corporation. The transfer of stock from Freedom Financial to Holding was a dividend to its parent corporation. The reason or the transfer was to centralize the Florida Gaming holdings. The Company pays management fees of $65,000 per month to Freedom Financial Corporation, for the services of W. B. Collett, Chairman and CEO.

	THE COMPANY						FREEDOM						HOLDING
Directors And Executive Officers	Number Of Shares (1)			Percent Of Class (2)			Number Of Shares (1)			Percent Of Class (3)			Number Of Shares (1)		Percent Of Class (4)

W. B. Collett		2,200,203	(3)		46.2	%		1,109,011	(4)		100	%		812.05		85.09	%

W. B. Collett, Jr.		*						—			—			87.95		9.21	%

Kimberly R. Tharp		31,625	(12)		1	%		—			—			—		—

Daniel Licciardi		54,625	(14)		1.4	%		—			—			—		—-

Jennifer Chong		12,250	(16)	<1		%		—			—			—		—

Roland M. Howell		472,079	(5)		11.7	%		—			—			—		—

William C. Haddon		43,750	(11)		1.2	%		—			—			—		—

George W. Galloway, Jr.		57,500	(10)		1.5	%		—			—			—		—

All current directors and Executive officers as a group (7 persons) (6)		2,872,032			57.5	%		1,109,011			100	%		900.00		94.3	%

5% Beneficial

Owners

Number

(1)

Percent

Class

(2)

Number

(1)

Percent

Class

(3)

Number

(1)

Percent

Class

(4)

Freedom Holding, Inc. (7)

2,200,203

46.2

N/A

Ramsey Asset (13)

205,735

N/A

Pride’s Capital Partners, LLC (15)

220,000

5.6

N/A

Roland M. and Dorothy V. Howell (5)(8)

472,079

11.7

N/A

(1) Based upon information furnished to the Company by the named person, and information contained in filings with the Securities and Exchange Commission (the “Commission”). Under the rules of the Commission, a person is deemed to beneficially own shares over which the person has or shares voting or investment power or which the person has the right to acquire beneficial ownership within 60 days. Unless otherwise indicated, the named persons have sole voting and investment power with respect to shares owned by them.

(2) Based on 3,888,959 shares outstanding as of March 29, 2010 Shares of Common Stock of the Company subject to options exercisable or preferred stock convertible within 60 days are deemed outstanding for computing the percentage of class of the person holding such options or preferred stock, but are not deemed outstanding for computing the percentage of class for any other person.

(3) Of the 2,200,203 shares, it includes 1,325,869 shares owned by Freedom Holding, Inc. (“Holding”), 706,000 options, and 148,334 shares of the Company’s Preferred F Stock. Holding also owns 20,000 warrants. On March 16, 2009, Holding converted 200 Shares of Class E Preferred Stock to 104,712 of the Company’s $.20 common stock which is included in the 1,325,869. Mr. Collett may be deemed to beneficially own the shares held by Holding, although he disclaims such beneficial ownership of such shares. Mr. Collett can exert considerable influence over the election of the Company's directors and the outcome of corporate actions requiring stockholder approval.

(4) Includes 1,109,011 shares owned by Holding. Mr. Collett may be deemed to beneficially own the shares held by Holding, although he disclaims beneficial ownership of such shares.

(5) Includes 148,334 shares of common stock into which 1000 shares of the Company's Series F Preferred Stock owned jointly by Mr. and Mrs. Howell are convertible. Of the 472,709 shares, Mr. and Mrs. Howell own 135,000 shares as joint tenants and share voting and investment power, Mr. Howell owns 107,500 shares individually and retains sole voting and investment power with respect to these shares. Mrs. Howell owns 72,500 shares individually and retains sole voting and investment power with respect to these shares. In addition, the above figure (472,709) includes options granted to Mr. Howell to purchase 9,375 shares of the Company's common stock.

(6) Includes 296,669 shares which may be acquired by all directors and executive officers as a group upon conversion of 2,000 shares of the Company's Series F Preferred Stock.

(7) See Note (5). The address of Freedom Financial Corporation and Freedom Holding, Inc. is 2669 Charlestown Road, Suite D, New Albany, Indiana 47150. The business address of W. B. Collett is 1750 South Kings Highway, Fort Pierce, Florida 34945-3099.

(8) Roland M. and Dorothy V. Howell's address is Plaza Venetia, Suite 22 A-B, Miami, Florida 33132.

(9) On March 11, 2008, W. Bennett Collett, Jr. transferred 198,000 options to Freedom Holding, Inc. On March 14, 2008, Freedom Holding exercised 105,000 of those options at $2.25 per share. W. B. Collett, Jr., has 9.21% ownership in Freedom Holding, Inc.

(10) George W. Galloway, director, transferred his 57,500 options to GWGJR, INC on March 12, 2008. On March 14, 2008, GWGJR, INC. exercised 30,000 options. GWGJR, INC. has 27,500 remaining vested options.

(11) William C. Haddon has 18,750 vested options and owns 25,000 shares individually. Mr. Haddon exercised his option to purchase 25,000 shares at $3.50 per share on March 16,2009.

(12) Kimberly R. Tharp has 4,125 vested options and owns 27,500 shares individually. Ms. Tharp exercised her option to purchase 5,000 shares @ $2.25 per share on February 11, 2009.

(13) The address of Ramsey Asset Management, LLC is 8200 Greensboro Drive, Suite 1550, McLean, VA 22102.

(14) Daniel Licciardi has 24,625 vested options and owns 30,000 shares individually.

(15) Prides Capital Partners, LLC owns 5,000 shares of Preferred AA stock that is convertible into 200,000 shares of common stock. Prides Capital also has 20,000 warrants. Prides Capital address is 200 High Street, #700, Boston, MA 02110.

(16) Jennifer Chong has 2,250 vested options and owns 10,000 individually.

Item 13. Certain Relationships and Related Transactions

On March 17, 2008, Freedom Financial Corporation transferred all ownership in Florida Gaming Corporation to Freedom Holding, Inc. (“Holding”) This consisted of 886,157 shares of Florida Gaming Corporation common stock, 1,000 shares of Preferred F Stock, 200 Shares of Preferred E Stock, 20,000 warrants and 315,000 stock options. On March 11, 2008 , W. Bennett Collett transferred his 528,000 options to Freedom Holding, Inc. (“Holding”), and W. B. Collett, Jr. transferred his 198,000 options to Holding. On March 14, 2008, Holding exercised 335,000 options. Holding may each be deemed to be a “parent” of the Company as such term is defined in the rules promulgated under the U.S. Securities & Exchange Act, by virtue of beneficial ownership of 46.2% of the Common Stock of the Company. On March 16, 2009, Holding converted 200 shares of Series E Preferred Stock for 104,712 shares of the Company's $.20 par value common stock. Before the transfer Freedom Holding owned 100% of Freedom Financial Corp. Freedom Holding is owned by three individuals, two of which are executive officers in Florida Gaming, W. B. Collett, and W. B. Collett, Jr. Their option shares were transferred to Freedom Holding representing capital contributions by the officers to a controlled corporation. The transfer of stock from Freedom Financial to Holding was a dividend to its parent corporation. The reason or the transfer was to centralize the Florida Gaming holdings. See ITEM 12. “Security Ownership of Certain Beneficial Owners and Management”.

On November, 1997, the Company entered into a new business — residential real estate development. These Properties consisted of over 100 fully-developed, and 163 partially-developed, single-family residential home sites, a swim and tennis club facility, and 27 acres of partially-developed commercial property. As of December 31, 2009, the Company has six (6) residential lots remaining to be sold and owed the Hamilton State Bank $38,368 on one of the lots. The Company is currently in default on the mortgage and Mr. Collett has been named the defendant in a lawsuit filed by Hamilton State Bank. (See Item 3. Legal Proceedings) The suit has been filed in the Superior Court of Hall County State of Georgia. The Note also provides for collection of attorney’s fees in the amount of 15% of principal and interest owed in the event of default. The six (6) lots have a book value of $234,000. The Properties are located on the east side of Georgia Highway 81, approximately one (1) mile south of U.S. Highway 78, inside the Loganville, Georgia city limits, in Walton County.

On October 31, 2005 Freedom Financial purchased Florida Gaming’s note with First Bank (formerly CIB) for $2,400,000. At the same date, Florida Gaming renegotiated the terms of this note with Freedom. Under the new terms, the note had a fixed interest rate of 8.0% per annum and was secured by various mortgages, rents, and receivables. The note matured on October 31, 2008 and was refinanced under a new note with Freedom Holding Inc. (“Holding”), the parent company of Freedom Financial, dated November 1, 2008. The Holding note is unsecured, bears interest at 10.0% per annum, and matured on May 1, 2009. As an inducement to refinance the note the Company issued Holding a warrant to purchase 20,000 shares of the Company’s $0.20 par value common stock at a price per share $8.25. The warrant is exercisable at any time from November 1, 2008 through November 1, 2011. The fair value of this warrant issued totaled $12,984 and was amortized on a straight line basis from November 1, 2008 through May 1, 2009. The Company accounted for the note as a debt refinance. The Company then extended the Note from May 1, 2009 through September 1, 2009, and then again from September 1, 2009 through March 1, 2010. The extension of the notes were accounted for as debt refinances and did not have any expense associated with the refinance.

In lieu of a salary for the Chairman / CEO, the Company pays management fees to Freedom Financial of $65,000 per month. Effective April 1, 2008, the Board of Directors increased the monthly management fee from $60,000 to $65,000 per month. The Company has accrued $780,000 for the management fee for 2009.

Item. 14 Principal Accountant Fees and Services

Audit Fees. For the year ended December 31, 2009, audit fees were $99,545 compared to $81,620 for the year ended December 31, 2008.

Audit-Related Fees. For the year ended December 31, 2009, audit-related fees were $5,900 compared to $5,150 for the year ended December 31, 2008. Audit-Related fees consisted of a review of 10-K and communications with audit committee.

Tax Fees. For corporation tax return preparation for the year ended December 31, 2009, the fees were $19,575 compared to $14,965 for the year ended December 31, 2008.

All Other Fees. Miscellaneous Fees for the year ended December 31, 2009 were $2,050 compared to $7,838 for the year ended December 31, 2008.

Audit Committee Pre-Approval Policies

The duties and responsibilities of our Audit Committee include the pre-approval of all audit, audit related, tax, and other services permitted by law or applicable SEC regulations (including fee and cost ranges) to be performed by our independent auditor. Any pre-approved services that will involve fees or costs exceeding pre-approved levels will also require specific pre-approval by the Audit Committee. Unless otherwise specified by the Audit Committee in pre-approving a service, the pre-approval will be effective for the 12-month period following pre-approval. The Audit Committee will not approve any non-audit services prohibited by applicable SEC regulations or any services in connection with a transaction initially recommended by the independent auditor, the purpose of which may be tax avoidance and the tax treatment of which will not be supported by the Internal Revenue Code and related regulations.

To the extent deemed appropriate, the Audit Committee may delegate pre-approval authority to any one or more members of the Audit Committee provided that any member of the Audit Committee who has exercised any such delegation must report any such pre-approval decision to the Audit Committee at its next scheduled meeting. The Audit Committee will not delegate the pre-approval of services to be performed by the independent auditor to management.

All of the services provided by King & Company, PSC and described above under the captions “Audit Fees,” were approved by our Audit Committee.

Item 15. Exhibits List and Reports on Form 8-K

3.1	Registrant’s Third Amended and Restated Certificate of Incorporation filed with the Delaware Secretary of State on March 28, 2005, filed as reference 3.1 to the Registrant’s 2004 10-KSB, is incorporated herein by reference as Exhibit 3.1.

3.2	Registrant’s By-Laws as amended to date filed as Exhibit 3.5 to Registrant’s Form 10-KSB for the fiscal year ended December 31, 1998 are incorporated herein by reference as Exhibit 3.2.

4.1	Registrant’s Amended and Restated Master Stock Option Plan filed as Exhibit 99.1 to the Second Post-Effective Amendment of Registrants Registration Statement Form S-8 dated August 23, 2006, is incorporated herein by reference as Exhibit 4.1.

4.2	Stock Option Agreement entered into by and between Registrant and Freedom Financial Corporation dated April 28, 2006 and is filed as Exhibit 4.1 to Registrants Current Report on Form 8-K dated April 28, 2006, is incorporated herein by reference as Exhibit 4.2.

4.5	Stock Subscription Agreement entered into between the Registrant and Prides Capital Fund I.L.P. dated June 15, 2007 and is filed as Exhibit 4.5 to Registrant Current Report on Form 8-K dated June 15, 2007 and is incorporated herein by reference as Exhibit 4.5.

4.6	Stockholders Agreement entered into between the Registrant and Prides Capital Fund I.L.P. dated June 15, 2007 and is filed as Exhibit 4.6 to Registrant Current Report on Form 8-K dated June 15, 2007 and is incorporated herein by reference as Exhibit 4.6.

4.7	Warrant Agreement entered into between the Registrant and Prides Capital Fund I.L.P. dated June 15, 2007 and is filed as Exhibit 4.7 to Registrant Current Report on Form 8-K dated June 15, 2007 and is incorporated herein by reference as Exhibit 4.7.

10.0

Note Restructuring Agreement, Mortgage and Security Agreement, Amended and Restated Pledge Agreement, Amended and Restated Secured Promissory Note, and certain other related instruments and agreements dated December 31, 2008, between the Registrant and Isle of Capri, filed as Exhibit 10.1 on Form 8-K dated January 8, 2009, and is incorporated herein by reference as Exhibit 10.1.

10.1	Settlement Agreement as to Parcel No. 155 and Parcel No. 155TCE, dated February 3, 2009, by and between the Registrant and the County, filed as Exhibit 10.1 on Form 8-K dated April 6, 2009, and is incorporated herein by reference as Exhibit 10.1.

10.2	Promissory Note, entered into by the Registrant, the County and City National Bank of Florida on April 2, 2009, filed as Exhibit 10.2 on Form 8-K dated April 6, 2009 and is incorporated herein by reference as Exhibit 10.2.

10.3	Mortgage and Security Agreement, entered into by the Registrant, the County and City National Bank of Florida on April 6, 2009, filed as Exhibit 10.3 on Form 8-K dated April 6, 2009 and is incorporated herein by reference as Exhibit 10.3.

10.4	Letter Agreement dated October 29, 2004 entered into by and among Registrant, Florida Gaming Centers, Inc., and Isle of Capri Casinos, Inc. filed as Exhibit 10.48 to Registrant’s Current Report on Form 8-K dated November 4, 2004 and is incorporated herein by reference as Exhibit 10.4.

10.7

Agreement dated January 31,2005 between Florida Gaming Centers, Inc., d/b/a Miami Jai-Alai, the Summer Jai-Alai partnership and Miami Dade County regarding slot machine in pari-mutuel facilities was filed as reference 10.7 to the Registrant’s 2004 10-KSB and is incorporated herein by reference as Exhibit 10.7.

