<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                   FORM 10-Q



(Mark One)
[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

For the quarterly period ended   March 31, 2000
                                 ----------------------------------------------

                                      OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
     EXCHANGE COMMISSION ACT OF 1934

For the transition period from __________ to __________
Commission file number   1-6339
                       --------

                         GREATE BAY CASINO CORPORATION
--------------------------------------------------------------------------------
            (Exact name of Registrant as specified in its charter)


             Delaware                                     75-1295630
-----------------------------------          -----------------------------------
  (State or other jurisdiction of                        (I.R.S. Employer
   incorporation or organization)                      Identification No.)

c/o Advanced Casino Systems Corporation
    200 Decadon Drive, Suite 100
   Egg Harbor Township, New Jersey                             08234
  -----------------------------------        -----------------------------------
(Address of principal executive offices)                     (Zip Code)

(Registrant's telephone number, including area code)        (609) 441-0704
                                                            --------------

                                (Not Applicable)
--------------------------------------------------------------------------------
             (Former name, former address and former fiscal year,
                        if changed since last report.)

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

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

           Class                                Outstanding at May 11, 2000
-----------------------------------          -----------------------------------
   Common Stock, $.10 par value                        5,186,627 shares

                                       1
<PAGE>

                GREATE BAY CASINO CORPORATION AND SUBSIDIARIES

PART I:   FINANCIAL INFORMATION
-------------------------------

Introductory Notes to Consolidated Financial Statements
-------------------------------------------------------

     Current GBCC Operations -

     Greate Bay Casino Corporation, a Delaware corporation, and its subsidiaries
("GBCC" or the "Company") is currently engaged in the development and sale of
casino-related information technology systems.  In prior years, GBCC was also
engaged in casino-related operations consisting of management and consulting
contracts with gaming facilities located in Aurora, Illinois (the "Aurora
Casino") and Tunica County, Mississippi (the "Tunica Casino") and ownership and
operation of the Sands Hotel and Casino in Atlantic City, New Jersey (the
"Sands").  GBCC's common stock is listed on the OTC Bulletin Board Service under
the trading symbol "GEAAQ".  On December 31, 1996, Hollywood Casino Corporation
("HCC", a Delaware corporation) which owned approximately 80% of the outstanding
common stock of GBCC, distributed such stock to its shareholders.  As a result,
approximately 36% of GBCC's outstanding stock is owned by Jack E. Pratt, Edward
T. Pratt, Jr. and William D. Pratt and by certain general partnerships and
trusts controlled by the Pratts and by other family members (collectively, the
"Pratt Family").  The Pratt Family also owns approximately 54% of HCC, which
also owns the Aurora Casino and the Tunica Casino. The principal executive
offices of GBCC are located at 200 Decadon Avenue, Suite 100, Egg Harbor
Township, New Jersey 08234, telephone (609) 441-0704.

     GBCC's only significant remaining operating activity is the development,
installation and maintenance of casino systems by ACSC. GBCC and its
subsidiaries currently have debt outstanding to HCC at March 31, 2000 consisting
of (1) demand notes and accrued interest thereon totaling $9.7 million and (2) a
14.875% secured promissory note due 2006 in the amount of $41.9 million. ACSC's
operations do not generate sufficient cash flow to provide debt service on the
HCC demand obligations and, consequently, GBCC is currently insolvent.
Additionally, semi-annual interest payments of approximately $3.5 million
attributable to the 14.875% secured promissory note become payable commencing in
February 2001. Accordingly, GBCC has commenced discussions with HCC to
restructure its obligations and, in that connection, has entered into a
standstill agreement with HCC. Under the standstill agreement, monthly payments
of principal and interest due from HCC for the three months ended May 1, 2000
with respect to an intercompany note more fully described in Note 7 of the Notes
to Consolidated Financial Statements have been deferred until June 1, 2000 in
consideration of HCC's agreement not to demand payment of principal or interest
on the previously described demand notes outstanding to GBCC. There can be no
assurance at this time that the discussions with HCC will result in a
restructuring of GBCC's obligations to HCC. In addition, it is possible that any
restructuring will result in a conveyance of all of GBCC's remaining assets,
including ACSC, to HCC in order to satisfy GBCC's obligations to HCC. Any
restructuring of GBCC's obligations, consensual or otherwise, will require the
Company to file for protection under federal bankruptcy laws.

     The insolvency of GBCC raises substantial doubt about its ability to
continue as a going concern. The consolidated financial statements do not
include any adjustments that might result from the outcome of these
uncertainties.

     GB Holdings, Inc. and Subsidiaries -

     On January 5, 1998, GB Holdings, Inc. ("Holdings"), at the time a wholly
owned subsidiary of GBCC, together with Holdings' wholly owned subsidiaries,
Greate Bay Hotel and Casino, Inc. ("GBHC") and GB Property Funding Corp. ("GB
Property Funding"), filed petitions for relief under Chapter 11 of the United
States Bankruptcy Code (the "Bankruptcy Code") in the United States Bankruptcy
Court for the District of New Jersey (the "New Jersey Bankruptcy Court"). On
June 1, 1999, a plan of reorganization was filed by the debtors with the New
Jersey Bankruptcy Court.  The reorganization plan, as filed, provided for the
secured bondholders to receive new debt and 100% of the equity ownership of
Holdings in exchange for their claims and for unsecured creditors to receive a
partial cash settlement of their claims.  Subsequent to the filing of a
reorganization plan by the debtors, two competing plans were filed by (1) Park
Place Entertainment Corporation, a large and diversified gaming company with
significant operations in Atlantic City, and (2) jointly by High River Limited
Partnership, an entity controlled by Carl C. Icahn, and by the Official
Committee of Unsecured Creditors.  Both of these plans provide for significant
cash infusions by

                                       2
<PAGE>

the plan proponents in exchange for equity in a reorganized Holdings ranging
from 46.3% to 57.7% with the secured bondholders to receive the remaining equity
in reorganized Holdings together with new secured debt. None of the plans
provide for any distributions to the present shareholders. A hearing on the
adequacy of the disclosure statements relating to the various plans was held on
April 5, 2000. Creditors are currently voting on the competing plans and a
confirmation hearing is scheduled to begin on June 20, 2000.

     As a result of the Chapter 11 filings discussed above, GBCC's control over
the filing subsidiaries is subject to supervision of the New Jersey Bankruptcy
Court and GBCC does not expect to have ownership or operating control of such
subsidiaries after reorganization.  Furthermore, as a result of a settlement
agreement reached by GBCC and Holdings during September 1998, GBCC no longer
participates in the management of the Sands.  Accordingly, Holdings, GB Property
Funding and GBHC are no longer included on the accompanying consolidated balance
sheets of GBCC.  As more fully explained in Note 1 of the Notes to Consolidated
Financial Statements, during the period from January 1, 1998 through June 30,
1998, the operations of Holdings and its subsidiaries were accounted for by GBCC
under the equity method of accounting.  As a result of GBCC no longer
controlling the operations of the Sands, the continued expectation that
ownership control of Holdings will only be temporary and the September 1998
settlement agreement which resolved certain significant uncertainties, GBCC's
investment in Holdings as well as certain amounts due to Holdings and its
subsidiaries were revalued to a zero basis effective on July 1, 1998.
Accordingly, for periods subsequent to June 30, 1998, GBCC is accounting for its
investment in Holdings under the cost method of accounting.  Effective on
December 31, 1998, GBCC's ownership of Holdings was reduced to 79%.

     Pratt Casino Corporation and Subsidiaries -

     The filings of petitions for relief by Holdings and its subsidiaries
resulted in a default under the indenture for $85 million principal amount of
11.625% senior notes (the "PRT Funding Notes") issued by PRT Funding Corp. and
guaranteed by Pratt Casino Corporation ("PCC"), both wholly owned, indirect
subsidiaries of GBCC. Accordingly, the outstanding principal amount of the PRT
Funding Notes accelerated and became currently due and payable. PRT Funding
deferred payment of interest due on the April 15 and October 15, 1998 and April
15, 1999 payment dates. On October 22, 1998, PRT Funding paid to the bondholders
an amount equal to a single semiannual interest payment ($4.9 million) while
negotiations to restructure the PRT Funding Notes continued. In connection with
the Restructuring (as defined below), PRT Funding paid deferred interest
amounting to $6.8 million to the bondholders on April 30, 1999.

     On April 28, 1999, PCC, PRT Funding Corp., New Jersey Management, Inc.
("NJMI," a PCC subsidiary)  GBCC, HCC and the holders of substantially all of
the PRT Funding Notes entered into a voting agreement which provided for the
restructuring of the PRT Funding Notes (the "Restructuring").  The voting
agreement provided for HCC to acquire the stock of PCC, the parent of PRT
Funding, from GBCC for nominal consideration.  When acquired by HCC, PCC's
assets were to consist of its limited partnership interest in a management
contract for the Aurora Casino and its consulting contract for the Tunica Casino
and its liabilities were to consist of a new obligation in the amount of $40.3
million payable in satisfaction of the PRT Funding Notes.  The voting agreement
provided for HCC to immediately discharge the obligation.

     As part of the Restructuring, holders of the PRT Funding Notes were also to
receive 100% of the remaining assets of PCC and its subsidiaries not acquired by
HCC.  Such assets consisted primarily of claims against Holdings, GB Property
Funding and GBHC in their Chapter 11 proceedings.

     The successful completion of the Restructuring required that PCC, PRT
Funding and NJMI file for protection under Chapter 11 with the above
transactions included as part of a pre-negotiated plan of reorganization. Such
petitions for relief were filed on May 25, 1999 in the United States Bankruptcy
Court for the District of Delaware (the "Delaware Bankruptcy Court") and the
related plan of reorganization was filed on May 26, 1999. The plan was confirmed
by the Delaware Bankruptcy Court on October 1, 1999 and the Restructuring was
completed on October 14, 1999.

     As a result of the Chapter 11 filings and plan of reorganization of PCC,
PRT Funding and NJMI, GBCC's control over the filing subsidiaries was subject to
supervision of the Delaware Bankruptcy Court. GBCC did not expect to have
ownership or operating control of such subsidiaries after reorganization. As
more fully explained in Note 1 of the Notes to Consolidated Financial
Statements, GBCC's investment in PCC and its subsidiaries as well as certain
intercompany balances with PCC and its subsidiaries were

                                       3
<PAGE>

revalued to a zero basis effective on May 25, 1999. Accordingly, for periods
subsequent to May 25, 1999, GBCC accounted for its investment in PCC under the
cost method of accounting. As part of the Restructuring, GBCC sold its interest
in PCC to HCC in October 1999.

