<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                  FORM 10-Q/A

                 QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
                    THE SECURITIES AND EXCHANGE ACT OF 1934


FOR QUARTER ENDED JANUARY 31, 1999                COMMISSION FILE NUMBER O-7607
                  ----------------                                       ------


                            FAIR GROUNDS CORPORATION
                            ------------------------
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S>                                                                    <C>

                  LOUISIANA                                                          72-0361770
-------------------------------------------------------------------------------------------------------------
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)         (I.R.S. EMPLOYER IDENTIFICATION NO.)

 1751 GENTILLY BLVD., NEW ORLEANS, LA                                                    70119
-------------------------------------------------------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                                              (ZIP CODE)
</TABLE>


REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE               (504) 944-5515
                                                                --------------


NOT APPLICABLE
-------------------------------------------------------------------------------
(FORMER NAME, FORMER ADDRESS, AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST
REPORT)


INDICATE BY A CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS 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 REPORT(S)), AND (2) HAS BEEN SUBJECT TO SUCH RILING
REQUIREMENTS FOR THE PAST 90 DAYS.

                   [X] YES     [ ] NO

          468,580 COMMON SHARES WERE OUTSTANDING AS OF MARCH 1, 1999.


<PAGE>   2


                            FAIR GROUNDS CORPORATION

                                     INDEX

<TABLE>
<CAPTION>
                                                                                                                  PAGE
                                                                                                                  ----
<S>                                                                                                               <C>
PART 1.  FINANCIAL INFORMATION

         ITEM 1.  FINANCIAL STATEMENTS

                  BALANCE SHEET, JANUARY 31, 1999 (UNAUDITED)
                  AND BALANCE SHEET, OCTOBER 31, 1998.............................................................2

                  STATEMENTS OF OPERATIONS AND RETAINED
                  EARNINGS FOR THE THREE MONTHS ENDED
                  JANUARY 31, 1999 AND 1998 (UNAUDITED)...........................................................4

                  STATEMENTS OF CASH FLOWS FOR THE THREE
                  MONTHS ENDED JANUARY 31, 1999 AND 1998
                  (UNAUDITED).....................................................................................7

                  NOTES TO FINANCIAL STATEMENTS FOR THE THREE
                  MONTHS ENDED JANUARY 31, 1999 AND 1998 (UNAUDITED)..............................................9

         ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS.............................................................17

PART 11.          OTHER INFORMATION

         ITEM 1. LEGAL PROCEEDINGS................................................................................25


         ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.................................................................25


SIGNATURES........................................................................................................26
</TABLE>




<PAGE>   3


                                     PART I
                             FINANCIAL INFORMATION


                                       1
<PAGE>   4


                                EXPLANATORY NOTE

This Form 10-Q/A is being filed to amend the Registrant's Form 10-Q for the
quarter ended January 31, 1999, which was filed with the Securities and
Exchange Commission on March 16, 1999 to reflect the effects of the restatement
of the Company's financial statements as of, and for the year ended, October
31, 1998 as set forth in the Company's Form 10-K/A for the year ended October
31, 1998.

                            FAIR GROUNDS CORPORATION
                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                       (Unaudited)
                                                           January 31,         October 31,
                                                              1999                1998
                                                           -----------         -----------
<S>                                                       <C>                 <C>
ASSETS

CURRENT ASSETS
         Cash and cash equivalents                        $   4,107,940       $   7,577,730
         Cash and cash equivalents
                   - restricted                                 125,665             118,218
         Accounts receivable                                  4,278,790           1,078,638
         Mutuel settlements                                     444,621             139,964
         Inventory                                              172,690             118,357
         Prepaid expenses                                     1,657,558             437,322
         Deferred Taxes                                          59,940              59,940
                                                          -------------       -------------

                  Total Current Assets                       10,847,204           9,530,169
                                                          -------------       -------------

OTHER ASSETS                                                    279,761             283,411
                                                          -------------       -------------

PROPERTY, PLANT AND EQUIPMENT
         Buildings and improvements                          43,870,295          43,870,295
         Land improvements                                    4,348,135           4,348,135
         Automotive equipment                                   931,424             931,424
         Machinery and equipment                              2,542,942           2,432,433
         Furniture and fixtures                                 382,868             366,575
                                                          -------------       -------------

                  Total                                      52,075,879          51,948,862

         Less: accumulated depreciation
                  and amortization                          (16,400,522)        (15,904,346)
                                                          -------------       -------------

         Depreciable property - net                          35,675,142          36,044,516
         Land                                                 3,286,281           3,286,281
                                                          -------------       -------------
</TABLE>


                                       2
<PAGE>   5


                            FAIR GROUNDS CORPORATION
                           BALANCE SHEETS (CONTINUED)

<TABLE>
<CAPTION>
                                                           (Unaudited)
                                                           January 31,         October 31,
                                                               1999               1998
                                                          -------------       -------------
<S>                                                       <C>                 <C>
         Property, plant and
                  equipment - net                            38,961,423          39,330,797
                                                          -------------       -------------

                  TOTAL ASSETS                            $  50,088,388       $  49,144,377
                                                          =============       =============

