<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    September 30, 2001
                               -------------------------

                                       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)

<TABLE>
<S>                                                        <C>
                       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
                                                            --------------------------------------
</TABLE>

                                (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.

<TABLE>
<S>                                                         <C>
                         Class                                 Outstanding at November 13, 2001
-------------------------------------------------------     --------------------------------------
      Common Stock, $.10 par value                                   5,186,627 shares
</TABLE>

                                       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") are 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 "GEAA". Approximately 35% of GBCC's outstanding stock is
owned by Jack E. Pratt, Edward T. Pratt, Jr., William D. Pratt, Edward T. Pratt
III 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 53% of Hollywood Casino Corporation ("HCC", a Delaware
corporation), which 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 is insolvent and its only remaining operating activity is the
development, installation and maintenance of casino systems by its wholly owned
subsidiary, Advanced Casino Systems Corporation ("ACSC"). At September 30, 2001,
GBCC and its subsidiaries had debt outstanding to HCC consisting of (1) demand
notes and accrued interest thereon totaling $9.9 million and (2) a 14.875%
promissory note due 2006 and accrued interest thereon totaling $51.9 million.
ACSC's operations do not generate sufficient cash flow to provide debt service
on the HCC demand notes and, consequently, GBCC is currently insolvent.
Additionally, semi-annual interest payments of approximately $3.5 million
attributable to the 14.875% promissory note became payable commencing in August
2001. GBCC is currently negotiating with HCC to restructure its obligations and,
in that connection, has entered into certain standstill agreements with HCC.
Under the standstill agreements, all payments of principal and interest due from
HCC during the period from March 1, 2000 through November 1, 2001 with respect
to an intercompany note as detailed in Note 7 of the Notes to Consolidated
Financial Statements have been deferred until December 1, 2001 in consideration
of HCC's agreement not to demand payment of principal or interest on GBCC's
obligations to HCC (see (1) and (2) above). The fair market value of GBCC's
assets is substantially less than its existing obligations to HCC. Accordingly,
management anticipates that any restructuring of GBCC's obligations will result
in the conveyance of all of its assets (or the proceeds from the sale of its
assets) to HCC, resulting in no cash or other assets remaining available for
distribution to the Company's shareholders. Any restructuring of GBCC's
obligations, consensual or otherwise, will require the Company to file for
protection under federal bankruptcy laws and will ultimately result in
liquidation of the Company.

     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.

     Subsidiary Chapter 7 Filings -

     On June 30, 2000, three inactive, wholly owned, indirect subsidiaries of
GBCC filed for liquidation under Chapter 7 of the United States Bankruptcy Code
in the United States Bankruptcy Court for the District of Delaware (the
"Delaware Bankruptcy Court"). The subsidiaries were originally formed to

                                        2

<PAGE>

     acquire property and build a second casino/hotel in Atlantic City, New
Jersey. These plans were subsequently abandoned; however, the companies remained
in existence pending the outcome of certain litigation which was substantially
resolved in 1996. The cases were closed by the Trustee in Bankruptcy in December
2000. The filings did not have a significant effect on the operations or
financial position of GBCC.

     Financial Reporting -

     The consolidated financial statements as of September 30, 2001 and for the
three and nine month periods ended September 30, 2001 and 2000 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 September 30, 2001, the results of its
operations for the three and nine month periods ended September 30, 2001 and
2000 and its cash flows for the nine month periods ended September 30, 2001 and
2000.

     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 2000 Annual Report on Form 10-K.

                                        3

<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 September 30, 2001, and the
related condensed consolidated statements of operations for the three and nine
month periods ended September 30, 2001 and 2000 and of cash flows for the nine
month periods ending September 30, 2001 and 2000. These financial statements are
the responsibility of the Corporation's management.

We conducted our reviews 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 reviews, 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, 2000, 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
March 15, 2001 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, 2000 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
November 5, 2001

                                        4

<PAGE>

                 GREATE BAY CASINO CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS

<TABLE>
<CAPTION>
                                                                   September 30,
                                                                       2001              December 31,
                                                                    (Unaudited)              2000
                                                                 -----------------     ---------------
<S>                                                              <C>                   <C>
Current Assets:
   Cash and cash equivalents                                     $       9,067,000     $     5,903,000
   Temporary cash investments                                              100,000             100,000
   Accounts receivable                                                   3,384,000           1,301,000
   Inventories                                                             753,000             520,000
   Costs and estimated earnings in excess of billings                    1,090,000             340,000
   Due from affiliates                                                   2,526,000           2,241,000
   Other current assets                                                    938,000             612,000
                                                                 -----------------     ---------------