     Financial Reporting -

     The consolidated financial statements as of March 31, 2000 and for the
three month periods ended March 31, 2000 and 1999 have been prepared by GBCC
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. In the opinion of management, these consolidated financial
statements contain all adjustments (consisting of only normal recurring
adjustments) necessary to present fairly the consolidated financial position of
GBCC as of March 31, 2000 and the results of its operations and cash flows for
the three month periods ended March 31, 2000 and 1999.

     Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. These consolidated financial statements should
be read in conjunction with the consolidated financial statements and notes
thereto included in GBCC's 1999 Annual Report on Form 10-K.

                                       4
<PAGE>

                        INDEPENDENT ACCOUNTANTS' REPORT


To the Board of Directors and Stockholders of
Greate Bay Casino Corporation
Egg Harbor Township, New Jersey


We have reviewed the accompanying condensed consolidated balance sheet of Greate
Bay Casino Corporation and subsidiaries as of March 31, 2000, and the related
condensed consolidated statements of operations and cash flows for the three-
month periods ended March 31, 2000 and 1999.  These financial statements are the
responsibility of the Corporation's management.

We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants.  A review of interim financial
information consists principally of applying analytical procedures to financial
data and of making inquiries of persons responsible for financial and accounting
matters.  It is substantially less in scope than an audit conducted in
accordance with auditing standards generally accepted in the United States of
America, the objective of which is the expression of an opinion regarding the
financial statements taken as a whole.  Accordingly, we do not express such an
opinion.

Based on our review, we are not aware of any material modifications that should
be made to such condensed consolidated financial statements for them to be in
conformity with accounting principles generally accepted in the United States of
America.

We have previously audited, in accordance with auditing standards generally
accepted in the United States of America, the consolidated balance sheet of
Greate Bay Casino Corporation and subsidiaries as of December 31, 1999, and the
related consolidated statements of operations, shareholders' deficit, and cash
flows for the year then ended (not presented herein); and in our report dated
February 25, 2000 we expressed an unqualified opinion, including an explanatory
paragraph relating to an uncertainty as to the Company's ability to continue as
a going concern, on those consolidated financial statements.  In our opinion,
the information set forth in the accompanying condensed consolidated balance
sheet as of December 31, 1999 is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.



DELOITTE & TOUCHE LLP
Dallas, Texas
May 5, 2000

                                       5
<PAGE>

                GREATE BAY CASINO CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS

                                    ASSETS

<TABLE>
<CAPTION>
                                                       March 31,
                                                         2000        December 31,
                                                      (Unaudited)       1999
                                                      -----------    ------------
<S>                                                   <C>            <C>
Current Assets:
 Cash and cash equivalents                            $4,568,000     $4,801,000
 Accounts receivable, net of allowances of $28,000       202,000        391,000
 Inventories                                             441,000        599,000
 Due from affiliates                                   1,235,000      1,088,000
 Other current assets                                    839,000        599,000
                                                      ----------     ----------

  Total current assets                                 7,285,000      7,478,000
                                                      ----------     ----------

Property and Equipment:
 Operating equipment                                     798,000        771,000
 Less - accumulated depreciation                        (485,000)      (438,000)
                                                      ----------     ----------

  Net property and equipment                             313,000        333,000
                                                      ----------     ----------

Other Assets:
 Due from affiliates                                     947,000      1,180,000
 Deferred income taxes                                    10,000         13,000
                                                      ----------     ----------

  Total other assets                                     957,000      1,193,000
                                                      ----------     ----------

                                                      $8,555,000     $9,004,000
                                                      ==========     ==========
</TABLE>



    The accompanying introductory notes and notes to consolidated financial
     statements are an integral part of these consolidated balance sheets.

                                       6
<PAGE>

                GREATE BAY CASINO CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS

                     LIABILITIES AND SHAREHOLDERS' DEFICIT

<TABLE>
<CAPTION>
                                               March 31,
                                                 2000        December 31,
                                             (Unaudited)         1999
                                             -----------     ------------
<S>                                          <C>             <C>
Current Liabilities:
 Borrowings from affiliate                   $   6,750,000   $   6,750,000
 Accounts payable                                  669,000       1,223,000
 Accrued liabilities -
  Salaries and wages                               171,000         188,000
  Interest                                       2,957,000       2,722,000
  Other                                             40,000          15,000
 Unearned revenues                               1,036,000         133,000
 Other current liabilities                          40,000          32,000
                                             -------------   -------------

  Total current liabilities                     11,663,000      11,063,000
                                             -------------   -------------

Long-Term Debt                                  41,922,000      40,446,000
                                             -------------   -------------

Commitments and Contingencies

Shareholders' Deficit:
 Common stock, $.10 par value per
  share; 10,000,000 shares authorized;
  5,186,627 shares issued and outstanding          519,000         519,000
 Additional paid-in capital                     75,212,000      75,212,000
 Accumulated deficit                          (120,761,000)   (118,236,000)
                                             -------------   -------------

  Total shareholders' deficit                  (45,030,000)    (42,505,000)
                                             -------------   -------------

                                             $   8,555,000   $   9,004,000
                                             =============   =============

</TABLE>


    The accompanying introductory notes and notes to consolidated financial
     statements are an integral part of these consolidated balance sheets.

                                       7
<PAGE>

                GREATE BAY CASINO CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                  Three Months Ended
                                                        March 31,
                                               --------------------------
                                                   2000          1999
                                               -----------   -----------
<S>                                            <C>           <C>
Revenues:
 System sales and support services             $   717,000   $ 1,905,000
 Consulting fees                                         -       300,000
                                               -----------   -----------

  Total revenues                                   717,000     2,205,000
                                               -----------   -----------

Expenses:
 Cost of sales                                     270,000     1,018,000
 Marketing                                          43,000         9,000
 System development and support services           731,000       612,000
 General and administrative                        631,000       697,000
 Depreciation                                       47,000        44,000
                                               -----------   -----------

  Total expenses                                 1,722,000     2,380,000
                                               -----------   -----------

 Loss from operations                           (1,005,000)     (175,000)
                                               -----------   -----------

Non-operating income (expense):
 Interest income                                   123,000       212,000
 Interest expense                               (1,710,000)   (3,980,000)
 Equity in earnings of Limited Partnership               -     2,022,000
 Restructuring costs                                     -       (82,000)
                                               -----------   -----------

  Total non-operating expense, net              (1,587,000)   (1,828,000)
                                               -----------   -----------

Loss before income taxes                        (2,592,000)   (2,003,000)
 Income tax benefit (provision)                     67,000       (33,000)
                                               -----------   -----------

Net loss                                       $(2,525,000)  $(2,036,000)
                                               ===========   ===========

Basic and diluted net loss per common share          $(.49)        $(.39)
                                               ===========   ===========

</TABLE>



    The accompanying introductory notes and notes to consolidated financial
       statements are an integral part of these consolidated statements.

                                       8
<PAGE>

                GREATE BAY CASINO CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                Three Months Ended
                                                                    March 31,
                                                            --------------------------
                                                                2000          1999
                                                            ------------  ------------
<S>                                                         <C>           <C>
OPERATING ACTIVITIES:
 Net loss                                                   $(2,525,000)  $(2,036,000)
 Adjustments to reconcile net loss to net cash (used in)
  provided by operating activities:
  Depreciation and amortization, including
   accretion of debt discount                                 1,523,000     1,322,000
  Equity in earnings of Limited Partnership                           -    (2,022,000)
  Distributions received from Limited Partnership                     -     2,017,000
  Deferred income tax (benefit) provision                        (2,000)        6,000
  Decrease in accounts receivable                               189,000       119,000
  (Decrease) increase in accounts payable and
   other accrued liabilities                                   (311,000)    1,441,000
  Net change in other current assets and liabilities            687,000       (41,000)
  Net change in noncurrent due from affiliates                  233,000        10,000
                                                            -----------   -----------

  Net cash (used in) provided by operating activities          (206,000)      816,000
                                                            -----------   -----------

INVESTING ACTIVITIES:
 Purchases of property and equipment                            (27,000)      (16,000)
 Collections on notes receivable                                      -       174,000
                                                            -----------   -----------

   Net cash (used in) provided by investing activities          (27,000)      158,000
                                                            -----------   -----------

  Net (decrease) increase in cash and cash equivalents         (233,000)      974,000
  Cash and cash equivalents at beginning of period            4,801,000    10,616,000
                                                            -----------   -----------

  Cash and cash equivalents at end of period                $ 4,568,000   $11,590,000
                                                            ===========   ===========

</TABLE>



    The accompanying introductory notes and notes to consolidated financial
       statements are an integral part of these consolidated statements.

                                       9
<PAGE>

                GREATE BAY CASINO CORPORATION AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)


(1)  Organization, Business and Basis of Presentation

     Greate Bay Casino Corporation ("GBCC"), a Delaware corporation, is
currently engaged in the development, installation and maintenance of casino
systems through its wholly owned subsidiary, Advanced Casino Systems Corporation
("ACSC"). In prior years, GBCC and its other subsidiaries were also engaged in
the operation and management of and provision of services to casino properties,
including the ownership and operation of the Sands Hotel and Casino located in
Atlantic City, New Jersey (the "Sands") and, until October 1999, contracts to
manage and consult with gaming facilities located in Aurora, Illinois (the
"Aurora Casino") and Tunica County, Mississippi (the "Tunica Casino") (see Notes
7 and 8). As explained below, the GBCC subsidiary which owns the Sands is
currently in Chapter 11 proceedings and GBCC does not expect to have ownership
or operating control after reorganization. The GBCC subsidiary which held the
management and consulting contracts completed its reorganization under Chapter
11 in October 1999 and is no longer owned by GBCC. Accordingly, as further
described below, the activities of the subsidiaries which own the Sands and
which held the management contracts with the Aurora and Tunica casinos are no
longer included in the operating results of GBCC.

     On December 31, 1996, Hollywood Casino Corporation ("HCC"), owner of
approximately 80% of the outstanding common stock of GBCC, distributed such
stock to its shareholders. As a result, approximately 36% of GBCC's outstanding
stock is owned by Jack E. Pratt, Edward T. Pratt, Jr. and William D. Pratt and
by certain general partnerships and trusts controlled by the Pratts and by other
family members (collectively, the "Pratt Family"). The Pratt Family also owns
approximately 54% of HCC. HCC owns the Aurora Casino and the Tunica Casino.

     Until October 1999, HCC owned the general partnership interest in Pratt
Management, L.P. ("PML"), the limited partnership which held the management
contract on the Aurora Casino. Such ownership interest was acquired from PPI
Corporation, a wholly owned subsidiary of GBCC, effective April 1, 1997. As a
result, GBCC's limited partnership interest in PML which was held by its wholly
owned subsidiary, Pratt Casino Corporation ("PCC"), was presented under the
equity method of accounting (see Note 8). As explained below, the operating
results of PCC including its equity in the earnings of PML for periods
subsequent to May 25, 1999 are not included in the consolidated results of
operations of GBCC.