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
         Notes payable                                    $   1,168,578       $      46,894
         Accounts payable                                       267,878           1,552,141
         Accrued liabilities:
                  Deferred purses                             6,830,787           7,930,825
                  Host track fees                               512,266             374,251
                  Uncashed mutuel tickets                       550,431             446,786
                  Other                                         501,899             369,135
         Deferred revenues                                      147,182             275,701
         Income taxes payable                                 1,240,860             515,391
                                                          -------------       -------------

                  Total Current Liabilities                  11,219,881          11,511,124
                                                          -------------       -------------

DEFERRED INCOME TAXES                                         9,995,418           9,995,418
                                                          -------------       -------------

                  Total Liabilities                          21,215,299          21,506,542
                                                          -------------       -------------

COMMITMENTS AND CONTINGENCIES                                        --                  --
                                                          -------------       -------------

STOCKHOLDERS' EQUITY
         Capital stock - no par value;
                  authorized 600,000 shares,
                  469,940 shares issued and
                  468,580 shares outstanding                  1,525,092           1,525,092
         Additional paid-in-capital                           1,936,702           1,936,702
         Retained earnings                                   25,446,820          24,211,566
                                                          -------------       -------------

                  Total                                      28,908,614          27,673,360

         Less: treasury stock at cost,
                  1,360 shares                                  (35,525)            (35,525)
                                                          -------------       -------------

                  Total Stockholders' Equity                 28,873,089          27,637,835
                                                          -------------       -------------
</TABLE>


                                       3


<PAGE>   6


                            FAIR GROUNDS CORPORATION
                           BALANCE SHEETS (CONTINUED)

<TABLE>
<CAPTION>
                                                              (Unaudited)
                                                              January 31,     October 31,
                                                                 1999            1998
                                                              -----------     -----------
                 <S>                                          <C>             <C>
                 TOTAL LIABILITIES AND
                 STOCKHOLDERS' EQUITY                         $50,088,388     $49,144,377
                                                              ===========     ===========
</TABLE>


See accompanying notes to financial statements.


                                       4
<PAGE>   7


                            FAIR GROUNDS CORPORATION
                 STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
              FOR THE THREE MONTHS ENDED JANUARY 31, 1999 AND 1998
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                               1999                1998
                                                          -------------       -------------
<S>                                                       <C>                 <C>
REVENUES
         Pari-mutuel commissions                          $   7,529,071       $   6,809,274
         Breakage                                               203,958             142,005
         Uncashed mutuel tickets                                 83,177              70,948
                                                          -------------       -------------

                  Total                                       7,816,206           7,022,227

         Less: pari-mutuel tax                                  927,646             888,660
                                                          -------------       -------------

         Commission income                                    6,888,560           6,133,567
         Host track fees                                      5,167,045           4,201,058
                                                          -------------       -------------

                  Total Mutuel Income                        12,055,605          10,334,625

         Concessions                                            881,344             824,618
         Video poker (net)                                      433,064             402,701
         Admissions (net of taxes)                              296,129             447,122
         Parking                                                 30,634              23,370
         Programs and forms                                     430,147             461,550
         Miscellaneous                                          373,413             148,245
                                                          -------------       -------------

                  Total Operating Revenues                   14,500,336          12,642,231
                                                          -------------       -------------

RACING EXPENSES
         Purses                                               5,377,051           4,756,470
         Salaries and related taxes
                  and benefits                                2,184,820           2,325,050
         Contracts and services                                 734,000             735,836
         Host track fees                                        763,755             599,097
         Depreciation                                           496,176             510,410
         Cost of sales - concessions                            240,391             265,724
         Utilities                                              199,870             255,654
         Repairs and maintenance                                245,214             214,875
         Program paper, forms and other
                  supplies                                      587,879             580,453
         Advertising and promotion                              453,689             337,268
         Rent                                                    78,758              96,456
         Miscellaneous                                          216,093             133,091
                                                          -------------       -------------

                  Total Racing Expenses                      11,577,696          10,810,384
                                                          =============       =============
</TABLE>

(Continued)


                                       5


<PAGE>   8


                            FAIR GROUNDS CORPORATION
                 STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
                                  (CONTINUED)
              FOR THE THREE MONTHS ENDED JANUARY 31, 1999 AND 1998
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                               1999                1998
                                                          -------------       -------------
<S>                                                       <C>                 <C>
GENERAL AND ADMINISTRATIVE EXPENSES
         Salaries and related taxes
                  and benefits                            $     307,013       $     281,400
         Insurance                                              227,611             219,118
         Property taxes                                         233,403             142,216
         Legal, audit and director fees                         107,624             187,675
         Loan closing costs                                          --              24,042
         Contracts and services                                  53,457              91,214
         Office expenses                                        126,338             142,378
         Miscellaneous                                          105,071              86,111
                                                          -------------       -------------

                  Total General and
                  Administrative Expenses                     1,160,517           1,174,154
                                                          -------------       -------------

NET INCOME FROM OPERATIONS                                    1,762,123             657,693

OTHER INCOME (EXPENSE)
         Interest expense                                        (9,789)                 --
         Interest income                                         13,387              54,013
                                                          -------------       -------------

INCOME BEFORE PROVISION FOR INCOME
TAXES AND EXTRAORDINARY ITEM                                  1,765,721             711,706