     Total current assets                                               17,858,000          11,017,000
                                                                 -----------------     ---------------

Property and Equipment:
   Operating equipment                                                   1,198,000             946,000
   Less - accumulated depreciation                                        (744,000)           (610,000)
                                                                 -----------------     ---------------

     Net property and equipment                                            454,000             336,000
                                                                 -----------------     ---------------

Other Assets:
   Due from affiliates                                                           -             216,000
   Deferred income taxes                                                     2,000               1,000
                                                                 -----------------     ---------------

     Total other assets                                                      2,000             217,000
                                                                 -----------------     ---------------

                                                                 $      18,314,000     $    11,570,000
                                                                 =================     ===============
</TABLE>

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

                                        5

<PAGE>

                 GREATE BAY CASINO CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                      LIABILITIES AND SHAREHOLDERS' DEFICIT

<TABLE>
<CAPTION>
                                                                           September 30,
                                                                               2001                December 31,
                                                                            (Unaudited)                2000
                                                                        -----------------       ----------------
<S>                                                                     <C>                     <C>
Current Liabilities:
   Borrowings from affiliate                                            $       5,704,000       $      5,704,000
   Accounts payable                                                             2,857,000              1,878,000
   Accrued liabilities -
     Salaries and wages                                                           832,000                305,000
     Interest                                                                   8,551,000              3,635,000
     Other                                                                         47,000                 36,000
   Unearned revenues                                                            1,559,000              2,407,000
   Other current liabilities                                                       28,000                 20,000
                                                                        -----------------       ----------------

     Total current liabilities                                                 19,578,000             13,985,000
                                                                        -----------------       ----------------

Long-Term Debt                                                                 47,603,000             46,687,000
                                                                        -----------------       ----------------

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                                                       (124,598,000)          (124,833,000)
                                                                        -----------------       ----------------

     Total shareholders' deficit                                              (48,867,000)           (49,102,000)
                                                                        -----------------       ----------------

                                                                        $      18,314,000       $     11,570,000
                                                                        =================       ================
</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 STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                    Three Months Ended
                                                                                      September 30,
                                                                         ---------------------------------------
                                                                                2001                 2000
                                                                         -----------------     -----------------
<S>                                                                      <C>                   <C>
Revenues:
   System sales and support services                                     $      10,505,000     $       4,644,000
                                                                         -----------------     -----------------

Expenses:
   Cost of sales                                                                 4,075,000             2,008,000
   Marketing                                                                       385,000               415,000
   System development and support services                                       1,912,000               924,000
   General and administrative                                                    1,085,000               619,000
   Depreciation                                                                     56,000                44,000
                                                                         -----------------     -----------------

     Total expenses                                                              7,513,000             4,010,000
                                                                         -----------------     -----------------

   Income from operations                                                        2,992,000               634,000
                                                                         -----------------     -----------------

Non-operating income (expense):
   Interest income                                                                 125,000               136,000
   Interest expense                                                             (1,933,000)           (1,851,000)
                                                                         -----------------     -----------------

     Total non-operating expense, net                                           (1,808,000)           (1,715,000)
                                                                         -----------------     -----------------

Income (loss) before income taxes                                                1,184,000            (1,081,000)
   Income tax provision                                                           (211,000)              (69,000)
                                                                         -----------------     -----------------

Net income (loss)                                                        $         973,000     $      (1,150,000)
                                                                         =================     =================

Basic and diluted net income (loss) per common share                     $             .19     $            (.22)
                                                                         =================     =================
</TABLE>

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

                                       7

<PAGE>

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

<TABLE>
<CAPTION>
                                                                                     Nine Months Ended
                                                                                      September 30,
                                                                         ---------------------------------------
                                                                                2001                  2000
                                                                         -----------------     -----------------
<S>                                                                      <C>                   <C>
Revenues:
   System sales and support services                                     $      27,418,000     $       9,509,000
                                                                         -----------------     -----------------

Expenses:
   Cost of sales                                                                11,469,000             4,098,000
   Marketing                                                                     1,241,000               872,000
   System development and support services                                       5,238,000             2,559,000
   General and administrative                                                    3,105,000             2,068,000
   Depreciation                                                                    150,000               139,000
                                                                         -----------------     -----------------

     Total expenses                                                             21,203,000             9,736,000
                                                                         -----------------     -----------------

   Income (loss) from operations                                                 6,215,000              (227,000)
                                                                         -----------------     -----------------

