<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                                Washington, D.C.

                                    FORM 10-K

(Mark One)

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

For the annual period ended      December 31, 2002
                            ------------------------------

                                       OR

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

For the transition period from _____________________ to _____________________

Commission file number                        33-69716
                       ------------------------------------------------

                            GB PROPERTY FUNDING CORP.
                                GB HOLDINGS, INC.
                        GREATE BAY HOTEL AND CASINO, INC.
--------------------------------------------------------------------------------
           (Exact name of each Registrant as specified in its charter)

             DELAWARE                                    75-2502290
             DELAWARE                                    75-2502293
            NEW JERSEY                                   22-2242014
---------------------------------------  ---------------------------------------
  (States or other jurisdictions of                   (I.R.S. Employer
    incorporation or organization)                  Identification No.'s)

       c/o Sands Hotel & Casino
    Indiana Avenue & Brighton Park
      Atlantic City, New Jersey                             08401
---------------------------------------  ---------------------------------------
(Address of principal executive offices)                 (Zip Code)

(Registrants' telephone number, including area code):        (609) 441-4517
                                                      --------------------------


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

      Indicate by check mark whether each of the Registrants (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
Registrants were required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.   Yes  X    No
                                                    -----    -----

      Indicate by check mark whether the Registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.    Yes  X    No
                            -----    -----

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

<TABLE>
<CAPTION>
             Registrant                                Class                  Outstanding at March 24, 2003
---------------------------------------  ---------------------------------    ------------------------------
<S>                                      <C>                                  <C>
      GB Property Funding Corp.            Common stock, $1.00 par value                100 shares
          GB Holdings, Inc.                 Common stock, $.01 par value             10,000,000 shares
  Greate Bay Hotel and Casino, Inc.          Common stock, no par value                 100 shares
</TABLE>
<PAGE>

                                     PART I


ITEM 1.  BUSINESS

        GB Holdings, Inc. ("Holdings") is a Delaware corporation and was a
wholly owned subsidiary of Pratt Casino Corporation ("PCC") through December 31,
1998. PCC, a Delaware corporation, was incorporated in September 1993 and was
wholly owned by PPI Corporation ("PPI"), a New Jersey corporation and a wholly
owned subsidiary of Greate Bay Casino Corporation ("GBCC"). Effective after
December 31, 1998, PCC transferred 21% of the stock ownership in Holdings to
PBV, Inc. ("PBV"), a newly formed entity controlled by certain stockholders of
GBCC. As a result of a certain confirmed plan of reorganization of PCC and
others in October 1999, the remaining 79% stock interest of PCC in Holdings was
transferred to Greate Bay Holdings, LLC ("GBLLC"), whose sole member as a result
of the same reorganization was PPI. In February 1994, Holdings acquired Greate
Bay Hotel and Casino, Inc. ("GBHC"), a New Jersey corporation, through a capital
contribution by its then parent. GBHC's principal business activity is its
ownership of the Sands Hotel and Casino located in Atlantic City, New Jersey
(the "Sands"). GB Property Funding Corp. ("GB Property Funding"), a Delaware
corporation and a wholly owned subsidiary of Holdings, was incorporated in
September 1993 as a special purpose subsidiary of Holdings for the purpose of
borrowing funds for the benefit of GBHC. Holdings has no operating activities
and its only source of income is interest on cash equivalent investments.
Holdings' only significant assets are its investment in GBHC and its cash
balance at December 31, 2002 of $31.8 million.

       The accompanying consolidated financial statements include the accounts
and operations of Holdings and its subsidiaries (Holdings, GBHC and GB Property
Funding, collectively, the "Company"). All significant intercompany balances and
transactions have been eliminated. Throughout this document, references to Notes
are referring to the Notes to Consolidated Financial Statements contained
herein.

       On January 5, 1998, the Company filed petitions for relief under Chapter
11 of the United States Bankruptcy Code (the "Bankruptcy Code") in the United
States Bankruptcy Court for the District of New Jersey (the "Bankruptcy Court").
On August 14, 2000, the Bankruptcy Court entered an order (the "Confirmation
Order") confirming the Modified Fifth Amended Joint Plan of Reorganization Under
Chapter 11 of the Bankruptcy Code Proposed by the Official Committee of
Unsecured Creditors and High River Limited Partnership and its affiliates (the
"Plan") for the Company. High River Limited Partnership ("High River") is an
entity controlled by Carl C. Icahn. On September 13, 2000, the New Jersey Casino
Control Commission (the "Commission") approved the Plan. On September 29, 2000,
the Plan became effective (the "Effective Date") (see Note 2). All material
conditions precedent to the Plan becoming effective were satisfied on or before
September 29, 2000. Accordingly, the accompanying consolidated financial
statements have been prepared in accordance with Statement of Position No. 90-7,
"Financial Reporting by Entities in Reorganization under the Bankruptcy Code"
("SOP 90-7"). In addition, as a result of the Confirmation Order and the
occurrence of the Effective Date, and in accordance with SOP 90-7, the Company
has adopted "fresh start reporting" in the preparation of the accompanying
consolidated financial statements. The Company's emergence from Chapter 11
resulted in a new reporting entity with no retained earnings or accumulated
deficit as of September 30, 2000. As a result, the consolidated financial
statements for the periods subsequent to September 30, 2000 reflect the new
basis of accounting and are not comparable to consolidated financial statements
presented prior to September 30, 2000. A black line has been drawn on the
accompanying consolidated financial statements to distinguish between the
pre-reorganization and post-reorganization entities.