     Current GBCC Operations -

     GBCC's only significant remaining operating activity is the development,
installation and maintenance of casino systems by ACSC. GBCC and its
subsidiaries currently have debt outstanding to HCC at March 31, 2000 consisting
of (1) demand notes and accrued interest thereon totaling $9,707,000 (see Notes
4 and 7) and (2) a 14.875% secured promissory note due 2006 in the amount of
$41,922,000 (see Note 5). ACSC's operations do not generate sufficient cash flow
to provide debt service on the HCC demand obligations and, consequently, GBCC is
currently insolvent. Additionally, semi-annual interest payments of
approximately $3.5 million attributable to the 14.875% secured promissory note
become payable commencing in February 2001. Accordingly, GBCC has commenced
discussions with HCC to restructure its obligations and, in that connection, has
entered into a standstill agreement with HCC. Under the standstill agreement,
monthly payments of principal and interest due from HCC for the three months
ended May 1, 2000 with respect to a note more fully described in Note 7 have
been deferred until June 1, 2000 in consideration of HCC's agreement not to
demand payment of principal or interest on the previously described demand notes
outstanding to GBCC. There can be no assurance at this time that the discussions
with HCC will result

                                       10
<PAGE>

                GREATE BAY CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                  (Unaudited)


in a restructuring of GBCC's obligations to HCC. In addition, it is possible
that any restructuring will result in a conveyance of all of GBCC's remaining
assets, including ACSC, to HCC in order to satisfy GBCC's obligations to HCC.
Any restructuring of GBCC's obligations, consensual or otherwise, will require
the Company to file for protection under federal bankruptcy laws.

     The insolvency of GBCC raises substantial doubt about its ability to
continue as a going concern. The consolidated financial statements do not
include any adjustments that might result from the outcome of these
uncertainties.

     GB Holdings, Inc. and Subsidiaries -

     On January 5, 1998, GB Holdings, Inc. ("Holdings"), at that time a wholly
owned subsidiary of GBCC, together with Holdings' wholly owned subsidiaries, GB
Property Funding Corp. ("GB Property Funding") and Greate Bay Hotel and Casino,
Inc. ("GBHC"), filed petitions for relief under Chapter 11 of the United States
Bankruptcy Code (the "Bankruptcy Code") in the United States Bankruptcy Court
for the District of New Jersey (the "New Jersey Bankruptcy Court"). Each company
continues to operate in the ordinary course of business, as set forth in the
Bankruptcy Code, and each company's executive officers and directors remain in
office, subject to the jurisdiction of the New Jersey Bankruptcy Court. On June
1, 1999, a plan of reorganization was filed by the debtors with the New Jersey
Bankruptcy Court. The reorganization plan, as filed, provided for the secured
bondholders to receive new debt and 100% of the equity ownership of Holdings in
exchange for their current claims and for unsecured creditors to receive a
partial cash settlement of their claims. Subsequent to the filing of a
reorganization plan by the debtors, two competing plans were filed by (1) Park
Place Entertainment Corporation, a large and diversified gaming company with
significant operations in Atlantic City, and (2) jointly by High River Limited
Partnership, an entity controlled by Carl C. Icahn, and by the Official
Committee of Unsecured Creditors. Both of these plans provide for significant
cash infusions by the plan proponents in exchange for equity in a reorganized
Holdings ranging from 46.3% to 57.7% with the secured bondholders to receive the
remaining equity in reorganized Holdings together with new secured debt. None of
the plans provide for any distributions to the present shareholders. A hearing
on the adequacy of the disclosure statements relating to the various plans was
held on April 5, 2000. Creditors are currently voting on the competing plans and
a confirmation hearing is scheduled to begin on June 20, 2000. Effective on
December 31, 1998, GBCC's ownership of Holdings was reduced to 79% (see Note
10).

     As a result of the Chapter 11 filings, GBCC's control over the filing
subsidiaries is subject to supervision of the New Jersey Bankruptcy Court and
GBCC does not expect to have ownership or operating control of such subsidiaries
after reorganization. Prior to July 7, 1998, New Jersey Management, Inc.
("NJMI"), a wholly owned subsidiary of GBCC, was responsible for the operations
of the Sands under a management agreement with GBHC. On May 22, 1998, GBHC filed
a motion with the Bankruptcy Court seeking to reject the existing management
agreement with NJMI. A substitute agreement (the "Interim Agreement") was
entered into on June 27, 1998 and approved by the New Jersey Bankruptcy Court on
July 7, 1998. Under the Interim Agreement, NJMI continued to provide certain
agreed upon services to GBHC until September 28, 1998. Furthermore, as the
result of a settlement agreement reached by GBCC and Holdings during September
1998 (see Note 10), GBCC no longer controls the management of the Sands.
Accordingly, Holdings, GB Property Funding and GBHC are no longer included on
the accompanying consolidated

                                       11
<PAGE>

                GREATE BAY CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                  (Unaudited)



balance sheets. During the period from January 1, 1998 through June 30, 1998,
the operations of Holdings and its subsidiaries were accounted for under the
equity method of accounting (see Note 10). As a result of GBCC no longer
controlling the operations of the Sands, the expectation that ownership control
of Holdings will only be temporary and the September 1998 settlement agreement
which resolved certain significant uncertainties, GBCC's investment in Holdings
and its subsidiaries as well as certain amounts due to Holdings were revalued to
a zero basis effective on July 1, 1998. Accordingly, for periods subsequent to
June 30, 1998, GBCC has accounted for its investment in Holdings under the cost
method of accounting.

     Pratt Casino Corporation and Subsidiaries -

     The filings under Chapter 11 by Holdings, GB Property Funding and GBHC
resulted in a default under the indenture for $85,000,000 principal amount of
11.625% senior notes due 2004 (the "PRT Funding Notes") issued by PRT Funding
Corp. ("PRT Funding"), an indirect, wholly owned subsidiary of GBCC.
Accordingly, the outstanding principal amount of the PRT Funding Notes
accelerated and became currently due and payable.  PCC, as guarantor of the PRT
Funding Notes, did not have sufficient assets to satisfy the outstanding amounts
applicable to the PRT Funding Notes.  PRT Funding deferred payment of interest
due on the April 15 and October 15, 1998 and April 15, 1999 interest payment
dates.  On October 22, 1998, PRT Funding paid to the bondholders an amount equal
to a single semiannual interest payment ($4,941,000) while negotiations to
restructure the PRT Funding Notes continued.  In connection with the
Restructuring (as defined below) PRT Funding paid deferred interest amounting to
$6,768,000 to the bondholders on April 30, 1999.

     On April 28, 1999, PCC, PRT Funding, NJMI, GBCC, HCC and the holders of
substantially all of the PRT Funding Notes entered into a voting agreement which
provided for the restructuring of the PRT Funding Notes (the "Restructuring").
The voting agreement provided for HCC to acquire the stock of PCC, the parent of
PRT Funding, from GBCC for nominal consideration.  When acquired by HCC, PCC's
assets were to consist of its limited partnership interest in its management
contract for the Aurora Casino and a consulting contract for the Tunica Casino
and its liabilities were to consist of a new obligation in the amount of
$40,329,000 payable in satisfaction of the PRT Funding Notes.  The voting
agreement provided for HCC to immediately discharge the obligation.

     As part of the Restructuring, holders of the PRT Funding Notes were also to
receive 100% of the remaining assets of PCC and its subsidiaries not acquired by
HCC.  Such assets consist primarily of claims against Holdings, GB Property
Funding and GBHC in their Chapter 11 proceedings (see discussion of Greate Bay
Holdings, L.L.C. in Note 9).

     The successful completion of the Restructuring required that PCC, PRT
Funding and NJMI file for protection under Chapter 11 with the above
transactions included as part of a pre-negotiated plan of reorganization. Such
petitions for relief were filed on a May 25, 1999 in the United States
Bankruptcy Court for the District of Delaware (the "Delaware Bankruptcy Court")
and the related plan of reorganization was filed on May 26, 1999. The plan was
confirmed by the Delaware Court on October 1, 1999. On October 13, 1999, GBCC
sold its ownership of PCC, which held the consulting agreement with the Tunica
Casino and the limited partnership interest in PML (see Notes 7 and 8) to HCC.
When sold by GBCC, PCC's assets consisted of the limited partnership interest
and the consulting agreement valued in the aggregate at

                                       12
<PAGE>

                GREATE BAY CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                  (Unaudited)



$40,329,000. PCC's liabilities consisted of an obligation in the amount of
$40,329,000 payable in satisfaction of the PRT Funding Notes. HCC settled the
obligation on October 14, 1999. GBCC's claims against Holdings, GB Property
Funding and GBHC in their Chapter 11 proceedings as well as other claims
previously held by PCC, PRT Funding and NJMI were conveyed to Greate Bay
Holdings, L.L.C., a new GBCC subsidiary, for the benefit of the PRT Funding
noteholders (see Note 9).

     As a result of the Chapter 11 filings and plan of reorganization of PCC,
PRT Funding and NJMI, GBCC's control over the filing subsidiaries was subject to
supervision of the Delaware Bankruptcy Court and GBCC did not expect to have
ownership or operating control of such subsidiaries after reorganization.
Accordingly, GBCC's investment in PCC and its subsidiaries as well as certain
intercompany balances with PCC and its subsidiaries were revalued to a zero
basis effective on May 25, 1999. For periods subsequent to May 25, 1999 and
before October 14, 1999, GBCC accounted for its investment in PCC under the cost
method of accounting.

     Financial Reporting -

     The consolidated financial statements as of March 31, 2000 and for the
three month periods ended March 31, 2000 and 1999 have been prepared by GBCC
without audit. In the opinion of management, these consolidated financial
statements contain all adjustments (consisting of only normal recurring
adjustments) necessary to present fairly the consolidated financial position of
GBCC as of March 31, 2000 and the results of its operations and cash flows for
the three month periods ended March 31, 2000 and 1999.

(2)  Net loss per common share -

     Basic net loss per common share is calculated by dividing the net loss by
the weighted average number of shares of common stock outstanding. Diluted net
loss per common share is calculated for any period in which income from
continuing operations was earned by dividing the components of net income by the
weighted average number of shares of common stock and potential common shares
outstanding. All potential common shares are excluded from the calculation of
diluted net loss per share for periods during which a loss was incurred because
the effect of their inclusion would be antidilutive.