Non-operating income (expense):
   Interest income                                                                 412,000               388,000
   Interest expense                                                             (5,833,000)           (5,329,000)
                                                                         -----------------     -----------------

     Total non-operating expense, net                                           (5,421,000)           (4,941,000)
                                                                         -----------------     -----------------

Income (loss) before income taxes                                                  794,000            (5,168,000)
   Income tax provision                                                           (559,000)              (52,000)
                                                                         -----------------     -----------------

Net income (loss)                                                        $         235,000     $      (5,220,000)
                                                                         =================     =================

Basic and diluted net income (loss) per common share                     $             .05     $           (1.01)
                                                                         =================     =================
</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>
                                                                                     Nine Months Ended
                                                                                        September 30,
                                                                         ---------------------------------------
                                                                                2001                  2000
                                                                         -----------------     -----------------

<S>                                                                      <C>                   <C>
OPERATING ACTIVITIES:
   Net income (loss)                                                     $         235,000     $      (5,220,000)
   Adjustments to reconcile net income (loss) to net cash
     provided by operating activities:
     Depreciation and amortization, including
       accretion of debt discount                                                1,066,000             4,762,000
     Provision for doubtful accounts                                                     -                 5,000
     Deferred income tax benefit                                                   (50,000)              (14,000)
     Increase in accounts receivable                                            (2,083,000)             (507,000)
     Increase in accounts payable and
       other accrued liabilities                                                 6,433,000             1,663,000
     Net change in other current assets and liabilities                         (2,187,000)              882,000
     Net change in other noncurrent assets                                          18,000                     -
                                                                         -----------------     -----------------

     Net cash provided by operating activities                                   3,432,000             1,571,000
                                                                         -----------------     -----------------

INVESTING ACTIVITIES:
   Purchases of property and equipment                                            (268,000)             (108,000)
   Collections on notes receivable                                                       -               140,000
                                                                         -----------------     -----------------

     Net cash (used in) provided by investing activities                          (268,000)               32,000
                                                                         -----------------     -----------------

     Net increase in cash and cash equivalents                                   3,164,000             1,603,000
     Cash and cash equivalents at beginning of period                            5,903,000             4,801,000
                                                                         -----------------     -----------------

     Cash and cash equivalents at end of period                          $       9,067,000     $       6,404,000
                                                                         =================     =================
</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 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").

     Approximately 35% of GBCC's outstanding stock is owned by Jack E. Pratt,
Edward T. Pratt, Jr., William D. Pratt, Edward T. Pratt III 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 53% of Hollywood Casino Corporation ("HCC"), which owns the Aurora
Casino and the Tunica Casino.

     Current GBCC Operations -

     GBCC is insolvent and its only remaining operating subsidiary is ACSC. At
September 30, 2001, GBCC and its subsidiaries had debt outstanding to HCC
consisting of (1) demand notes and accrued interest thereon totaling $9,935,000
and (2) a 14.875% promissory note due 2006 and accrued interest thereon totaling
$51,923,000. ACSC's operations do not generate sufficient cash flow to provide
debt service on the HCC demand notes and, consequently, GBCC is currently
insolvent. Additionally, semi-annual interest payments of $3,540,000
attributable to the 14.875% promissory note became payable commencing in August
2001. GBCC is currently negotiating with HCC to restructure its obligations and,
in that connection, has entered into certain standstill agreements with HCC.
Under the standstill agreements, all payments of principal and interest due from
HCC during the period from March 1, 2000 through November 1, 2001 with respect
to an intercompany note as detailed in Note 7 have been deferred until December
1, 2001 in consideration of HCC's agreement not to demand payment of principal
or interest on GBCC's obligations to HCC (see (1) and (2) above). The fair
market value of GBCC's assets is substantially less than its existing
obligations to HCC. Accordingly, management anticipates that any restructuring
of GBCC's obligations will result in the conveyance of all of its assets (or the
proceeds from the sale of its assets) to HCC, resulting in no cash or other
assets remaining available for distribution to the Company's shareholders. Any
restructuring of GBCC's obligations, consensual or otherwise, will require the
Company to file for protection under federal bankruptcy laws and will ultimately
result in liquidation of the Company.

     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.