                                       2
<PAGE>

       On the Effective Date, GB Property Funding's existing debt securities,
consisting of its 10 7/8% First Mortgage Notes due January 15, 2004 (the "Old
Notes") and all of Holdings' issued and outstanding shares of common stock owned
by PBV and GBLLC (the "Old Common Stock") were cancelled. As of the Effective
Date, an aggregate of 10,000,000 shares of new common stock of Holdings (the
"New Common Stock") were issued and outstanding, and $110,000,000 of 11% Notes
due 2005 were issued by GB Property Funding (the "New Notes"). Holders of the
Old Notes received a distribution of their pro rata shares of (i) the New Notes
and (ii) 5,375,000 shares of the New Common Stock (the "Stock Distribution").

       Holdings and GB Property Funding listed the New Common Stock and New
Notes, respectively, on the American Stock Exchange on March 27, 2001.

The Sands

       For a description of the Sands' facilities, please refer to "Item 2. -
Properties."

       The Sands has segregated its gaming customers into three broad
categories:

       The Premium Categories - Those customers who have a high potential loss
per trip. This category has the lowest profit margin percentage per customer.

       The Middle Categories - Those customers who have a high repeat trip
frequency along with a potential loss per trip that equates to a high annual
potential loss per customer.

       The Mass Categories - Those customers who have a low casino loyalty and a
low potential loss per trip. This category has the highest profit margin
percentage per customer.

Business Strategy. Traditionally, the Sands' marketing strategy in the highly
competitive Atlantic City market has consisted of seeking premium category
patrons. In the past, the Sands has been successful in its marketing efforts
towards these premium patrons through its offering of private, limited-access
facilities, related amenities and use of sophisticated information technology to
monitor patron play, control certain casino operating costs and target marketing
efforts toward frequent visitors with above average gaming budgets. While the
Sands strived to maintain market share within this category, competition within
the industry for the premium category (both table and slot) reduced the Sands
ability to attract this type of player on a profitable basis.

       In 2001, the Sands focused on the "Value Gaming" concept. The general
concept in "Value Gaming" is to provide the customer with the best possible
gaming experience for the amount of time that the customer is on property.
Whether that experience is enhanced by competitive odds on games, the ability to
find a food outlet that provides an affordable quality food product, or superior
service, the intent is to provide all categories with an expanded and improved
entertainment experience that would lead to an increase in subsequent trips.

       As part of its commitment to make the "Value Gaming" concept a reality
for its customers, the Sands continued to provide the "loosest" slots in the
Atlantic City market during 2001 and through the first quarter of 2002. That is,
the Sands provided the best overall odds for winning at slots of any casino in
Atlantic City, according to monthly data filed with the Commission.

       Additionally in 2001, the Sands invested approximately $4.6 million in
new slot machines, gaming equipment and casino renovations. The Boardwalk Buffet
reopened after renovations in the summer of 2001, providing guests with an
expanded buffet outlet featuring a wide variety of culinary choices at an
affordable price in a nostalgic Atlantic City atmosphere.



                                       3
<PAGE>

       In the second quarter of 2002, under the direction of newly appointed
President Herbert Wolfe, the Sands changed its marketing strategy to reduce its
focus on the lower profit margin table games business and focus almost
exclusively on the slot machine business. In the process the Sands reduced the
number of table games from 69 to 26 and increased its number of slot machines by
400. The Sands began to market its product predominantly to the mass slot player
categories. As part of this strategy, the Sands, in keeping with its "Value
Gaming" concept, increased the number of lower denomination slot machines, thus
making the product more available to this mass category. However the increase in
the number of lower denomination slot machines created a more competitive slot
machine hold percentage and as a result caused the Sands to move away from its
"loosest" slots in Atlantic City. The "Value Gaming" concept continued to be
reinforced through the availability of slot machines, discounted food product,
and availability of hotel rooms to the mass category.