     For each of the three month periods ended March 31, 2000 and 1999, there
were no potential common shares outstanding and basic and diluted loss per share
were the same. The weighted average number of shares of common stock used in the
calculation of both basic and diluted loss per share was 5,186,627 for each of
the three month periods ended March 31, 2000 and 1999.

(3)  Revenue recognition -

     ACSC licenses casino information technology systems to affiliates of GBCC
as well as to non-affiliated casino companies. Revenue is generally recognized
when all significant contractual obligations have been satisfied and collection
is reasonably assured. Revenue from hardware and inventory sales is recognized
upon delivery and acceptance. Revenues from services is recognized upon
performance.

                                       13
<PAGE>

                GREATE BAY CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                  (Unaudited)


     Certain of ACSC's sales of software to third parties are pursuant to
agreements which specify modifications to be made, require on-going vendor
support or provide for other specialized terms and conditions.  In recognizing
revenue under such agreements, ACSC has adopted and complies with the reporting
requirements of Statement of Position 97-2, "Software Revenue Recognition" ("SOP
97-2") issued by the American Institute of Certified Public Accountants.  The
provisions of SOP 97-2 require, among other things, that revenue from software
sales that do not require significant production, modification or customization
be recognized when evidence of an arrangement exists, delivery has occurred, the
fee is fixed as determinable and collectability is probable.  Software sales for
which significant modifications are required are recognized under a percentage-
of-completion method based on costs incurred to date compared with total
estimated costs.  Profit estimates on such contracts are reviewed periodically
whenever there is a change in facts or circumstances.  Any losses on a contract
would result in the full amount of the loss being recognized immediately.

     Unearned revenues of $1,036,000 and $133,000 at March 31, 2000 and December
31, 1999, respectively, represent deposits or prepayments received by customers
for services yet to be performed.  Such advance payments are applied over the
lives of the contracts.

(4)  Borrowings from Affiliate

     GBCC and its subsidiaries had outstanding affiliate borrowings from HCC of
$6,750,000 as of both March 31, 2000 and December 31, 1999. During the third
quarter of 1996, GBCC borrowed $6,500,000 from HCC on a demand basis with
interest at the rate of 13.75% per annum payable quarterly commencing October 1,
1996; such funds were loaned by GBCC to GBHC for working capital purposes on the
same terms. On September 2, 1998, the working capital loans to GBHC were
cancelled as part of a settlement agreement among GBCC and Holdings, together
with certain of their subsidiaries, and HCC (see Note 10). In addition, a
$250,000 loan from HCC with interest at the rate of 14% per annum payable
semiannually was due on April 1, 1998; to date, such payment has not been made.

(5)  Long-Term Debt and Pledge of Assets

     Long-term debt consists of the following:

<TABLE>
<CAPTION>
                                                       March 31,   December 31,
                                                          2000         1999
                                                      -----------  ------------
<S>                                                   <C>          <C>
 14.875% secured promissory note, due 2006, net of
   discount of $5,681,000 and $7,157,000,
   respectively                                       $41,922,000   $40,446,000

   Less - current maturities                                    -             -
                                                      -----------  ------------

     Total long-term debt                             $41,922,000   $40,446,000
                                                      ===========  ============
</TABLE>

     On February 17, 1994, PPI Funding Corp., a subsidiary of GBCC, issued
$40,524,000 discounted principal amount of new deferred interest notes (the "PPI
Funding Notes") to HCC in exchange for the

                                       14
<PAGE>

                GREATE BAY CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                  (Unaudited)

$38,779,000 principal amount of 15.5% unsecured notes (the "PCPI Notes") held by
HCC and issued by PCPI Funding Corp., another subsidiary of GBCC. The PPI
Funding Notes were discounted to yield interest at the rate of 14.875% per annum
and had a face value of $110,636,000. Subsequent principal payment by PPI
Funding Corp. reduced the maturity value of the notes to $98,353,000 at December
31, 1996. During the second quarter of 1997, HCC assigned $13,750,000
undiscounted principal amount of the PPI Funding Notes to PPI Corporation as
consideration, in part, for HCC's acquisition of the general partnership
interest in PML (see Note 7). Such assignment reduced the maturity value of the
notes to $84,603,000. At December 31, 1997, an additional $37,000,000
undiscounted face value ($23,631,000 discounted value) of the PPI Funding Notes
was forgiven by HCC, further reducing the maturity value to $47,603,000. Payment
of interest on the PPI Funding Notes is deferred through February 17, 2001 at
which time interest will become payable semiannually, with the unpaid principal
balance due on February 17, 2006.

     No interest was paid during either of the three month periods ended March
31, 2000 or 1999.

(6)  Income Taxes

     GBCC's benefit (provision) for income taxes consists of the following:

<TABLE>
<CAPTION>
                                            Three Months Ended
                                                 March 31,
                                           ---------------------
                                                2000        1999
                                           ---------   ---------
<S>                                        <C>         <C>
Federal income tax benefit (provision):
 Current                                   $       -   $ (25,000)
 Deferred                                    871,000     377,000
State income tax benefit (provision):
 Current                                      65,000      (2,000)
 Deferred                                      2,000     161,000
 Valuation allowance                        (871,000)   (544,000)
                                           ---------   ---------

                                           $  67,000   $ (33,000)
                                           =========   =========
</TABLE>

     GBCC paid no federal income taxes during the three month period ended March
31, 2000; federal income taxes of $25,000 were paid during the three month
period ended March 31, 1999.  GBCC paid no state income taxes during either of
the three month periods ended March 31, 2000 or 1999.

     Federal and state income tax provisions or benefits are based upon
estimates of the results of operations for the current period and reflect the
nondeductibility for income tax purposes of certain items, including meals and
entertainment and certain other expenses. Deferred taxes are computed based on
the expected future tax effects of differences between the financial statement
and tax bases of assets and liabilities, using enacted tax rates. Deferred
income taxes result primarily from differences in the timing of deductions
between financial and federal tax reporting purposes and from the use of the
allowance method rather than the direct write-off method for doubtful accounts.

                                       15
<PAGE>

                GREATE BAY CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                  (Unaudited)



     As a result of a settlement agreement entered into in September 1998 (see
Note 10), Holdings and its subsidiaries are no longer included in the
consolidated tax return of GBCC for periods subsequent to December 31, 1998.
The deconsolidation and sale of PCC and its subsidiaries has also resulted in
those entities no longer being included in GBCC's consolidated tax return for
periods subsequent to October 1999. As of March 31, 2000, GBCC and its
subsidiaries, exclusive of Holdings and its subsidiaries, have net operating
loss carryforwards ("NOL's") totaling approximately $17,400,000 for federal
income tax purposes, none of which begin to expire until the year 2012.
Additionally, GBCC and its subsidiaries have alternative minimum tax and other
tax credits available totaling approximately $29,000 and $511,000, respectively.
Alternative minimum tax credits do not expire and the other tax credits expire
in 2000 ($97,000) and 2001 ($414,000).  Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes"  ("SFAS 109"), requires that
the tax benefit of such NOL's, credit carryforwards and deferred tax assets
resulting from temporary differences be recorded as an asset and, to the extent
that management can not assess that the utilization of such asset is more likely
than not, a valuation allowance should be recorded.  Due to the continued
availability of NOL's originating in prior years and uncertainties regarding
GBCC's ability to continue as a going concern, management is unable to determine
that realization of such asset is more likely than not and, thus, has provided
valuation allowances for substantially all of the deferred tax assets for all
periods presented.  The remaining deferred tax assets represent state timing
differences expected to be utilized.

                                       16
<PAGE>

                GREATE BAY CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                  (Unaudited)


     The components of the net deferred tax asset are as follows:

<TABLE>
<CAPTION>
                                       March 31,    December 31,
                                         2000          1999
                                      -----------   ------------
<S>                                   <C>           <C>
Deferred tax assets:
  Net operating loss carryforwards    $ 5,901,000    $ 5,060,000
  Allowance for doubtful accounts          94,000         94,000
  Investment and jobs tax credits         511,000        511,000
  Other liabilities and accruals           68,000         11,000
  Alternative minimum tax credit           29,000         29,000
                                      -----------    -----------

    Total deferred tax assets           6,603,000      5,705,000
Deferred tax liability -
   Depreciation                           (25,000)             -
                                      -----------    -----------

Net deferred tax asset                  6,578,000      5,705,000
Valuation allowance                    (6,554,000)    (5,683,000)
                                      -----------    -----------

                                      $    24,000    $    22,000
                                      ===========    ===========

Classified as:
 Other current assets                 $    14,000    $     9,000
 Deferred tax asset                        10,000         13,000
                                      -----------    -----------

                                      $    24,000    $    22,000
                                      ===========    ===========
</TABLE>

     Sales or purchases of GBCC common stock by certain five percent
stockholders, as defined in the Internal Revenue Code of 1986, as amended (the
"Code"), can cause a "change of control", as defined in Section 382 of the Code,
which would limit the ability of GBCC to utilize these loss carryforwards in
later tax periods. Should such a change of control occur, the amount of annual
loss carryforwards available for use would most likely be substantially reduced.
Future treasury regulations, administrative rulings or court decisions may also
effect GBCC's future utilization of its loss carryforwards.

     GBCC was included in the consolidated federal income tax returns of HCC
until HCC distributed the stock of GBCC it owned to its shareholders on December
31, 1996. The Internal Revenue Service has been examining the consolidated
federal income tax returns of HCC for the years 1993 through 1996 during which
period GBCC was included. Such examination for 1993 and 1994 has been completed
and resulted in adjustments to GBCC's consolidated NOL's and deferred tax
assets, but in no additional tax obligations. The Internal Revenue Service is
continuing its examination of the consolidated federal income tax returns of
HCC, including GBCC, for 1995 and 1996. Until such examination is completed,
allocations of tax attributes and additional alternative minimum tax or regular
tax obligations, if any, can not be determined. Due to the inclusion of Holdings
and its subsidiaries in such consolidated returns, an as yet undetermined

                                       17
<PAGE>

                GREATE BAY CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                  (Unaudited)


portion of any resulting tax liability to GBCC may be recoverable from Holdings.
As a result, management is presently unable to estimate the ultimate impact of
the examination on the consolidated financial position or results of operations
of GBCC.