                                       10

<PAGE>

                 GREATE BAY CASINO CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                   (Unaudited)


     Subsidiary Chapter 7 Filings -

     On June 30, 2000, three inactive, wholly owned, indirect subsidiaries of
GBCC filed for liquidation under Chapter 7 of the United States Bankruptcy Code
in the United States Bankruptcy Court for the District of Delaware (the
"Delaware Bankruptcy Court"). The subsidiaries were originally formed to acquire
property and build a second casino/hotel in Atlantic City, New Jersey. These
plans were subsequently abandoned; however, the companies remained in existence
pending the outcome of certain litigation which was substantially resolved in
1996. The cases were closed by the Trustee in Bankruptcy in December 2000. The
filings did not have a significant effect on the operations or financial
position of GBCC.

     Financial Reporting -

     In July 2001, the Financial Accounting Standards Board issued Statement No.
141, "Business Combinations" ("SFAS 141") and Statement No. 142, "Goodwill and
Other Intangible Assets" ("SFAS 142"). SFAS 141 requires the use of the purchase
method of accounting for all business combinations initiated after June 30,
2001. SFAS 142 establishes new standards for goodwill acquired in a business
combination and requires that goodwill and other intangible assets be
periodically reviewed for impairment rather than being amortized. SFAS 142 is
effective for fiscal years beginning after December 15, 2001 with earlier
application permitted. The Company does not expect the adoption of SFAS 142 to
have a material effect on its consolidated financial statements.

     The Financial Accounting Standards Board issued Statement No. 143,
"Accounting for Asset Retirement Obligations" ("SFAS 143") in August 2001 and
Statement No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets" ("SFAS 144") in October 2001. SFAS 143 addresses reporting for
obligations associated with the retirement of tangible long-lived assets and the
related asset retirement costs. SFAS 143 is effective for fiscal years beginning
after June 15, 2002. SFAS 144 supercedes earlier guidance with respect to such
accounting and is effective for fiscal years beginning after December 15, 2001.
The Company does not expect the adoption of SFAS 143 and SFAS 144 to have a
material effect on its consolidated financial statements.

     The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

     The consolidated financial statements as of September 30, 2001 and for the
three and nine month periods ended September 30, 2001 and 2000 have been
prepared by GBCC without audit. In the opinion of management, these consolidated
financial statements contain all adjustments (consisting of only

                                       11

<PAGE>

                 GREATE BAY CASINO CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                   (Unaudited)


normal recurring adjustments) necessary to present fairly the consolidated
financial position of GBCC as of September 30, 2001, the results of its
operations for the three and nine month periods ended September 30, 2001 and
2000 and its cash flows for the nine month periods ended September 30, 2001 and
2000.


(2)  Earnings per common share

     Basic earnings per common share is calculated by dividing the net income
(loss) by the weighted average number of shares of common stock outstanding.
Diluted earnings per common share is calculated for any period in which income
from continuing operations was earned by dividing the components of net income
(loss) by the weighted average number of shares of common stock and potential
common shares outstanding. For each of the three and nine month periods ended
September 30, 2001 and 2000, there were no potential common shares outstanding
and basic and diluted earnings per share were the same. The weighted average
number of shares of common stock used in the calculation of both basic and
diluted earnings per share was 5,186,627 for each of the three and nine month
periods ended September 30, 2001 and 2000.

(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. Revenue from services is recognized upon
performance.

     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.

     Costs and estimated earnings in excess of billings on contracts in progress
represent recoverable costs and the estimated profits thereon which have not yet
been billed to the customer. Unearned revenues represent deposits or prepayments
received by customers for services yet to be performed. Such advance payments
are applied over the lives of the contracts.

                                       12

<PAGE>

                 GREATE BAY CASINO CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                   (Unaudited)


(4)  Borrowings from Affiliate

     GBCC and its subsidiaries had outstanding affiliate borrowings from HCC of
$5,704,000 at both September 30, 2001 and December 31, 2000. During 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. 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 and remains outstanding. These borrowings
from HCC are currently subject to a standstill agreement (see Notes 1 and 7)
while GBCC continues negotiations with HCC to restructure its obligations.
During October 2000, GBCC paid $900,000 of the outstanding principal balance and
entered into an agreement to offset an additional $146,000 of principal against
other receivables due from HCC while negotiations to restructure the debt
continued.

(5)  Long-Term Debt and Pledge of Assets

     Long-term debt consists of the following:

<TABLE>
<CAPTION>
                                                               September 30,         December 31,
                                                                    2001                 2000
                                                             -----------------     -----------------
         <S>                                                 <C>                   <C>
         14.875% promissory note, due 2006, net of
           discount of $916,000 at December 31, 2000         $      47,603,000     $      46,687,000

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

         Total long-term debt                                $      47,603,000     $      46,687,000
                                                             =================     =================
</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 $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 payments 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, a wholly owned subsidiary of GBCC, as consideration,
in part, for HCC's acquisition of the general partnership interest in the entity
which held the management contract for the Aurora Casino (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
was deferred through February 17, 2001 and would have become payable
semiannually beginning on August 17, 2001. Payment of interest is currently
subject to a standstill agreement (see Notes 1 and 7). The unpaid principal
balance of the PPI Funding Notes is due on February 17, 2006.