10.8	Registrant’s Third Amended and Restated Note between Florida Gaming Centers, Inc. and Freedom Financial Corp, dated October 31, 2005, was filed as reference 10.8 to Registrant’s 2005 10KSB, herein incorporated by reference as Exhibit 10.8.

10.9	Registrant’s Amended and Restated Loan Agreement between Florida Gaming Centers, Inc. City National Bank of Florida, and Freedom Financial Corp, dated October 31, 2005, was filed as reference 10.9 to Registrant’s 2005 10-KSB, herein incorporated by reference as Exhibit 10.9.

10.10

Registrant’s Guaranty Agreement between Florida Gaming Corporation and Freedom Financial Corporation, dated October 31, 2005, was filed as Exhibit 10.10 to Registrant’s 2005 10-KSB, is incorporated herein by reference as Exhibit 10.10.

10.11

Registrant’s Guaranty Agreement between W, Bennett Collett and Freedom Financial Corporation, dated October 31, 2005, was filed as reference 10.11 to Registrant’s 2005 10-KSB, is incorporated herein by reference as Exhibit 10.11.

10.13

Promissory Note entered into between the Registrant and Freedom Holding, Inc. dated November 1, 2008, was filed as Exhibit 10.13 to the Registrant's 10-Q dated November 14, 2008, and is incorporated herein by reference as Exhibit 10.13.

10.14

Promissory Note entered into between the Registrant and Nurmi Properties, dated December 11, 2009, was filed as Exhibit 10.14 to an 8-k filed December 17, 2009 and is incorporated herein by reference as Exhibit 10.14.

10.15

Mortgage and Security Agreement entered into between the Registrant and Nurmi Properties, dated December 11, 2009, was filed as Exhibit 10.15 to an 8-K filed December 17, 2009 and is incorporated herein by reference as Exhibit 10.15.

10.16

Security Agreement entered into between the Registrant and Nurmi Properties, dated December 11, 2009, was filed as Exhibit 10.16 to an 8-k filed December 17, 2009 and is incorporated herein by reference as Exhibit 10.16.

10.17

Assignment of Rents and Leases between the Registrant and Nurmi Properties, dated December 11, 2009, was filed as Exhibit 10.17 to an 8-k filed December 17, 2009 and is incorporated herein by reference as Exhibit 10.17.

10.18

Warrant Agreement entered into between the Registrant and Nurmi Properties, dated December 11, 2009, was filed as Exhibit 10.18 to an 8-k filed December 17, 2009 and is incorporated herein by reference as Exhibit 10.18.

10.21

Note and Mortgage Modification between the Registrant and Nurmi Properties, dated March 10, 2010, and is attached hereto.

10.22

Note and Mortgage Modification between the Registrant and Nurmi Properties, dated March 25, 2010, and is attached hereto.

10.49

Shareholders Support and Release of Lien Agreement dated October 29, 2004 entered into among Registrant, Isle of Capri Casinos, Inc., Freedom Financial Corporation, Freedom Holding, Inc., Collett Capital Corporation, and W. Bennett Collett, individually, filed as Exhibit 10.49 on Form 8-K dated November 4, 2004, is incorporated herein by reference as Exhibit 10.49.

10.50

Shareholders Support Agreement dated October 29, 2004 entered into between Isle of Capri Casinos, Inc. and Roland and Dorothy Howell filed as Exhibit 10.50 on Form 8-K dated November 4, 2004 is incorporated herein by reference as Exhibit 10.50.

14.0	Registrant’s Code of Ethics adopted by the Board of Directors on May 16, 2003, filed as Exhibit 14 to Registrant’s 2004 10-KSB is incorporated by reference as Exhibit 14.0

21.0	List of Registrant’s Subsidiaries as of December 31, 2004, filed as Exhibit 21 to Registrant’s 2004 10-ksb is incorporated by reference as Exhibit 21.0.

31.1	Certification by Registrant’s Chief Executive Officer pursuant to Rule 302 as adopted pursuant to Section 902 of the Sarbanes-Oxley Act of 2002 is attached hereto.

31.2	Certification by Registrant’s Chief Financial Officer pursuant to Rule 302 as adopted pursuant to Section 902 of the Sarbanes-Oxley Act of 2002 is attached hereto.

32.1	Certification by Registrant’s Chief Executive Officer pursuant to18 USC 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 is attached hereto.

32.2	Certification by Registrant’s Chief Financial Officer pursuant to18 USC 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 is attached hereto.

99.1	Secured Promissory Note dated October 29, 2004 in the face amount of $5,000,000 executed by Registrant in favor of Isle of Capri Casinos, Inc. was filed as Exhibit 99.1 to Registrant's 8-K dated November 4, 2004, and is incorporated herein by reference as Exhibit 99.1.

99.3

Promissory Note dated January 31,2 005 in the face amount of $833,333 executed by Florida Gaming Centers, Inc. to Calder Race Course, Inc. and West Flagler Associated, LTD., was filed as Exhibit 99.3 to Registrant's 10-KSB dated March 31, 2005, and is incorporated herein by reference as Exhibit 99.3.

(b)	Registrant filed a current report on Form 8-K dated January 7, 2009 reporting the transaction with Isle of Capri Casinos, Inc. described herein.

Registrant filed a report on Form 8-K dated April 6, 2009, reporting the Settlement Agreement with Miami-Dade County, Florida described herein.

Registrant filed a report on Form 8-K dated May 1, 2009 reporting the transaction with Freedom Holding, Inc described herein.

Registrant filed a report on Form 8-K dated August 14, 2009 entering into a Memorandum of Agreement ) with Solomon O. Howell and James W. Stuckert pursuant to which the Lenders may advance cash up to a maximum aggregate amount of one million dollars ($1,000,000).

Registrant filed a report on Form 8-K dated September 1, 2009 reporting the transaction with Freedom Holding, Inc described herein.

Registrant filed a report on Form 8-K dated October 7, 2009 reporting the transaction with Mr. James Stuckert and Mr. Solomon Howell .

Registrant filed a report on Form 8-K dated December 11, 2009 reporting the transaction with Nurmi Properties, LLC and Robinette Investments, LLC

Registrant filed a report on Form 8-K dated December 31, 2009, reporting an event of default pursuant to an Amended and Restated Secured Promissory Note with Isle of Capri, and reporting an event of default on the James W. Stuckert and Solomon O. Howell Note.

Registrant filed a report on Form 8-K dated February 4, 2010, reporting the transaction with Nurmi Properties, LLC and H2C, Inc.

Registrant filed a report on Form 8-K dated March 1, 2010, reporting the transaction with Freedom Holding.

Registrant filed a report on Form 8-K dated March 1, 2010, reporting the Registrant was served with a complaint by Isle of Capri Casinos, Inc.

Registrant filed a report on Form 8-K dated March 19, 2010, reporting the Registrant received a complaint from Isle of Capri to foreclose on mortgage.

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused the report to be signed on its behalf by the undersigned, thereunto duly authorized.

	FLORIDA GAMING CORPORATION

Date: March 31, 2010	By:	/s/ W. Bennett Collett
		W. Bennett Collett
		Chairman and Chief Executive Officer

In accordance with the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated.

/s/ W. Bennett Collett	Chairman of the Board	March 31, 2010
W. Bennett Collett	of Directors and
	Chief Executive Officer
	(Principal Executive Officer)

/s/ Kimberly R. Tharp	Chief Financial Officer, Secretary	March 31, 2010
Kimberly R.Tharp	and Treasurer

/s/ W. Bennett Collett, Jr.	President, Director,	March 31, 2010
W. Bennett Collett, Jr.	and Chief Operating Officer

/s/ George W. Galloway, Jr.	Director	March 31, 2010
George W. Galloway, Jr.

/s/ Roland M. Howell	Director	March 31, 2010
Roland M. Howell

/s/ William C. Haddon	Director	March 31, 2010
William C. Haddon

Audited Consolidated Financial Statements

FLORIDA GAMING CORPORATION AND SUBSIDIARIES

December 31, 2009 and 2008

Report of Independent Registered Accounting Firm	F-1

Consolidated Financial Statements
Balance Sheets	F-2
Statements of Operations	F-4
Statement of Changes in Stockholders' Equity	F-6
Statements of Cash Flows	F-8
Notes to Consolidated Financial Statements	F-9

REPORT OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders

Florida Gaming Corporation and Subsidiaries

Miami, Florida

We have audited the accompanying consolidated balance sheets of Florida Gaming Corporation and Subsidiaries (a Delaware Corporation) as of December 31, 2009 and 2008 and the related consolidated statements of operations, changes in stockholders' equity and cash flows for the years then ended. 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Florida Gaming Corporation and Subsidiaries as of December 31, 2009 and 2008, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note Q to the financial statements, the Company has suffered recurring losses from operations and cash flow deficiencies which raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note Q. The financial statements do not include any adjustment that might result from the outcome of this uncertainty.

/s/ King + Company, PSC

Louisville, Kentucky

March 31, 2010

F-1

CONSOLIDATED BALANCE SHEETS

FLORIDA GAMING CORPORATION AND SUBSIDIARIES

	December 31,
	2009			2008

ASSETS

CURRENT ASSETS
Cash and cash equivalents	$	819,256		$	1,512,719
Accounts receivable, including ITW, net		234,674			280,593
Inventory		43,494			52,051
		1,097,424			1,845,363

PROPERTY, PLANT AND EQUIPMENT—Note I
Land		8,164,543			4,780,472
Buildings and improvements		8,941,404			8,852,989
Furniture, fixtures and equipment		1,782,111			1,797,641
		18,888,058			15,431,102

Less accumulated depreciation		(4,480,410	)		(4,000,825	)
		14,407,648			11,430,277

REAL ESTATE HELD FOR SALE—Note K		234,000			297,500

OTHER ASSETS—Notes F and J		488,788			577,597

	$	16,227,860		$	14,150,737

F-2

	December 31,
	2009			2008

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Unclaimed winnings	$	162,350		$	261,800
Accrued payroll and related expenses		393,452			436,680
Accounts payable and accrued expenses		6,055,065			3,418,917
Current portion of long-term debt—Note H		6,412,746			4,640,083
		13,023,613			8,757,480

LONG-TERM DEBT (less current portion)—Note H		3,002,813			300,926

STOCKHOLDERS' EQUITY—Notes B and C
Class A cumulative convertible preferred stock; 1,200,000 shares authorized; 27,756 and 28,135 shares issued and outstanding in 2009 and 2008, respectively; aggregate 2009 liquidation preference of $304,502		2,776			2,813
Series AA 7% cumulative convertible preferred stock; 5,000 shares authorized; issued and outstanding in 2009 and 2008; aggregate 2009 liquidation preference of $5,437,500		500			500
Series B cumulative convertible preferred stock; 50 shares authorized; 45 shares issued and outstanding in 2009 and 2008; aggregate 2009 liquidation preference of $95,852		5			5
Series E 8% cumulative convertible preferred stock, 300 shares authorized; 200 issued and outstanding in 2008; no shares issued and outstanding in 2009		-0-			20
Series F 8% cumulative convertible preferred stock, 2,500 shares authorized; 2,000 issued and outstanding in 2009 and 2008; aggregate 2009 liquidation preference of $2,140,000		200			200
Common stock, $.20 par value, 7,500,000 shares authorized; 3,888,959 and 3,754,205 shares issued and outstanding in 2009 and 2008, respectively		777,792			750,841
Capital in excess of par value		50,615,750			50,120,254
Accumulated deficit		(51,195,589	)		(45,782,302	)
		201,434			5,092,331

	$	16,227,860		$	14,150,737

See notes to consolidated financial statements

F-3

CONSOLIDATED STATEMENTS OF OPERATIONS

FLORIDA GAMING CORPORATION AND SUBSIDIARIES

For the years ended December 31, 2009 and 2008

	2009			2008

JAI-ALAI MUTUEL REVENUE	$	6,856,199		$	8,475,887
Less Florida State pari-mutuel taxes incurred—Note D		(972,624	)		(1,133,141	)
Less simulcast guest commissions		(1,883,326	)		(2,417,037	)
INTER TRACK MUTUEL COMMISSIONS		2,694,732			3,041,262
Net Pari-Mutuel Revenue		6,694,981			7,966,971

ADMISSION INCOME, net of State taxes incurred		26,947			30,013
PROGRAM REVENUE		135,218			118,376
FOOD AND BEVERAGE		989,087			899,910
CARD ROOM REVENUE		5,998,668			4,847,231
OTHER		151,038			138,462
GAMING OPERATING REVENUE		13,995,939			14,000,963

REAL ESTATE SALES		-0-			-0-

TOTAL OPERATING REVENUE		13,995,939			14,000,963

OPERATING EXPENSES
Advertising and promotions		404,137			712,104
Operating and mutuels payroll and related costs		4,828,975			4,986,358
Player payroll and related costs		3,020,738			3,237,222
Food and beverage costs		784,651			916,841
Repairs and maintenance		228,576			336,230
Totalizator/teleview rent—Note G		385,591			387,901
ITW and television costs		844,969			776,756
Programs		175,108			164,779
Card room payroll and related costs		1,427,075			1,225,170
Other card room operating costs		1,237,975			1,102,908
Depreciation and amortization		490,918			417,794
Utilities		574,798			602,959
Provision for loss on real estate held for sale		63,500			-0-
Miscellaneous, net		1,086,646			1,275,138
TOTAL OPERATING EXPENSES		15,553,657			16,142,160

(CONTINUED)

See notes to consolidated financial statements

F-4

CONSOLIDATED STATEMENTS OF OPERATIONS—CONTINUED

FLORIDA GAMING CORPORATION AND SUBSIDIARIES

For the years ended December 31, 2009 and 2008

	2009			2008

GENERAL AND ADMINISTRATIVE
Executive payroll and related costs	$	579,467		$	542,059
Stock options—Note C		231,257			664,291
Directors' fees		72,000			63,000
Management consulting—Note F		780,000			765,000
Telephone and travel		443,324			521,982
Professional fees		728,919			549,913
Interest and financing costs—Note H		903,280			617,044
Property taxes		398,623			403,467
Insurance		787,038			816,478
		4,923,908			4,943,234
LOSS FROM OPERATIONS		(6,481,626	)		(7,084,431	)

OTHER INCOME (EXPENSE)
Interest and dividend income		7,866			53,696
State tax credits on handle and admissions—Note D		703,511			853,892
Insurance recoveries net of losses—Note N		-0-			7,134,956
Legislative initiatives—Notes H and M		-0-			(1,083,333	)
Gain on sale of right-of-way—Note I		870,185			-0-
Miscellaneous income		39,872			18,174
		1,621,434			6,977,385
NET LOSS BEFORE INCOME TAX		(4,860,192	)		(107,046	)
Federal income taxes		10,164			-0-

NET LOSS		(4,870,356	)		(107,046	)

Dividends on preferred stock		(542,931	)		(555,282	)
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	(5,413,287	)	$	(662,328	)

Loss per common share – Basic	$	(1.40	)	$	(.18	)
Loss per common share – Diluted	$	(1.40	)	$	(.18	)