       At the end of the third quarter of 2002, Herbert Wolfe resigned as
President. Shortly thereafter Richard Brown was appointed Chief Executive
Officer of the Company. By this time, it also had become apparent that the gain
in slot machine revenue could not offset the loss of table game revenue. In
addition the volume required from the mass slot player categories, to make up
the loss of the middle to premium slot player categories, could not be
accommodated in a property with the physical constraints of the Sands.
Subsequent review of marketing data revealed that the loss in table game play
had a direct effect on the loss in some slot machine play, as many slot patrons
who frequented the Sands with family and friends were forced to patronize
competitors to find the variety of gaming experience they desired. As a result,
by the end of the fourth quarter of 2002, the Sands had added fourteen table
games to bring the total number of table games to forty, and changed its
marketing strategy to focus more on the middle to premium categories of slot
players.

       During 2002, the Sands continued to invest in improvements and upgrades
to the casino hotel complex. These improvements included the new slot machines,
renovations to the first floor casino and hotel room renovations to both the
Sands and the Madison House Hotel (see Properties). With the ongoing upgrades to
the property, the Sands will be able to broaden its appeal to both the premium
category, as well as increase its marketing effort towards the middle and mass
categories of the gaming market.

       The Sands has also introduced a new comprehensive customer service
program that includes customer service training for new employees, customer
service monitoring for operations and customer service recovery programs.

       As part of the Sands capital expenditure program, certain improvements,
additions and enhancements have been made, or are planned to be made, to the
facility, including slot machines, other gaming equipment and physical plant
renovations. These additions and enhancements will primarily benefit guests in a
variety of services and will compliment the "Value Gaming" marketing strategy.

       The Sands uses sophisticated information technology that enables it to
track and rate patrons' play through the use of identification cards, which it
issues to patrons ("casino players' cards"). All Sands' slot machines are
connected with, and information with respect to table games activity can be
input into, a computer network. When patrons insert their casino players' card
into slot machines or present them to supervisors at table games, meaningful
information, including amounts wagered and duration of play, is transmitted in
real-time to a casino management database. The information contained in the
database facilitates the implementation of targeted and cost effective marketing
programs, which appropriately recognize and reward patrons during current and
future visits to the Sands. Certain of these marketing programs allow patrons to
automatically obtain complimentaries based on levels of play. Such
complimentaries include free meals, hotel accommodations, entertainment, retail
merchandise, parking, and sweepstakes giveaways. Management believes that its
ability to reward its customers on a "same-visit" basis is valuable in
encouraging the loyalty of repeat visits. Sands Management believes this is a
unique benefit and strategy in the Atlantic City market providing a marketing
edge over its competitors. The computer systems also allow the Sands to monitor,
analyze and control the granting of gaming credit, promotional expenses and
other marketing costs.



                                       4
<PAGE>

       Management primarily focuses its marketing efforts on patrons who have
been identified by its casino management computer system as profitable patrons.
Management believes that its philosophy of encouraging participation in its
casino players' card program, using the information obtained thereby to identify
the relative playing patterns of patrons and tailoring specific marketing
programs and property amenities to this market category enhances profitability
of the Sands.

       The Sands also markets to the mass casino patron market through various
forms of direct and indirect advertising, and group and bus tour programs. Once
new patrons are introduced to the Sands' "Value Gaming" concept and the casino
players' card program, management uses its information technology capabilities
to directly market to these patrons to encourage repeat patronage.

       Competition. The Sands faces intense competition from the eleven other
existing Atlantic City casinos. According to reports of the Commission, the
twelve Atlantic City casinos currently offer approximately 1.2 million square
feet of gaming space. After completion of the acquisition of Caesars by Park
Place Entertainment Corp. (PPE) in December 1999, PPE connected Caesars to
Bally's Park Place and added slot machines in the connecting space. In January
2001, over the objections of the Sands, the Commission determined that the
proposed acquisition of the Claridge Hotel and Casino ("the Claridge") by PPE
which is located adjacent to the Sands and with whom the Sands jointly operates
the "People Mover" walkway from the boardwalk, would not violate the Casino
Control Act's prohibition against undue economic concentration. As a result of
the confirmation of the Claridge Chapter 11 Plan by the Bankruptcy Court, PPE
acquired the Claridge, and PPE constructed a connection between the Claridge and
Bally's Park Place Casino, which was already interconnected to the PPE
controlled Caesars Hotel and Casino. With the addition of the Claridge, PPE
controls four casinos, the Trump Organization controls three and the Harrah's
Organization controls two of the twelve Atlantic City casinos. PPE also controls
the so-called Traymore site located between the boardwalk and the Sands and has
acquired a lot contiguous to the Sands parking garage that formerly contained
the Continental Motel property. PPE announced that it may develop another
hotel-casino complex on this site but has not announced specific plans at this
time. In addition, several companies have announced plans to build and operate
additional casino/hotels over the next few years. For example, Boyd Gaming
Corporation in partnership with MGM Mirage is currently constructing a 40 story
2,010-room hotel and 120,000 square foot casino (the "Borgata") in the Marina
District of Atlantic City that is expected to be completed in the summer of
2003. The Borgata development will be situated on approximately 30 acres and
will also include specialty restaurants, distinct boutiques, a European style
spa and several entertainment venues. In connection with that project,
construction is complete on a tunnel connecting the Atlantic City Expressway
with the Marina District. Other casino companies and individuals have submitted
applications and have been qualified in New Jersey to hold casino licenses.
Tropicana Atlantic City has started plans to construct a 502-room hotel tower, a
25-room conference center, a 2,400 space-parking garage and an expanded casino
floor. The plans will also include a 200,000 square foot themed shopping, dining
and entertainment complex called The Quarter. Tropicana intends to complete the
project in the second quarter 2004. Showboat and Resorts are currently
constructing hotel room additions of approximately 400 - 500 rooms each and are
set to open in the second quarter of 2003 and the second quarter of 2004,
respectively. Accordingly, the existing and future competing forces could have a
materially adverse impact on the operations of the Sands.