     No interest was paid during either of the nine month periods ended
September 30, 2001 or 2000.

                                       13

<PAGE>

                 GREATE BAY CASINO CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                   (Unaudited)


(6)  Income Taxes

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

<TABLE>
<CAPTION>
                                                 Three Months Ended                    Nine Months Ended
                                                   September  30,                        September 30,
                                        -----------------------------------     ------------------------------
                                               2001              2000               2001               2000
                                        ---------------     ---------------     -------------    -------------
<S>                                     <C>                 <C>                 <C>              <C>
Federal income tax (provision) benefit:
   Current                              $             -     $             -     $           -    $           -
   Deferred                                  (2,083,000)           (388,000)       (1,954,000)       1,036,000
State income tax (provision) benefit:
   Current                                     (239,000)            (80,000)         (609,000)         (66,000)
   Deferred                                      28,000              11,000            50,000           14,000
Valuation allowance                           2,083,000             388,000         1,954,000       (1,036,000)
                                        ---------------     ---------------     -------------    -------------

                                        $      (211,000)    $       (69,000)    $    (559,000)   $     (52,000)
                                        ===============     ===============     =============    =============
</TABLE>

     GBCC paid no federal income taxes during either of the nine month periods
ended September 30, 2001 or 2000. GBCC paid state income taxes of $727,000 and
$1,000, respectively, during the nine month periods ended September 30, 2001 and
2000.

     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.

     As of September 30, 2001, GBCC and its subsidiaries have net operating loss
carryforwards ("NOL's") totaling approximately $13,000,000 for federal income
tax purposes, none of which begin to expire until the year 2018. Additionally,
GBCC and its subsidiaries have alternative minimum tax and other tax credits
available totaling approximately $29,000 and $414,000, respectively. Alternative
minimum tax credits do not expire and the other tax credits expire in 2001.
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 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.

                                       14

<PAGE>

                 GREATE BAY CASINO CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                   (Unaudited)


     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 and the consolidated federal income tax returns of GBCC
for the years 1997 and 1998. Such examinations are substantially complete and
have resulted in adjustments to GBCC's consolidated NOL's and deferred tax
assets. The Company anticipates no additional tax obligations.

(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 the entity that held the management contract for the
Aurora Casino. The $3,800,000 note agreement, as amended in October 1999,
provides for monthly installments of $83,000 including interest and additional
quarterly principal payments of $21,000 beginning January 1, 2000. GBCC, PPI
Corporation and HCC have entered into agreements to defer all payments of
principal and interest on the note otherwise due during the period from March 1,
2000 through November 1, 2001 in consideration of HCC's agreement not to demand
payment on the short-term borrowings described in Note 4 and interest on the PPI
Funding Notes described in Note 5. 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 December 1, 2001. The outstanding note receivable
balance at both September 30, 2001 and December 31, 2000 is $1,893,000, all of
which is included in current amounts due from affiliates on the accompanying
consolidated balance sheet at September 30, 2001. At December 31, 2000, $198,000
of the outstanding balance was included in noncurrent due from affiliates on the
accompanying consolidated balance sheet. Interest income on the note from HCC
amounted to $66,000 during each of the three month periods ended September 30,
2001 and 2000 and $198,000 and $199,000, respectively, during the nine month
periods ended September 30, 2001 and 2000. Accrued interest receivable of
$441,000 and $243,000, respectively, is included in amounts due from affiliates
on the accompanying consolidated balance sheets at September 30, 2001 and
December 31, 2000.

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

<TABLE>
<CAPTION>
                           Three Months Ended September 30,      Nine Months Ended September 30,
                           -------------------------------       -------------------------------
                                2001              2000               2001               2000
                           -------------     -------------       ------------       ------------
<S>                        <C>               <C>                 <C>                <C>
PPI Funding Notes
  (Note 5)                 $   1,770,000     $   1,614,000       $  5,236,000       $  4,623,000
Short-term borrowings
  (Note 4)                       198,000           237,000            595,000            706,000
</TABLE>

                                       15

<PAGE>

                 GREATE BAY CASINO CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                   (Unaudited)


     Accretion of interest on the PPI Funding Notes for periods prior to
February 17, 2001 is included in the outstanding note payable balance. Interest
accrued on short-term borrowings from HCC and on the PPI Funding Notes for
periods subsequent to February 17, 2001 amounted to $8,551,000 and $3,635,000,
respectively, at September 30, 2001 and December 31, 2000.