(7)  Transactions with Related Parties

     In April 1997, HCC issued a five-year note in the original amount of
$3,800,000 and assigned $13,750,000 undiscounted principal amount ($7,597,000
discounted value) of PPI Funding Notes (see Note 5) and $350,000 of accrued
interest due from GBCC to PPI Corporation in exchange for the general
partnership interest in PML.  The $3,800,000 note was payable in monthly
installments of $83,000, including interest at the rate of 14% per annum,
commencing on May 1, 1997, with additional quarterly variable principal payments
commencing on July 1, 1997 in an amount equal to the general partner's share of
quarterly cash distributions, as defined, from PML.  The note was amended as of
the October 1999 acquisition of PCC by HCC (see Note 1) to provide for monthly
installments of $83,000 including interest and additional quarterly principal
payments of $21,000 beginning January 1, 2000.  During March 2000, PPI
Corporation and HCC entered into an agreement to defer the March and April
payments of principal and interest on the note until May while negotiations
continue to restructure the obligation.  The deferral of payments was extended
for one additional month in May 2000.  These deferrals do not extend the
maturities or represent a forgiveness of either principal or interest as all
past due amounts, if not otherwise restructured, will become due and payable on
the extended payment date of June 1, 2000.  The outstanding note balances at
March 31, 2000 and December 31, 1999 are $1,893,000 and $2,033,000,
respectively.  Of these balances, $946,000 and $853,000, respectively, are
included in current amounts due from affiliates and $947,000 and $1,180,000,
respectively, are included in noncurrent amounts due from affiliates at March
31, 2000 and December 31, 1999.  Interest income on the note from HCC amounted
to $66,000 and $94,000, respectively, during the three month periods ended March
31, 2000 and 1999.  Accrued interest receivable of $43,000 and $24,000,
respectively, is included in amounts due from affiliates on the accompanying
consolidated balance sheets at March 31, 2000 and December 31, 1999.

     Pursuant to a consulting agreement which was terminated effective October
13, 1999 with Hollywood Casino - Tunica, Inc. ("HCT"), the HCC subsidiary which
owns and operates the Tunica Casino, PCC received monthly consulting fees of
$100,000. Fees amounting to $300,000 are included on the accompanying
consolidated statement of operations for the three month period ended March 31,
1999.

     HCC and its subsidiaries allocate certain general and administrative costs
to GBCC and its subsidiaries pursuant to services agreements. Net allocated
costs and fees charged to GBCC and its subsidiaries by HCC and its subsidiaries
amounted to $69,000 and $157,000, respectively, during the three month periods
ended March 31, 2000 and 1999. In connection with such charges, payables in the
amount of $15,000 and $20,000 are included in accounts payable on the
accompanying consolidated balance sheets at March 31, 2000 and December 31,
1999, respectively.

     ACSC provides computer, marketing and other administrative services to GBHC
and to HCC and its subsidiaries. Computer services provided include hardware,
software and operator support and, for the most part, such services are billed
by ACSC at its direct cost plus expenses incurred. ACSC and HCT entered into a
Computer Services Agreement dated as of January 1, 1994 and renewed through
December 31, 1999 to

                                       18
<PAGE>

                GREATE BAY CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                  (Unaudited)


provide such services and to license or sublicense to HCT computer software
necessary to operate HCT's casino, hotel and related facilities and business
operations. HCT paid ACSC for such equipment and licensed such software at
amounts and on terms and conditions that ACSC provides to unrelated third
parties. HCT also paid ACSC a fixed license fee of $33,600 per month. ACSC also
provided services to HCA through HCA's management agreement with PML. ACSC's
service agreements with PML and HCT terminated on October 13 and December 31,
1999, respectively. ACSC continues to provide services to HCA and HCT on an as
needed basis at third party consulting rates while negotiations for new service
agreements continue. ACSC's billings to HCC and its subsidiaries for such
services amounted to $384,000 and $289,000, respectively, for the three month
periods ended March 31, 2000 and 1999. Unpaid charges from HCC and its
subsidiaries included in due from affiliates on the accompanying consolidated
balance sheets at March 31, 2000 and December 31, 1999 amounted to $123,000 and
$106,000, respectively. Billings to GBHC amounted to $113,000 and $232,000,
respectively, for the three month periods ended March 31, 2000 and 1999. Unpaid
charges to GBHC included in due from affiliates on the accompanying consolidated
balance sheets at March 31, 2000 and December 31, 1999 amounted to $93,000 and
$76,000, respectively.

     ACSC has outstanding payables to GBHC amounting to $159,000 at both March
31, 2000 and December 31, 1999 included in accounts payable on the accompanying
consolidated balance sheets.

     Interest expense with respect to borrowings from HCC is set forth below:

<TABLE>
<CAPTION>
                                  Three Months Ended March 31,
                                  ----------------------------
                                     2000              1999
                                  ----------        ----------
<S>                               <C>               <C>
PPI Funding Notes (Note 5)        $1,476,000        $1,278,000
Short-term borrowings (Note 4)       235,000           232,000
</TABLE>

     Accretion of interest on the PPI Funding Notes is included in the
outstanding note payable balances at March 31, 2000 and December 31, 1999.
Interest accrued on short-term borrowings at March 31, 2000 and December 31,
1999, which amounted to $2,957,000 and $2,722,000, respectively, is included in
interest payable on the accompanying consolidated balance sheets.

(8)  Investment in Pratt Management, L.P.

     Prior to the Restructuring in October 1999 (see Note 1), PCC held the
limited partnership interest in PML which earned management fees from the Aurora
Casino and incurred operating and other expenses with respect to its management
thereof. As the limited partner in PML, PCC received 1% of the first $84,000 of
net income earned by the partnership each month and 99% of any income earned
above such amount. PML earned management fees amounting to $2,600,000 during the
three month period ended March 31, 1999. PML also incurred operating and other
expenses amounting to $307,000 during the three month period ended March 31,
1999.

                                       19
<PAGE>

                GREATE BAY CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                  (Unaudited)


(9)  Greate Bay Holdings, L.L.C. -

     Greate Bay Holdings, L.L.C. is an indirect, wholly owned limited liability
subsidiary of GBCC formed in October 1999 for the purpose of holding the
remaining assets of PCC not acquired by HCC in connection with the
Restructuring.  Such assets consist primarily of claims against Holdings, GB
Property Funding and GBHC in their Chapter 11 proceedings.  Greate Bay Holdings,
L.L.C. has no operating activities and all transactions, once approved by the
Delaware Bankruptcy Court, are accounted for as an adjustment to its net assets
and obligations.  In accordance with the plan of reorganization confirmed by the
Delaware Bankruptcy Court in October 1999, the holders of the PRT Funding Notes
will at some future date receive whatever assets of Greate Bay Holdings, L.L.C.
remain in final settlement of their claims.  Accordingly, because control by
GBCC of Greate Bay Holdings, L.L.C. is temporary and because all of its net
assets have an offsetting liability to the holders of the PRT Funding Notes, the
accounts of Greate Bay Holdings, L.L.C. are not included in the accompanying
consolidated balance sheets of GBCC at March 31, 2000 or December 31, 1999.

     The schedule below sets forth the accounts of Greate Bay Holdings, L.L.C.:

<TABLE>
<CAPTION>
                                                          March 31,  December 31,
                                                           2000         1999
                                                        -----------  -----------
<S>                                                     <C>          <C>
  Cash and cash equivalents                             $   283,000  $   402,000
  Receivables from Holdings and its subsidiaries (a)     23,247,000   23,247,000
                                                        -----------  -----------

  Total assets                                           23,530,000   23,649,000
                                                        -----------  -----------

  Accounts payable and accrued liabilities                   44,000      156,000
  Due to holders of PRT Funding Notes (a)                23,258,000   23,254,000
  Litigation reserve as established by the plan
    of reorganization                                       228,000      239,000
                                                        -----------  -----------

  Total obligations                                      23,530,000   23,649,000
                                                        -----------  -----------

  Net assets                                            $         -  $         -
                                                        ===========  ===========

</TABLE>

---------------

(a) It is anticipated that Greate Bay Holdings, L.L.C. will realize
    substantially less than the carrying amount of the receivables from Holdings
    upon confirmation of a plan of reorganization. Amounts due to holders of the
    PRT Funding Notes will be reduced correspondingly.

                                       20
<PAGE>

(10) Litigation

     Subsidiary Chapter 11 Filings and Related Litigation -

     On January 5, 1998, Holdings, GB Property Funding and GBHC filed petitions
for relief under Chapter 11 of the Bankruptcy Code.  Each company continues to
operate in the ordinary course of business, as set forth in the Bankruptcy Code,
and each company's executive officers and directors remain in office, subject to
the jurisdiction of the New Jersey Bankruptcy Court.  On June 1, 1999, a plan of
reorganization was filed by the debtors with the New Jersey Bankruptcy Court.
The reorganization plan, as filed, provided for the secured bondholders to
receive new debt and 100% of the equity ownership of Holdings in exchange for
their current claims and for unsecured creditors to receive a partial cash
settlement of their claims. Subsequent to the filing of a reorganization plan by
the debtors, two competing plans were filed by (1) Park Place Entertainment
Corporation, a large and diversified gaming company with significant operations
in Atlantic City, and (2) jointly by High River Limited Partnership, an entity
controlled by Carl C. Icahn, and by the Official Committee of Unsecured
Creditors.  Both of these plans provide for significant cash infusions by the
plan proponents in exchange for equity in a reorganized Holdings ranging from
46.3% to 57.7% with the secured bondholders to receive the remaining equity in
reorganized Holdings together with new secured debt.  None of the plans provide
for any distributions to the present shareholders.  A hearing on the adequacy of
the disclosure statements relating to the various plans was held on April 5,
2000.  Creditors are currently voting on the competing plans and a confirmation
hearing is scheduled to begin on June 20, 2000.

     On May 22, 1998, GBHC filed a motion with the New Jersey Bankruptcy Court
seeking to reject its management agreement with NJMI.  The Interim Agreement was
entered into and approved by the New Jersey Bankruptcy Court on July 7, 1998 and
the motion to reject the management agreement was approved by the New Jersey
Bankruptcy Court on September 28, 1998.  As a consequence of the September 1998
settlement agreement described below, GBCC and GBHC may no longer assert claims
against each other with respect to the operation of the management contract and,
with the passage of time, the cancellation thereof.

     On April 22, 1999, GBHC filed a motion with the New Jersey Bankruptcy Court
seeking to disallow NJMI's pre-petition claims.  In November 1999, a compromise
was reached establishing the amount of the claim at $75,000.  The ultimate
settlement of this amount is subject to the confirmation of a plan of
reorganization by the New Jersey Bankruptcy Court.

     On July 27, 1998, GBHC filed an action in the New Jersey Bankruptcy Court
against GBCC, certain affiliates of GBCC and Jack E. Pratt, Edward T. Pratt, Jr.
and William D. Pratt as directors of GBCC and former directors of GBHC
(collectively, the "GBCC Parties"), which alleged, among other things,
usurpation of corporate opportunities of GBHC and breach of fiduciary duty with
respect to GBHC in connection with the acquisition of certain land parcels in
Atlantic City, New Jersey.  The action sought, among other things, to enjoin the
GBCC Parties from transferring the land parcels to third parties and to require
that the land parcels be conveyed to GBHC.  The action also sought to enjoin
GBCC from using the tax NOL's of GBHC.

