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SOUTHWEST
CASINO CORPORATION

2001
Killebrew Drive, Suite 350

Minneapolis,
Minnesota  55425

(952)
853-9990 * (952) 853-9991 (Fax)

June
28, 2005

Mr. Michael Fay

Branch Chief Accountant

Securities and Exchange Commission

Washington, D.C.  20549

  Re:

  Southwest
  Casino Corporation (the “Company”)

  Form 10-KSB for the Fiscal
  Year Ended December 31, 2004

  File No. 000-50572

  Filed March 31, 2005

Dear
Mr. Fay:

We
are writing to respond to your letter of June 13, 2005, which sets forth a
question regarding Southwest Casino Corporation’s Form 10-K for the Fiscal Year
Ended December 31, 2004.

Form
10-K for the Fiscal Year ended December 31, 2004

Note 2 —
Summary of Significant Accounting Policies, page F-7

Principles
of Consolidation, page F-7

1.                                      We note
your response to prior comment 1.  Please
tell us how you have evaluated North Metro Harness Initiative (“NMHI”) as a
variable interest entity (“VIE”) under paragraph 5 of FIN 46(R).  We note that this paragraph of FIN 46(R)
details the criteria that must be evaluated in order to determine if an entity
is a VIE under the standard.  In this
regard, it is not clear from your response how NMHI meets the criteria as a VIE
under the standard.  We would also note
that the evaluation of NMHI should be done at the date you became involved with
the entity (paragraph 6 of FIN 46(R)).

In addition, should you determine that NMHI qualifies as a VIE under
FIN 46(R), you should expand your future disclosures to include a description
of your evaluation of NMHI as a VIE under the standard and any other
disclosures as required by paragraphs 23-26 of FIN 46(R).

Response:

Southwest
Casino and Hotel Corp. (“SWC&HC,” a wholly owned subsidiary of Southwest
Casino Corporation (“Southwest”)) was responsible for the formation of North
Metro Harness Initiative, LLC on June 16, 2003 and was the sole member of NMHI
until

June
8, 2004.  On June 8, 2004, MTR-Harness,
Inc. (“MTR-Harness”) became a member of the LLC.  Under the terms of the Member Control
Agreement between SWC&HC and MTR-Harness, MTR-Harness contributed $10,000
to NMHI and a made a conditional commitment to provide an additional $7,490,000
if NMHI received the racing licenses from the Minnesota Racing Commission
required for development of the NMHI facility.
SWC&HC agreed to contribute $1 million for pre-licensing costs to
NMHI and an additional $1,500,000 after NMHI received its racing licenses.  In exchange for the agreements of SWC&HC
and MTR-Harness to make these contributions, SWC&HC and MTR-Harness divided
voting rights and decision-making power over NMHI equally, 50 percent each.

Southwest
evaluated whether NMHI should be treated as a variable interest entity (“VIE”)
subject to consolidation during the applicable reporting period under FIN 46(R).  Southwest determined that, as provided in
paragraph 5.a. of FIN 46(R), SWC&HC’s total equity investment at risk was
not sufficient to permit the entity to finance its activities without
additional subordinated financial support.
We reached this determination because, in addition to SWC&HC’s $1
million equity investment in NMHI, SWC&HC paid more than $1.1 million in
NMHI pre-licensing costs that are treated by NMHI as a subordinated loan from
SWC&HC to NMHI, not equity.

Under
the Member Control Agreement between SWC&HC and MTR-Harness, SWC&HC was
required to pay substantially all costs associated with pursuing Class A and B
racing licenses from the Minnesota Racing Commission prior to the granting of
those licenses.  SWC&HC was given
equity credit towards its membership contribution for only $1 million of the
pre-licensing costs of NMHI paid by SWC&HC (referred to as matchable
pre-licensing costs).  The $1,156,782 in
pre-licensing costs paid by SWC&HC in excess of the $1 million membership
contribution are considered unmatched pre-licensing costs and treated as a
subordinated loan from SWC&HC to NMHI to be repaid from future operating
profits.  Because NMHI could not have
financed its activities without this additional $1.1 million in non-equity,
subordinated financial support from SWC&HC, we determined that NMHI is a
VIE subject to consolidation under paragraph 5.a.

In
addition, under paragraphs 5.b(1) and 5.c. of FIN 46(R), SWC&HC lacked the
ability through voting or similar rights to make decisions regarding NMHI’s
activities because SWC&HC’s voting rights were not proportionate to
SWC&HC’s obligation to absorb expected losses of the entity during
2004.  As of December 31, 2004,
SWC&HC had contributed matched equity in the amount of $1 million and
unmatched subordinated loan of $1,156,782.
As of December 31, 2004, SWC&HC had provided approximately 95
percent of NMHI’s financial support, but held only 50 percent of the NMHI
voting power.  Because SWC&HC would
absorb substantially all losses of NMHI before MTR-Harness made capital contributions
proportionate to its voting power (which MTR-Harness had no obligation to make
before NMHI was issued its racing licenses), but held only 50 percent of the
decision making power, we determined that NMHI is also a VIE subject to
consolidation under paragraphs 5.b(1) and 5.c of FIN 46(R).

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Thus,
Southwest concluded that until MTR-Harness made capital contributions to NMHI
proportionate to MTR-Harness’ voting power within NMHI, it was appropriate to
consolidate NMHI with Southwest’s financial statements.  NMHI did not receive its racing licenses
during fiscal year 2004.  The racing
licenses were subsequently granted on January 19, 2005, and MTR-Harness has
since begun making additional capital contributions to NHHI as required under
the Member Control Agreement.

Due
to the license approval and ongoing capital contributions by MTR-Harness,
future consolidation of NMHI with Southwest’s financial statements must be
re-evaluated in accordance with paragraph 7.d. of FIN 46(R) for reporting
periods in 2005 and later.  As of March
31, 2005, MTR-Harness’ contributions to NMHI equaled only 24 percent of NMHI’s
financial support and Southwest again determined that, because NMHI still could
not finance its activities without the $1.1 million in non-equity subordinated
financial support from SWC&HC and because SWC&HC’s financial support
and risk of loss continued to be disproportionate to its 50 percent voting
interest, NMHI should be consolidated with Southwest in its Quarterly Report on
Form 10-QSB.

With
regard to paragraph 6 of FIN 46(R), SWC&HC became involved with NMHI when
SWC&HC formed NMHI as a wholly-owned subsidiary on June 16, 2003.  Thus, as an initial matter, NMHI was not a
VIE but was subject to consolidation on Southwest’s financial statements.  However, as noted in paragraph 6, while the
determination is made as of the date SWC&HC became involved with NMHI, the
determination whether NMHI is a VIE on that date includes future changes in
NMHI’s governing documents and contractual relationships.  Thus, the determination that NMHI is a VIE
must include an analysis of MTR-Harness’ purchase of its membership interest in
NMHI, and SWC&HC and MTR-Harness, Inc. entering into the NMHI Member
Control Agreement on June 8, 2004.  The
June 8, 2004 Member Control Agreement created the financial relationship among
SWC&HC, MTR-Harness, and NMHI that is analyzed above under paragraphs 5.a.,
5.b(1) and 5.c. of FIN 46R and on which Southwest based its determination that
NMHI was a VIE that must be consolidated with Southwest on its fiscal year 2004
and first quarter 2005 financial statements.

We have read the disclosure requirements in paragraphs 23-26 of FIN
46(R) and will ensure that these disclosures are made in all future filings.

  Very truly yours,

  /s/ James
  B. Druck

  Chief Executive Officer

  /s/
  Thomas E. Fox

  President and Chief
  Financial Officer

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