         Provision for income taxes                             653,317             263,331
                                                          -------------       -------------

INCOME BEFORE EXTRAORDINARY ITEM
         (per share 1999 - $2.37,
         1998 - $.96)                                         1,112,404             448,375

Extraordinary item - gain from fire
         (net of $72,150 and $2,849,000
         of taxes in 1999 and 1998,
         respectively)                                          122,850           4,851,000
                                                          -------------       -------------
NET INCOME (per share
         1999 - $2.64, 1998 - $11.31)                     $   1,235,254       $   5,299,375

RETAINED EARNINGS, BEGINNING OF
PERIOD                                                       24,211,566          18,254,654
                                                          -------------       -------------

RETAINED EARNINGS, END OF PERIOD                          $  25,446,820       $  23,554,029
                                                          =============       =============

CASH DIVIDENDS PER SHARE                                  $        NONE       $        NONE
                                                          =============       =============
</TABLE>


                                       6
<PAGE>   9


                            FAIR GROUNDS CORPORATION
                 STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
                                  (CONTINUED)
              FOR THE THREE MONTHS ENDED JANUARY 31, 1999 AND 1998
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                   1999          1998
                                                                  -------       -------

<S>                                                               <C>           <C>
WEIGHTED AVERAGE NUMBER OF
         SHARES OUTSTANDING                                       468,580       468,580
                                                                  =======       =======
</TABLE>




See accompanying notes to financial statements


                                       7
<PAGE>   10


                            FAIR GROUNDS CORPORATION
                            STATEMENTS OF CASH FLOWS
              FOR THE THREE MONTHS ENDED JANUARY 31, 1999 AND 1998
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                               1999                1998
                                                          -------------       -------------
<S>                                                       <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES
         Net income                                       $   1,235,254           5,299,375
         Adjustments to reconcile net income
                  to net cash used for
                  operating activities:
                           Extraordinary item -
                           gain from fire                      (195,000)         (7,700,000)
                           Depreciation                         496,176             510,410
         Deferred income taxes                                       --           3,162,332
         Change in assets and liabilities:
                  (Increase) decrease in:
                           Accounts receivable               (3,504,809)         (2,870,496)
                           Inventory                            (54,333)           (104,583)
                           Prepaid expenses                  (1,220,236)         (1,028,312)
                           Restricted cash                       (7,447)          2,640,021
                  Increase (decrease) in:
                           Accounts payable and
                           accrued liabilities                 (954,752)            883,236
                           Deferred revenue                    (128,519)            727,703
                           Deferred purses                   (1,100,038)         (1,312,917)
                           Income taxes payable                 725,469                  --
                           Uncashed Mutuel Tickets              103,645          (1,156,726)
                           Contracts Payable                    (58,732)                 --

         Total adjustments -                                 (5,898,576)         (6,249,332)

         Net cash used for operating
         activities                                          (4,663,322)           (949,957)

CASH FLOWS FROM INVESTING ACTIVITIES
         Proceeds from litigation
                  settlement                                    195,000           7,700,000
         Capital expenditures                                  (126,802)         (1,265,601)
         Decrease in Deposits                                     3,650               2,504
         Proceeds provided by sale of
                  investment securities                         500,000                  --
         Net cash provided by investing
                  activities                                     71,848           6,936,903
</TABLE>

(Continued)


                                       8


z
<PAGE>   11


                            FAIR GROUNDS CORPORATION
                      STATEMENTS OF CASH FLOWS (CONTINUED)
              FOR THE THREE MONTHS ENDED JANUARY 31, 1999 AND 1998
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                               1999                1998
                                                          -------------       -------------
<S>                                                       <C>                 <C>

CASH FLOWS FROM FINANCING ACTIVITIES
         Loan proceeds                                    $     200,627       $   2,133,740
         Principal repayments on loans                          (78,943)         (7,298,178)
         Advances from third party                            1,000,000           1,000,000
         Repayments to third party                                   --            (166,667)
                                                          -------------       -------------

         Net cash provided by (used for)
                  financing activities                        1,121,684          (4,331,105)
                                                          -------------       -------------

NET INCREASE (DECREASE) IN CASH
         AND CASH EQUIVALENTS                                (3,469,790)          1,655,841

CASH AND CASH EQUIVALENTS AT
         BEGINNING OF PERIOD                                  7,577,730           5,192,756
                                                          -------------       -------------

CASH AND CASH EQUIVALENTS AT
         END OF PERIOD                                    $   4,107,940       $   6,848,597
                                                          =============       =============

SUPPLEMENTAL DISCLOSURES:

         Interest paid                                    $       9,789       $          --
                                                          =============       =============
</TABLE>

(Continued)


                                       9
<PAGE>   12


                            FAIR GROUNDS CORPORATION
                         NOTES TO FINANCIAL STATEMENTS
              FOR THE THREE MONTHS ENDED JANUARY 31, 1999 AND 1998
                                  (UNAUDITED)

NOTE 1 - COMMITMENTS AND CONTINGENCIES

Fire Related Litigation

The Company has been a party to a number of legal proceedings which have arisen
as a result of the December 1993 fire or in connection with the Company's
efforts to collect insurance proceeds after the fire. The following is a brief
description of such fire-related proceedings that were concluded during the
quarter ended January 31, 1999 or have not yet been concluded:

Travelers Litigation

         On May 14, 1994, the Company filed an action in the 24th Judicial
         Court in the State of Louisiana against Travelers Indemnity Company of
         Illinois ("Travelers") and others. The Company contended that the
         insurance policy provided by Travelers provided the Company with
         blanket coverage in the amount of $24.2 million in excess of the $10
         million of underlying coverage. Accordingly, the Company maintained
         that Travelers was liable for the difference between $24.2 million and
         the amount which had been paid at that time (approximately $9.5
         million), plus statutory penalties of lot of the amount not paid,
         interest, attorney's fees and costs. The Company further contended
         that the insurance agent and the insurance broker who arranged for the
         insurance were liable to the Company for any damages sustained
         including any damages sustained because the amount of coverage is less
         than that claimed by the Company. Travelers, position is that its
         liability under such policy is limited to the amount which it had
         previously paid.

         In November 1996, the Company entered into a joint settlement with the
         insurance agent and broker pursuant to which the insurance agent and
         broker agreed to pay a total of $10,000,000 to the Company. Such
         amount was


                                      10
<PAGE>   13


                            FAIR GROUNDS CORPORATION
                         NOTES TO FINANCIAL STATEMENTS
              FOR THE THREE MONTHS ENDED JANUARY 31, 1999 AND 1998
                                  (UNAUDITED)

NOTE 1 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

         placed in escrow until April 9, 1997, when the Company utilized such
         funds in connection with the closing of its construction financing
         previously reported. The settlement agreement included a "Mary Carter"
         provision whereby the liability insurers of the insurance agent and
         broker would be entitled to share in the Company's recovery from
         Travelers in that litigation.

         The Company's action against Travelers was tried in September 1997,
         and in April 1998, the trial court entered judgment in favor of the
         Company and against Travelers, awarding the Company an additional
         $2,410,905 in business interruption insurance, legal interest on that
         sum from May 13, 1994 until paid, statutory penalties in the amount of
         $222,128 and attorney's fees in an amount to be set by the Court. In
         August 1998, the Court denied all post trial motions and certified the
         judgment as being immediately appealable. The court later fixed the
         amount of attorney's fees at $75,000. Appeals by both the Company and
         Travelers are now pending before the state court of appeals. Under the
         Mary Carter agreement referenced above, the liability insurers of the
         agent and broker are entitled to share in any recovery from Travelers.

ADT Litigation

         In December 1994, the Company filed an action in the Civil District
         Court for the Parish of Orleans, State of Louisiana against ADT
         Security Systems, Mid-South, Inc. ("ADT"), the company which provided
         and maintained the fire alarm system at the race track, and other
         defendants. The complaint sought damages that were allegedly caused by
         the negligence of one or more of the defendants. The Company's three
         fire insurers and


                                      11
<PAGE>   14


                            FAIR GROUNDS CORPORATION
                         NOTES TO FINANCIAL STATEMENTS
              FOR THE THREE MONTHS ENDED JANUARY 31, 1999 AND 1998
                                  (UNAUDITED)

NOTE 1 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

         a third party's insurance company, which insured the operator of the
         video poker machines destroyed in the fire, intervened in the suit
         asserting subrogation claims against the same defendants.

         In late 1996, the Company and the three insurance companies entered
         into settlements with the manufacturer of a lighting ballast and an
         architect. After division of the settlement proceeds among the Company
         and the three insurance companies and the payment of various
         litigation expenses, the Company received approximately $268,000. In
         March 1997, a jury trial was held on the remaining claims and resulted
         in an award in favor of the Company and the subrogated insurance
         companies of approximately $49.8 million in the aggregate in damages
         against ADT, plus interest, of which approximately $31.8 million, plus
         interest, was awarded to the Company and the balance to the subrogated
         insurance companies, including approximately $4.25 million to the
         Company's primary property insurer. The judgment was appealed to the
         Court of Appeals of Louisiana, Fourth Circuit, by ADT, the Company and
         three of the subrogated insurance companies. In June 1997, the
         insurance company that insured the initial layer of ADT's liability
         tendered approximately $9.3 million in partial settlement of the
         action. After a dispute with the subrogated insurers over the division
         of these funds was resolved in August 1997, the Company received
         approximately $4 million of those proceeds after litigation expenses.

         In December 1997, the Company entered into a settlement with ADT and
         ADT's excess coverage insurers pursuant to which the Company was paid
         $37 million and agreed to indemnify ADT and its insurers against the
         judgment creditor claims of the four subrogated insurers. In December
         1997, the Company received $7.7 million of


                                      12
<PAGE>   15


                            FAIR GROUNDS CORPORATION
                         NOTES TO FINANCIAL STATEMENTS
              FOR THE THREE MONTHS ENDED JANUARY 31, 1999 AND 1998
                                  (UNAUDITED)

NOTE 1 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

         such funds net of litigation expenses, and the balance of the
         settlement funds was placed in escrow pending resolution of the
         subrogation claims. In July 1998, the Company settled the subrogation
         claims of three of the four insurers, as well as an action filed in
         April 1997 in United States District Court for the Eastern District of
         Louisiana by those three insurers against the Company seeking a
         declaratory judgement that a contract had been entered into by the
         parties respecting the distribution of funds recovered in the ADT
         litigation. Under the terms of this settlement, the three insurers
         received a total of $12.97 million from the funds in escrow. At that
         time, the Company received an additional $2.2 million from the funds
         in escrow, net of litigation expenses. Approximately $6.3 million was
         held in escrow pending resolution of the claims between the Company
         and its primary property insurer, and such funds are not reflected as
         an asset on the Company's balance sheet as of January 31, 1999.