     On September 2, 1998, the GBCC Parties reached a settlement with GBHC which
was approved by the New Jersey Bankruptcy Court.  The terms of the settlement
agreement provided, among other things,

                                       21
<PAGE>

                GREATE BAY CASINO CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                  (Unaudited)


(1) that the GBCC Parties convey the land parcels and related mortgage note to
GBHC in exchange for a cash payment equal to the GBCC Parties' cost in such land
parcels with an additional $500,000 payment due upon confirmation of a plan of
reorganization by the New Jersey Bankruptcy Court and (2) that GBHC be included
in the consolidated federal income tax return of GBCC for 1997 and 1998 enabling
GBCC to utilize GBHC's tax NOL's. The agreement also provided that on or before
December 31, 1998, GBCC would cause Holdings and its subsidiaries to be
deconsolidated from the GBCC federal income tax return by means of transferring
21% of the stock ownership of Holdings to an unconsolidated entity. Such
transfer was accomplished effective as of December 31, 1998. In addition, the
settlement agreement also allowed GBHC to offset its working capital loan from
GBCC in the amount of $8,000,000 together with interest accrued thereon against
a claim asserted by GBHC against GBCC under the existing tax allocation
agreements.

     GBCC licenses the "Sands" name under a license agreement dated as of May
19, 1987, which rights are sublicensed to GBHC. The license agreement has a term
of 99 years and requires a royalty payment of the greater of 1.5% of gross room
charges, as defined in the agreement, payable monthly, or $100,000 per calendar
year. The license agreement may be terminated by either party in the event of a
material breach, bankruptcy, suspension of normal business operations or certain
other actions by the other party. GBCC intends to terminate the license
agreement as a result of the licensor's suspension of normal business operations
evidenced by the destruction of the Sands Hotel and Casino in Las Vegas in 1996.
Pursuant to the terms of the sublicense agreement, termination of the license
agreement results in automatic termination of the sublicense agreement. GBCC
filed a motion with the New Jersey Bankruptcy Court to allow GBCC's termination
of the license agreement and the resulting termination of the sublicense
agreement; the New Jersey Bankruptcy Court denied such motion. As a result, GBCC
may not be able to terminate the license agreement, although the New Jersey
Bankruptcy Court may, at some future time, allow GBCC to do so. If unable to
terminate the license agreement, GBCC may remain liable for future royalty
payments. GBCC filed an appeal to the decision of the New Jersey Bankruptcy
Court on March 10, 1999; such appeal was denied on June 10, 1999. GBCC has filed
an appeal of such decision.

     Planet Hollywood Litigation -

     In 1996, Planet Hollywood International, Inc. and Planet Hollywood (Region
IV), Inc. filed a complaint in the United States District Court for the Northern
District of Illinois, Eastern Division, against GBCC and HCC and certain of its
subsidiaries seeking (1) a declaratory judgment that it was entitled to use the
name "Planet Hollywood" for a casino and (2) damages.  In its complaint, Planet
Hollywood alleged, among other things, that GBCC and HCC had, in operating the
Hollywood Casino concept, infringed on their trademark, service mark and trade
dress and had engaged in unfair competition and deceptive trade practices.  GBCC
and  HCC and its subsidiaries filed counterclaims seeking (1) a declaratory
judgment that Planet Hollywood was not entitled to use the name "Planet
Hollywood" for a casino and (2) damages.  The counterclaims alleged, among other
things, that Planet Hollywood had, through its planned use of its mark in
connection with casino services, infringed on GBCC and HCC's service marks and
trade dress and had engaged in unfair competition.  The trial commenced on July
19, 1999 and was completed on July 26, 1999.  On August 25, 1999, GBCC and HCC
and the other defendants filed a motion to dismiss the declaratory judgment
claims of all parties asserting, among other things, that as a result of Planet
Hollywood's reported deteriorating financial condition and perceived inability
to enter into the casino business, there was no longer any actual case or
controversy.  On October 12, 1999, Planet Hollywood (Region IV), Inc. filed a
petition for

                                       22
<PAGE>

reorganization under Chapter 11 of the United States Bankruptcy Code. On
December 3, 1999 the judge entered a judgment in favor of GBCC and HCC with
respect to the damage claims brought by Planet Hollywood and granted their
motion to dismiss the declaratory judgment claims of all parties. Planet
Hollywood has filed a notice of appeal of the judgment with the Seventh Circuit
Court of Appeals.

     Other Litigation -

     On October 8, 1998, GBCC and HCC filed a complaint in the District Court of
Dallas County, Texas against Arthur Andersen LLP, GBCC and HCC's former
independent accountants, and certain of its partners alleging negligent advice
and breach of contract with respect to the tax consequences resulting from the
spin-off of GBCC's stock to HCC's shareholders on December 31, 1996.  The
lawsuit is currently in the discovery stage with a trial currently scheduled to
begin in September 2000.

(11) Operating Leases

     GBCC and its subsidiaries lease office space and operating equipment under
lease agreements accounted for as operating leases.  The lease agreements expire
at various dates through the year 2004 and several contain automatic renewals
unless notice of termination is given.  Some of the operating leases also
include minimal contingent rental payments based on levels of use.  Total rental
expense amounted to $101,000, and $98,000, respectively, during the periods
ended March 31, 2000 and 1999.

     Future minimum lease payments as of March 31, 2000 under operating leases
having an initial or remaining noncancelable lease term in excess of one year
are as follows:

<TABLE>
<S>                                           <C>
     2000(nine months)                        $286,000
     2001                                      351,000
     2002                                      173,000
     2003                                        4,000
     2004                                        2,000
                                              --------

                                              $816,000
                                              ========
</TABLE>

                                       23
<PAGE>

(12) Major Customers

     ACSC's computer service revenues are derived primarily from either system
installation contracts or from sales to affiliates.  System installation
contracts generally require an extended period of time to complete and represent
significant, but nonrecurring revenue earned from a given customer.  Upon
completion of an installation, ACSC may continue to recognize service or
maintenance revenues from the customer at a much reduced amount.  The following
table demonstrates ACSC's dependence on installation contracts and on sales to
affiliates:

<TABLE>
<CAPTION>
                                                         Three Months Ended
                                                             March 31,
                                                        ---------------------
                                                           2000        1999
                                                        ---------   ---------
<S>                                                     <C>         <C>
Total percentage of period revenues attributable to
 installation contracts                                    15.7%        74.1%
Percentage of period revenues attributable to
 affiliate sales                                           47.2%        16.6%
</TABLE>

(13) Reclassifications

     Certain reclassifications have been made to the prior year's consolidated
financial statements to conform to the 2000 consolidated financial statement
presentation.

                                       24
<PAGE>

                GREATE BAY CASINO CORPORATION AND SUBSIDIARIES


          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                           AND RESULTS OF OPERATIONS


     This Quarterly Report on Form 10-Q contains forward-looking statements
about the business, results of operations, cash flows, financial condition and
prospects of GBCC. The actual results could differ materially from those
indicated by the forward-looking statements because of various risks and
uncertainties including, among other things, changes in competition, economic
conditions, tax regulations, state regulations applicable to the gaming industry
in general or GBCC in particular, and other risks indicated in GBCC's filing
with the Securities and Exchange Commission. Such risks and uncertainties are
beyond management's ability to control and, in many cases, can not be predicted
by management. When used in this Quarterly Report on Form 10-Q, the words
"believes", "estimates", "anticipates" and similar expressions as they relate to
GBCC or its management are intended to identify forward-looking statements.

LIQUIDITY AND CAPITAL RESOURCES

     Operating Activities

     In prior years, GBCC and its subsidiaries conducted three major business
activities: (1) non-casino operations and the management thereof, (2) management
services for casino operations and (3) ownership of the Sands Hotel and Casino
in Atlantic City, New Jersey.  As a result of the Chapter 11 filings by PCC, PRT
Funding and NJMI and the resulting plan of reorganization confirmed in October
1999, GBCC no longer provides casino-related management services.  As a result
of Holdings and GBHC's Chapter 11 filings, GBCC does not anticipate that it will
retain an equity position in the Sands.  Accordingly, GBCC's current business
activity consists solely of the operations of ACSC.

     ACSC licenses casino information technology systems to HCC's casino
facilities, the Sands and non-affiliated casino companies.  The results of
ACSC's operations for the three month periods ended March 31, 2000 and 1999 are
set forth below:

<TABLE>
<CAPTION>
                                              Three Months Ended
                                                    March 31,
                                             -----------------------
                                                2000         1999
                                             ----------   ----------
<S>                                          <C>          <C>
System sales and support service revenues    $  717,000   $1,905,000
                                             ----------   ----------

Cost of sales                                   270,000    1,018,000
Marketing                                        43,000        9,000
System development and support services         731,000      612,000
General and administrative                      396,000      265,000
Depreciation                                     47,000       44,000
                                             ----------   ----------

                                              1,487,000    1,948,000
                                             ----------   ----------

Loss from operations                         $ (770,000)  $  (43,000)
                                             ==========   ==========
</TABLE>

     The decrease in operating income during the first quarter of 2000 from the
same period in 1999 is due to a decline in revenues from system installation
contracts coupled with increased salaries and overhead costs

                                       25
<PAGE>

                GREATE BAY CASINO CORPORATION AND SUBSIDIARIES


          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS (Continued)



associated with ACSC's marketing of its information technology products (see
"Results of Operations" below).

