Highfields Capital Releases Letter to the Independent Directors of Great Canadian Gaming Corporation

5 April 2006

Highfields Capital Management today released the text of a letter to the independent directors of Great Canadian Gaming Corporation (TSX: GCD) regarding the Company's recent sale of Units to its Chairman and Chief Executive Officer. The text of the letter is set out below. Attached to such letter, and included in this release, is a letter from Highfields Capital to the Toronto Stock Exchange (TSX) raising questions about whether the discounted sale of securities to an insider fully complied with TSX rules.

April 4, 2006

Mr. Elmer H. Hintz, Director

Mr. Adrian R. Thomas, Director

Mr. Earnest C. Beaudin, Director

Mr. R. Ronald Sheppard, Director

Mr. Peter G. Meredith, Director

Mr. Bryan J. McKnight, Director

Great Canadian Gaming Corp.

1375 Commerce Parkway, Suite 350

Richmond, BC V6V 2V4

Canada

Dear Sirs:

As a large shareholder of Great Canadian Gaming Corporation we wrote to you on March 28, 2006, requesting a meeting with the independent directors responsible for oversight of Company Governance, Compliance and Compensation. The subject of our letter was specific and timely: namely, the Company's announced intention to sell nearly 10% of its equity to Ross McLeod, its Chairman and Chief Executive Officer, at a steeply discounted price.

In that letter, we expressed our view that the proposed sale was an unnecessary and unjustified transfer of wealth to a corporate insider. Analyst and news reports make it clear that our view is shared by others, with the sale to Mr. McLeod being described as "priced well below market," "expensive and dilutive to the Company" and representing a "21-31% discount" to market value.

By letter dated April 3, 2006, you declined to meet with us and instead suggested that we look to the Company's public filings for more information. Such filings only raise more questions. They fail to identify the investment banker who helped set pricing terms, fail to disclose the other participants in the transaction and reveal that Mr. McLeod's purchase was not made personally, but made through a newly-formed corporation.

We regret your choice not to disclose further information about this transaction and your refusal to hear our concerns directly. We hope you reconsider this decision soon. In the meantime, for your information we attach a copy of our letter to the Toronto Stock Exchange in which we explain some of those concerns.

Very truly yours, Very truly yours,

Jonathon S. Jacobson Richard L. Grubman

Managing Director Managing Director

About Highfields Capital Management:

Highfields Capital Management is a Boston-based investment management firm, established in 1998, that primarily makes long-term equity investments in securities of both public and private companies. Highfields Capital manages approximately $8 billion in investment funds on behalf of charitable foundations, school endowments and other institutional and private investors.

March 31, 2006

By Fax and Federal Express

Ms. Julie Shin, Director

Listed Issuer Services

Toronto Stock Exchange ("TSX")

The Exchange Tower

2 First Canadian Place

Toronto ON M5X 1J2

Re: Great Canadian Gaming Corporation (the "Company")

Private Placement of Units to Company Chairman and CEO

Dear Ms. Shin:

We are a shareholder of 3,338,000 common shares of Great Canadian Gaming Corporation (approximately 4% of outstanding shares) and are submitting this letter to address what we and many other shareholders view as one of the most extraordinary transfers of wealth to a public company insider that we have seen. Moreover, we believe that this self-dealing transaction is being undertaken in violation of TSX rules regarding pricing and authorization of private placements, and may raise questions regarding TSX rules on related party transactions. As a large shareholder of both the Company and many other Canadian public companies, we believe the TSX should take prompt action to inquire into such matters, take steps to remedy any such violations, and to communicate to the investing public that such self-enriching transactions by public company insiders will not be tolerated.

As you know, on March 27, 2006, the Company announced that it had sold to Ross J. McLeod, Chairman and CEO of the Company, approximately 3,878,000 "Units" issued by the Company, at a price of C$12.89 per Unit. Each such Unit (a "GCD Unit") included one common share of the Company and one Warrant to purchase a Company common share. A subsequent filing by the Company revealed that Mr. McLeod made his purchase through what appears to be a newly-formed corporation, fails to identify the other purchasers of the GCD Units and referenced the participation of an "independent financial adviser" without identifying such adviser.

In our view, this transaction represents a bargain sale of Company securities to Mr. McLeod since by any reasonable analysis (such as those done by independent securities analysts, attached) each GCD Unit has an implied value of between approximately C$15.50 and C$17 per Unit. In effect, the Company and its Board of Directors transferred to Mr. McLeod approximately C$11,000,000 to C$15,000,000 of excess value for no consideration, no services, and with no apparent justification.

TSX Rules prohibit such a discounted private placement unless approved by shareholders. Further, TSX rules require that such shareholder vote be taken without giving effect to votes cast by Mr. McLeod, since he is the beneficiary of the bargain transaction.

Specifically, Section 607(e) explicitly provides that independent shareholder approval is required of any private placement where the "price per security" is outside the maximum 15% discount permitted by that subsection.

The Company's Press Release of March 27, 2006, stated that the GCD Units were sold at the "market price, as defined" under TSX rules, implying that the price of C$12.89 reflected the value of a Unit. In fact, that "market price" was only the price of one common share of the Company, so that the price of the Units was set well below their likely actual value of between approximately C$15.50 and C$17 per Unit. Such a total value is consistent with published reports and independent research, which indicate Warrant valuations of between C$2.74 and C$4.07 per Warrant. Accordingly, the pricing requirements of Section 607(e) are not satisfied since Mr. McLeod's corporation paid a price per Unit (C$12.89) that is discounted by at least 20% to 25% from the actual value of the Units.