(8)  Litigation

     Subsidiary Chapter 7 Filings -

     On June 30, 2000, three inactive, wholly owned, indirect subsidiaries of
GBCC filed for liquidation under Chapter 7 of the United States Bankruptcy Code
in the Delaware Bankruptcy Court. The subsidiaries were originally formed to
acquire property and build a second casino/hotel in Atlantic City, New Jersey.
These plans were subsequently abandoned; however, the companies remained in
existence pending the outcome of certain litigation which was substantially
resolved in 1996. The cases were closed by the Trustee in Bankruptcy in December
2000. The filings did not have a significant effect on the operations or
financial position of GBCC.

(9)  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                  Nine Months Ended
                                              September 30,                      September 30,
                                  ---------------------------------     ------------------------------
                                         2001              2000             2001              2000
                                  ----------------    -------------     -------------    -------------
<S>                               <C>                 <C>               <C>              <C>
Total percentage of period
  revenues attributable to
  installation contracts                77.9%              55.6%            80.3%            67.6%
Percentage of period revenues
  attributable to
  affiliate sales                        5.4%              27.0%             3.9%            17.9%
</TABLE>

(10) Reclassifications

     Certain reclassifications have been made to the prior year's consolidated
financial statements to conform to the 2001 consolidated financial statement
presentation.

                                       16

<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 ACSC's operations,
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

     GBCC's current business activity consists solely of the operations of ACSC.
ACSC licenses casino information technology systems to HCC's casino facilities
and non-affiliated casino companies. The results of ACSC's operations for the
three and nine month periods ended September 30, 2001 and 2000 are set forth
below:

<TABLE>
<CAPTION>
                                                     Three Months Ended                 Nine Months Ended
                                                        September 30,                    September 30,
                                               ------------------------------     ------------------------------
                                                   2001              2000             2001              2000
                                               -------------    -------------     --------------  --------------
<S>                                            <C>              <C>               <C>             <C>
System sales and support service
  revenues                                     $  10,505,000    $   4,644,000     $   27,418,000  $    9,509,000
                                               -------------    -------------     --------------  --------------

Cost of sales                                      4,075,000        2,008,000         11,469,000       4,098,000
Marketing                                            385,000          415,000          1,241,000         872,000
System development and support services            1,912,000          924,000          5,238,000       2,559,000
General and administrative                           808,000          493,000          2,290,000       1,315,000
Depreciation                                          56,000           44,000            150,000         139,000
                                               -------------    -------------     --------------  --------------

                                                   7,236,000        3,884,000         20,388,000       8,983,000
                                               -------------    -------------     --------------  --------------

Income from operations                         $   3,269,000    $     760,000     $    7,030,000  $      526,000
                                               =============    =============     ==============  ==============
</TABLE>

     The improvement in operating results during the third quarter and first
nine months of 2001 from the same periods in 2000 is primarily due to the
increased volume of system sales and installation contracts in the current year
as explained in "Results of Operations".

     ACSC's computer service revenues are derived primarily from system
installation contracts which 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

                                       17

<PAGE>

                 GREATE BAY CASINO CORPORATION AND SUBSIDIARIES


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


contracts. Growth in installation contracts has greatly diminished ACSC's
reliance on affiliate sales which, in prior periods, were a significant source
of its revenues. The following table demonstrates ACSC's dependence on
installation contracts and on sales to affiliates:

<TABLE>
<CAPTION>
                                                     Three Months Ended                  Nine Months Ended
                                                        September 30,                      September 30,
                                                -----------------------------     ------------------------------
                                                   2001              2000              2001             2000
                                                ------------    -------------     -------------    -------------
<S>                                             <C>             <C>               <C>              <C>
Total percentage of period revenues
  attributable to installation contracts            77.9%            55.6%            80.3%            67.6%
Percentage of period revenues
  attributable to affiliate sales                    5.4%            27.0%             3.9%            17.9%
</TABLE>