See notes to consolidated financial statements

F-5

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

FLORIDA GAMING CORPORATION AND SUBSIDIARIES

For the two years ended December 31, 2009

	Class A Preferred Stock Par Value $.10						Series AA Preferred Stock Par Value $.10				Series B Preferred Stock Par Value $.10				Series E Preferred Stock Par Value $.10				Series F Preferred Stock Par Value $.10			Common Stock Par Value $.20				Capital in Excess of		Accumulated
	Shares			Amount			Shares		Amount		Shares		Amount		Shares		Amount		Shares	Amount		Shares		Amount		Par Value		Deficit

Balances at January 1, 2008		28,235		$	2,823			5,000	$	500		45	$	5		200	$	20	2000	$	200		3,339,194	$	667,839	$	48,553,076	$	(45,119,974	)

Dividends on Series F preferred stock ($80/share)																													(160,000	)

Dividends on Series A preferred stock ($.89/share)																													(25,232	)

Dividends on Series E preferred stock ($80/share)																													(16,000	)

Dividends on Series B preferred stock ($90/share)																													(4,050	)

Dividends on Series AA preferred stock ($70/share)																													(350,000	)

Exercise of stock options																							415,000		83,000		850,750

Common stock conversion		(100	)		(10	)																	11		2		8

Stock warrants issued																											52,129

Stock options repriced																											664,291

Net loss for the year																													(107,046	)

BALANCES AT DECEMBER 31, 2008		28,135		$	2,813			5,000	$	500		45	$	5		200	$	20	2,000	$	200		3,754,205	$	750,841	$	50,120,254	$	(45,782,302	)

(CONTINUED)

See notes to consolidated financial statements

F-6

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY—CONTINUED

FLORIDA GAMING CORPORATION AND SUBSIDIARIES

For the two years ended December 31, 2009

	Class A Preferred Stock Par Value $.10						Series AA Preferred Stock Par Value $.10				Series B Preferred Stock Par Value $.10				Series E Preferred Stock Par Value $.10						Series F Preferred Stock Par Value $.10				Common Stock Par Value $.20				Capital in Excess of			Accumulated
	Shares			Amount			Shares		Amount		Shares		Amount		Shares			Amount			Shares		Amount		Shares		Amount		Par Value			Deficit

Balances at January 1, 2009		28,135		$	2,813			5,000	$	500		45	$	5		200		$	20			2,000	$	200		3,754,205	$	750,841	$	50,120,254		$	(45,782,302	)

Dividends on Series F preferred stock ($80/share)																																	(160,000	)

Dividends on Series A preferred stock ($.92/share)																																	(25,592	)

Dividends on Series E preferred stock ($16.44/share)																																	(3,289	)

Dividends on Series B preferred stock ($90/share)																																	(4,050	)

Dividends on Series AA preferred stock ($70/share)																																	(350,000	)

Exercise of stock options																										30,000		6,000		92,750

Common stock conversion		(379	)		(37	)										(200	)		(20	)						104,754		20,951		(20,893	)

Stock options and warrants issued																														285,435

Discount on convertible debt																														138,204

Net loss for the year																																	(4,870,356	)

BALANCES AT DECEMBER 31, 2009		27,756		$	2,776			5,000	$	500		45	$	5		-0-		$	-0-			2,000	$	200		3,888,959	$	777,792	$	50,615,750		$	(51,195,589	)

See notes to consolidated financial statements

F-7

CONSOLIDATED STATEMENTS OF CASH FLOWS

FLORIDA GAMING CORPORATION AND SUBSIDIARIES

For the years ended December 31, 2009 and 2008

	2009			2008
OPERATING ACTIVITIES
Net loss	$	(4,870,356	)	$	(107,046	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		545,265			480,247
Stock options and warrants		285,435			716,420
Discount on convertible debt		138,204			-0-
Gain on sale of right of way		(870,185	)		-0-
Provision for loss on real estate held for sale		63,500			-0-
Insurance recoveries net of losses		-0-			(7,134,956	)
Legislative initiative		-0-			1,083,333
Increase (decrease) in inventory		8,557			(10,205	)
Decrease in accounts receivable		45,919			75,219
Decrease in other assets		23,129			34,576
Increase (decrease) in unclaimed winnings		(99,450	)		33,400
Increase (decrease) in accounts payable and accrued expenses		2,313,279			(301,113	)
NET CASH USED IN OPERATING ACTIVITIES		(2,416,703	)		(5,130,125	)

INVESTING ACTIVITIES
Net proceeds from sale of right of way		935,345			-0-
Purchases of property and equipment		(508,530	)		(1,946,712	)
Insurance proceeds from hurricane settlement, net		-0-			7,134,956
NET CASH PROVIDED BY INVESTING ACTIVITIES		426,815			5,188,244

FINANCING ACTIVITIES
Proceeds from issuance of debt		1,500,000			1,602,500
Repayment of short-term debt		(239,036	)		(3,954,023	)
Proceeds from exercise of stock options		98,750			933,750
Dividends paid		(63,289	)		(551,322	)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		1,296,425			(1,969,095	)

NET DECREASE IN CASH AND CASH EQUIVALENTS		(693,463	)		(1,910,976	)

Cash and cash equivalents at beginning of period		1,512,719			3,423,695

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	819,256		$	1,512,719

SUPPLEMENTAL DISCLOSURES
Interest paid	$	269,472		$	564,560
Taxes paid	$	10,164			-0-
Noncash financing costs	$	192,382		$	52,129
Noncash purchase of land	$	3,013,586			-0-

See notes to consolidated financial statements

F-8

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FLORIDA GAMING CORPORATION AND SUBSIDIARIES

December 31, 2009 and 2008

NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Florida Gaming Corporation (the Company) operates live jai-alai games at frontons in Ft. Pierce, and Miami, Florida through its Florida Gaming Centers, Inc. subsidiary (Centers). The Company also conducts intertrack wagering (ITW) on jai-alai, horse racing and dog racing from its facilities. In addition, the Company operates Tara Club Estates, Inc. (“Tara”), a residential real estate development and commercial project located near Atlanta in Walton County, Georgia (See Note K). Approximately 46.2% of the Company's common stock is controlled by the Company's Chairman and CEO either directly or beneficially through available stock options and his ownership of Freedom Holding, Inc. (“Holding”), a closely held investment company.

Basis of Presentation: These consolidated financial statements include the accounts of the Company and its subsidiaries. Significant intercompany transactions have been eliminated. Certain 2008 amounts have been reclassified to conform with their 2009 presentation.

Going Concern: The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The attainment of sustainable profitability and positive cash flow from operations is dependent on certain future events. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty (See Note Q).

Estimates: The preparation of financial statements in conformity with generally accepted accounting principles 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 those estimates.

Cash and Cash Equivalents: The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

Property, Plant and Equipment: Property, plant and equipment are stated at cost. Depreciation is provided using the straight-line and accelerated methods over the estimated useful life of the related assets as follows:

Buildings		39 years
Land and building improvements		15 years
Furniture and equipment		5-7 years
Automobiles		5 years

F-9

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FLORIDA GAMING CORPORATION AND SUBSIDIARIES

December 31, 2009 and 2008

NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—CONTINUED

Long-lived Assets: The Company's investment in its residential and commercial property is carried at cost. The Company evaluates the carrying value of its real estate development and other long-lived assets, annually under Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 360, “Plant, Property, and Equipment” and ASC Topic 970 “Real Estate.”

Accounts Receivables: In the ordinary course of business, the Company maintains accounts receivable from other gaming facilities (ITW receivables). Past due status is based on contractual terms. Receivables are charged off after 90 days if not being actively collected.

Bad Debt Reserve: The Company provides an allowance for doubtful accounts equal to estimated uncollectible amounts. The Company’s estimate is based on historical losses, changes in volume and economic conditions impacting the current receivables. The Company estimated no reserve necessary at December 31, 2009 or 2008. There was no activity in the allowance during 2009 or 2008.

Inventory: The Company's inventory, consisting of food and beverage products and souvenirs, is stated at the lower of cost or market using the First-In First-Out method to assign cost. Inventory market values exceeded its cost at December 31, 2009.

Other Comprehensive Income: The Company follows the provisions of ASC Topic 220, “Comprehensive Income.” The Company had no “other comprehensive income” during either year presented. Accordingly, comprehensive income is equal to net income in 2009 and 2008.

Pari-mutuel Wagering: Revenue is derived from acceptance of wagers under a pari-mutuel wagering system. The Company accepts wagers on both on-site and ITW events. On-site wagers are accumulated in pools with a portion being returned to winning bettors, a portion paid to the State of Florida, and a portion retained by the Company. ITW wagers are also accepted and forwarded to the "host" facility after retention of the Company's commissions. Unclaimed winnings (outs) totaled $162,350 and $261,800 at December 31, 2009 and 2008, respectively.

Revenue Recognition: The Company recognizes revenue from gaming operations in accordance with ASC Topic 605, “Revenue Recognition,” which requires revenues to be recognized when realized or realizable and earned. Jai-Alai and inter track mutuel commissions are recognized immediately upon completion of the event upon which the related wagers are placed. In general, wagers are placed immediately prior to the event and are made in cash or other good funds so collectability is not an issue. Revenues derived from admission, program sales, food and beverage sales, card room activities, and other revenues are recognized at the time of the transaction. Revenues from the Company’s real estate operations are recognized in accordance with ASC Topic 360-20, “Real Estate Sales”, which generally allows the Company to record all profit on real estate sales at closing unless the down payment is insufficient to accrue the revenue.

F-10

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FLORIDA GAMING CORPORATION AND SUBSIDIARIES

December 31, 2009 and 2008

NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—CONTINUED

Income Taxes: The Company utilizes the asset and liability approach to accounting for income taxes. The objective of the asset and liability method is to establish deferred tax assets and liabilities for temporary differences between the financial reporting and the tax bases of the Company’s assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

The Company follows ASC Topic 740, “Income Taxes” regarding accounting for income tax uncertainties. ASC Topic 740 states that a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. The Company maintained no net tax assets at December 31, 2009 and 2008 (see Note D).

It is the Company’s policy to recognize interest and/or penalties related to income tax matters in income tax expense.

The Company files income tax returns in the U.S. federal jurisdiction. The Company is no longer subject to U.S. federal income tax examinations by tax authorities for all years prior to and including 2005.

Income (Loss) Per Common Share: Basic income (loss) per common share is determined by dividing income (loss), less required dividends on preferred shares ($542,931 and $555,282 in 2009 and 2008, respectively), by the weighted average number of shares of common stock outstanding. Diluted income (loss) per common share is determined by dividing income (loss) by the weighted average number of shares of common stock outstanding plus the weighted average number of shares that would be issued upon exercise of dilutive stock options and warrants assuming proceeds are used to repurchase shares pursuant to the treasury stock method plus the weighted average number of shares that would be issued if holders of the Company’s preferred stock converted those shares to common stock using the “if converted” method, unless the use of such methods would be anti-dilutive.

The weighted average number of shares outstanding used in the calculation of both basic and diluted net loss per common share was 3,862,061 and 3,675,600 for 2009 and 2008, respectively.

F-11

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FLORIDA GAMING CORPORATION AND SUBSIDIARIES

December 31, 2009 and 2008

NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—CONTINUED

Options and warrants to purchase 985,625 and 1,020,625 shares of the Company’s common stock were outstanding on December 31, 2009 and 2008, respectively. None of the shares subject to option at December 31, 2009 or 2008, net of forfeitures, were included in the computation of diluted loss per common share for either year because their effect would have been antidilutive. Outstanding options and warrants are discussed further in Note C.

Advertising Costs: Advertising costs are expensed as incurred.

Stock Options: The Company accounts for all employee stock based compensation in accordance with ASC Topic 718, “Stock Compensation,” which requires that equity instruments issued as compensation be measured at fair value (See Note C).

The Company accounts for non-employee stock-based compensation in accordance with ASC Topic 505-50, “Equity Based Payments to Non-Employees”. Amounts are based on the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The value assigned to stock options granted to non-employees are accounted for in accordance with ASC Topic 505-50, which require that such costs be measured at the end of each reporting period to account for changes in the fair value of our Common Stock until the options are vested using the Black-Scholes pricing model. Common Stock is valued using the market price of Common Stock on the measurement date as defined in ASC Topic 505-50 (See Note C).

Real Estate Development: The Company’s Tara Subsidiary accounts for the cost of lots sold by dividing the acquisition and development costs by the number of lots developed.

Compensated Absences: The Company has not accrued compensated absences for the years ending December 31, 2009 and 2008 because the amounts cannot be reasonably estimated.

Subsequent Events: The Company adopted the provisions of SFAS No. 165, “Subsequent Events” (SFAS 165), during the year ended December 31, 2009. SFAS 165, as incorporated into ASC Topic 855, establishes general standards of accounting for and disclosure of events that occur after the balance sheet date and through the date financial statements are issued. The Company evaluated all events or transactions that occurred after December 31, 2009 through March 31, 2010, the date these financial statements were issued.

F-12

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FLORIDA GAMING CORPORATION AND SUBSIDIARIES

December 31, 2009 and 2008

NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—CONTINUED

Effect of Implementing Recently Issued Accounting Standards: In February 2008, Financial Accounting Standards Board (FASB) Staff Position (FSP) No. 157-2, “Effective Date of FASB Statement No. 157” was issued. FSP No. 157-2 defers the effective date of Statement of Financial Accounting Standards (SFAS) No. 157 to fiscal years beginning after December 15, 2008, and interim periods within those fiscal years, for all non-financial assets and liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). Examples of items within the scope of FSP No. 157-2 are non-financial assets and non-financial liabilities initially measured at fair value in a business combination (but not measured at fair value in subsequent periods), and long-lived assets, such as property, plant and equipment and intangible assets measured at fair value for an impairment assessment under SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” The partial adoption of SFAS 157 on January 1, 2008, with respect to financial assets and financial liabilities recognized or disclosed at fair value in the financial statements on a recurring basis, did not have a material effect on the Company’s consolidated financial statements. The adoption of the remainder of SFAS No. 157 on January 1, 2009 did not have a material effect on the Company’s financial statements.

In March, 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments and Hedging Activities." SFAS No. 161 changes the reporting requirements for derivative instruments and hedging activities under SFAS No. 133, "Accounting for Derivatives and Hedging Activities", by requiring enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments are accounted for under SFAS No. 133 and (c) the effect of derivative instruments and hedging activities on an entity's financial position, financial performance and cash flows. SFAS No. 161 is effective for fiscal years beginning after November 15, 2008. The adoption of this statement on January 1, 2009 did not have a material effect on the Company's financial statements.

In April 2008, the FASB issued FASB Staff Position (FSP) FSP 142-3, “Determination of the Useful Life of Intangible Assets.” This FSP amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No. 142, “Goodwill and Other Intangible Assets.” The intent of this FSP is to improve the consistency between the useful life of a recognized intangible asset under Statement 142 and the period of expected cash flows to measure the fair value of the asset under FASB Statement No. 141 (Revised 2007), “Business Combinations,” and other U.S. generally accepted accounting principles (GAAP). This FSP is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. Early adoption is prohibited. The adoption of FSP 142-3 on January 1, 2008 did not have a material effect on the Company’s financial statements.