         In September 1998, the Court of Appeals, among other things, reversed
         the trial court's award of $4.25 million to the Company's primary
         property insurer on its subrogation claim, concluding that the trial
         court had erred in making that award to the insurer when the Company
         had not been fully compensated for its property loss. This decision
         rendered moot the remainder of the appeals. The insurer appealed this
         decision to the Louisiana Supreme Court which denied the appeal. In
         February and March 1999, the Company received additional funds
         totaling $3.79 million, net of litigation expenses, from the funds
         held in escrow.


                                      13
<PAGE>   16


                            FAIR GROUNDS CORPORATION
                         NOTES TO FINANCIAL STATEMENTS
              FOR THE THREE MONTHS ENDED JANUARY 31, 1999 AND 1998
                                  (UNAUDITED)

NOTE 1 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

United National Litigation

         The Company was a defendant, along with its general liability
         insurance carrier, United National Insurance Company ("United
         National"), in a civil action filed in December 1994 in the United
         States District Court for the Eastern District of Louisiana by St.
         Paul Mercury Insurance Company ("St. Paul"), the insurer of the
         computerized betting equipment at the race track. St. Paul alleged
         that it was subrogated to its insured's rights to collect damages and
         that it paid approximately $1,175,000 to its insured for the loss of
         equipment in the fire.

         Subsequently, United National filed a declaratory judgment action
         against the Company, wherein it sought to deny coverage for St. Paul's
         subrogation claim. The Company filed a counterclaim against United
         National, seeking coverage for the St. Paul claim as well as payment
         for various other fire-related claims previously denied by United
         National. This action was consolidated for trial with the suit filed
         by St. Paul against the Company.

         Both United National and the Company moved for summary judgment on the
         question of whether the exclusion relied on by United National to deny
         coverage for the various claims applied or not. In 1996, the District
         Court ruled that the policy exclusions relied upon by United National
         did not apply to the claim asserted by St. Paul and to claims made by
         various jockeys and valets that were previously paid by the Company.
         United National subsequently appealed this decision to the United
         States Fifth Circuit Court of Appeals, which held that the claims were
         covered.



                                      14


<PAGE>   17


                            FAIR GROUNDS CORPORATION
                         NOTES TO FINANCIAL STATEMENTS
              FOR THE THREE MONTHS ENDED JANUARY 31, 1999 AND 1998
                                  (UNAUDITED)

NOTE 1 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

         In May 1997, the St. Paul suit was settled pursuant to an agreement
         whereby ADT agreed to pay an undisclosed sum and United National, as
         the Company's insurer, agreed to pay $275,000. In February 1998,
         United National tendered $56,553 to the Company for claims which it
         acknowledged were covered under the policy. In November 1998, United
         National tendered an additional $11,818 to the Company for claims
         which it acknowledged were covered under the policy. In December 1998,
         the Company settled the balance of its claims against United National
         for an additional $140,000 which has been paid by United National.


Other Litigation

         In 1996, a suit was filed in U.S. District Court in Baton Rouge by
         Livingston Downs Racing Association ("Livingston") naming the Company
         and other defendants in an antitrust/civil RICO suit alleging the
         Company participated in a conspiracy to prevent the plaintiff from
         entering the live racing, off-track betting and video poker markets.
         This suit is currently in the discovery stages. Management of the
         Company believes the action is without merit. Livingston had
         previously filed a series of other legal actions against the Company
         which were resolved in the Company's favor. The amount in question in
         this action has not yet been determined but could be substantial.

         A suit was also filed in 1996 by Livingston against the Company and
         the State of Louisiana seeking a judgment that the State off-track
         betting law is unconstitutional. The trial court ruled in the
         plaintiff's favor. The Louisiana Supreme Court reversed the trial
         court's decision, holding that the off-track betting statute is
         constitutional. Livingston's request for rehearing was subsequently
         denied.


                                      15
<PAGE>   18


                            FAIR GROUNDS CORPORATION
                         NOTES TO FINANCIAL STATEMENTS
              FOR THE THREE MONTHS ENDED JANUARY 31, 1999 AND 1998
                                  (UNAUDITED)

NOTE 1 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

         A suit was filed in 1996 by the Louisiana Horsemen's Benevolent and
         Protective Association ("HBPA") against the Company, the State of
         Louisiana, and all other pari-mutuel wagering facilities operating in
         Louisiana. The HBPA is seeking a larger portion of video poker
         proceeds. The Company believes it is currently in compliance with the
         guidelines established by the Louisiana State Police Gaming Division,
         which regulates compliance with the State of Louisiana video poker
         law.

