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

Executive Overview

We are a leading developer, owner and operator of branded gaming facilities and related lodging and entertainment facilities in regional markets in the United States. We have intentionally sought geographic diversity to limit the risks caused by weather, regional economic difficulties and local gaming authorities and regulations. We currently operate casinos in Mississippi, Louisiana, Missouri, Iowa, Colorado and Florida. We also operate a harness racing track at our casino in Florida. Internationally we currently operate casinos in Dudley and Wolverhampton, England, which are classified as discontinued operations and in Freeport, Grand Bahamas.

Our operating results for the periods presented have been affected, both positively and negatively, by current economic conditions and several other factors discussed in detail below. This Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with and giving consideration to the following:

Our historical operating results may not be indicative of our future results of operations because of these factors and the changing competitive landscape in each of our markets, as well as by factors discussed elsewhere in this Annual Report.

Impact of Current Economic Conditions-The current state of the United States economy has negatively impacted our results of operations through fiscal 2009. The turmoil in the credit and other financial markets, and in the broader global economy has exacerbated these trends and consumer confidence has been significantly impacted, as evidenced by broader indications of consumer behavior such as trends in auto and other retail sales. We believe that our customers have reduced their discretionary spending as a result of these adverse economic conditions. Given these economic conditions, we have increasingly focused on managing costs. Given the uncertainty in the economy and the unprecedented nature of the situation with the financial and credit markets, forecasting future results has become very difficult.

Items Impacting Income (Loss) from Continuing Operations-Significant items impacting our income (loss) from continuing operations during the fiscal years ended April 26, 2009, April 27, 2008 and April 29, 2007 are as follows:

                                                           Fiscal Year Ended
                                                 April 26,     April 27,     April 29,
                                                   2009          2008          2007
Hurricane and other insurance recoveries, net    $     95.2    $      2.1    $      2.8
Valuation charges                                     (36.1 )        (6.5 )        (7.8 )
Pre-opening expenses                                      -          (3.6 )       (11.4 )
Minority interest                                         -          (4.9 )        (3.6 )
Gain (loss) on early extinguishment of debt            57.7         (15.3 )           -

Hurricane and Other Insurance Recoveries, net-Our insurance recoveries for fiscal year 2009 include $92.2 million relating to the final settlement of our Hurricane Katrina claim at our Biloxi property and other insurance recoveries.

Valuation Charges-As a result of our annual impairment tests of goodwill and long-lived intangible assets under SFAS 142, we recorded impairment charges of $18.3 million at our Black Hawk property

in fiscal 2009 and $7.8 million at our Lula property in fiscal year 2007. The results from operations for the fiscal year 2009 also include a $11.9 million write-off of construction in progress at our Biloxi property following our decision not to continue a previously anticipated current construction project, in its current form and a $6.0 million charge following our termination of an agreement for a potential development of a casino in Portland, Oregon. Fiscal year 2008 results also include $6.5 million of charges related to the termination of our plans to develop a new casino in west Harrison County, Mississippi and the cancellation of construction projects in Davenport, Iowa and Kansas City, Missouri.

Opening/Acquisition of New Properties and Pre-opening Expenses-During fiscal year 2008, our operating results were impacted by the opening of the slot gaming facility at our Pompano facility in April 2007, the acquisition of our Caruthersville, Missouri casino in June 2007 and the opening of our Waterloo, Iowa casino in June 2007. The periods prior to the opening of each of our new casino operations were impacted by pre-opening expenses.

Acquisition of Minority Interest-On January 27, 2008, we acquired the remaining 43% minority interest in our Black Hawk, Colorado casino properties for $64.8 million.

Gain (Loss) on Early Extinguishment of Debt-During February of 2009, we retired $142.7 million of our senior subordinated notes, through a tender offer, for a cash payment of $82.8 million. After expenses related to the elimination of deferred financing costs and transactions costs, we recognized a pretax gain of $57.9 million related to the transaction. During March 2009, we permanently repaid $35.0 million of our variable rate term loans as required under our senior secured credit facility with proceeds from our Hurricane Katrina insurance settlement resulting in a loss on early extinguishment of debt of $0.2 million due to the write-off of deferred financing cost.

We recorded a total of $15.3 million in losses associated with the early extinguishment of debt during fiscal year 2008, including a $9.0 million call premium paid to retire $200.0 million of our 9% Senior Subordinated Notes, and $6.3 million of deferred financing costs associated with the retired debt instruments.