                                       5
<PAGE>

       The Casino Reinvestment Development Authority ("CRDA") is a governmental
agency that administers the statutorily mandated investments required to be
funded by casino licensees. Legislation enacted during 1993 and 1996 allocated
an aggregate of $175 million of CRDA funds and credits to subsidize and
encourage the construction of additional hotel rooms by Atlantic City casino
licensees. Competitors of the Sands that have the financial resources to
construct hotel rooms can take advantage of such credits more readily than the
Sands. The Sands has an approved hotel expansion program with the CRDA and a
retail entertainment development project. Plans have been announced by other
casino operators to complete expansions within the required subsidy period. The
expansion of existing gaming facilities and the addition of new casinos will
continue to increase competition within the Atlantic City market.

       In this highly competitive environment, each property's relative success
is affected by a great many factors that relate to its location and facilities.
These include the number of parking spaces and hotel rooms it possesses, close
proximity to Pacific Avenue, the Boardwalk and to other casino/hotels and access
to the main expressway entering Atlantic City. The Company believes that, in
prior years, its operating strategy enabled the Sands to compete against most
other Atlantic City casino/hotels. In the past, many of its competitors had
greater financial resources for capital improvements and marketing and
promotional activities than the Company and, as a result, the Sands' facilities
and amenities fell behind many of the other casinos. In order to improve the
Company's competitive position, the Company sought the approval of the
Bankruptcy Court for a capital expenditure program to renovate the majority of
its hotel rooms and suites and to purchase approximately 700 slot machines. The
Bankruptcy Court approved the capital expenditure program in the amount of
approximately $13.6 million in March 1998. In addition, the lack of access to
Pacific Avenue hampered the Sands' efforts to expand its "drive-in" patron base.
However, in 1999, the Sands acquired land parcels on Pacific Avenue and
demolished the existing structures and constructed a new front entrance to the
Sands' facility on Pacific Avenue, which opened in June 2000.

       In order to enhance its competitive position in the marketplace, the
Sands may determine to incur substantial additional costs and expenses to
maintain, improve and expand its facilities and operations. Those activities may
require Holdings to consider seeking additional financing.

      A significant amount of the Sands' revenues is derived from patrons living
within a 120-mile radius of Atlantic City, New Jersey, particularly northern New
Jersey, southeastern Pennsylvania, and metropolitan New York City. Proposals to
allow casino gaming in certain areas of Pennsylvania have been defeated within
the past three years. If casino gaming were to be legalized in those areas or in
other venues that are more convenient to those areas, it could have a material
adverse effect on the Sands. Gaming is currently conducted on Indian lands in
nearby states, including the Foxwoods and Mohegan Sun Casinos in Connecticut and
the Turning Stone Casino in Oneida, New York near Syracuse. In addition, New
York State passed legislation that was signed by the Governor in October 2001 to
allow slot machines at racetracks and six (6) Indian owned casinos within the
State of New York. The legislation also allows the State to join the multi state
Powerball lottery. The gaming portion of the legislation may face legal
challenge including a challenge based on the New York State Constitution.
Therefore, it is not possible to determine the timing or financial impact of
this legislation on Atlantic City at this time.

       The tragic events of September 11, 2001 had an immediate negative impact
on hotel and casino business volume. The Sands hotel occupancy was down
approximately ten percentage points during the week that followed the terrorist
attacks. Bus passenger volume for the Sands was lower than normal, especially
for those bus tours originating from the New York metropolitan area. There were
approximately 17,500 fewer, or 22.5% less bus passengers at the Sands during
September 2001 than during the same month in the prior year.