F-13

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FLORIDA GAMING CORPORATION AND SUBSIDIARIES

December 31, 2009 and 2008

NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—CONTINUED

In May 2008, the FASB issued FASB Staff Position (FSP) No. APB 14-1 “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement).” FSP APB 14-1 requires the issuer of certain convertible debt instruments that may be settled in cash (or other assets) on conversion to separately account for the liability (debt) and equity (conversion option) components of the instrument in a manner that reflects the issuer’s non-convertible debt borrowing rate. FSP APB 14-1 is effective for fiscal years beginning after December 15, 2008, on a retroactive basis and was adopted by the Company on January 1, 2009. The adoption of FSP APB 14-1 did not have a material effect on the Company’s financial statements.

In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles,” which became effective upon approval by the SEC. The standard sets forth the sources of accounting principles and provides entities with a framework for selecting the principles used in the preparation of financial statements that are presented in conformity with GAAP. It did not change any of the Company’s current accounting principles or practices and therefore, did not have a material impact on the Company’s financial statements.

In April 2009, the FASB issued Staff Position (“FSP”) SFAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly,” which was subsequently incorporated into ASC Topic 820, “Fair Value Measurements and Disclosures.” This ASC emphasizes that even if there has been a significant decrease in the volume and level of activity, the objective of a fair value measurement remains the same. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants. The ASC provides a number of factors to consider when evaluating whether there has been a significant decrease in the volume and level of activity for an asset or liability in relation to normal market activity. In addition, when transactions or quoted prices are not considered orderly, adjustments to those prices based on the weight of available information may be needed to determine the appropriate fair value. The ASC also requires increased disclosures. This ASC is effective for interim and annual reporting periods ending after June 15, 2009. The adoption of this ASC did not have a material impact on the Company’s financial statements.

In May 2009, the FASB issued SFAS No. 165 “Subsequent Events.” SFAS No. 165 established general standards of accounting for disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. The statement sets forth 1) the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements 2) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements 3) the disclosures that an entity should make about events or transactions that occurred after the balance sheet date.

F-14

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FLORIDA GAMING CORPORATION AND SUBSIDIARIES

December 31, 2009 and 2008

NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—CONTINUED

This statement is effective for interim and annual financial periods ending after June 15, 2009. The adoption of this statement did not have a material effect on the Company’s financial statements.

In June 2009, the FASB issued SFAS No. 166 “Accounting for Transfers of Financial Assets” an amendment of SFAS No. 140, which was subsequently incorporated into ASC Topic 860. This statement removes the concept of a qualifying special-purpose entity from SFAS No. 140 and removes the exception from applying FASB Interpretation No. 46 (revised December 2003), “Consolidation of Variable Interest Entities”, to qualifying special-purpose entities. SFAS No. 166 also clarifies that the objective of SFAS No. 140 is to determine whether a transferor and all of the entities included in the transferor’s financial statements being presented have surrendered control over transferred financial assets. This statement modifies the financial-components approach used in SFAS No. 140 and limits the circumstances in which a financial asset, or portion of a financial asset, should be derecognized when the transferor has not transferred the entire original financial asset to an entity that is not consolidated with the transferor in the financial statements being presented and/or when the transferor has continuing involvement with the transferred financial asset. Additionally, SFAS No. 166 defines the term participating interest to establish specific conditions for reporting a transfer of a portion of a financial asset as a sale. If the transfer does not meet those conditions, a transferor should account for the transfer as a sale only if it transfers an entire financial asset or a group of entire financial assets and surrenders control over the entire transferred asset(s) in accordance with the conditions addressed in SFAS No. 140, as amended by SFAS No. 166. The special provisions in SFAS No. 140 and SFAS No. 65, “Accounting for Certain Mortgage Banking Activities”, for guaranteed mortgage securitizations are removed. SFAS No. 166 requires that a transferor recognize and initially measure at fair value all assets obtained (including a transferor’s beneficial interest) and liabilities incurred as a result of a transfer of financial assets accounted for as a sale. Enhanced disclosures are required to provide financial statement users with greater transparency about transfers of financial assets and a transferor’s continuing involvement with transferred financial assets. SFAS No. 166 is effective for annual reporting periods that begin after November 15, 2009. The adoption of this statement is not expected to have a material effect on the Company’s financial statements.

F-15

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FLORIDA GAMING CORPORATION AND SUBSIDIARIES

December 31, 2009 and 2008

NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—CONTINUED

In June 2009, the FASB issued SFAS No. 167 “Amendments to FASB Interpretation No. 46(R)”, which was subsequently incorporated into ASC Topic 810. This statement amends Interpretation 46(R) to require an enterprise to perform an analysis to determine whether the enterprise’s variable interest or interests give it a controlling financial interest in a variable interest entity. This analysis identifies the primary beneficiary of a variable interest entity as the enterprise that has both of the following characteristics: 1) the power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance 2) the obligation to absorb losses of the entity that could potentially be significant to the variable interest entity or the right to receive benefits from the entity that could potentially be significant to the variable interest entity. Additionally, this statement amends other technical points in Interpretation 46(R) and enhances disclosures that will provide users of financial statements with more transparent information about an enterprise’s involvement in a variable interest entity. SFAS No. 167 is effective for annual reporting periods that begin after November 15, 2009. The adoption of this statement is not expected to have a material effect on the Company’s financial statements.

On June 30, 2009, the FASB issued SFAS No. 168 “The FASB Accounting Standards Codification (ASC) and the Hierarchy of Generally Accepted Accounting Principles”. On its effective date, SFAS No. 168 became the source of authoritative U.S. generally accepted accounting principles (GAAP) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. SFAS No. 168 is effective for financial statements issued for interim and annual periods ending after September 15, 2009 except for nonpublic nongovernmental entities that have not followed the guidance included in AICPA Technical Inquiry Service Section 5100. Despite the implementation of SFAS No. 168, the following standards issued by the FASB remained authoritative until such time that each was integrated into the Codification: SFAS No. 164 “Accounting for Non-Profit Mergers and Acquisitions”, SFAS No. 166, SFAS No. 167, and SFAS No. 168. The adoption of SFAS No. 168 did not have a material effect on the Company’s financial statements.

In August 2009, the FASB amended ASC Topic 820-10 “Fair Value Measurements and Disclosures – Measuring Liabilities at Fair Value.” The amendment reduces ambiguity in measuring the fair value of liabilities by providing that in circumstances in which a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using either a valuation technique that uses the quoted price of the identical liability when traded as an asset, the quoted prices for similar liabilities or similar liabilities when traded as assets, or another valuation technique that is consistent with the principles of Topic 820 e.g. the income approach using the present value technique. The amendment is effective for the first reporting period following its release. The adoption of this amendment did not have a material effect on the Company’s financial statements.

F-16

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FLORIDA GAMING CORPORATION AND SUBSIDIARIES

December 31, 2009 and 2008

NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—CONTINUED

In January 2010, the FASB amended ASC Topic 820 “Improving Disclosures about Fair Value Measurements.” This amendment provides more robust disclosures about (1) the different classes of assets and liabilities measured at fair value, (2) the valuation techniques and inputs used, (3) the activity in Level 3 fair value measurements, and (4) the transfers between Levels 1, 2, and 3. This amendment is effective for reporting periods beginning after December 15, 2010 with the exception of disclosures about purchases, sales, issuances, and settlements relating to Level 3 measurements, which are effective after December 15, 2010. The adoption of this amendment is not expected to have a material effect on the Company’s financial statements.

In February 2010, the FASB amended ASC Topic 855 “Subsequent Events.” This amendment allows entities which are either 1) SEC filers or 2) conduit bond obligors for conduit debt securities that are publicly traded to evaluate subsequent events through the date that their financial statements are issued; unlike other entities which must evaluate subsequent events through the date their financial statements are available to be issued. The adoption of this amendment did not have a material effect on the Company’s financial statements.

NOTE B—PREFERRED STOCK

Class A Preferred: The Company's Class A Preferred Stock provides annual dividends, at the rate of $.90 per share payable in cash, property or common stock, which are cumulative and have priority over dividends on the common stock. The Company has declared and paid or accrued the required dividends for 2009 and 2008. Accrued dividends on the Class A preferred stock totaled $26,942 ($.97 per share) and $1,350 ($.05 per share) at December 31, 2009 and 2008, respectively.

F-17

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FLORIDA GAMING CORPORATION AND SUBSIDIARIES

December 31, 2009 and 2008

NOTE B—PREFERRED STOCK—CONTINUED

Each share of Class A Preferred Stock is convertible into .1125 shares of common stock at the holder's option.

During the year ended December 31, 2009 and 2008, 379 and 100 shares of Class A Preferred Stock were converted to 42 and 11 shares, respectively, of the Company’s common stock. The Class A Preferred is redeemable at the option of the Company at $10.60 per share. In the event of dissolution, the holders of Class A Preferred shall be entitled to receive $10.00 per share, plus accrued dividends, prior to any distribution to holders of common stock.

Series AA Preferred: The Company’s 5,000 shares of Series AA cumulative convertible preferred stock, $.10 par value (the “Series AA Preferred Stock”), provides annual dividends at the rate of 7% of the shares stated value. The stated value per share is equal to $1,000 (as adjusted for any stock dividends, combinations or splits). The Company has declared and paid or accrued the required dividends for 2009 and 2008. Accrued dividends on the series AA Preferred stock totaled $437,500 ($87.50 per share) and $87,500 ($17.50 per share) at December 31, 2009 and 2008 respectively.

Each share of the Series AA Preferred Stock may be converted into 40 shares of the Company’s $.20 par value Common Stock (the “Conversion Stock”). The number of shares of Conversion Stock into which each share of Series AA Preferred Stock may be converted shall be proportionately adjusted for any increase or decrease in the number of shares of Common Stock or Series AA Preferred Stock, as the case may be, outstanding arising from any division or consolidation of shares, stock dividend, reverse stock split, or other similar increase or decrease in the number of shares of Common Stock or Series AA Preferred Stock outstanding. The Company will also pay the holder of converted shares all accrued but unpaid dividends through the conversion date on the converted shares.

Upon liquidation, the holders of Series AA Preferred Stock are entitled to receive the greater of (i) the stated value per share and all accrued and unpaid dividends to and including the date of payment thereof and (ii) the amount the holders of Series AA Preferred Stock would have received upon liquidation of the Company had such holders converted their shares to common stock.

All 5,000 shares of Series AA Preferred Stock were issued to Prides Capital Fund 1, LP (“Prides”) for an aggregate of $5,000,000 on June 15, 2007. To induce Prides to purchase the Series AA Preferred Stock, the Company issued Prides a stock warrant to purchase 20,000 shares of the Company’s common stock at an exercise price of $30 per share. The warrant is exercisable from June 15, 2012 and its fair market value of $182,794 was recorded as a financing cost for the year ending December 31, 2007.

F-18

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FLORIDA GAMING CORPORATION AND SUBSIDIARIES

December 31, 2009 and 2008

NOTE B—PREFERRED STOCK—CONTINUED

In association with the Series AA Preferred Stock issue, the Company entered into a Stockholders Agreement (the “Agreement”) with Prides which provides shelf and demand registration rights to Prides at any time after September 1, 2009 for all registrable securities issued to Prides. The Agreement also provides Prides with Tag-Along rights to shares of the Company’s common stock owned by the Company’s Chairman.

Class B Preferred: The Company's Series B convertible preferred stock provides annual cumulative dividends at the rate of 8% to 10% of the consideration paid for the stock. Such dividends are payable in shares of the Company's common stock. The consideration received by the Company upon initial issuance of each share of the Series B stock was $1,000. Holders of Series B shares may convert all or any of such Series B shares to the Company's common stock using a ratio based on the consideration paid for the stock and 80% of the market value of the common stock. Upon liquidation, the holders of Series B preferred shares shall be entitled to be paid $1,000 per share plus 8% to 10% accrued dividends before any distribution to holders of common stock. The required Series B dividends were declared and accrued during 2009 and 2008. Accrued dividends on the Series B stock totaled $50,852 ($1,130 per share) and $46,802 ($1,040 per share) at December 31, 2009 and 2008, respectively.

Series E Preferred: The Company is authorized to issue 300 shares of Series E 8% cumulative convertible preferred stock, $.10 par value (the “Series E Preferred Stock”), which provides annual dividends at the rate of 8% of the share’s stated value, payable upon conversion of the Series E preferred stock into common stock. The stated value per share equals $1,000 (as adjusted for any stock dividends, combination or splits).

Holders of Series E Preferred Stock may convert all or any such shares to the Company’s common stock (the “Series E Conversion Shares”) beginning 120 days after the issuance of the Series E Preferred Stock. In general, the number of Series E Conversion Shares issuable on conversion of each share of Series E Preferred Stock shall equal the consideration paid for such share together with accrued and unpaid dividends on such share, if any, divided by the lesser of (i) $7.00 and (ii) 80% of the average of the closing bid price of the common stock on the five trading days before conversion. A holder of Series E Conversion Shares may not sell more than 25% of such shares between 120 and 150 days of his purchase of Series E Preferred Stock converted into each share, 50% of such shares between 151 and 180 days of his purchase of Series E Preferred Stock converted into such shares and 75% of such shares between 181 and 210 days of his purchase of Series E Preferred Stock converted into each share; holders may generally sell all of their Series E Conversion Shares 211 days after their purchase.

F-19

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FLORIDA GAMING CORPORATION AND SUBSIDIARIES

December 31, 2009 and 2008

NOTE B—PREFERRED STOCK—CONTINUED

Upon liquidation, the holders of Series E Preferred Shares shall be entitled to be paid $950 per share plus accrued dividends before any distribution to holders of common stock. The required Series E dividends were declared and paid during 2009 and 2008.

On March 16, 2009 all 200 shares of Series E Preferred Stock outstanding were converted into 104,712 shares of the Company’s $.20 par value common stock.

Series F Preferred: The Company is also authorized to issue up to 2,500 shares of Series F 8% Cumulative Convertible Preferred Stock (the “Series F Preferred Stock”), which provides annual dividends at the rate of 8% of the shares’ stated value. The stated value per share equals $1,000 (as adjusted for any stock dividends, combination or split). At the discretion of the Company’s Board of Directors, such dividends may be paid in shares of the Series F Preferred Stock.

Holders of Series F Preferred Stock may convert all or any of such shares to the Company’s common stock at any time. Each share of Series F Preferred Stock shall be converted into 148.3345 shares of common stock (the “Conversion Stock”). The number of shares of Conversion Stock into which each share of Series F Preferred Stock shall be converted shall be proportionately adjusted for any increase or decrease in the number of shares of common stock or Series F Preferred Stock.

Upon liquidation, the holders of Series F Preferred Shares shall be entitled to be paid $1,000 per share plus accrued dividends before any distribution to holders of common stock.