     ACSC's computer service revenues are derived primarily from system
installation contracts and from sales to affiliates. System installation
contracts generally require an extended period of time to complete and represent
significant, but nonrecurring revenue earned from a given customer. Upon
completion of an installation, ACSC may continue to recognize service or
maintenance revenues from the customer at a much reduced amount. Accordingly, in
order to maintain its current level of revenues, ACSC would need to continue to
obtain installation contracts. The following table demonstrates ACSC's
dependence on installation contracts and on sales to affiliates:

<TABLE>
<CAPTION>
                                             Three Months Ended
                                                  March 31,
                                             ------------------
                                               2000      1999
                                             --------  --------
<S>                                          <C>       <C>
Total percentage of period revenues
 attributable to installation
 contracts                                      15.7%     74.1%
Percentage of period revenues attributable
 to affiliate sales                             47.2%     16.6%
</TABLE>

     GBCC and its subsidiaries currently have debt outstanding to HCC at March
31, 2000 consisting of (1) demand notes (the "GBCC Notes")and accrued interest
thereon totaling $9.7 million and (2) a 14.875% secured promissory note due 2006
(the "PPI Funding Notes") in the amount of $41.9 million. ACSC's operations do
not generate sufficient cash flow to provide debt service on the HCC demand
obligations and, consequently, GBCC is currently insolvent. Additionally, semi-
annual interest payments of approximately $3.5 million attributable to the
14.875% secured promissory note become payable commencing in February 2001.
Accordingly, GBCC has commenced discussions with HCC to restructure its
obligations and, in that connection, has entered into a standstill agreement
with HCC. Under the standstill agreement, monthly payments of principal and
interest due from HCC for the three months ended May 1, 2000 with respect to an
intercompany note more fully described in Note 7 of the Notes to Consolidated
Financial Statements have been deferred until June 1, 2000 in consideration of
HCC's agreement not to demand payment of principal or interest on the previously
described demand notes outstanding to GBCC. There can be no assurance at this
time that the discussions with HCC will result in a restructuring of GBCC's
obligations to HCC. In addition, it is possible that any restructuring will
result in a conveyance of all of GBCC's remaining assets, including ACSC, to HCC
in order to satisfy GBCC's obligations to HCC. Any restructuring of GBCC's
obligations, consensual or otherwise, will require the Company to file for
protection under federal bankruptcy laws.

     The insolvency of GBCC raises substantial doubt about its ability to
continue as a going concern. The consolidated financial statements do not
include any adjustments that might result from the outcome of these
uncertainties.

     Financing Activities

     During 1994, GBCC issued $40.5 million discounted principal amount of
deferred interest notes (the "PPI Funding Notes") to HCC in exchange for $38.8
million principal amount of 15.5% notes issued by

                                       26
<PAGE>

                GREATE BAY CASINO CORPORATION AND SUBSIDIARIES


          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS (Continued)



another GBCC subsidiary and held by HCC. Effective as of April 1, 1997, HCC
acquired from PPI Corporation the general partnership interest in PML which,
prior to October 14, 1999, held the Aurora management contract. The acquisition
price for the general partnership interest included, among other things, the
assignment of $7.6 million discounted amount of the PPI Funding Notes to PPI
Corporation. During 1997, HCC forgave $23.6 million discounted principal amount
of the PPI Funding Notes. The remaining PPI Funding Notes have a maturity value
of $47.6 million. Payment of interest on the PPI Funding Notes is deferred
through February 17, 2001 at which time interest will become payable
semiannually with the unpaid balance due on February 17, 2006.

     Consideration paid by HCC to acquire the general partnership interest in
PML also included a note in the original amount of $3.8 million. Annual
principal and interest payments by HCC on the $3.8 million note have
approximated the general partner's share of annual partnership distributions
which were made to HCC. During March 2000, GBCC and HCC entered into the
standstill agreement previously described to defer the March and April payments
of principal and interest on the note until May while negotiations continue to
restructure the obligation. The deferral of payments was extended for one
additional month in May 2000. These deferrals do not extend the maturities or
represent a forgiveness of either principal or interest as all past due amounts,
if not otherwise restructured, will become due and payable on the extended
payment date of June 1, 2000.

     The GBCC Notes include $6.5 million borrowed from HCC during the third
quarter of 1996.  Such borrowing accrues interest at the rate of 13.75% per
annum payable quarterly commencing October 1, 1996. GBCC loaned the proceeds
from this loan to GBHC on similar terms.  The loan to GBHC along with the
related interest receivable were cancelled as part of a settlement agreement
approved by the New Jersey Bankruptcy Court on September 2, 1998.

     As previously described, GBCC has commenced discussions with HCC to
restructure its obligations. There can be no assurance at this time that the
discussions with HCC will result in a restructuring of GBCC's obligations to HCC
or that any restructuring will not result in a conveyance of all of GBCC's
remaining assets, including ACSC, to HCC in order to satisfy these obligations.
Any restructuring of GBCC's obligations, consensual or otherwise, will require
the Company to file for protection under federal bankruptcy laws.

     Capital Expenditures and Other Investments

     Property and equipment additions during the three month period ended March
31, 2000 totaled $27,000; management anticipates that capital expenditures
during the remainder of 2000, consisting only of ongoing equipment replacements
and enhancements at ACSC, will not be significant.

RESULTS OF OPERATIONS

     General

     As a result of the filings by Holdings, GB Property Funding, and GBHC,
GBCC's control over the filing subsidiaries is subject to the supervision of the
Bankruptcy Court. GBCC does not expect to have ownership or operating control of
such subsidiaries after reorganization. For the three month periods ended

                                       27
<PAGE>

                GREATE BAY CASINO CORPORATION AND SUBSIDIARIES


          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS (Continued)



March 31, 2000 and 1999, the accompanying consolidated statements of operations
reflect the operations of Holdings and its subsidiaries under the cost method of
accounting.

     The accompanying consolidated statement of operations for the three month
period ended March 31, 1999 includes the activities of PCC, NJMI and PRT Funding
on a consolidated basis.  GBCC sold its interest in PCC to HCC during October
1999 as part of the Restructuring.  Accordingly, PCC and its subsidiaries are no
longer included in the consolidated financial statements of GBCC.

     HCC acquired the general partnership interest in PML from a subsidiary of
GBCC effective April 1, 1997.  From that date until October 14, 1999, GBCC held
only the limited partnership interest in PML.  This interest is presented under
the equity method of accounting on the accompanying consolidated statement of
operations for the three month period ended March 31, 1999.

     Revenues

     System sales and support service revenues earned by ACSC declined $1.2
million (62.4%) during the three month period ended March 31, 2000 compared to
the prior year period.  Such decrease results from a significant installation
contract for ACSC's slot monitoring system during the first quarter of 1999 for
which there was no corresponding contract during the 2000 first quarter period.

     Consulting fees earned by PCC from the Tunica Casino, which amounted to
$300,000 during the first quarter of 1999, were eliminated with the sale of PCC
to HCC as part of the Restructuring in October 1999.

     Cost of Sales

     ACSC's cost of sales decreased $748,000 (73.5%) during the three month
period ended March 31, 2000 compared to the three month period ended March 31,
1999. Such decrease reflects the 62.4% decline in system sales and support
service revenues previously noted.

     Marketing Expenses

     Marketing expenses increased by $34,000 (377.8%) during the three month
period ended March 31, 2000 compared to the three month period ended March 31,
1999 due to incremental travel and advertising relating to increased efforts to
sell its information technology products to unaffiliated third parties.

     General and Administrative Expenses

     GBCC's general and administrative expenses decreased by $66,000 (9.5%)
during the three month period ended March 31, 2000 compared to the 1999 period.
Increases in salaries and overhead costs incurred by ACSC ($131,000) were
partially offset by savings in overhead charges from HCC ($88,000). The 1999
three month period expenses also include approximately $120,000 of expenses
incurred by NJMI in connection with the termination of its casino management
services.

                                       28
<PAGE>

     Interest

     Interest income decreased $89,000 (42%) during the first quarter of 2000
compared to the same period during 1999 as less cash was available for
investment purposes and less interest was earned on GBCC's note receivable from
HCC due to principal reductions.  Interest expense decreased $2.3 million (57%)
during the three month period ended March 31, 2000 compared to the same period
in 1999.  Interest expense on the PRT Funding Notes which were settled as part
of the Restructuring amounted to $2.5 million during the 1999 first quarter
period.

     Equity in Earnings of Limited Partnership

     During the first quarter of 1999, PCC continued to hold the limited
partnership interest in PML which earned management fees from the Aurora Casino.
The Agreement of Limited Partnership of PML provided for distributions to PCC of
1% of the first $84,000 of net income earned by PML each month and 99% of any
net income earned above such amount, with all remaining income distributed to
the general partner. GBCC reflected the equity in earnings of PML only through
the May 25, 1999 deconsolidation of PCC.

     Restructuring Costs

     Restructuring costs during the first quarter relate to fees incurred with
respect to the Chapter 11 filings by PCC and its subsidiaries.  Such costs
ceased with the deconsolidation of PCC in May 1999.

     Income Tax Provision

     As a result of a settlement agreement entered into in September 1998 (see
Note 10 of Notes to Consolidated Financial Statements), Holdings and its
subsidiaries are no longer included in the consolidated tax return of GBCC for
periods subsequent to December 31, 1998.  The deconsolidation and sale of PCC
and its subsidiaries has also resulted in those entities no longer being
included in GBCC's consolidated tax return for periods subsequent to October
1999.  Due to the availability of NOL's originating in prior years and
uncertainties regarding GBCC's ability to continue as a going concern,
management is unable to determine that realization of deferred tax assets
resulting from NOL's and temporary differences is more likely than not.
Accordingly, under the provisions of Statement of Financial Accounting Standards
No. 109, "Accounting for Income Taxes", GBCC has provided valuation allowances
for substantially all of the deferred tax assets at March 31, 2000 and December
31, 1999.  The remaining deferred tax assets represent state timing differences
expected to be utilized.

     GBCC was included in the consolidated federal income tax returns of HCC
until HCC distributed the stock of GBCC it owned to its shareholders on December
31, 1996. The Internal Revenue Service has been examining the consolidated
federal income tax returns of HCC for the years 1993 through 1996 during which
period GBCC was included. Such examination for 1993 and 1994 has been completed
and resulted in adjustments to GBCC's consolidated NOL's and deferred tax
assets, but in no additional tax obligations. The Internal Revenue Service is
continuing its examination of the consolidated federal income tax returns of
HCC, including GBCC, for 1995 and 1996. Until such examination is completed,
allocations of tax attributes and additional alternative minimum tax or regular
tax obligations, if any, can not be determined. Due to the inclusion of Holdings
and its subsidiaries in such consolidated returns, an as yet undetermined
portion of any resulting tax liability to GBCC may be recoverable from Holdings.
As a result, management

                                       29
<PAGE>

                GREATE BAY CASINO CORPORATION AND SUBSIDIARIES


          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS (Continued)



is presently unable to estimate the ultimate impact of the examination on the
consolidated financial position or results of operations of GBCC.

     Year 2000 Compliance

     At the beginning of the year 2000, computer programs that had date
sensitive software might have recognized a date using "00" as the year 1900
rather than 2000. Such an error could have resulted in a system failure or
miscalculations causing disruptions of operations including, among other things,
a temporary inability to process transactions or engage in similar normal
business activities.

     In preparation for the Year 2000, management conducted a program to prepare
the Company's computer systems and applications as well as its non-information
technology (embedded microchip) systems. Such program included the use of both
internal and external resources to test and, if necessary, modify or replace
software applications.  Year 2000 date conversion projects were completed on a
timely basis and the cost of acquiring, testing and converting such systems
proved to be minimal.  The Company also communicated with its significant
suppliers to determine the extent to which GBCC's information systems might have
been vulnerable to those third parties' failure to resolve their Year 2000
issues. Such suppliers either confirmed their compliance or new suppliers were
located.