                                       6
<PAGE>

       During the fourth quarter 2001, bus ridership remained approximately 11%
lower than during the same prior year period. However, the Sands slot handle and
slot handle per unit during the fourth quarter 2001 exceeded their respective
levels compared to the same prior year period (up 7.8% and 3.6%, respectively).
By comparison, Atlantic City casinos, other than the Sands, experienced a 6.3%
increase in slot handle and a 2.9% increase in handle per unit for the same
periods. Net slot revenue for the Sands only increased $149,000 when comparing
the fourth quarter of 2001 to the same prior year period. The increase in volume
was largely offset by a decrease of .44% in hold percentage. Total coin
incentives also decreased approximately $2.8 million or 28.9%, comparing the
fourth quarter 2001 to the same prior year period.

       The Sands table game drop decreased $18.4 million during the fourth
quarter 2001 compared to the same prior year period, although drop per unit
increased approximately 13.4%. It is difficult to discern how much of the
decline in table game volume is due to the tragic events of September 2001, the
decrease in the number of table games, changes in table game marketing or the
struggling economy.

       Industry Developments. In a budget proposed to the New Jersey Legislature
in 2003, Governor McGreevey announced a proposed tax on complementaries, an
increase in gross revenue tax from 8% to 10%, and an increase in tax on rooms as
part of his fiscal 2004 budget proposal. The Company, at this time, cannot
assess whether these proposals will be passed by the New Jersey Legislature. If
passed, this proposal would cost the Sands approximately $4-6 million annually
in additional expenses.

       New Jersey regulators have approved a number of significant changes to
the regulations governing the casino industry in recent years. Significant
deregulation of the industry began in 1995 with the enactment of legislation
amending the New Jersey Casino Control Act (the "Casino Act") and has continued
with additional rule modifications to stimulate industry growth. Partly as a
result of such regulatory changes, industry-wide revenues in New Jersey have
remained steady at $4.3 billion in 2002, 2001 and 2000, despite the adverse
market conditions. However, the general economic uncertainties may continue to
have an adverse impact on the results of the Sands.

       Casino/hotel operators have also benefited in recent years from a trend
toward increased slot play as slot machines have become increasingly more
popular than table games particularly with frequent patrons and with
recreational and other casual visitors. Casino operators have been catering
increasingly to slot patrons through new forms of promotions and incentives such
as slot machines that are linked among the various casinos enabling the pay out
of large pooled jackpots, and through more attractive and entertaining gaming
machines. Slot machines generally produce higher margins and profitability than
table games because they require less labor and have lower operating costs. As a
result, slot machine revenue growth has outpaced table game revenue growth in
recent years. In 2002, according to Commission filings, slot win accounted for
approximately 75.0% of total Atlantic City gaming win. However, table games
remain important to a select category of gaming patrons. Management believes the
availability of table games provides a varied gaming experience that benefits
both slot and table game revenues.

       Casino Credit. Casino operations are conducted on both a credit and a
cash basis. Patron gaming debts incurred in accordance with the Casino Act are
enforceable under New Jersey law. For the year ended December 31, 2002, gaming
credit extended to Sands' table game patrons accounted for approximately 18.6%
of overall table game wagering, and table game wagering accounted for
approximately 9.8% of overall casino wagering during the period. At December
31, 2002, gaming receivables amounted to $15.3 million before an allowance for
uncollectible gaming receivables of $11.0 million. Management believes that such
allowance is adequate.



                                       7
<PAGE>

       License Agreement. GBHC's rights to the trade name "Sands" (the "Trade
Name") were derived from a license agreement between GBCC and an unaffiliated
third party. Amounts payable by the Sands for these rights were equal to the
amounts paid to the unaffiliated third party. As a result of the Confirmation
Order and the occurrence of the Effective Date and under the terms of the Plan,
GBHC was assigned by High River the rights under a certain agreement with the
owner of the Trade Name to use the Trade Name as of the Effective Date. High
River received no payments for its assignment of these rights. Payment is made
directly to the owner of the Trade Name. The calculation of the license fee is
the same as under the previous agreement. For the year ended December 31, 2002,
the license fee amounted to $272,000. For the year ended December 31, 2001, such
charges amounted to $268,000.

       Employees and Labor Relations. In Atlantic City, all employees, except
certain hotel employees, must be licensed under the Casino Act. Due to the
seasonality of the operations of the Sands, the number of employees varies
during the course of the year. At December 31, 2002, the Sands had approximately
2,500 employees. The Sands has collective bargaining agreements with three
unions that represent approximately 1,000 employees, most of whom are
represented by the Hotel, Restaurant Employees and Bartenders International
Union, AFL-CIO, Local 54. The collective bargaining agreement with Local 54
expires in September 2004. The collective bargaining agreements with the
Carpenters, Local 623 and Entertainment Workers, Local 68 expire in April and
July 2005, respectively. Management considers its labor relations to be good.