         In July 1997, Evelyn Allen and other present or former security or
         concessions employees of the Company filed an action in the United
         States District Court in New Orleans claiming that the plaintiffs were
         entitled, under the Fair Labor Standards Act, to overtime for hours
         worked over 40 in each work week from July 1994 to July 1997. Two of
         the plaintiffs also sought to recover damages for alleged retaliatory
         discharge. In December 1998, the Company and the plaintiffs reached a
         settlement agreement pursuant to which the Company will pay the
         plaintiffs $100,000 in full settlement of all claims for overtime pay.
         The retaliatory discharge claims were tried in December 1998. At the
         conclusion of evidence, the court dismissed those claims. The
         plaintiffs' claim for attorneys fees has not yet been resolved.

         Except as described above, there are no material pending legal
         proceedings, other than ordinary routine litigation incidental to its
         business, to which the Company is a party or of which any of its
         property is the subject.

NOTE 2 - ADVANCE

In January 1999, the Company received a non-interest bearing advance of
$1,000,000 from Video Services, Inc., to be repaid in six equal monthly
installments beginning in February 1999. The advance is included in notes
payable in the financial statements.

NOTE 3 - RECLASSIFICATION

In the current fiscal quarter, host track fee income was reported at its
contractual rate of approximately 3% of the betting handle. In the prior
comparable fiscal quarter, host track fee income was shown net of related purse
expenses. The January 31, 1998 host track fees and related purse expenses have
been reclassified to conform to the current fiscal quarter presentation. This
reclassification has no effect on the earnings for the quarter ended January 31,
1998.

NOTE 4 - RESTATEMENT OF 1998 FINANCIAL STATEMENTS

The financial statements for the quarter ended January 31, 1999 have been
restated to correct for an error in the calculation of deferred income taxes
occurring during the fiscal year ended October 31, 1998. The Company's
statement of operations for the fiscal year ended October 31, 1998 erroneously
reflected a benefit for income taxes of $3,364,232 and net income for fiscal
1998 of $8,973,671. The benefit for income taxes was primarily related to the
insurance and litigation recoveries arising out of a fire at the Company's race
track in 1993 and the reinvestment of those recoveries in the Company's new
facilities. Had this error not occurred, net income would have been reduced by
$3,016,759, or $6.38 per share, to $5,956,912, or $12.69 per share.
Stockholders' equity at October 31, 1998 would have been $27,637,835 as
compared to the previously reported amount of $30,654,594. The Company's
financial statements as of, and for the year ended, October 31, 1998 have been
restated to reflect this adjustment. This restatement affected income taxes
payable, deferred income taxes and retained earnings at January 31, 1999 and
resulted in stockholders' equity at January 31, 1999 totaling $28,873,089 as
compared to the previously reported amount of $31,889,848. This adjustment had
no effect on the Company's Statement of Operations for the three months ended
January 31, 1999. The Company's financial statements as of, and for the quarter
ended, January 31, 1999 have been restated to reflect the effects of this
adjustment.


                                      16
<PAGE>   19


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

COMPARISON OF THE THREE MONTHS ENDED JANUARY 31, 1999 AND 1998

         Revenues. During the fiscal quarters ended January 31, 1999 and 1998,
         the Company derived its pari-mutuel income by conducting live racing
         47 and 46 days, respectively, during each fiscal quarter and in the
         operation of its tele-tracks for off-track wagering. In both fiscal
         quarters, the Company utilized its new grandstand and clubhouse
         facilities, which were completed in November 1997. During each such
         fiscal quarter, the Company operated tele-tracks in New Orleans at the
         Fair Grounds Race Course and on Bourbon Street, and at locations in
         Jefferson, Lafourche, St. Bernard and St. John Parishes, Louisiana.
         Through Finish Line Management Corporation, an affiliated company, the
         Company operated tele-track facilities in Terrebonne, St. Tammany, and
         Jefferson Parishes, Louisiana.

         For the fiscal quarter ended January 31, 1999, the Company reported
         total in-state pari-mutuel wagering of $32,521,065 compared to
         $30,270,439 in the same quarter in fiscal 1998.

         Comparative pari-mutuel wagering and attendance figures for the
         quarters ended January 31, 1999 and 1998 are as follows:

<TABLE>
<CAPTION>
                                                        1999             1998
                                                     -----------      -----------
<S>                                                 <C>              <C>
Pari-mutuel wagering:
     On-track handle                                $ 14,285,631     $ 13,211,435
     Off-track handle                                 18,235,434       17,059,004
                                                    ------------     ------------
     Total in-state wagering                          32,521,065     $ 30,270,439
                                                    ============     ============

     Out-of-state simulcast handle                  $164,697,790     $120,829,901
                                                    ============     ============

Total On-Track Attendance                                133,729          127,617
                                                    ============     ============
</TABLE>


                                      17
<PAGE>   20


         The Company attributes the $1,074,196, or 8.1%, increase in the
         on-track handle in the current year quarter primarily to the amenities
         provided by the new racing facility and the improved quality of racing
         resulting from increased purses paid in the current fiscal year
         quarter.