Discontinued Operations-Discontinued operations include the results of our Coventry, Blue Chip, Bossier City and Vicksburg Properties. On April 23, 2009, we completed the sale of our assets and terminated our lease of Arena Coventry Convention Center relating to our casino operations in Coventry, England. Our lease termination costs and other expenses, net of cash proceeds from our assets sales, resulted in a pretax charge of $12.0 million recorded in fiscal year 2009 related to our discontinued Coventry operations. Our Blue Chip casino operations are classified as discontinued operations with assets held for sale at the end of fiscal year 2009 and we recorded a $1.4 million charge to reduce the assets held for sale to their estimated fair value. Our Bossier City and Vicksburg properties were sold during fiscal year 2007 and our discontinued operating results include a pretax gain of $23.2 million.

Smoking Restrictions-While we have benefited at our Bettendorf and Davenport Iowa properties from a smoking ban that impacts a competitor, the smoking ban enacted in Colorado during January 2008 has had a continuing adverse impact on our overall operating results at our Black Hawk, Colorado properties.

Increased Competition-The introduction of table games and expansion of Class III gaming at competing Native American casinos, beginning July 2008, has had a negative impact on our Pompano property's net revenues and operating results. The opening of a competing land-based facility, which replaced a riverboat operation in the Quad Cities area during December 2008, has had a negative impact on net revenues and operating results at our Bettendorf and Davenport, Iowa properties. Following the impact of Hurricane Katrina in the fall of 2005, our Mississippi properties in Biloxi and Natchez experienced strong revenue growth as a result of limited competition on the Gulf Coast. Since

that time, the Gulf Coast has seen recovery in casino development which, combined with the closure of the Biloxi/Ocean Springs bridge through November 1, 2007, has significantly reduced our market share in Biloxi from their artificially high post-Katrina levels. Patron counts have decreased at our Natchez property as gaming patrons who were displaced by hurricanes have returned to the Gulf Coast. In Louisiana, our Lake Charles property experienced higher gaming revenues in fiscal year 2007 due to the closure of competitors' facilities as a result of Hurricane Rita. Competition has reopened which has resulted in decreased gaming revenues at our Lake Charles property in fiscal years 2008 and 2009 as compared to fiscal year 2007.

Results of Operations

Our results of continuing operations for the fiscal years ended April 26, 2009, April 27, 2008 and April 29, 2007 reflect the consolidated operations of all of our subsidiaries. Fiscal year 2008 and 2007 results have been reclassified to reflect the classification of certain operations as discontinued. This includes our Coventry and Blue Chip Casino operations in the UK classified as discontinued operations in the fourth quarter of fiscal 2009 and our Vicksburg, Mississippi and the Bossier City, Louisiana properties which were sold on July 31, 2006.

Our fiscal year ends on the last Sunday in April. This fiscal year convention creates more comparability of our quarterly operations, by generally having an equal number of weeks (13) and weekend days (26) in each quarter. Periodically, this convention necessitates a 53-week year. The fiscal years ended April 26, 2009, April 27, 2008 and April 29, 2007 were 52-week years.

                          ISLE OF CAPRI CASINOS, INC.
                                 (In thousands)

                                            Net Revenues                      Operating Income (Loss)
                                         Fiscal Year Ended                       Fiscal Year Ended
                                April 26,     April 27,    April 29,    April 26,    April 27,    April 29,
(in thousands)                    2009          2008          2007         2009         2008         2007
Mississippi
  Biloxi                       $    83,519   $    90,586    $ 147,825    $  (7,952 )  $  (3,538 )  $  26,948
  Natchez                           35,936        35,707       40,864        9,674        7,412        9,391
  Lula                              70,987        75,399       83,068       11,498       11,034       12,031

  Mississippi Total                190,442       201,692      271,757       13,220       14,908       48,370
Louisiana
  Lakes Charles                    152,112       159,470      168,540       22,041       20,623       19,868
Missouri
  Kansas City                       74,435        75,630       82,269       10,369        8,121        7,258
  Boonville                         78,581        79,816       81,156       20,737       19,485       17,884
  Caruthersville(1)                 31,579        26,857            -        1,638        2,574            -