Explicit TSX rules require calculation of the "price per unit" in a manner that yields the same conclusion: i.e. that an excessive (and even larger) discount to market value was granted to Mr. McLeod without the required shareholder approval. Section 607(e) specifically mandates that the TSX "will discount the price per security by the amount of any fees or other amounts payable by the listed issuer to the subscriber...if the listed issuer cannot demonstrate that such amounts are commercially reasonable in the circumstances."

The Company's press release and filings unambiguously state that the price per Unit was equal to a calculated market price of one of the Company's common shares "without discount." Accordingly, no consideration was paid by Mr. McLeod for each Warrant that was included in the GCD Unit. Since the Warrant was issued for no consideration then it necessarily follows that the Warrant actually represented a form of payment "by the listed issuer to the subscriber" as an inducement for the subscriber to purchase the Unit.

As a form of "payment" under Section 607(e), the Company must "demonstrate that" the value of the Warrants issued to Mr. McLeod was "commercially reasonable," a standard that the Company has not met, and we believe cannot meet. First, as noted, the Company's announcement makes it clear that in selling the GCD Unit for a price of C$12.89, the Company did not assign any value at all to the Warrants, and they have not announced anything to the contrary. Second, even if the Company were to suddenly reform its announcement, reverse field and assign a value to the Warrants, the payment of such value (approximately C$11,000,000 to C$15,000,000 by analyst estimates) to a controlling officer and shareholder, in a non-arms length transaction, and without market test is excessive, unnecessary and would not meet the standard of "commercially reasonable in the circumstances."

Accordingly, Section 607(e) requires the TSX to "discount the price per security" (C$12.89) by the "amounts payable by the listed issuer" to Mr. McLeod as a subscriber (approximately C$2.74 to C$4.07 per Warrant), yielding a final "price per security" between C$10.15 and C$8.82. These resulting prices represent prices that are 21% to 31% below the market value of the securities at the time of purchase, failing the pricing test of 607(e) and thereby requiring independent shareholder vote as a condition to consummation.

As a public shareholder and investor we are distressed by the self-dealing and insider enrichment presented by this transaction and the dilution and, therefore, abuse of shareholders that it accomplishes. We are equally concerned that the Company's Board of Directors could authorize such a transaction.

We draw your attention to the rules contained in the New York Stock Exchange ("NYSE") Listed Company Manual that would apply to an issuance of such a large amount of securities (in this case Mr. McLeod is being issued nearly 10% of the Company's outstanding shares). NYSE Rule 312.03(b) generally requires shareholder approval prior to the issuance of common stock or convertible securities to any director or officer if the shares to be issued equal 1% or more of the outstanding shares. The NYSE rule also requires shareholder approval for the issuance of more than 5% of a company's outstanding securities to a substantial security holder (defined as a 5% of greater shareholder). Such a shareholder vote is required even when the sale is at a price equal or greater than "each of the book and market value of the issuer's common stock." Accordingly, the NYSE would require a shareholder vote of this transaction, on multiple grounds, even when full value is being paid, and in any case not allow the type of insider "discount" transaction that we see here.

Similarly, we believe existing TSX rules provide the necessary basis to set aside this unjustifiable discount sale to a controlling insider. With no power over day-to-day governance, and limited or no ability to replace incumbent Board members or management, public shareholders must look to the TSX for protection from such actions through diligent application and enforcement of TSX rules.

Even if the Company has successfully engineered the transaction to technically avoid the requirement for shareholder approval, we believe this is an instance where the TSX, under its general mandate, should initiate a further inquiry and impose a corrective remedy, as appropriate.

As noted, the Company has not identified either the other subscriber(s) for the GCD Units, nor has it identified the "independent financial adviser" who helped set the terms. The presence of at least two unidentified, and key, participants in the structuring and consummation of the transaction raises questions as to whether there are agreements and relationships that cast the transaction in a different, and perhaps even worse, light. Further, it appears that Mr. McLeod purchased his large allocation of this offering through a private, controlled corporation which we have not previously seen in his, or the Company's, disclosures. No information has been provided about such corporation, its sources of funding to make such purchase, or any arrangements or relationships it might have with other parties, including other parties who participated in the offering. Without such information, the investing public cannot fully appreciate and analyze the terms of the sale, the interests of the Company's principal and controlling shareholder, or the constraints that the Company may face in the future operation of its business and management of its capital structure.

We believe that the integrity of the market requires that the TSX look into such matters and to the extent material, require the Company to disclose to the public significant further information about the Board of Director deliberations and decisions that led to such a transaction, the identity and interests of the other parties to the transaction and the "financial adviser" retained by the Company, the source of funds and arrangements that allowed a corporation controlled by the Chairman and CEO to purchase and pay cash for C$50,000,000 of securities, and other facts that are relevant to the propriety of, and motives and agreements behind, the transaction.

We appreciate your time and attention to this matter and our request. If you have any questions, or would like to discuss these issues with us further, please contact the undersigned.

Very truly yours,

Joseph F. Mazzella

For further information: Larry Larsen for Highfields Capital Management, +1-617-520-7239

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Highfields Capital Releases Letter to the Independent Directors of Great Canadian Gaming Corporation

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