Casino Regulation

       Casino gaming is strictly regulated in Atlantic City under the Casino Act
and the regulations of the Commission, which affect virtually all aspects of the
operations of the Sands. The Casino Act and regulations affecting Atlantic City
casino licensees concern primarily the financial stability, integrity and
character of casino operators, their employees, their debt and equity security
holders and others financially interested in casino operations; the nature of
casino/hotel facilities; the operation methods (including rules of games and
credit granting procedures); and financial and accounting practices used in
connection with casino operations. A number of these regulations require
practices that are different from those in casinos in Nevada and elsewhere, and
some of these regulations result in casino operating costs greater than those in
comparable facilities in Nevada and elsewhere.

       Casino Licenses. The Casino Act requires that all casino owners and
management contractors be licensed by the Commission and that all employees
(except for certain non-casino related job positions), major shareholders and
other persons or entities financially interested in the casino operation be
either licensed or approved by the Commission. A license is not transferable and
may be revoked or suspended under certain circumstances by the Commission. A
plenary license authorizes the operation of a casino with the games authorized
in an operation certificate issued by the Commission, and the operation
certificate may be issued only on a finding that the casino conforms to the
requirements of the Casino Act and applicable regulations and that the casino is
prepared to entertain the public. Under such determination, GBHC has been issued
a plenary casino license. The plenary license issued to the Sands was renewed by
the Commission in September 2000 for a period of four years.

       The Casino Act provides for a casino license fee of not less than
$200,000 based upon the cost of the investigation and consideration of the
license application, and a renewal fee of not less than $100,000 or $200,000 for
a one year or four year renewal, respectively, based upon the cost of
maintaining control and regulatory activities. In addition, a licensee must pay
annual taxes of 8% of casino win (as defined in the Casino Act), net of a
provision for uncollectible gaming debts of up to 4% of casino win ("Gross
Revenue"). During the years ended December 31, 2002, 2001 and 2000, the taxes
and the license and other fees incurred by the Sands amounted to $21.3 million,
$23.0 million and $22.7 million, respectively.



                                       8
<PAGE>

       The Casino Act also requires casino licensees to pay an investment
alternative tax of 2.5% of Gross Revenue (the "2.5% Tax") or, in lieu thereof,
to make quarterly deposits of 1.25% of quarterly Gross Revenue with the CRDA
(the "Deposits"). The Deposits are then used to purchase bonds at below-market
interest rates from the CRDA or to make qualified investments approved by the
CRDA. The CRDA administers the statutorily mandated investments required to be
funded by casino licensees and is required to expend the monies received by it
for eligible projects as defined in the Casino Act. The Sands has elected to
make the Deposits with the CRDA rather than pay the 2.5% Tax.

         The Sands has, from time to time, contributed certain amounts held in
escrow by the CRDA to fund CRDA sponsored projects. During 2002, the Sands
contributed $925,000 of its escrowed funds to CRDA sponsored projects and
received $116,000 in a cash refund. In 2001, the Sands contributed $322,000 of
its escrowed funds to CRDA sponsored projects and received $80,000 in a cash
refund and $84,000 in waivers of certain future Deposit obligations. During the
three months ended December 31, 2000, the Sands contributed $3,310,000 of its
escrowed funds to a CRDA sponsored project and received a cash refund of
$828,000 in consideration for the contribution. Prior to this, the CRDA had
granted the Sands waivers of certain of its future Deposit obligations in
consideration of similar contributions. The Sands had made such contributions of
Deposits during the nine months ended September 30, 2000, totaling $142,000,
resulting in waivers granted by the CRDA totaling $72,000. Intangible assets
aggregating $811,000 and $1,010,000, respectively, have been recognized on the
accompanying consolidated balance sheets in other assets at December 31, 2002
and 2001, and are being amortized over a period of ten years commencing with the
completion of the projects. Amortization of other assets totaled $199,000,
$202,000, $51,000 and $151,000 for the years ended December 31, 2002 and 2001,
the three months ended December 31, 2000 and the nine months ended September 30,
2000, respectively.

       The Casino Act also imposes certain restrictions upon the ownership of
securities issued by a corporation that holds a casino license or is a holding
company of a corporate licensee. Among other restrictions, the sale, assignment,
transfer, pledge or other disposition of any security issued by a corporate
licensee or holding company is subject to the regulation of the Commission. The
Commission may require divestiture of any security held by a disqualified holder
such as an officer, director or controlling stockholder who is required to be
qualified under the Casino Act.