The Series F shares are all held by related parties of the Company. Two thousand Series F shares were outstanding at December 31, 2009 and 2008. The required Series F dividends were declared and paid or accrued during 2009 and 2008. Accrued dividends on the Series F Preferred shares totaled $140,000 ($70 per share) and $40,000 ($20 per share) at December 21, 2009 and 2008, respectively.

The Class A Preferred Stock, the Series AA Preferred Stock, the Series B Preferred Stock, the Series E Preferred Stock and the Series F Preferred Stock are all equal in rank with respect to the payment of dividends and the distribution of assets upon liquidation of the Company.

NOTE C—STOCK OPTIONS AND WARRANTS

The Company maintains a Master Stock Option Plan, last amended July 31, 2006, which encompasses the following stock option plans: a Stock Incentive Plan; a Nonqualified Stock Option Plan; an Officers and Directors Stock Option Plan; and an Advisors and Consultants Stock Option Plan. Each stock option plan governs the administration, participation, and other terms and conditions of option agreements under the plan.

F-20

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FLORIDA GAMING CORPORATION AND SUBSIDIARIES

December 31, 2009 and 2008

NOTE C—STOCK OPTIONS AND WARRANTS—CONTINUED

On July 10, 2006 the Company issued a total of 473,125 options: 33,000 options were issued to key employees, 325,000 options were issued to Freedom Financial Corporation (“Freedom”), and 115,125 options were granted to executive employees and directors.

On July 11, 2006, the Company issued 362,500 options to executive employees and directors.

On January 21, 2008, the Company granted to Florida Marketing Ventures, LLC, (Ventures), an option (the “Option”) under the Company’s Advisors and Consultants Stock Option plan (the “Plan”), to purchase up to 20,000 shares of $.20 par value common stock of the Company at an option price of $30.00 per share. The Option was non-transferable except by operation of law and was exercisable, in whole or in part, from time to time, anytime after January 29, 2008, the date the legal approval of slot machines at the Company’s Miami Jai-Alai facility was obtained, and before twenty four (24) months. The purchase price for each share subject to the Option was $30.00 (“the Purchase Price”). Ventures acknowledged and agreed that the obligation of the Company to issue any shares to them was subject to the simultaneous payment made by Ventures to the Company of an amount equal to the required charge to the Company’s capital or expense accounts as computed independently using the Black-Scholes Method of calculating the required charge. As such, the Company recorded no expense upon granting these options. These options expired January 29, 2010.

The Company’s CEO and President both maintain ownership interest in Freedom Holding, Inc. (“Holding”) and Freedom Financial Corporation. In January, 2008 Freedom Financial Corporation transferred 10,000 options of the 325,000 options issued to it in July, 2006 to a third party. On March 11, 2008 Freedom Financial transferred its remaining 315,000 options in the form of a dividend to Holding. Additionally on March 11, 2008, the Company’s CEO and President both transferred all options in their possession to Freedom Holding, Inc. Holding recorded these transfers from the Company’s CEO and President as capital contributions.

On June 26, 2008 the Company borrowed $1,000,000 from Mr. James Stuckert (“Stuckert”) with an interest rate of Wall Street Journal prime plus three percent. The entire unpaid principal balance of this Note, together with accrued interest, was due and payable on or before September 30, 2008. On October 1, 2008, the Company repaid Mr. Stuckert the $1,000,000 due along with $20,000 in interest.

F-21

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FLORIDA GAMING CORPORATION AND SUBSIDIARIES

December 31, 2009 and 2008

NOTE C—STOCK OPTIONS AND WARRANTS—CONTINUED

As an additional inducement to Stuckert to make the loan, the Company issued a warrant to purchase 20,000 shares of the Company’s $.20 par common stock with an exercise price of $12.50 per share. The warrant is exercisable at any time from June 26, 2008 through June 26, 2013 and had a fair value of $34,756, which was expensed by the Company in 2008 as a financing cost. The number of shares of common stock issuable upon the exercise of the warrant and the exercise price are subject to adjustment upon certain events including: dividend or distribution of common stock or other securities; stock splits or combinations, stock reclassification or reorganization; and merger, consolidation or sale of assets. On October 7, 2008 the Company re-priced the Stuckert warrant issued in association with this loan from an exercise price of $12.50 per share to $8.25 per share. Additional financing costs of $4,389 were recognized due to the repricing of this warrant.

On July 3, 2008, the Company re-priced all 835,625 options issued in July 2006 from an exercise price of $17 per share to $12 per share. Additional compensation expense of $402,804 was recorded due to the re-pricing of these options. On August 26, 2008, the Company re-priced the same 835,625 options from $12 per share to $8.25 per share. Additional compensation expense of $261,487 was recorded due to the second re-pricing. The Company recognized total stock based compensation expense of $664,291 for the year ended December 31, 2008.

On October 31, 2008, Centers’ note payable to Freedom matured and was subsequently refinanced with a $1,322,574 note payable issued November 1, 2008 to Freedom Holding, Inc. The Holding note is unsecured and bears interest at a fixed rate of 10%, with all principal and interest originally due May 1, 2009, later refinanced until September 1, 2010 (see Note H). As an inducement to refinance the note, the Company issued Holding a warrant to purchase 20,000 shares of the Company's $0.20 par value common stock at a price per share of $8.25. The warrant is exercisable at any time from November 1, 2008 through November 1, 2011. The fair value of this warrant issue totaled $12,984 and was amortized over the loan’s initial six month life. The number of shares of common stock issuable upon the exercise of the warrant and the exercise price are subject to adjustment upon certain events including: dividend or distribution of common stock or other securities; stock splits or combinations, stock reclassification or reorganization; and merger, consolidation or sale of assets.

On July 11, 2009, the Company amended the 362,500 options originally issued on July 11, 2006. These options were repriced on July 8, 2008 and again on August 26, 2008. The amended agreement provided the option holders a one year extension on the option term at a price of $8.25 per share. The Company recognized total stock based compensations expense of $231,257 for the year ended December 31, 2009 due to this amendment. The amendment affected three employees and one director. Freedom Holding, Inc., a related party controlled by the Company’s chairman, with additional ownership maintained by the Company’s president, held 325,000 of these options; an executive officer of the Company held 17,500 of these options; and the remaining 20,000 options were held by a director of the Company.

F-22

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FLORIDA GAMING CORPORATION AND SUBSIDIARIES

December 31, 2009 and 2008

NOTE C—STOCK OPTIONS AND WARRANTS—CONTINUED

On August 14, 2009, the Company entered into a Memorandum of Agreement (the “Agreement”) with Solomon O. Howell (“Howell”) and James W. Stuckert (“Stuckert,” and collectively the “Lenders”) which allowed the Company to borrow up to $1,000,000 from the

Lenders (see Note H). The Agreement was amended on October 7, 2009 with a provision which granted to each of the Lenders warrants to acquire up to 20,000 (40,000 total) shares of the Company’s $.20 par common stock at a price of $6.00 per share. The warrants are exercisable at any time from October 7, 2009 through October 7, 2010. The number of shares issuable upon the exercise of the warrants are subject to adjustment upon certain events including: dividend or distribution of common stock or other securities; stock splits or combinations, stock reclassification or reorganization; and merger, consolidation or sale of assets. The warrants’ fair value of $39,451 was expensed by the Company over the remaining Agreement term from October 7, 2009 through December 31, 2009 and is reflected in the Company’s 2009 Statement of Operations as financing costs.

On December 11, 2009, the Company borrowed $500,000 from Nurmi Properties, LLC and Robinette Investments, LLC (collectively “Nurmi”) (see Note H). As an inducement to make this loan, the Company issued a warrant to purchase 30,000 shares of the Company’s $.20 par common stock at $6.00 per share to Steven Craig, a related party of Nurmi. The warrant is exercisable at any time from December 11, 2009 through October 11, 2011. The number of shares issuable upon the exercise of the warrant are subject to adjustment upon certain events including: dividend or distribution of common stock or other securities; stock splits or combinations, stock reclassification or reorganization; and merger, consolidation or sale of assets. The warrant’s fair value of $14,726 was recognized as a capitalized financing cost and will be expensed over the one year term of the related loan from December 11, 2009 through December 11, 2010.

F-23

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FLORIDA GAMING CORPORATION AND SUBSIDIARIES

December 31, 2009 and 2008

NOTE C—STOCK OPTIONS AND WARRANTS—CONTINUED

The following table summarizes options and warrants issued or amended by the Company during the years ended December 31, 2009 and 2008.

Date of Grant	Number of Options/ Warrants		Grantee	Vesting Period: Grant Date Through	Con- tractual Term in Years		Grant Price		Fair Value of Stock on Grant Date

July 10, 2006		33,000	Key Employees	50%-12/31/06 50%-07/01/07		6	$	17.00	$	13.30
July 3, 2008	reprice						$	12.00	$	10.00
August 26, 2008	reprice						$	8.25	$	6.25

July 10, 2006		325,000	Freedom Financial Corp.	50%-12/31/06 50%-07/01/07		6	$	17.00	$	13.30
July 3, 2008	reprice						$	12.00	$	10.00
August 26, 2008	reprice						$	8.25	$	6.25

July 10, 2006		115,125	Executive Employees and Directors	50%-12/31/06 50%-07/01/07		6	$	17.00	$	13.30
July 3, 2008	reprice						$	12.00	$	10.00
August 26, 2008	reprice						$	8.25	$	6.25

July 11, 2006		362,500	Executive Employees and Directors	50%-12/31/06 50%-07/01/07		3	$	17.00	$	13.30
July 3, 2008	reprice						$	12.00	$	10.00
August 26, 2008	reprice						$	8.25	$	6.25
July 11, 2009	Extended					1	$	8.25	$	7.00

June 15, 2007	20,000		Prides Capital Fund I, LP	6/15/07		5	$	30.00	$	26.15

January 21, 2008		20,000	Advisors and Consultants	1/29/08		2	$	30.00	$	17.00

June 26, 2008		20,000	James Stuckert	6/26/08		5	$	12.50	$	12.00
October 7, 2008	reprice						$	8.25	$	4.50

October 31, 2008		20,000	Freedom Holding, Inc.	11/1/08		3	$	8.25	$	3.80

October 7, 2009		40,000	Stuckert/Howell	10/7/09		3	$	6.00	$	6.05

December 11, 2009		30,000	Craig	12/11/09		2	$	6.00	$	4.25

F-24

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FLORIDA GAMING CORPORATION AND SUBSIDIARIES

December 31, 2009 and 2008

NOTE C—STOCK OPTIONS AND WARRANTS—CONTINUED

The fair value of options and warrants is determined using the Black-Scholes option pricing model consistent with ASC Topics 718 and 505-50. The Black-Scholes option pricing model uses assumptions for inputs including the risk free rate of return, expected forfeitures, expected volatility, expected term, and expected dividends. The risk-free rate of return for the option or warrant life is based on U.S. Treasury zero coupon issues with a remaining term equal to the expected option term. Expected forfeitures are based on environmental factors tied to the options and warrants as well as historical behavior. Expected volatilities are based on historical volatility of the Company’s stock. Expected terms are generally based on the options contractual term unless environmental factors reflect that the option holder would likely exercise their option sooner. Expected dividends are based on historical dividends paid on the Company’s common stock. The assumptions used during 2009 and 2008 to value the Company's stock options and warrants were as follows:

Date of Grant	Number of Options		Risk- Free Rate			Expected Forfeitures			Expected Volatility			Expected Term (in years)		Expected Dividends

June 26, 2008		20,000		2.34	%		48.00	%		50.00	%		2	None
July 3, 2008		473,125		2.34	%		48.00	%		46.00	%		2	None
July 3, 2008		362,500		2.34	%		48.00	%		46.00	%		1	None
August 26, 2008		473,125		2.11	%		48.00	%		62.00	%		2	None
August 26, 2008		362,500		2.11	%		48.00	%		62.00	%		1	None
October 7, 2008		20,000		1.47	%		48.00	%		77.78	%		2	None
October 31, 2008		20,000		1.80	%		48.00	%		78.77	%		3	None
July 11, 2009		362,500		4.50	%		56.06	%		67.30	%		1	None
October 7, 2009		40,000		0.87	%		56.06	%		66.70	%		2	None
December 11, 2009		30,000		0.83	%		56.06	%		66.70	%		2	None

F-25

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FLORIDA GAMING CORPORATION AND SUBSIDIARIES

December 31, 2009 and 2008

NOTE C—STOCK OPTIONS AND WARRANTS—CONTINUED

	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual/ Term		Aggregate Intrinsic Value

Outstanding, beginning of year		1,020,625		$	10.47
Granted		432,500			7.89
Exercised		(30,000	)		3.29
Forfeited		-0-
Expired		(437,500	)		11.78

Outstanding, end of year		985,625		$	8.97		1.74		-0-

Options and warrants exercisable, end of year		985,625		$	8.97		1.74		-0-

Fully vested share options, end of year		985,625		$	8.97		1.74		-0-

A summary of the status of the Company's nonvested shares as of December 31, 2009 and changes during the year ended December 31, 2009, is presented below.

Nonvested Shares	Shares			Weighted-Average Grant Date Fair Value

Nonvested at January 1, 2009		-0-			-0-
Granted		432,500		$	0.66
Vested		(432,500	)	$	0.66
Forfeited		-0-			-0-
Nonvested at December 31, 2009		-0-			-0-

F-26

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FLORIDA GAMING CORPORATION AND SUBSIDIARIES

December 31, 2009 and 2008

NOTE C—STOCK OPTIONS AND WARRANTS—CONTINUED

The number of shares of Common Stock reserved for issuance upon the exercise of fixed conversion rights, options and warrants were 1,666,523 and 1,669,848 at December 31, 2009 and 2008, respectively.

During 2009, the Company received proceeds of $98,750 from the exercise of 30,000 stock options at $3.29 per share. At the dates of exercise, these shares had no intrinsic value.

During 2008, the Company received proceeds of $933,750 from the exercise of 415,000 stock options at $2.25 per share. The intrinsic value of shares exercised during 2008 totaled $6,165,250.

The weighted average grant date fair value of options and warrants granted during the years 2009 and 2008 was $.66 and $.41, respectively.

NOTE D—TAXES ON INCOME, HANDLE AND ADMISSIONS

The Company recorded $10,164 in Federal income tax expense for the year ending December 31, 2009. This amount represents $9,379 in alternative minimum tax and $785 in penalties and interest.

At December 31, 2009, the Company had tax net operating loss (NOL) carryforwards of approximately $20,042,000 available to offset future taxable income. These NOL carryforwards expire fifteen years from the year in which the losses were incurred or at various intervals through fiscal 2023.

Any deferred tax assets arising from differences from taxable income and financial reporting income are deemed to be offset by an allowance in an equal amount due to the uncertainty of future taxable income.