         The Company believes that the $1,176,430, or 6.9%, increase in
         off-track handle is primarily due to the Company transmitting better
         simulcasting signals and higher quality horses currently racing in the
         Company's live racing meet. The $43,867,889, or 36.3%, increase in
         out-of-state handle is believed to be the result of those same
         factors. In addition, the Company's races were sometimes simulcasted
         to some locations that do not generally simulcast the Company's races
         because certain other tracks were unable to race due to severe winter
         weather, thus increasing the Company's simulcasting handle. During the
         quarter ended January 31, 1999, the Company experienced significant
         handle increases from Florida and New York. These two markets
         accounted for approximately $17.3 million of the handle increase.

         As a result of the increases in total handle, the Company's operating
         revenues in the quarter ended January 31, 1999 increased by
         $1,858,105, or 14.7%, from the prior comparable fiscal year quarter.
         This included increases of $719,797, or 10.6%, in pari-mutuel
         commissions, $61,958, or 43.6%, in breakage, $12,229, or 17.2%, in
         uncashed mutuel tickets, $965,987, or 23%, in host track fees,
         $30,363, or 7.5%, in video poker revenues, $7,264, or 31.1%, in
         parking revenues and $225,168, or 152%, in miscellaneous revenues,
         which included $133,500 of promotional fee revenues paid by third
         parties who advertise in the Company's racing program.

         These increases are partially offset by decreases of $31,403 of
         programs and forms revenues and $150,993 in admissions revenues.
         Approximately $147,000 of admissions revenues has been deferred in the
         current fiscal quarter to be recognized in the second fiscal



                                      18
<PAGE>   21


         quarter of 1999 when earned. This relates to grandstand and clubhouse
         box seats and parterre box admissions that are prorated over the live
         racing season. In fiscal 1998, all box admissions were recognized in
         the quarter ended January 31, 1998. As a result, the decrease in
         admissions during the current fiscal quarter relates only to a timing
         of revenue recognition.

         Racing Expenses. Total racing expenses increased $767,312, or 7.1%,
         over prior comparable fiscal year quarter, primarily as a result of
         the increased pari- mutuel activities. These included increases of
         $620,581, or 13.05%, in purses, and $164,658, or 27.5%, in host track
         fee expenses. Other increases included repair and maintenance,
         advertising and promotions, and miscellaneous racing expenses. These
         were partially offset by decreases in racing salaries and related
         taxes and benefits, and utilities.

         General and Administrative Expenses. General and Administrative
         expenses decreased by $13,637, or 1.1%, in the current fiscal quarter
         primarily as a result of decreased legal fees relating to the
         conclusion of much of the Company's fire litigation, partially offset
         by increases in property taxes due to higher property assessments by
         Orleans Parish.

         Other Income (Expenses). Other income decreased by $44,367, or 92.5%,
         as a result of decreased investment earnings of the Company in the
         current fiscal quarter. The Company utilized its funds for the payment
         of purses thereby reducing the amount of funds available to generate
         investment income.

         Extraordinary Items. During fiscal quarter ended January 31, 1998, the
         Company received settlement payments in connection with the fire
         related litigation previously reported in the aggregate of $7.7
         million. These proceeds were reported net of related taxes of
         approximately $2.85 million. In the current fiscal quarter,
         settlements received were $195,000 and are reported net of $72,150 of
         income taxes.


                                      19
<PAGE>   22


         Income Taxes. In addition to the components of net income previously
         discussed, the net income for the fiscal quarter ended January 31,
         1999 included income tax expense of $653,317 compared to income tax
         expense of $263,331 in the comparable quarter in fiscal 1998. The
         difference between the two quarters is attributable to the difference
         in pre-tax income between the quarters.

         Net Income. The Company reported net income of $1,235,254 for the
         fiscal quarter ended January 31, 1999 compared to $5,299,375 for the
         fiscal quarter ended January 31, 1998. In the fiscal quarter ended
         January 31, 1998, the Company reported a net extraordinary gain of
         $4,851,000 relating to the receipt of fire litigation settlements
         previously reported. During the fiscal quarter ended January 31, 1999,
         the Company received only $195,000 of litigation settlements.
         Excluding the extraordinary gains, net income in the current year
         quarter was $1,112,404 compared to $448,375 in the quarter ended
         January 31, 1998.

LIQUIDITY AND CAPITAL RESOURCES

         General

         Cash and cash equivalents decreased $3,469,790 during the fiscal
         quarter ended January 31, 1999, compared to an increase of $1,655,841
         during the fiscal quarter ended January 31, 1998. The decrease in cash
         and cash equivalents in fiscal 1999 was the result of cash used by
         operations of $4,663,322, partially offset by cash provided by
         investing activities of $71,848, and cash provided by financing
         activities of $1,121,684.

         Cash used in operations was primarily due to the payment of purses and
         the increase in host track fees and other receivables. Cash provided
         by financing was primarily the result of an advance of $1 million from
         the Company's video poker operator.


                                      20
<PAGE>   23


         As of January 31, 1999, the company had received cumulatively, since
         the December 1993 fire, approximately $44.2 million, before taxes, of
         insurance proceeds resulting from fire loss claims submitted to the
         Company's insurance carriers or in litigation settlements. The
         Company's new main grandstand and racing facility was substantially
         completed in November 1997 and was opened for the start of the
         Company's 1997-1998 live racing meet. The total cost of constructing
         and furnishing the facility, including the tele-track facility at the
         Fair Grounds Race Course that was completed in late 1994, through
         January 31, 1999 was in excess of $35 million.