       Note holders are also subject to the qualification provisions of the
Casino Act and may, in the sole discretion of the Commission, be required to
make filings, submit to regulatory proceedings and qualify under the Casino Act.
If an investor is an "Institutional Investor" such as a retirement fund for
governmental employees, a registered investment company or adviser, a collective
investment trust, or an insurance company, then, in the absence of a prima facie
showing by the New Jersey Division of Gaming Enforcement that the "Institutional
Investor" may be found unqualified, the Commission shall grant a waiver of this
qualification requirement with respect to publicly traded debt or equity
securities of parent companies or affiliates if the investor will own (i) less
than 10% of the common stock of the company in question on a fully diluted
basis, or (ii) less than 20% of such company's overall indebtedness provided the
investor owns less than 50% of an outstanding issue of indebtedness of such
company; the Commission, upon a showing of good cause, may, in its sole
discretion, grant a waiver of qualification to an "Institutional Investor" not
satisfying the above percentage criteria. An "Institutional Investor" must also
purchase securities for investment and have no intent to influence the
management or operations of such company. The Commission may, in its sole
discretion, grant a waiver of the qualification requirement to investors not
qualifying as "Institutional Investors" under the Casino Act if such investors
will own less than 5% of the publicly traded common stock of such company on a
fully diluted basis or less than 15% of the publicly traded outstanding
indebtedness of such company.


                                       9
<PAGE>

ITEM 2.  PROPERTIES

       The Sands is located in Atlantic City, New Jersey on approximately 6.1
acres of land one-half block from the Boardwalk at Brighton Park between Indiana
Avenue and Dr. Martin Luther King, Jr. Boulevard. The Sands facility currently
consists of a casino and simulcasting facility with approximately 79,000 square
feet of gaming space containing approximately 2,322 slot machines and
approximately 40 table games; a hotel with 637 rooms (including 57 suites); six
restaurants; one cocktail lounge; two private lounges for invited guests; an
800-seat cabaret theater; retail space; an adjacent nine-story office building
with approximately 77,000 square feet of office space for its executive,
financial and administrative personnel; the "People Mover", an elevated,
enclosed, one-way moving sidewalk connecting the Sands to the Boardwalk using
air rights granted by an easement from the City of Atlantic City and a garage
and surface parking for approximately 1,750 vehicles.

       In April 2000, GBHC entered into an agreement with the entities
controlling the Claridge to acquire the Claridge Administration Building. The
purchase price was $3.5 million, consisting of $1.5 million in cash at closing
and $2.0 million consideration tendered through the elimination for 40 months of
a $50,000 monthly license fee paid by the Claridge to GBHC, under an agreement
between the Claridge and GBHC governing the development and operation of the
"People Mover" leading from the Boardwalk to the Sands and the Claridge. The
present value of the $2.0 million consideration has been recorded in other
current and other noncurrent liabilities sections of the balance sheet.

       The Sands entered into a long-term lease of the Madison House Hotel (the
"Madison House"). The initial lease period is from December 2000 to December
2012 with lease payments ranging from $1.8 million per year to $2.2 million per
year. The Madison House is physically connected at two floors to the existing
Sands casino-hotel complex. The Sands recently completed renovations to upgrade
and combine the rooms of the Madison House into a total of 113 suites and 13
single rooms. It is the intention of the Sands to maintain and operate the
Madison House at the same quality level as the Sands.

ITEM 3.  LEGAL PROCEEDINGS

       The Company filed tax appeals with the New Jersey Tax Court (the "NJ Tax
Court") challenging the amount of its real property assessment for calendar
years 1996 through 2001, inclusive, and filed an appeal for calendar year 2002
with the Atlantic County Tax Board ("AC Tax Board"). The City of Atlantic City
also appealed the amount of assessments for the years 1996 through 2001,
inclusive, and filed a cross-petition with the Atlantic County Tax Board for
calendar year 2002. The AC Tax Board declined to hear the appeal and therefore
the appeal and cross-petition for calendar year 2002 is now pending before the
NJ Tax Court. The Sands has also filed a tax appeal for calendar year 2003 with
the New Jersey Tax Court.

       The Company discovered certain failures relating to currency transaction
reporting and self-reported the situation to the applicable regulatory agencies.
The Company conducted an internal examination of the matter and the New Jersey
Division of Gaming Enforcement conducted a separate review. The Company has
revised internal control processes and taken other measures to address the
situation. The Company may be subjected to regulatory sanctions, which may
include cash penalties. However, the potential cash penalties cannot be
estimated at this time.



                                       10
<PAGE>

        The Company is a party in various legal proceedings with respect to the
conduct of casino and hotel operations and has received employment related
claims. Although a possible range of losses cannot be estimated, in the opinion
of management, based upon the advice of counsel, the Company does not expect
settlement or resolution of these proceedings or claims to have a material
adverse impact upon the consolidated financial position or results of operations
of the Company, but the outcome of litigation and the resolution of claims is
subject to uncertainties and no assurances can be given. The accompanying
consolidated financial statements do not include any adjustments that might
result from these uncertainties.

       On February 26, 2003, the Sands received a letter from counsel for Mr.
Frederick H. Kraus, Executive Vice President, General Counsel and Secretary,
indicating that he had been retained to represent Mr. Kraus "in regards to a
constructive discharge, breach of contract, severance pay" and other claims.
This matter has been referred to legal counsel for evaluation. Management has
not yet determined whether or not the claims made by Mr. Kraus would, if
adversely determined, materially impact the financial position or results of
operations of the Company.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        On June 19, 2002, the annual meeting of shareholders was held to elect
the Board of Directors and the appointment of new independent auditors. Proxies
were solicited for the annual meeting under Regulation 14A.