The components of the Company’s deferred tax asset/liability are as follows:

	2009			2008

Deferred tax asset:
Net operating loss carryforwards	$	6,814,245		$	7,003,143
Alternative minimum tax credit carryforward		3,189			-0-
Real estate valuation reserve		23,313			1,723
Stock options		215,539			1,173,061
Charitable contributions		16,009			15,021
Total deferred tax assets		7,072,295			8,192,948
Deferred tax liability:
Difference in depreciation methods		(117,151	)		(141,665	)
Net deferred tax asset before valuation allowance		6,955,144			8,051,283
Less: Valuation allowance		(6,955,144	)		(8,051,283	)

Net deferred tax assets	$	-0-		$	-0-

F-27

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FLORIDA GAMING CORPORATION AND SUBSIDIARIES

December 31, 2009 and 2008

NOTE D—TAXES ON INCOME, HANDLE AND ADMISSIONS—CONTINUED

Effective July 1, 1998, tax relief legislation was enacted by the State of Florida (HB3663) stipulating that jai-alai permit holders incurring state taxes on handle and admissions in an amount exceeding its operating earnings (before deduction of certain expenses such as depreciation and interest) for the prior year are entitled to credit such excess against pari-mutuel taxes due and payable.

The Company’s Tampa Jai-Alai Permit (Fronton closed in 1998) retains such tax credits carried forward totaling $1,362,265. The Company’s Ft. Pierce facility has not incurred statutory operating losses and therefore has not earned any state tax credits.

As of December 31, 2009, unused credits available for recovery under the permit held by Miami Jai-Alai and Summer Jai-Alai totaled $2,352,201 and $1,220,208, respectively.

Pari-mutuel taxes incurred and tax credits utilized reflected in the 2009 and 2008 Statement of Operations include $370,776 and $426,408, respectively related to Miami Jai-Alai operations.

Pari-mutuel taxes incurred and tax credits utilized reflected in the 2009 and 2008 Statement of Operations include $332,735 and $427,484, respectively related to Summer Jai-Alai operations (See Note J).

NOTE E—RETIREMENT PLAN

The Company provides defined contribution retirement plans under Internal Revenue Code Section 401(k). The plans, which cover employees included in its current Collective Bargaining Agreement and certain non-union employees, provide for the deferral of salary and employer matching. The Company’s costs for matching employee contributions totaled $51,000 and $53,650 during 2009 and 2008, respectively.

NOTE F—RELATED PARTY TRANSACTIONS

Reference is made to Note J for details of the Company’s transactions with Summer Jai-Alai.

F-28

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FLORIDA GAMING CORPORATION AND SUBSIDIARIES

December 31, 2009 and 2008

NOTE F—RELATED PARTY TRANSACTIONS—CONTINUED

Reference is made to Note B for information pertaining to Series F Preferred Stock held by related parties.

Reference is made in Note C pertaining to stock options and warrants issued to Freedom Financial Corporation and Freedom Holding, Inc. Reference is made to Note H for details on the Company’s credit facilities with Freedom Financial Corporation and Freedom Holding, Inc.

Additionally, the Company maintained $493,430 in accounts payable to Freedom Financial Corporation at December 31, 2009.

Additional information can be found in Note C pertaining to compensating stock option arrangements between the Company and its employees and Directors.

The Company paid $765,000 in 2008 to Freedom Financial Corporation for the services of the Company’s Chairman and CEO. An amount of $780,000 was accrued for these services in 2009, but remained unpaid at December 31, 2009 and through the date the Company issued these financial statements. No written employment or consulting agreement exists between the Company and Freedom.

Reference is made to Note H regarding the Chairman’s guarantee of the Company’s debt with Freedom Financial Corporation and the related compensation to the Chairman.

NOTE G—COMMITMENTS AND CONTINGENCIES

Leases: The Company rents totalizator equipment (Scientific Games) at each fronton under operating leases. The totalizator leases required a minimum annual rental at the Miami and Ft. Pierce locations through October 31, 2008, but are subsequently being leased on a month-to-month basis. Additionally, transmission of the Miami Jai-Alai signal requires the use of a satellite uplink simulcasting service which requires a fee of five hundred dollars ($500.00) per performance. Total totalizator rental expense and other equipment rental under operating leases for the year ended December 31, 2009 and 2008 was approximately $386,000 and $388,000, respectively.

Through March 31, 2009, the Company leased certain parking facilities adjacent to its Miami Fronton. Lease payments totaled $34,000 in 2009 with the lease concluding with purchase of the underlying properties.

Collective Bargaining Agreement: The Company is a party to a collective bargaining agreement with the International Jai-Alai Players Association U.A.W. Local 8868, AFL-CIO. The agreement allows the Company to negotiate individual contracts with players and provides for minimum salaries and bonuses based on pari-mutuel handle, certain cesta allowances and retirement benefits. The agreement continues from year to year unless timely notice of termination is given by either party to the agreement.

F-29

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FLORIDA GAMING CORPORATION AND SUBSIDIARIES

December 31, 2009 and 2008

NOTE G—COMMITMENTS AND CONTINGENCIES—CONTINUED

Concentration of Credit: The Company maintains significant cash balances with financial institutions in excess of the insurance provided by the Federal Deposit Insurance Corporation (FDIC).

Dependence on One Vendor: The Company depends on Scientific Games Corp. (Scientific), a leading supplier of pari-mutuel wagering systems, to provide the computer systems that accumulate wagers, record sales, calculate payoffs and display wagering data accurately and in a secure manner. If Scientific failed to properly maintain their computer systems and software it could affect the security of wagering and the Company’s ability to serve its customers. In addition, the Company is past due on monthly payments required by its contract with Scientific which could result in the termination of Scientific’s services to the Company.

Settlement Agreement with Miami-Dade County: In February 2009 the Company entered into a settlement agreement with Miami-Dade County related to an eminent domain proceeding. As part of the settlement the Company agreed to purchase 10.982 acres of land from the County for $16,742,145 in two phases. The phase one purchase of 2.283 acres for $3,348,429 was completed in 2009. The phase two purchase of the approximately 8.7 remaining acres for $13,393,716 is to close no later than 60 days after the United States Corps of Engineers releases the property free and clear of environmental contamination or July 1, 2010, whichever is later.

Prior to the second closing, a resolution will be presented to the Board of Miami-Dade County Commissioners (Board) to close part of N.W. 37th Avenue. If the Board votes to close the road and the County decides to expand N.W. 36th Avenue within 36 months of the vote, the Company shall pay the cost of design, land acquisition and construction for said N.W. 36th Avenue road expansion as well as any required utility relocations with the total paid by the Company not to exceed $5,700,000.

Litigation: The Company is a defendant in routine litigation arising in the ordinary course of business. Reference is made to Note H regarding complaints filed against the Company by its creditors. Reference is made to Note M for the Company’s legislative initiative litigation.

Letters of Credit: The Company has letters of credit in favor of its bonding company totaling $300,000. These letters of credit are secured by cash on deposit of an equal amount.

NOTE H—LONG-TERM DEBT

The Company's long-term debt comprised the following at December 31, 2009 and 2008:

	December 31, 2009				December 31, 2008
	Current		Long-Term		Current		Long-Term

Mortgage note dated December 18, 2006 secured by lot #28B at Tara Club Estates; principal and interest payable in 34 monthly installments of $578.86 with final payment due November 17, 2009	$	38,368		-0-	$	39,732		-0-

Note payable to Calder Race Course, Inc. and West Flagler Associated, LTD dated January 31, 2005, unsecured with payments beginning 10 days after authorization of slot machines in Miami-Dade County’s licensed pari-mutuel facilities, payable in thirty six installments of $23,148 plus accrued interest or if a substantial portion of the Florida Gaming Centers business operations, stock or other ownership is sold or Centers’ Miami slot machine operations is transferred before all installments are made then the note must be paid in full at such time. Interest rate is the prime lending rate plus 4.0%.		416,666		-0-		277,777	$	300,926

Note payable to Freedom Holding, Inc. dated November 1, 2008, unsecured with all principal and interest due September 1, 2009. Interest rate is 10.0% per annum. Note refinanced with maturity extended through September 1, 2010.		1,322,574		-0-		1,322,574		-0-

F-30

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FLORIDA GAMING CORPORATION AND SUBSIDIARIES

December 31, 2009 and 2008

NOTE H—LONG-TERM DEBT—CONTINUED

	December 31, 2009				December 31, 2008
	Current		Long-Term		Current		Long-Term
Note payable to Isle of Capri Casinos, Inc., Delaware, dated December 31, 2008, secured by Florida Gaming’s capital stock in its Florida Gaming Centers subsidiary, a mortgage on Centers’ property in Ft. Pierce, Florida, and a security interest in Centers’ Ft. Pierce gaming license, payable as follows: quarterly interest only payments beginning April 1, 2009 and due on the first day of each quarter thereafter at the rate of 10% until December 31, 2009, when either the principal and any interest accrued is due or if the sale of all or material portions of the assets are sold or all or any material amount of equity interest is sold before December 31, 2009 then the note must be paid at that time.	$	3,000,000		-0-	$	3,000,000		-0-

Note payable to party in legal settlement dated March 1, 2009, unsecured and payable in 23 installments of $1,166.67 and final payment due February 1, 2011. Interest rate is 7.0% per annum.		14,000	$	186,000		-0-		-0-

Note payable to Miami-Dade County dated March 30, 2009, secured by a mortgage and security agreement on a portion of the Company’s Miami real estate and payable in installments of principal plus interest over a 15 year amortization period ending April 1, 2024. Interest rate is 7.25% per annum.		121,138		2,816,813		-0-		-0-

Notes payable to private financiers, Stuckert and Howell, as part of a credit agreement dated August 14, 2009, with interest and principal outstanding convertible into the Company’s $.20 par common stock at $6.00 per share, maturing December 31, 2009. Interest rate is 5.0% per annum.		1,000,000		-0-		-0-		-0-

Note payable to Nurmi Properties, LLC and Robinette Investments, LLC, dated December 11, 2009, secured by mortgage and security agreement on the Company’s Miami facilities and an assignment of rents and leases; payable as follows: monthly interest only payments beginning January 11, 2010 and continuing thereafter until December 11, 2010 when all principal and interest are due. Interest rate is 13% per annum.		500,000		-0-		-0-		-0-

	$	6,412,746	$	3,002,813	$	4,640,083	$	300,926

F-31

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FLORIDA GAMING CORPORATION AND SUBSIDIARIES

December 31, 2009 and 2008

NOTE H—LONG-TERM DEBT—CONTINUED

The maturities of the Company’s long-term debt for the five years subsequent to December 31, 2009 are as follows: $6,412,746 in 2010; $316,217 in 2011; $139,959 in 2012; $150,470 in 2013; $161,749 in 2014; and $2,234,418 there after.

The weighted average interest rate on short-term borrowings was 9.3% and 10.0% for the years ending December 31, 2009 and 2008, respectively. The average amount of short-term borrowings totaled approximately $5,165,000 and $6,364,000 for the years ended December 31, 2009 and 2008, respectively.

On October 29, 2004, Florida Gaming borrowed $5 million (the "Loan") from Isle of Capri Casinos, Inc., a Delaware corporation ("ICC"), pursuant to a Secured Promissory Note (the "Note"). The Note’s maturity date was December 31, 2008, with interest accruing on the unpaid principal balance at an annual rate of 6%. To secure the Note, a Pledge Agreement dated October 29, 2004 among ICC, Florida Gaming, and Centers (the "Pledge Agreement") was executed.

Under the Pledge Agreement, Florida Gaming’s obligations to ICC under the Note were secured by Florida Gaming's pledge to ICC of a continuing security interest in (i) 1,000 shares of the capital stock of Centers owned by Florida Gaming, which constitutes all of the issued and outstanding shares of Centers’ capital stock, (ii) all other property delivered to ICC in substitution for or in addition to the Centers capital stock, and (iii) all products and proceeds of all of the foregoing.

Under the Note, on October 29, 2004 Florida Gaming was required to repay certain indebtedness owed by it to Freedom Financial Corporation ("Freedom Financial"), an Indiana corporation and the beneficial owner of approximately 31.2% of the voting power of Florida Gaming. The Note further required Freedom Financial to release its security interest in all of the outstanding shares of the capital stock of Centers, its lien and security interest on all of the assets of Centers, and the guarantee by Centers of all of Florida Gaming's obligations under an Agreement for Line of Credit dated November 24, 1998 by and between Florida Gaming and Freedom Financial (collectively, the "Released Security"). The Note also required that Freedom Financial pay to ICC $1,200,000 on October 29, 2004 to repay a portion of certain pre-existing indebtedness owed by Freedom Financial to ICC.

F-32

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FLORIDA GAMING CORPORATION AND SUBSIDIARIES

December 31, 2009 and 2008

NOTE H—LONG-TERM DEBT—CONTINUED

In connection with the Loan, Florida Gaming, Centers, and ICC also entered into a letter agreement dated October 29, 2004 (the "Letter"). Pursuant to the Letter, Florida Gaming and Centers promised that during the period beginning October 29, 2004 and ending on the date (the "Final Approval Date") which is the earlier of (i) the date that is six months after the date on which legislation allowing for the operation of slot machines at the Miami Jai-Alai business owned and operated by Centers (the "Miami Jai-Alai Business") is duly passed and adopted by the State of Florida and (ii) December 31, 2008, Florida Gaming and Centers will not solicit, initiate, or engage in any discussions or negotiations with any third party relating to any possible agreement or other arrangement involving the acquisition of all or substantially all of the Miami Jai-Alai Business from Centers or any other transaction (a "Prohibited Transaction") that would otherwise materially interfere with or impair or delay the Transaction (as hereinafter defined).

The Letter further provides that beginning on October 29, 2004 and ending on the date that is six months after the Final Approval Date, but in no event later than December 31, 2008, Florida Gaming, Centers, and ICC will use their commercially reasonable best efforts to negotiate in good faith a definitive agreement providing for the purchase by ICC of the Miami Jai-Alai Business (the "Transaction") at a purchase price that is, to the extent that the projected net revenue retained by the Miami Jai-Alai Business is greater than or equal to 55%, equal to the greater of: (i) the difference between (a) six times the projected first year EBITDA of the Miami Jai-Alai Business and (b) the projected cost to ICC of the development, construction, equipping and opening of the slot machine facility proposed by ICC at the location of the Miami Jai-Alai Business; or (ii) $100 million. The Letter further provided that if the projected net revenue is less than 55%, the parties may further negotiate the purchase price with appropriate adjustments for such lesser net revenue. The Letter’s Final Approval Date was triggered on January 29, 2008 when legislation allowing for the operation of slot machines was approved in Dade County, Florida; the county in which the Miami Jai-Alai business is located.