     GBCC is insolvent and its only remaining operating activity is the
development, installation and maintenance of casino systems by ACSC. At
September 30, 2001, GBCC and its subsidiaries had debt outstanding to HCC
consisting of (1) demand notes and accrued interest thereon totaling $9.9
million and (2) a 14.875% promissory note due 2006 and accrued interest thereon
totaling $51.9 million. ACSC's operations do not generate sufficient cash flow
to provide debt service on the HCC demand notes and, consequently, GBCC is
currently insolvent. Additionally, semi-annual interest payments of
approximately $3.5 million attributable to the 14.875% promissory note became
payable commencing in August 2001. GBCC is currently negotiating with HCC to
restructure its obligations and, in that connection, has entered into certain
standstill agreements with HCC. Under the standstill agreements, all payments of
principal and interest due from HCC during the period from March 1, 2000 through
November 1, 2001 with respect to an intercompany note as detailed in Note 7 of
the Notes to Consolidated Financial Statements have been deferred until December
1, 2001 in consideration of HCC's agreement not to demand payment of principal
or interest on GBCC's obligations to HCC (see (1) and (2) above). The fair
market value of GBCC's assets is substantially less than its existing
obligations to HCC. Accordingly, management anticipates that any restructuring
of GBCC's obligations will result in the conveyance of all of its assets (or the
proceeds from the sale of its assets) to HCC, resulting in no cash or other
assets remaining available for distribution to the Company's shareholders. Any
restructuring of GBCC's obligations, consensual or otherwise, will require the
Company to file for protection under federal bankruptcy laws and will ultimately
result in liquidation of the Company.

     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 the PPI Funding Notes to HCC in exchange for $38.8
million principal amount of 15.5% notes issued by another GBCC subsidiary and
held by HCC. The PPI Funding Notes have a maturity value of $47.6 million.
Payment of interest on the PPI Funding Notes was deferred through February 17,
2001 and would have become payable semiannually beginning on August 17, 2001.
Payment of interest is currently subject to the standstill agreement described
above. The unpaid principal balance of the PPI Funding Notes is due on February
17, 2006.

                                       18

<PAGE>

                 GREATE BAY CASINO CORPORATION AND SUBSIDIARIES


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

     Effective as of April 1, 1997, HCC acquired from PPI Corporation the
general partnership interest in the entity which held the management contract
for the Aurora Casino. The acquisition price for the general partnership
interest included, among other things, the assignment of a portion of the PPI
Funding Notes to PPI Corporation and a new note in the original amount of $3.8
million. Principal and interest payments by HCC on the $3.8 million note
approximated the general partner's share of annual partnership distributions.
GBCC and HCC have entered into standstill agreements to defer all payments of
principal and interest on the note otherwise due during the period from March 1,
2000 through November 1, 2001 while GBCC negotiates with HCC to restructure its
obligations. 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 December 1, 2001.

     The demand notes consist primarily of loans in the original amount of $6.5
million borrowed from HCC during the third quarter of 1996. Such borrowings
accrue interest at the rate of 13.75% per annum payable quarterly commencing
October 1, 1996. Although payment is on a demand basis, HCC has agreed not to do
so as part of the standstill agreements described in the previous paragraph.
During October 2000, GBCC paid $900,000 of the outstanding principal balance of
the demand notes to HCC and entered into an agreement to offset an additional
$146,000 of principal against other receivables due from HCC while negotiations
to restructure GBCC's debt continued.

     As previously described, GBCC is currently negotiating with HCC to
restructure its obligations. The fair market value of GBCC's assets is
substantially less than its existing obligations to HCC. Accordingly, management
anticipates that any restructuring of GBCC's obligations will result in the
conveyance of all of its assets (or the proceeds from the sale of its assets) to
HCC, resulting in no cash or other assets remaining available for distribution
to the Company's shareholders. Any restructuring of GBCC's obligations,
consensual or otherwise, will require the Company to file for protection under
federal bankruptcy laws and will ultimately result in liquidation of the
Company.

     Capital Expenditures and Other Investments

     Property and equipment additions during the nine month period ended
September 30, 2001 totaled $268,000; management anticipates that capital
expenditures during the remainder of 2001, consisting only of ongoing equipment
replacements and enhancements at ACSC, will not be significant.

RESULTS OF OPERATIONS

     Revenues

     System sales and support service revenues earned by ACSC increased $5.9
million (126.2%) and $17.9 million (188.2%) during the three and nine month
periods ended September 30, 2001 compared to the prior year periods. Such
increases were a result of increased system installations during 2001 compared
to 2000. During the first nine months of 2001, ACSC was engaged in thirteen
system installation contracts, eight of which have been completed. These
thirteen contracts accounted for approximately $8.3 million and $22.1 million,
respectively, of revenues during the third quarter and first nine months of
2001. By comparison, the 2000 third quarter and first nine month periods
included revenues with respect to five system installations amounting to $3.7
million and $7.5 million,

                                       19

<PAGE>

                 GREATE BAY CASINO CORPORATION AND SUBSIDIARIES


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

respectively. Revenues from inventory sales and from consulting and other
services provided to third parties also increased in the three and nine month
periods of 2001 to $1.7 million and $4.3 million, respectively, from $808,000
and $1.4 million, respectively, in the comparable 2000 periods. The addition of
personnel during 2000 has better positioned ACSC to service multiple contracts
and provide other ancillary services.