  Missouri Total                   184,595       182,303      163,425       32,744       30,180       25,142
Iowa
  Bettendorf                        91,657        92,429       87,699       20,090       18,967       17,120
  Davenport                         49,005        52,333       60,483       10,351        8,834        8,094
  Marquette                         29,875        32,968       37,593        3,704        4,380        4,802
  Waterloo(2)                       80,543        64,650            -       11,377        5,661          (36 )

  Iowa Total                       251,080       242,380      185,775       45,522       37,842       29,980
Colorado
  Black Hawk/Colorado
  Central Station                  123,382       144,521      153,718       16,588       30,811       27,894
Florida
  Pompano(2)                       142,672       160,831       29,453       (8,324 )     (7,442 )    (10,370 )
International
  Our Lucaya                        10,969        15,548       16,777       (2,934 )       (835 )      7,192

Insurance Recoveries(3)             62,932           348        2,817       95,209        2,105        2,817
Valuation Charges(4)                     -             -            -      (36,125 )     (6,526 )     (7,800 )
Pre-opening(2)                           -             -            -            -       (3,654 )    (11,433 )
Corporate and Other                    458           597          233      (46,341 )    (53,689 )    (59,135 )

  From Continuing Operations   $ 1,118,642   $ 1,107,690    $ 992,495    $ 131,600    $  64,323    $  72,525

º (1)
º Reflects results since the June 2007 acquisition effective date.

º (2)
º Waterloo and Pompano opened for operations in June 2007 and April 2007, respectively. Pre-opening expenses related to these properties are included in pre-opening and other.

º (3)
º Insurance recoveries include proceeds under insurance policies related to hurricanes, floods and insurable events. Fiscal year 2009 includes $92,179 of insurance proceeds from the final settlement of our Hurricane Katrina claim at our Biloxi property.

º (4)
º Valuation charges for fiscal years 2009 and 2007 include goodwill and other intangible impairments of $18,269 and $7,800 related to our Black Hawk and Lula properties, respectively. Other valuation charges for fiscal 2009 and 2008 result from our decisions to discontinue certain development projects and included; $11,856 in fiscal year 2009 related to our Biloxi property and $6,000 for

termination of a development project in Portland; and $6,526 in fiscal year 2008 related to Kansas City, Davenport and a former development project.

Fiscal Year 2009 Compared to Fiscal Year 2008

Revenues

    Revenues for the fiscal years 2009 and 2008 are as follows:

                                                     Fiscal Year Ended
                                                  April 26,     April 27,                Percentage
(in thousands)                                      2009          2008       Variance     Variance
Revenues:
   Casino                                        $ 1,066,162   $ 1,107,246   $ (41,084 )        -3.7 %
   Rooms                                              46,380        49,498      (3,118 )        -6.3 %
   Pari-mutuel, food, beverage and other             139,957       151,530     (11,573 )        -7.6 %
   Hurricane and other insurance recoveries           62,932           348      62,584           N/M

        Gross revenues                             1,315,431     1,308,622       6,809           0.5 %
            Less promotional allowances             (196,789 )    (200,932 )     4,143           2.1 %

                Net revenues                     $ 1,118,642   $ 1,107,690      10,952           1.0 %

Casino Revenues-Casino revenues decreased $41.1 million, or 3.7% in fiscal year 2009 compared to fiscal year 2008. We experienced a decrease in casino revenues at most of our properties primarily as a result of the continued deterioration in discretionary consumer spending in conjunction with poor economic conditions. Our Black Hawk properties' $24.2 million decline in casino revenues as compared to fiscal year 2008 also reflects the impact of a statewide smoking ban effective for Colorado casinos on January 1, 2008. The $8.4 million decrease in casino revenues at our Pompano slot facility also reflects the expansion of nearby competing Native American casinos. Decreases in our casino revenues were partially offset by increases in casino revenues of $20.5 million at our Waterloo and Caruthersville properties due to the casinos being opened for a full twelve months in fiscal 2009 compared to only ten and nine months, respectively, in fiscal 2008.

Rooms Revenue-Rooms revenue decreased $3.1 million, or 6.3% in fiscal year 2009 compared to fiscal year 2008 primarily resulting from decreased occupancy and lower average room rates as a result of reduced consumer demand for rooms.