As further inducement to ICC to provide the Loan, ICC required that Freedom Financial, Freedom Holding, Inc., a Delaware corporation and the owner of 100% of the outstanding equity of Freedom Financial, Collett Capital Corporation, a Delaware corporation and the beneficial owner of approximately 28.6% of the voting power of Florida Gaming ("Collett Capital"), and W. Bennett Collett ("Mr. Collett"), who is the beneficial owner of approximately 90.8% of Collett Capital, entered into a Shareholders' Support Agreement and Release of Liens (the "Shareholders' Support Agreement"). Under the Shareholders' Support Agreement, (i) Freedom Financial agreed to release the Released Security, (ii) Florida Gaming agreed to repay to Freedom Financial certain pre-existing indebtedness, (iii) Freedom Financial agreed to pay to ICC at least $1,200,000 as a prepayment of a portion of pre-existing indebtedness owed by Freedom Financial to ICC, (iv) Freedom Financial, Holding, Collett Capital, and Mr. Collett (collectively, the "Holders") agreed to not permit discussions or negotiations to continue regarding a Prohibited Transaction, (v) the Holders agreed to vote the stock in Florida Gaming in favor of the Transaction and against any Prohibited Transaction, and (vi) the Holders granted to ICC, contingent upon receipt of all necessary approvals by appropriate Florida regulatory agencies, a proxy to vote their Florida Gaming stock in favor of the Transaction and against any Prohibited Transaction. Mr. and Mrs. Rowland Howell (a Director), beneficial owners of approximately 13.8% of Florida Gaming's outstanding capital stock, entered into a separate Shareholders' Support Agreement with respect to items (iv), (v), and (vi), above. The grantors of the proxies described are, collectively, the beneficial owners of greater than 50% of the outstanding capital stock of Florida Gaming. On July 29, 2008 the exclusivity period under the Letter expired without execution of the Transaction.

F-33

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FLORIDA GAMING CORPORATION AND SUBSIDIARIES

December 31, 2009 and 2008

NOTE H—LONG-TERM DEBT—CONTINUED

On December 31, 2008, the parties entered into a Amended and Restated Secured Promissory Note (the “Amended Note”) which restructured the Note as follows: Florida Gaming made a partial repayment of $2 million, the interest rate on the Note was changed to 10%, the maturity date of the Note was moved to December 31, 2009, and the parties executed an Amended and Restated Pledge Agreement. Under the Amended Note, Florida Gaming must make quarterly payments of interest only, in arrears, to ICC, except that during the continuance of any Event of Default (as defined in the Amended Note), interest accrues at an annual rate of 18%. The entire unpaid principal amount of the amended Note and unpaid interest thereon is payable on the earlier of (i) the sale of all or any material portion of the assets of, or all or any substantial equity interest in, Florida Gaming Centers, Inc., (Centers), or (ii) December 31, 2009. Under the Amended and Restated Pledge Agreement, Florida Gaming’s obligations to ICC under the Amended Note are secured by Florida Gaming's pledge to ICC of a continuing security interest in (a) 1,000 shares of the capital stock of Centers owned by Florida Gaming, which constitutes all of the issued and outstanding shares of Centers’ capital stock, (b) all rights, title and interest in the Company’s Ft. Pierce gaming license, (c) the Company’s Ft. Pierce building, structures, and fixtures and (d) all products and proceeds of all of the foregoing.

The Company failed to repay the ICC note on its maturity date of December 31, 2009. That failure constitutes an Event of Default under the Amended Note. On March 1, 2010, the Company and its Centers subsidiary were served with a complaint (the “Complaint”) by ICC. The Complaint alleges: (1) that the Company breached its duties under the Amended and Restated Secured Promissory Note (2) that Centers breached its guaranty under the Note; (3) that the Company and Centers breached their duties under a Simulcast Wagering Agreement with ICC; and (4) that the Company and Centers were unjustly enriched through ICC’s broadcasts of horse racing events. Under the Complaint, ICC is demanding (1) foreclosure of a security interest ICC holds in all of the shares of outstanding stock of Center, and (2) damages of $358,823 plus interest, costs and such further relief as the court deems proper.

On March 19, 2010, the Company and Centers were served with a second complaint by ICC related to the Note. The second complaint seeks foreclosure on the mortgage granted to ICC on Center’s real property located in Ft. Pierce, Florida, and all buildings, structures, and fixtures and improvements located thereon.

F-34

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FLORIDA GAMING CORPORATION AND SUBSIDIARIES

December 31, 2009 and 2008

NOTE H—LONG-TERM DEBT—CONTINUED

As of December 31, 2009 and through March 31, 2010, the $3,000,000 ICC Note remains outstanding and the complaint is unresolved.

Florida Gaming agreed to compensate its Chairman annually in an amount equal to 2% of the outstanding balance of the Freedom Financial debt. Guarantee payments totaling $22,385 were paid during 2008, pursuant to this agreement.

On January 20, 2005, the Miami-Dade Board of County Commissioners called a countywide special election to be held by Miami-Dade County on March 8, 2005, (the “Special Election”) for the purpose of submitting to the qualified electors of Miami-Dade County the question of whether to authorize slot machines in certain existing, licensed pari-mutuel facilities. Florida Gaming agreed to enter into certain agreements with Miami-Dade County, which mandated a prepayment of $1,333,333 by Florida Gaming to Miami-Dade. Florida Gaming paid $500,000 of this prepayment in 2005 and signed a note payable to Calder Race Course, Inc. and West Flagler Associated, LTD, who paid the remaining $833,333 on Florida Gaming’s behalf. Payment of neither the note’s principal nor interest was due until the authorization by the qualified electors of Miami-Dade County of the operation of slot machines at Miami Jai-Alai (the “Event”). The Event failed to occur on March 8, 2005 but did occur in a subsequent election on January 29, 2008. Florida Gaming made its first payment on the note within ten days following the Event. The note bears interest at the prime lending rate plus 4% and is due in thirty-six installments of $23,145 plus all interest accrued.

F-35

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FLORIDA GAMING CORPORATION AND SUBSIDIARIES

December 31, 2009 and 2008

NOTE H—LONG-TERM DEBT—CONTINUED

On December 23, 2009, Centers was served with a summons and complaint (the “Complaint”) from West Flagler Associated, Ltd. And Calder Race Course, Inc. (“Plaintiffs”). The Complaint alleges that Centers executed a Promissory Note on January 31, 2005 in favor of the Plaintiffs and that Centers has breached the terms of the Promissory Note by failing to make the payments required there under, which Plaintiffs allege were to commence in February 2008. Plaintiffs allege that Centers made monthly payments under the Promissory Note in the amount of $23,148 per month from February 2008 to July 2009 but have failed to make payments thereafter. Plaintiffs allege that the entire debt is now due and owing and allege to be owed the principal amount of $416,666 plus interest since July 1, 2009, the date of the alleged last payment made under the Promissory Note. Plaintiffs also seek default interest and late penalties of undisclosed amounts. Centers filed an answer and affirmative defenses to the Complaint on March 2, 2010 and intends to vigorously defend the Complaint.

In February, 2009, in a settlement agreement related to an eminent domain proceeding, the Company agreed to acquire a total of 10.982 acres of land from Miami-Dade County (the “County”) in two separate phases and also sell the County a temporary construction easement and .492 acres of the Company’s land. The Company’s total purchase price of the 10.982 acreage is $16,742,145. The .492 acres sold to the County will be used by the Miami-Dade Metro Rail, an overhead light rail system.

On April 6, 2009, the Company completed Phase 1 of its two-phase acquisition of the 10.982 acres of property from the County. Phase 1 included the closing of the purchase of approximately 2.283 acres from the County for $3,348,429, including a down payment of $334,843 and a County financed note payable of $3,013,586 for 15 years with final payment due April 1, 2024, with a fixed interest rate of 7.25%. The Note is secured by the purchased property pursuant to a mortgage and security agreement between the Company and the County. The Company also received air-rights over N.W. 37th Avenue, a street separating the two properties. Closing of Phase 2 of the transaction for the remaining approximately 8.7 acres is scheduled to take place prior to July 1, 2010.

Phase 1 also included the County’s purchase of .492 acres from the Company for $1,185,345. The Company’s basis in the land was $65,160, costs to sell totaled $250,000; therefore, the net gain on the sale totaled $870,185.

The above table (at the beginning of Note H) representing the long-term portion of the Company’s note payable to the County reflects the Notes status through December 31, 2009. The Company has not made payments on this note since December 31, 2009 and through the date of these financial statements. As of March 31, 2010, the County has not informed the Company of any default on this note. Such notice from the County would cause all amounts classified long-term in the above table to become immediately due. Contractually, if the Note is not in default, principal payments are due as such: $121,138 in 2010; $130,217 in 2011; $139,959 in 2012; $150,470 in 2013; $161,749 in 2014; and $2,234,418 thereafter.

F-36

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FLORIDA GAMING CORPORATION AND SUBSIDIARIES

December 31, 2009 and 2008

NOTE H—LONG-TERM DEBT—CONTINUED

If the Company is found in default of its note to the County, the County may charge a default interest rate of 18.0%, impose late charges of 5.0% of any required payment which is not received, accelerate payment on the Note balance, and begin foreclosure on its secured interest.

On February 22, 2009 the Company executed a note payable to a party in settlement of a lawsuit. The note is unsecured and bears interest at 7.0%. Payments of principal and interest are paid monthly with all remaining unpaid principal and interest due February 1, 2011. Contractually, principal is due as such: $14,000 in 2010 and $186,000 in 2011.

On August 14, 2009, the Company entered into a Memorandum of Agreement (the “Agreement”) with Solomon O. Howell (“Howell”) and James W. Stuckert (“Stuckert,” and collectively with Howell, the “Lenders”) pursuant to which the Lenders may advance cash (each an “Advance”, and collectively the “Advances”) to the Company up to a maximum aggregate amount of $1,000,000.

Under the Agreement, the Advances are to be evidenced by convertible promissory notes (each a “Note”, and collectively, “Notes”). Advances to the Company were $1,000,000 through December 31, 2009 evidenced by eight separate Notes: two on August 14, 2009 for $150,000 each; two on September 2, 2009 for $150,000 each; two on October 7, 2009 for $100,000 each; and two on November 5, 2009 for $100,000 each. The Notes bear interest at an annual rate of 5% and matured December 31, 2009. The Notes include a convertible feature allowing the Lenders, at their option, to convert outstanding principal and any accrued but unpaid interest into the Company’s $.20 par common stock at $6.00 per share. The Company used the Black Scholes pricing model to value the conversion rights embedded in the Notes. The conversion rights were valued at $138,204; initially recorded as a discount on the notes payable; and subsequently amortized as financing costs in the Company’s 2009 statement of operations over the notes’ term ending December 31, 2009. Also, under the Agreement, if, using its good faith best efforts, the Company is able to obtain the consent of Isle of Capri, Inc., which holds a first mortgage on certain real property owned by the Company’s wholly-owned subsidiary, Florida Gaming Centers, the Company’s obligations under the Notes will be secured by a second mortgage on such property. As of December 31, 2009 and through March 31, 2010, the Company had failed to obtain such consent from Isle of Capri. Additionally, during the period which one or more of the Notes remains outstanding, the Agreement restricts the Company from granting to its officers or directors any new equity in the Company.

F-37

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FLORIDA GAMING CORPORATION AND SUBSIDIARIES

December 31, 2009 and 2008

NOTE H—LONG-TERM DEBT—CONTINUED

Assumptions in the Black Scholes model used to value the conversion rights in the Notes are outlined in the table below:

Date Notes Issued	Number of Options		Risk-Free Rate			Expected Forfeitures			Expected Volatility			Expected Term (in years)		Expected Dividends

August 14, 2009		50,000		0.18	%		71.00	%		21.06	%		.41	None
September 2, 2009		50,000		0.14	%		71.00	%		21.06	%		.33	None
October 7, 2009		33,000		0.09	%		71.00	%		21.06	%		.25	None
November 5, 2009		33,000		0.06	%		71.00	%		21.06	%		.167	None

On October 7, 2009, additional financing costs were paid to the Lenders related to the Agreement. These costs were paid in the form of 40,000 stock warrants. The warrants were valued at $39,451 using the Black Scholes pricing model and were amortized into expense over the remaining term of the Notes, which matured December 31, 2009 (see Note C).

The effective interest rate on the Notes is 22.77%, with the coupon rate at 5.0%, the conversion rights representing 13.82% and the warrant issue representing 3.95%. All eight Notes maintain a default interest rate of 24% and through March 31, 2010, all eight Notes remained past maturity and therefore in default.

On December 11, 2009, the Company executed a $500,000 note payable to Nurmi Properties, LLC and Robinette Investments, LLC (collectively “Nurmi”). The note is secured by a mortgage and security agreement on the Company’s Miami facilities as well as an assignment of rents and leases and bears interest at 13.0% per annum. Payments of interest only are due monthly with all interest accrued and unpaid as well as all principal due December 11, 2010. The note maintains a prepayment penalty of: 3.0% if prepaid before February 11, 2010; 2.0% if prepaid between February 11, 2010 and April 11, 2010; 1.0% if prepaid between April 11, 2010 and May 11, 2010; with no penalty post May 11, 2010. The note also contains a demand clause and late payment penalties of 5.0% of the late payment if the Company is found to be in default. On February 4, 2010, the Company modified the note by borrowing an additional $150,000 from Nurmi.

F-38

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FLORIDA GAMING CORPORATION AND SUBSIDIARIES

December 31, 2009 and 2008

NOTE H—LONG-TERM DEBT—CONTINUED

The Company’s mortgage note payable dated December 18, 2006 and secured by Lot 28B at Tara matured November 17, 2009. The Company failed to repay the note at this time and the lender has refused to extend the note. The note is in default at December 31, 2009 and through the date of theses financial statements.

NOTE I—PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment comprise the following:

	December 31,
	2009			2008

Land	$	8,164,543		$	4,780,472
Buildings and improvements		8,941,404			8,852,989
Equipment, furniture and fixtures		1,695,131			1,690,409
Vehicles		85,910			85,910
Construction in progress		1,070			21,322
Less accumulated depreciation		(4,480,410	)		(4,000,825	)

	$	14,407,648		$	11,430,277

Depreciation expense totaled $479,585 and $406,461 during 2009 and 2008, respectively.

In January, 2009, the Company agreed to acquire a total of 10.982 acres of land from Miami-Dade County (the “County”) in two separate phases and also sell the County .492 acres of the Company’s land. The Company’s total purchase price of the 10.982 acreage will be $16,742,145. The .492 acres sold to the County will be used by the Miami-Dade Metro Rail for an overhead light rail system.

On April 6, 2009, the Company completed Phase 1 of its two-phase acquisition of the 10.982 acres of property from the County (see Note H). Closing of Phase 2 of the transaction for the remaining approximately 8.7 acres is scheduled to take place prior to July 1, 2010.

F-39

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FLORIDA GAMING CORPORATION AND SUBSIDIARIES

December 31, 2009 and 2008

NOTE I—PROPERTY, PLANT AND EQUIPMENT—CONTINUED

Phase 1 also included the County’s purchase of the right-of-way of .492 acres from the Company for $1,185,345. The Company’s basis in the right-of-way was $65,160, costs to sell totaled $250,000; therefore, the net gain on sale totaled $870,185.

NOTE J—SUMMER JAI-ALAI

In conjunction with the acquisition of WJA’s Frontons, the Company acquired WJA’s 21% interest in the Summer Jai-Alai, Partnership (the “Partnership”), a Florida general partnership formed in 1980 with three other pari-mutuel permit holders for the purpose of conducting pari-mutuel jai-alai operations at the Miami fronton during the six months between May 1 to October 31 (“Summer Jai-Alai Operations”). The Company’s partners were Hollywood Greyhound, Flagler Greyhound and Biscayne Kennel Club or their successors. The Company’s interest in the Partnership was accounted for under the equity method and had a carrying value of $92,491 at December 31, 2009 and 2008.