     Cost of Sales

     ACSC's cost of sales increased by $2.1 million (102.9%) and $7.4 million
(179.9%), respectively, during the three and nine month periods ended September
30, 2001 compared to the same periods in 2000. The increases reflect the
increased contract installations during the 2001 periods compared to 2000. Cost
of sales may not fluctuate proportionately with the increase in revenues due to
the mix of revenues earned (sales versus support services) as well as to
differences in the profitability of system installation contracts resulting from
the bidding process.

     Marketing Expenses

     Marketing expenses for ACSC decreased $30,000 (7.2%) during the third
quarter of 2001 compared to the same period in 2000, reducing the nine month
increase to $369,000 (42.3%). The third quarter decrease reflects a change in
sales commission policies, whereby the expense is now incurred ratably over the
completion of the underlying installation contract.

     System Development and Support Service Expenses

     System development and support services increased by $988,000 (106.9%) and
$2.7 million (104.7%), respectively, for the three and nine month periods ended
September 30, 2001 compared to the same periods in 2000. The increases result
from additional personnel and equipment costs as a result of the dramatic
increase in sales volume.

     General and Administrative Expenses

     GBCC's consolidated general and administrative expenses increased by
$466,000 and $1 million, respectively, during the three and nine month periods
ended September 30, 2001 compared to the same periods in 2000. The 2001 three
and nine month increases of $315,000 and $975,000, respectively, at ACSC were a
result of expanded operations. The remaining increase in general and
administrative expenses for the three month period ended September 30, 2001
reflects a credit in the amount of $145,000 received by GBCC during the third
quarter of 2000 with respect to legal and other fees incurred.

     Interest

     Interest income decreased by 8.1% during the third quarter of 2001 compared
to the same period in 2000 due to lower interest rates. Interest income
increased by 6.2% for the nine month period ended September 30, 2001 compared to
the same period in 2000 reflecting additional cash available for investment
purposes.

                                       20

<PAGE>

                 GREATE BAY CASINO CORPORATION AND SUBSIDIARIES

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

     Interest expense increased $82,000 (4.4%) and $504,000 (9.5%),
respectively, during the third quarter and first nine months of 2001 compared to
the same periods in 2000 reflecting additional amortization of discount and the
accrual of interest with respect to the PPI Funding Notes. Such increases were
partially offset by the reduction of interest expense on certain demand notes
owed to HCC for which a principal payment was made in October 2000.

     Income Tax Provision

     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 September 30, 2001 and
December 31, 2000. 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 and the consolidated federal income tax returns of GBCC
for the years 1997 and 1998. Such examinations are substantially complete and
have resulted in adjustments to GBCC's consolidated NOL's and deferred tax
assets. The Company anticipates no additional tax obligations.

     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.

                                       21

<PAGE>

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

Item 1.  Legal Proceedings

     Subsidiary Chapter 7 Filings

     On June 30, 2000, three inactive, wholly owned, indirect subsidiaries of
GBCC filed for liquidation under Chapter 7 of the United States Bankruptcy Code
in the United States Bankruptcy Court for the District of Delaware (the
"Delaware Bankruptcy Court"). The subsidiaries were originally formed to acquire
property and build a second casino/hotel in Atlantic City, New Jersey. These
plans were subsequently abandoned; however, the companies remained in existence
pending the outcome of certain litigation which was substantially resolved in
1996. The cases were closed by the Trustee in Bankruptcy in December 2000. The
filings did not have a significant effect on the operations or financial
position of GBCC.

Item 6.(a). - Exhibits

10.1 Second Amendment to Employment Agreement dated as of September 20, 2001
     among Advanced Casino Systems Corporation and Lawrence C. Cole.

Item 6.(b). - Reports on Form 8-K

     The Registrant did not file any reports on Form 8-K during the quarter
ended September 30, 2001.

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:   November 13, 2001                          By: /s/ John C. Hull
     ----------------------                             ------------------------
                                                            John C. Hull
                                                         Chief Executive Officer
                                       22