Pari-mutuel, Food, Beverage and Other Revenues -Pari-mutuel, food, beverage and other revenues decreased $11.6 million, or 7.6% in fiscal year 2009 compared to fiscal year 2008 corresponding to an overall reduction in casino revenues and due to decreases in consumer spending caused by current economic conditions. Pari-mutuel commissions and fees earned at Pompano decreased $3.3 million, or 17.1% compared to the prior fiscal year due to decreases in wagering. These decreases were offset by increases at our Waterloo and Caruthersville properties due to the casinos being opened for a full twelve months in fiscal 2009 compared to only ten and nine months, respectively in fiscal 2008.

Promotional Allowances-Promotional allowances, which are made up of complimentary revenues, cash points and coupons, are rewards that we give our loyal customers to encourage them to continue to patronize our properties. These allowances decreased by $4.1 million in fiscal year 2009 compared to fiscal year 2008 primarily due to a decrease in patrons. For fiscal year 2009 and 2008, promotional allowances as a percentage of casino revenues were 18.5% and 18.1%, respectively.

Operating Expenses

    Operating expenses for the fiscal years 2009 and 2008 are as follows:

                                           Fiscal Year Ended
                                        April 26,     April 27,                 Percentage
 (in thousands)                            2009         2008       Variance      Variance
 Operating expenses:
    Casino                               $ 154,538   $   154,263   $     275            0.2 %
    Gaming taxes                           270,882       286,746     (15,864 )         -5.5 %
    Rooms                                   12,175        12,031         144            1.2 %
    Pari-mutuel, food, beverage and         53,143        58,676      (5,533 )         -9.4 %
    other
    Marine and facilities                   65,504        66,656      (1,152 )         -1.7 %
    Marketing and administrative           263,164       279,009     (15,845 )         -5.7 %
    Corporate and development               41,331        48,619      (7,288 )        -15.0 %
    Valuation charges                       36,125         6,526      29,599          453.6 %
    Hurricane and other insurance          (32,277 )      (1,757 )   (30,520 )          N/M
    recoveries
    Pre-opening                                  -         3,654      (3,654 )       -100.0 %
    Depreciation and amortization          122,457       128,944      (6,487 )         -5.0 %

        Total operating expenses         $ 987,042   $ 1,043,367     (56,325 )         -5.4 %

Casino-Casino operating expenses increased nominally year over year. These expenses are primarily comprised of salaries, wages and benefits and other operating expenses of our casinos. Casino properties opened in fiscal year 2008 experienced a $7.6 million increase in year over year casino expenses while casino properties operating for both years experienced a $7.3 million reduction in casino expenses corresponding to an overall decrease in gaming revenues and management's increased focus on cost management.

Gaming Taxes-State and local gaming taxes decreased by $15.9 million, or 5.5%, in fiscal year 2009 compared to fiscal year 2008. This reduction in gaming taxes is primarily a result of a 3.7% decrease in casino gaming revenue and changes in gaming revenues among states with differing gaming tax rates and refund of a $1.9 million in gaming taxes at our Pompano facility following an agreement reached with the State of Florida regarding the interpretation of the gaming tax calculation based on gaming taxes paid since Pompano's opening.

Pari-mutuel, Food, Beverage and Other-Pari-mutuel, food, beverage and other expenses decreased $5.5 million, or 9.4%, in fiscal year 2009 as compared to fiscal year 2008. The reduction in food and beverage expenses corresponds to a reduction in overall food and beverage revenues with food and beverage expenses as a percentage of gross food and beverage revenues remaining consistent at approximately 37% in both fiscal year 2009 and 2008. These expenses consist primarily of the cost of goods sold, salaries, wages and benefits and other operating expenses of these departments. This decrease reflects the reductions in our food, beverage and other revenues. Pari-mutuel operating costs of Pompano decreased $3.0 million in fiscal year 2009 compared to fiscal year 2008. Such costs consist primarily of compensation, benefits, purses, simulcast fees and other direct costs of track operations. The decreases in current year as compared to prior year are a result of cost reductions related to our pari-mutuel operations.

Marine and Facilities-These expenses include salaries, wages and benefits of the marine and facilities departments, operating expenses of the marine crews, maintenance of public areas, housekeeping and general maintenance of the riverboats and pavilions. Marine and facilities expenses decreased $1.2 million, or 1.7%, in fiscal year 2009 compared to fiscal year 2008 and is the result of headcount reductions and cost management.