Pursuant to the settlement of certain partnership disputes, since the 1998 season the Company operated the Partnership at its own risk and for its own benefit under annual agreements which required fixed payments to each of the partners. The agreement authorizing the Company’s use of the Summer Jai-Alai permit (the “Permit”) between June 30, 2002 and June 30, 2004 required a fee of $345,000 payable monthly in 12 equal installments. The Company agreed to hold its partners harmless for any and all losses or liabilities incurred through June 30, 2004. After June 30, 2004, the permit agreement terminated and the previous partnership agreement became the controlling document for the operation of the Partnership by the parties. The Partnership had a loss of $202,227 for its 2004 summer season. The Company entered into a dispute to recover $98,608 from its partners for their allocable shares of the loss after June 30, 2004.

The Company also took the position in the dispute with its partners that effective October 31, 2004 the Partnership terminated and subsequent to December 31, 2004 the Company had operated the Summer Jai-Alai Operations for its own benefit as a division of the Company. In this connection the Company assumed certain operating payables and receivables of the Partnership which resulted in the Company carrying a receivable from the Partnership of $255,509 at December 31, 2006. During 2007, a settlement was reached between the Company and its partners. The Company forgave its $255,509 receivable from the Partnership and its $98,608 receivable from its partners. The settlement provides the Partnership will continue as a going concern with the Company a 21% owner, West Flagler Associates LTD a 52% owner, and BKCLP 2 LTD a 27% owner. The Partnership owns the Permit and under a Permit Use Agreement (the “PUA”) between the Company and the Partnership, the Company has the exclusive right to conduct gaming operations under the Permit. The Company derives all revenue, and is responsible for all expenses, from such gaming operations. In addition, the Company must assure that the holder of the Permit remains authorized to conduct all activities that Florida law authorizes under the Permit, based on the law in effect at any particular time. The Company may terminate the PUA if the requirement to keep it valid imposes a material burden on the Company. West Flagler and BKCLP may terminate the PUA if they jointly elect to do so. If the PUA is terminated (and, thus the Permit’s use reverts to the Partnership) the Partnership does not have the right to conduct activities at the Company’s fronton. The Company, West Flagler and BKCLP entered into an Amended and Restated Partnership

F-40

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FLORIDA GAMING CORPORATION AND SUBSIDIARIES

December 31, 2009 and 2008

NOTE J—SUMMER JAI-ALAI—CONTINUED

Agreement for the Summer Jai-Alai Partnership and except for the following put/call rights, all actions of the Partnership require unanimous approval of the three Partners. The Partnership contains mandatory put/call rights which take effect if (1) the PUA is terminated by the Company, (2) the PUA is terminated by West Flagler and BKCLP, or (3) any two partners deliver to the third partner a notice of election to trigger the put/call. Under the put/call rights, the party(ies) triggering the put/call must offer to sell to the other partner(s) its interest at a stated price. The other partners may either buy the interest at that price, or sell their interests to the triggering partner at that price. Each partner must give the other partners 45 days advance notice of a “Change of Control” – which is a change of ownership of more that 40% of the partner’s equity and, in the case of the Company, a sale by its Chairman and his affiliates of more than 50% of their stock in the Company.

In accordance with the settlement, all revenues and expenses of the Summer Jai-Alai Operations are included in operating income and expenses of the Company in the accompanying Statements of Operations.

NOTE K—REAL ESTATE HELD FOR SALE

The Company’s Tara subsidiary holds six residential lots called Tara Club Estates (collectively, “Tara” or the “Properties”), all of which is situated in Loganville, Walton County, Georgia. The carrying value of these lots was as follows:

	2009			2008
Real estate held for sale:
Cost of real estate held for sale (six lots)	$	302,569		$	302,569
Reserve for losses on sale of real estate		(68,569	)		(5,069	)

Balances, December 31	$	234,000		$	297,500

In accordance with ASC Topic 360-10-05 “Impairment or Disposal of Long-lived Assets” the Company periodically evaluates and adjusts its reserve for losses on its property held for sale. Activity in the reserve for 2009 and 2008 was as follows:

F-41

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FLORIDA GAMING CORPORATION AND SUBSIDIARIES

December 31, 2009 and 2008

NOTE K—REAL ESTATE HELD FOR SALE—CONTINUED

	2009		2008
Allowance for losses on property held for sale
Balances, January 1	$	5,069	$	5,069
Provision for losses		63,500		-0-
Charges to the reserve		-0-		-0-

Balances, December 31	$	68,569	$	5,069

The Company has completed its development activities and will expend no additional resources to further develop its properties. Accordingly, future expenses incurred related to these properties will be expensed as incurred.

The Company’s real estate development activities comprise a separate segment of its operations (See Note L).

NOTE L—SEGMENT INFORMATION

The Company follows ASC Topic 280, “Segment Reporting.” Topic 280 requires companies to report information about the revenues derived from the enterprise’s segments, about the geographical divisions in which the enterprise earns revenues and holds assets, and about major customers.

The Company has defined its segments into two main areas: Florida Gaming Centers (Centers) and Tara Club Estates (Tara). These segments are organized under the supervision of the Florida Gaming executive management team and are evaluated based on the following information presented: Revenues from gaming operations, revenues from lot sales and operating profit contribution to the total corporation. All inter-segment transactions are eliminated to arrive at the total corporation revenue and operating profit. Income and expense items below operating profit are not allocated to the segments and are not disclosed.

The Florida Gaming Centers segment operates the Corporation’s jai-alai centers in Miami and Fort Pierce, Florida. Centers also operates the Company’s inter-track wagering operation in Florida. Tara Club Estates is a real estate development in Loganville, Georgia. Tara develops residential building lots for sales to builders and individuals. As permitted under Topic 280, certain information not routinely used in the management of these segments, information not allocated back to the segments or information that is impractical to report is not shown. Items not disclosed are as follows: Interest Income and Expense, Amortization Expense, Income Tax Expense or Benefit, Extraordinary Items, Significant non-cash items and Long-lived assets.

F-42

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FLORIDA GAMING CORPORATION AND SUBSIDIARIES

December 31, 2009 and 2008

NOTE L—SEGMENT INFORMATION—CONTINUED

Centers’ gaming operations comprise 100% of the Company’s revenues. Neither Centers nor Tara has any customers that individually represent a significant portion of their business.

	December 31, 2009
(Dollar Amounts in Thousands)				Assets				Revenues				Profit (Loss)

Florida Gaming Centers		98	%	$	15,964	100	%	$	13,996	98	%	$	(4,775	)

Tara Club Estates		2	%		264	-0-			-0-	2	%		(95	)

CONSOLIDATED TOTAL		100	%	$	16,228	100	%	$	13,996	100	%	$	(4,870	)

	December 31, 2008
(Dollar Amounts in Thousands)				Assets				Revenues				Profit (Loss)

Florida Gaming Centers		98	%	$	13,808	100	%	$	14,001	78	%	$	(83	)

Tara Club Estates		2	%		343	-0-			-0-	22	%		(24	)

CONSOLIDATED TOTAL		100	%	$	14,151	100	%	$	14,001	100	%	$	(107	)

NOTE M—REFERENDUM ON CASINO GAMING

In November 2004, voters in Florida approved an amendment to the Constitution of the State of Florida to allow Broward and Dade Counties in Florida the local option to hold elections to approve certain types of casino gaming at pari-mutuel betting facilities within each county. In March 2005, local option elections were held in Broward and Dade Counties. The Company’s Miami fronton is in Dade County. The local referendum passed in Broward County and failed in Dade County in 2005.

F-43

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FLORIDA GAMING CORPORATION AND SUBSIDIARIES

December 31, 2009 and 2008

NOTE M—REFERENDUM ON CASINO GAMING—CONTINUED

On January 31, 2005 the Company agreed to pay Dade County for certain “infrastructure improvements” required by the County in connection with the referendum. The arrangement required the Company to make an initial payment of $500,000 to Dade County in January 2005. A second payment of $833,333 was made on behalf of the Company by two other pari-mutuel facilities in Dade County. In consideration for this payment, the Company issued a note payable to these parties. The Company’s obligation to repay the $833,333 note was contingent on the passage of the gaming question. In January, 2008, the voters in Dade County voted to approve certain types of casino gaming at pari-mutual betting facilities. Accordingly, the Company recorded the resulting $833,333 liability concurrently with a charge to expense.

In 2005, Floridians Against Expanded Gambling filed suit against Floridians for a Level Playing Field, et al, challenging the process by which signatures were collected in order to place a constitutional amendment on the ballot in 2004 allowing Miami-Dade and Broward County voters to approve slot machines in pari-mutuel facilities. In February, 2009 the parties to the suit agreed to a settlement of all pending claims. The Company’s estimated cost of settlement was recorded as an expense in the accompanying 2008 Statement of Operations.

NOTE N—INSURANCE RECOVERY

During 2005, the Company’s Miami facilities were damaged by a hurricane. The Company’s insurance carrier issued a payment of $400,000 and offered an additional $500,000 for a total of $900,000 in settlement of the claims made to repair or replace the damaged Miami components. The Company incurred $171,795 in expenses related to the hurricane damage. The carrying value of the Miami assets damaged totaled $404,602. Accordingly, the Company’s insurance recoveries net of losses totaled $323,603 for the year ending December 31, 2005. As a result of the Company’s continued negotiations with the insurance carrier the Company received insurance proceeds totaling $1,852,160 from the carrier, $952,160 in excess of the insurance company’s original offer, through March 22, 2007. The Company also incurred expenses totaling $110,216 during 2006 in connection with the collection of these funds for the services of an independent consultant assisting with the negotiations. The Company recorded these additional net proceeds as insurance recoveries net of losses of $841,944 for the year ending December 31, 2006. Continued litigation in 2008 lead to a settlement payment from the insurance carrier of $8,500,000. Professional and consulting costs incurred to settle this litigation totaled $1,238,852 and bonuses of $126,192 were also paid to two Company officers for their contributions resulting in net proceeds of $7,134,956. The Company recorded these additional net proceeds as insurance recoveries net of losses of $7,134,956 for the year ending December 31, 2008. The 2008 recovery net of losses was recorded as a change in accounting estimate in accordance with Statements of Financial Accounting Standards No. 154 (FAS 154), Accounting Changes and Error Corrections, (now integrated into ASC Topic 250) which requires a change in accounting estimate be recorded prospectively. There were no income taxes resulting from the gain because the Company has sufficient tax net operating losses available to be carried forward. The 2008 recovery net of losses of $7,134,956 is included as other income in the accompanying 2008 Statements of Operations.

F-44

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FLORIDA GAMING CORPORATION AND SUBSIDIARIES

December 31, 2009 and 2008

NOTE O—HANDLE

Pari-Mutuel handle for years ending December 31, 2009 and 2008 is as follows:

	2009		2008
HANDLE
Live Jai-Alai	$	12,712,386	$	15,220,308
ITW-Guest		32,650,197		36,926,303
ITW-Host		13,546,357		17,291,894

Total Pari-Mutuel Handle	$	58,908,940	$	69,438,505

Since 2005, the Company has operated Summer Jai-Alai (Summer) as a division of the Company. Accordingly, all handle, income and expenses from Summer’s operations are included in the Company’s consolidated financial statements for the years ending December 31, 2009 and 2008 (see Note J). The Company’s Florida Gaming Centers and Summer Jai-Alai handle and operations are reported under separate licenses to the State of Florida.

NOTE P—FAIR VALUE MEASUREMENTS

ASC Topic 820 requires disclosures concerning fair value measurements and establishes a three-level valuation hierarchy. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:

Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

F-45

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FLORIDA GAMING CORPORATION AND SUBSIDIARIES

December 31, 2009 and 2008

NOTE P—FAIR VALUE MEASUREMENTS—CONTINUED

Level 3 — inputs to the valuation methodology are unobservable and significant to the fair value measurement.

ASC Topic 820 requires disclosure of assets and liabilities measured at fair value on a nonrecurring basis. The following tables present the financial assets carried by the Company at fair value and by the Topic 820 valuation hierarchy (as described above).

Assets measured at fair value on a nonrecurring basis as of December 31, 2009


	Total carrying value in balance sheet		Quoted market prices in an active market (Level 1)		Internal models with significant observable market parameters (Level 2)		Internal models with significant unobservable market parameters (Level 3)		Total Gains (Losses)

Real Estate Held For Sale	$	234,000		-0-	$	234,000		-0-	$	(68,569	)

Total assets at fair value	$	234,000		-0-	$	234,000		-0-	$	(68,569	)

Assets measured at fair value on a nonrecurring basis as of December 31, 2008


	Total carrying value in balance sheet		Quoted market prices in an active market (Level 1)		Internal models with significant observable market parameters (Level 2)		Internal models with significant unobservable market parameters (Level 3)		Total Gains (Losses)

Real Estate Held For Sale	$	297,500		-0-	$	297,500		-0-	$	(5,069	)

Total assets at fair value	$	297,500		-0-	$	297,500		-0-	$	(5,069	)

F-46

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FLORIDA GAMING CORPORATION AND SUBSIDIARIES

December 31, 2009 and 2008

NOTE P—FAIR VALUE MEASUREMENTS—CONTINUED

In accordance with the provisions of ASC Topic 360-10-05 the Company periodically evaluates and adjusts its real estate held for sale for impairment. Fair value is determined based on recent sales of similar property. The Company maintained a reserve for loss of $68,569 on its real estate held for sale as of December 31, 2009. A provision of $63,500 was made to the reserve in 2009 due to the decrease in real estate values in the area where the property is located.

ASC Topic 820 also requires disclosure of assets and liabilities measured at fair value on a recurring basis. The Company measured no assets or liabilities at fair value on a recurring basis as of December 31, 2009.

NOTE Q—GOING CONCERN

As reflected in the accompanying consolidated financial statements, the Company has net losses for the year ended December 31, 2009 of $4,860,192 and cash used in operations during the year ended December 31, 2009 of $2,416,703. Additionally, the Company is in default on several of its notes as further described in Note H. Delinquent notes payable may lead to loss of significant Company assets which secures such debt. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

The Company is primarily involved in the jai-alai gaming industry along with intertrack wagering on jai-alai, horse racing and dog racing. The industry as a whole has declined significantly in last ten years. Due to this decline, the Company has sought to increase revenues through investments in its licensed card rooms as well as continued analysis of their ability to install slot machines in its Miami facility. The ability of the Company to continue as a going concern is dependent on the Company’s ability to further implement its business plan to generate increased revenues and to raise additional funds. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

The attainment of sustainable profitability and positive cash flow from operations is dependent on certain future events. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Management may attempt to raise additional funds by way of a public or private offering of its securities or the issuance of additional debt. While the Company believes in the viability of its strategy to raise additional funds, there can be no assurances to that effect.

F-47

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