         The Company has a working capital line of credit agreement with Bank
         One. The line of credit is for $2.5 million with interest at 8% on
         amounts outstanding. In addition to monthly interest payments on
         outstanding balances, any amounts outstanding plus unpaid accrued
         interest are due on April 14, 1999. There were no amounts drawn down
         or outstanding on this line of credit during the fiscal year ended
         October 31, 1998.

         In January 1999, the Company received a $1.0 million noninterest
         bearing advance from its video poker operator which it will repay in
         six equal installments beginning in February 1999.

         The Company believes that the combination of existing cash, cash from
         future operations, any additional amounts received in the fire-related
         litigation, funds available under its working capital line of credit,
         and the Company's increased capacity to incur short-term and long-term
         indebtedness, if necessary, will be sufficient to fund the Company's
         cash requirements for the foreseeable future, including the repayment
         of the $1.0 million advance from the Company's video poker operator.


                                      21
<PAGE>   24


         As a result of the fire insurance and other litigation settlements
         received, the Company has a total net deferred tax liability of
         approximately $7.08 million at January 31, 1999. The deferred tax
         liability is to be paid over approximately 39 years in accordance with
         Internal Revenue Service regulations. The Company intends to fund
         these future tax obligations through operations.

         Year 2000 Compliance

         A significant part of the Company's operations are dependent on
         computer systems and applications. These systems are either owned by
         the Company or are provided under contract by third party technology
         or other service providers. If these systems are not year 2000
         compliant, the Company could experience system failures or
         miscalculations leading to disruption of business operations.

         In fiscal 1998 the Company began, and is now continuing, its
         assessment of its data processing functions to determine if they are
         year 2000 compliant. The Company has a task force which is assisting
         in its assessment of year 2000 readiness. Based in part on that
         assessment, in fiscal 1998 the Company purchased and installed an
         updated version of its accounting software that its vendor states is
         year 2000 compliant and is now in the process of testing that
         compliance.

         The Company has also made, and is continuing to make, inquiries to
         third party providers as to their compliance and is in the process of
         obtaining written assurances from certain vendors, as well as other
         race tracks with which the Company interfaces, as to their year 2000
         readiness. The Company's plant and equipment, as well as the providers
         of services to the plant and equipment, are also being reviewed to
         determine whether they are year 2000 ready. The services of certain of
         those providers, including electrical and telephone services, are
         essential to the Company's ability to operate. The Company's most
         significant third party technology services provider is Autotote,
         which performs the totalisator functions for the Company. The
         Company's contract with Autotote provides that the services are to


                                      22
<PAGE>   25


         be year 2000 compliant. Autotote has contracted with a third party
         consultant to attain such compliance. If Autotote does not become
         compliant, the Company's operations could be adversely affected until
         another provider of the totalisator function can be found. The video
         services provided by another third party provider are also important
         to the Company's operations. These services include the production of
         the telecast signal at the Fair Grounds Race Course and distribution
         to the Company's tele-tracks and to other wagering facilities within
         and outside Louisiana. The Company is working with such provider to
         ensure that the software applications that provide the graphical
         enhancements and other distinguishing features to the telecast signals
         are year 2000 compliant. The video poker devices at the Company's
         facilities are provided by another third party provider. The Company
         is working with that provider to ensure that such equipment is year
         2000 compliant.

         To date, the Company has incurred costs of approximately $35,000,
         including the cost and time of Company employees, to address year 2000
         issues. Although the Company has not completed its assessment of its
         facility, data processing and other equipment and, accordingly, has
         not determined the total costs associated with its efforts to prepare
         for year 2000, the Company currently believes that the costs of
         addressing its year 2000 transition will not have a material adverse
         effect on the Company's financial condition or business operations.
         The Company has not yet completed a contingency plan addressing
         failure to be year 2000 ready.

         Impact of Inflation

         To date, inflation has not had a material effect in the Company's
         operations.


                                      23
<PAGE>   26


                                    PART II
                               OTHER INFORMATION


                                      24
<PAGE>   27


Item 1. Legal Proceedings.

There were no material developments during the first quarter of fiscal 1999 in
any of the Company's legal proceedings as described in the Form 10-K for the
fiscal year ended October 31, 1998, except that in December 1998 the Company
settled its remaining claims against United National in the case filed in the
United States District Court for the Eastern District of Louisiana by St. Paul
Mercury Insurance Company, with United National's payment of an additional
$140,000 to the Company. In February and March 1999, in the Company's action
filed against ADT Security Systems, Mid-South, Inc., the Company received
additional funds totaling $3.79 million, net of litigation expenses, from the
funds held in escrow. No material legal proceeding was instituted during the
first quarter to which the Company is a party or of which any of its property
is subject.

Item 6. Exhibits and Reports on Form 8-K

         Exhibit 27 Financial Data Schedule (Filed electronically only)


                                      25
<PAGE>   28


                                   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.



                                            FAIR GROUNDS CORPORATION
                                            -----------------------------------
                                            (Registrant)



Date: March 15, 2000                        By: /s/ Bryan G. Krantz
      -------------------------------          --------------------------------
                                               Bryan G. Krantz
                                               President


                                      26