Marketing and Administrative-These expenses include salaries, wages and benefits of the marketing and sales departments, as well as promotions, direct mail, advertising, special events and entertainment. Administrative expenses include administration and human resource department expenses, rent, professional fees, insurance and property taxes. The $15.8 million decrease in marketing and administrative expenses in fiscal year 2009 compared to fiscal year 2008, reflects our decision to reduce marketing costs to less profitable customer segments and to reduce our administrative costs.

Corporate and Development-During fiscal year 2009, our corporate and development expenses were $41.3 million compared to $48.6 million for fiscal year 2008. This decrease in corporate and development expense reflects our continued efforts to reduce our corporate overhead and includes reductions of $3.5 million in professional and consulting services as well as reductions in other corporate expenses.

Depreciation and Amortization-Depreciation and amortization expense decreased by $6.5 million, or 5.0%, in fiscal year 2009 compared to fiscal year 2008 primarily due to certain assets becoming fully depreciated during the current year.

Other Income (Expense), Income Taxes, Minority Interest and Discontinued
Operations

    Interest expense, interest income, loss on early extinguishment of debt,
income tax (provision) benefit, minority interest and income from discontinued
operations, net of income taxes for the fiscal years 2009 and 2008 are as
follows:

                                        Fiscal Year Ended
                                     April 26,    April 27,                 Percentage
  (in thousands)                        2009         2008      Variance      Variance
  Interest expense                    $ (92,065 ) $ (106,826 ) $  14,761           -13.8 %
  Interest income                         2,112        3,293      (1,181 )         -35.9 %
  Gain (loss) on early                   57,693      (15,274 )    72,967          -477.7 %
  extinguishment of debt
  Income tax (provision) benefit        (39,942 )     21,288     (61,230 )        -287.6 %
  Minority interest                           -       (4,868 )     4,868          -100.0 %
  Loss from discontinued                (15,823 )    (58,810 )    42,987           -73.1 %
  operations, net of income taxes

Interest Expense-Interest expense decreased $14.8 million, or 13.8%, in fiscal year 2009 compared to fiscal year 2008. This decrease is primarily attributable to a lower average debt balance resulting from the pay down of $142.7 million of our senior subordinated 7% notes and a $35.0 million repayment on our senior secured credit facility debt in February and March 2009, respectively, and a decrease in the interest rate on the variable interest rate components of our debt.

Interest Income-During fiscal year 2009, our interest income decreased $1.2 million as compared to fiscal year 2008. The change in interest income reflects changes in our invested cash and marketable securities balances and lower interest rates.

Income Tax (Provision) Benefit-Our income tax (provision) benefit from continuing operations and our effective income tax rate has been impacted by amount of annual taxable income (loss) for financial statement purposes as well as our percentage of permanent items in relation to such income or loss. Effective income tax rates were as follows:

                                             Fiscal Year Ended
                                          April 26,     April 27,
                                             2009          2008
                  Continuing operations         40.2 %        39.1 %
                  Total                         41.7 %        41.3 %

Fiscal Year 2008 Compared to Fiscal Year 2007

Revenues

    Revenues for the fiscal years ended 2008 and 2007 are as follows:

                                                     Fiscal Year Ended
                                                  April 27,     April 29,                 Percentage
(in thousands)                                      2008          2007       Variance      Variance
Revenues:
   Casino                                        $ 1,107,246   $ 1,007,523   $  99,723            9.9 %
   Rooms                                              49,498        49,584         (86 )         -0.2 %
   Pari-mutuel, food, beverage and other             151,530       147,036       4,494            3.1 %
   Hurricane and other insurance recoveries              348         2,817      (2,469 )        -87.6 %

        Gross revenues                             1,308,622     1,206,960     101,662            8.4 %
            Less promotional allowances             (200,932 )    (214,465 )    13,533            6.3 %

                Net revenues                     $ 1,107,690   $   992,495     115,195           11.6 %

Casino Revenues-Casino revenues increased $99.7 million, or 9.9%, compared to fiscal year 2007. Our increased casino revenues were primarily a result of the opening or acquisition of new casino properties in Caruthersville, Waterloo and Pompano, and increased casino revenues at Bettendorf driven by the opening of our new hotel in May 2007. Casino revenues from our new casino operations were $226.2 million for fiscal year 2008. Same property casino revenues decreased $119.2 million for fiscal year 2008. This included decreased casino revenues at Biloxi of $62.7 million for fiscal year 2008, due to increased competition and post-hurricane normalization, and at Lake Charles of . . .