     As a result of its planning and implementation efforts, GBCC experienced no
significant disruptions to any of its computer systems and non-information
technology systems and management believes that all such systems have
successfully responded to the Year 2000 change.  The Company also encountered no
significant Year 2000 problems with its vendors or suppliers.  Management is
continuing to monitor the Company's systems and communicate with its suppliers
and vendors to ensure that any latent Year 2000 problems that might arise are
promptly addressed.

     Market Risk

     The Company does not have and does not expect to have any securities
subject to interest rate fluctuations. Management believes that all market risks
are immaterial.

     Inflation

     Management believes that in the near term, modest inflation, together with
competition for qualified and experienced personnel, will continue to cause
increases in operating expenses, particularly labor and employee benefits costs.

     Seasonality

     Management believes that with the termination of its management contracts
and limited partnership interest in such contracts, seasonality will no longer
materially affect GBCC's results of operations.

                                       30
<PAGE>

PART II:  OTHER INFORMATION
---------------------------

Item 1.   Legal Proceedings

     Subsidiary Chapter 11 Filings and Related Litigation -

     On January 5, 1998, Holdings, GB Property Funding and GBHC each filed
petitions for relief under Chapter 11 of the Bankruptcy Code.  Each company
continues to operate in the ordinary course of business, as set forth in the
Bankruptcy Code, and each company's executive officers and directors remain in
office, subject to the jurisdiction of the New Jersey Bankruptcy Court.  On
January 11, 1999, the New Jersey Bankruptcy Court terminated the debtors'
exclusive right to file a plan of reorganization.  On June 1, 1999, a plan of
reorganization was filed by the debtors with the New Jersey Bankruptcy Court.
The reorganization plan, as filed, provided for the secured bondholders to
receive new debt and 100% of the equity ownership of Holdings in exchange for
their claims and for unsecured creditors to receive a partial cash settlement of
their claims.  Subsequent to the filing of a reorganization plan by the debtors,
two competing plans were filed by (1) Park Place Entertainment Corporation, a
large and diversified gaming company with significant operations in Atlantic
City, and (2) jointly by High River Limited Partnership, an entity controlled by
Carl C. Icahn, and by the Official Committee of Unsecured Creditors.  Both of
these plans provide for significant cash infusions by the plan proponents in
exchange for equity in a reorganized Holdings ranging from 46.3% to 57.7% with
the secured bondholders to receive the remaining equity in reorganized Holdings
together with new secured debt.  None of the plans provide for any distributions
to the present shareholders.  A hearing on the adequacy of the disclosure
statements relating to the various plans was held on April 5, 2000. Creditors
are currently voting on the competing plans and a confirmation hearing is
scheduled to begin on June 20, 2000.

     On May 22, 1998, GBHC filed a motion with the New Jersey Bankruptcy Court
seeking to reject its existing management agreement with NJMI.  A substitute
agreement (the "Interim Agreement") was entered into and approved by the New
Jersey Bankruptcy Court on July 7, 1998 and the motion to reject the management
agreement was approved by the New Jersey Bankruptcy Court on September 28, 1998.
As a consequence of the September 1998 settlement agreement described below,
GBCC and GBHC may no longer assert claims against each other with respect to the
operation of the management contract and, with the passage of time, the
cancellation thereof.

     On April 22, 1999, GBHC filed a motion with the New Jersey Bankruptcy Court
seeking to disallow NJMI's pre-petition claims with respect to management fees.
In November 1999, a compromise was reached establishing the amount of the claim
at $75,000.  The ultimate settlement of this amount is subject to the
confirmation of a plan of reorganization by the New Jersey Bankruptcy Court.

     On July 27, 1998, GBHC filed an action in the New Jersey Bankruptcy Court
against GBCC, certain affiliates of GBCC and Jack E. Pratt, Edward T. Pratt, Jr.
and William D. Pratt as directors of GBCC and former directors of GBHC
(collectively, the "GBCC Parties"), which alleged, among other things,
usurpation of corporate opportunities of GBHC and breach of fiduciary duty with
respect to GBHC in connection with the acquisition of certain land parcels in
Atlantic City, New Jersey.  The action sought, among other things, to enjoin the
GBCC Parties from transferring the land parcels to third parties and to require
that the land parcels be conveyed to GBHC.  The action sought to enjoin GBCC
from using the tax net operating loss carryforwards ("NOL's") of GBHC.

     On September 2, 1998, the GBCC Parties reached a settlement with GBHC which
was approved by the New Jersey Bankruptcy Court.  The terms of the settlement
agreement provided, among other things, (1) that the GBCC Parties convey the
land parcels and related mortgage note to GBHC in exchange for a cash payment
equal to the GBCC Parties' cost in such land parcels with an additional $500,000
payment due upon confirmation of a plan of reorganization by the New Jersey
Bankruptcy Court and (2) that GBHC be included

                                       31
<PAGE>

in the consolidated federal income tax return of GBCC for 1997 and 1998 enabling
GBCC to utilize GBHC's tax NOL's. The agreement also provided that on or before
December 31, 1998, GBCC would cause Holdings and its subsidiaries to be
deconsolidated from the GBCC federal income tax return by means of transferring
21% of the stock ownership of Holdings to an unconsolidated entity. Such
transfer was accomplished effective as of December 31, 1998. In addition, the
settlement agreement also allowed GBHC to offset its working capital loan from
GBCC in the amount of $8 million together with interest accrued thereon against
claim asserted by GBHC against GBCC under the existing tax allocation
agreements.

     GBCC licenses the "Sands" name under a license agreement dated as of May
19, 1987, which rights are sublicensed to GBHC.  The license agreement has a
term of 99 years and requires a royalty payment of the greater of 1.5% of gross
room charges, as defined in the agreement, payable monthly, or $100,000 per
calendar year.  The license agreement may be terminated by either party in the
event of a material breach, bankruptcy, suspension of normal business operations
or certain other actions by the other party.  GBCC intends to terminate the
license agreement as a result of the licensor's suspension of normal business
operations evidenced by the destruction of the Sands Hotel and Casino in Las
Vegas in 1996.  Pursuant to the terms of the sublicense agreement, termination
of the license agreement results in automatic termination of the sublicense
agreement.  GBCC filed a motion with the New Jersey Bankruptcy Court to allow
GBCC's termination of the license agreement and the resulting termination of the
sublicense agreement; the New Jersey Bankruptcy Court denied such motion.  As a
result, GBCC may not be able to terminate the license agreement, although the
New Jersey Bankruptcy Court may, at some future time, allow GBCC to do so.  If
unable to terminate the license agreement, GBCC may remain liable for future
royalty payments.  GBCC filed an  appeal to the decision of the New Jersey
Bankruptcy Court on March 10, 1999; such appeal was denied on June 10, 1999.
GBCC has filed an appeal of such decision.

     Planet Hollywood Litigation -

     In 1996, Planet Hollywood International, Inc. and Planet Hollywood (Region
IV), Inc. filed a complaint in the United States District Court for the Northern
District of Illinois, Eastern Division, against GBCC and against HCC and certain
of its subsidiaries seeking (1) a declaratory judgment that it was entitled to
use the name "Planet Hollywood" for a casino and (2) damages.  In its complaint,
Planet Hollywood alleged, among other things, that GBCC and HCC had, in
operating the Hollywood Casino concept, infringed on their trademark, service
mark and trade dress and had engaged in unfair competition and deceptive trade
practices.  GBCC and HCC and its subsidiaries filed counterclaims seeking (1) a
declaratory judgment that Planet Hollywood was not entitled to use the name
"Planet Hollywood" for a casino and (2) damages.  The counterclaims alleged,
among other things, that Planet Hollywood had, through its planned use of its
mark in connection with casino services, infringed on GBCC and HCC's service
marks and trade dress and had engaged in unfair competition.  The trial
commenced on July 19, 1999 and was completed on July 26, 1999. On August 25,
1999, GBCC, HCC and the other defendants filed a motion to dismiss the
declaratory judgment claims of all parties asserting, among other things, that
as a result of Planet Hollywood's reported deteriorating  financial condition
and perceived inability to enter into the casino business, there was no longer
any actual case or controversy.  On October 12, 1999, Planet Hollywood (Region
IV), Inc. filed a petition for reorganization under Chapter 11 of the United
States Bankruptcy Code.  On December 3, 1999 the judge entered a judgment in
favor of GBCC and HCC with respect to the damage claims brought by Planet
Hollywood and granted their motion to dismiss the declaratory judgment claims of
all parties.  Planet Hollywood has filed a notice of appeal of the judgment with
the Seventh Circuit Court of Appeals.

                                       32
<PAGE>

     Other Litigation -

     On October 8, 1998, GBCC and HCC filed a complaint in the District Court of
Dallas County, Texas against Arthur Andersen LLP, GBCC and HCC's former
independent accountants, and certain of its partners alleging negligent advice
and breach of contract with respect to the tax consequences resulting from the
spin-off of GBCC's stock to HCC's shareholders on December 31, 1996.  The
lawsuit is currently in the discovery stage with a trial currently scheduled to
begin in September 2000.

Item 3.   Defaults Upon Senior Securities

     As a result of the filings discussed in Item 1. above, $182,500,000
principal amount of 10.875% First Mortgage Notes issued by GB Property Funding
are in default.  Principal payments of $2,500,000 each due on January 15 and
July 15, 1998 and on January 15, 1999 were not made.  Under an order of the
Bankruptcy Court permitting the disposition of furniture and equipment in the
ordinary course of business, any payments received by GBHC for the sale of such
assets, which are part of the security for the 10.875% First Mortgage Notes,
must be remitted to the Trustee for the 10.875% First Mortgage Notes as
reductions to the outstanding principal.  As of December 31, 1999, approximately
$400,000 had been remitted to the Trustee from the proceeds on the sale of
equipment.  The accrual of interest on the 10.875% First Mortgage Notes for
periods subsequent to the filings has been suspended; such interest on a
contractual basis amounts to approximately $56,250,000 as of May 10, 2000.

Item 6. - Exhibits and Reports on Form 8-K

     The Registrant did not file any reports on Form 8-K during the quarter
ended March 31, 2000.  The Registrant filed its Annual Report on Form 10-K for
the year ended December 31, 1999 with the Securities and Exchange Commission on
March 30, 2000.

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<PAGE>

SIGNATURES
----------

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                      GREATE BAY CASINO CORPORATION



Date:      May 12, 2000              By: /s/       John C. Hull
     -------------------------          -----------------------------------
                                                   John C. Hull
                                             Chief Executive Officer

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