                                     PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER
         MATTERS

       GB Property Funding's voting securities consist of 100 shares of common
stock with a par value of $1.00 per share, all of which are owned by Holdings.

       GBHC's voting securities consist of 100 shares of common stock with no
par value per share, all of which are owned by Holdings.

       Prior to the Effective Date, Holdings' voting securities consisted of
1,000 shares of common stock with a par value of $1.00 per share. All 1,000
shares were owned by PCC until December 31, 1998. Effective after December 31,
1998, PCC transferred 21% of its stock ownership in Holdings to PBV. As a result
of a confirmed Plan of Reorganization of PCC and others in October 1999, the
remaining 79% stock interest of PCC in Holdings was transferred to GBLLC. Upon
the Effective Date, the stock of Holdings owned by PBV and GBLLC was cancelled.
As of the Effective Date, an aggregate of 10,000,000 shares of New Common Stock
were issued and outstanding.

       The Company has not paid any dividends in the past and has no plans to
pay any in the future.

       The New Common Stock (trading symbol "GBH") and the New Notes were listed
and commenced trading on the American Stock Exchange ("AMEX") on March 27, 2001.
To Holdings' knowledge, other than certain of the shares of the New Common Stock
owned by Icahn (77.49%), and Merrill Lynch (20.68%), substantially all of the
shares of the New Common Stock are held by Cede & Co. as nominee.


                                       11
<PAGE>


       The range of high and low market prices for the New Common Stock on the
American Stock Exchange Composite Tape from March 27, 2001 through December 31,
2002 is as follows:

       Quarter Ended:                                   High            Low
       -------------                                    ----            ---

       June 30, 2001                                   $12.12          $3.25
       September 30, 2001                              $ 3.25          $1.66
       December 31, 2001                               $ 2.93          $1.50

       March 31, 2002                                  $ 3.11          $2.48
       June 30, 2002                                   $ 3.15          $2.22
       September 30, 2002                              $ 3.16          $2.25
       December 31, 2002                               $ 3.19          $2.62

ITEM 6.  SELECTED FINANCIAL DATA

       GB Holdings, Inc. and Subsidiaries

       The following table sets forth selected financial information for
Holdings, and is qualified in its entirety by, and should be read in conjunction
with, Holdings' Financial Statements and Notes thereto contained elsewhere
herein. The data as of December 31, 2002 and 2001 and for the years ended
December 31, 2002, 2001, the three months ended December 31, 2000 and the nine
months ended September 30, 2000 have been derived from the audited financial
statements of Holdings contained in Item 8 below.

       The Company implemented SOP 90-7 and, therefore, adopted "fresh start
reporting" as of September 30, 2000. The Company's emergence from its Chapter 11
proceedings resulted in a new reporting entity with no retained earnings or
accumulated deficit as of September 30, 2000. Accordingly, the Company's
consolidated financial statements for periods prior to September 30, 2000 are
not comparable to consolidated financial statements presented on or subsequent
to September 30, 2000. Column headings have been included on the accompanying
Consolidated Statement of Operations Data and Consolidated Balance Sheet Data to
distinguish between the pre-reorganization and post-reorganization entities. A
black line has been drawn on the accompanying consolidated financial statements
data to distinguish between the pre-reorganization and post-reorganization
entities.



                                       12
<PAGE>

                       GB HOLDINGS, INC. AND SUBSIDIARIES
        (dollars in thousands except income per share and common shares)

<TABLE>
<CAPTION>
Statement of Operations Data:
                                                    Post-reorganization                           Pre-reorganization
                                     ----------------------------------------------  -----------------------------------------------
                                                                    October 1, 2000  January 1, 2000
                                       Year Ended      Year Ended       through          through       Year Ended       Year Ended
                                       December 31,   December 31,    December 31,    September 30,   December 31,     December 31,
                                          2002            2001            2000           2000 (1)       1999 (1)         1998 (1)
                                     --------------  --------------  --------------  --------------  --------------  --------------
<S>                                  <C>             <C>             <C>             <C>             <C>             <C>
Net revenues ....................... $      193,473  $      215,749  $       46,711  $      162,463  $      209,811  $      199,918
                                     --------------  --------------  --------------  --------------  --------------  --------------

Expenses:
      Departmental .................        159,714         185,255          45,427         131,985         178,188         165,106
      General and administrative ...         12,799          11,512           2,175           7,663          10,586          12,497
      Depreciation and
        amortization................         15,457          12,133           3,834           9,414          16,215          12,795
      Loss on impairment of
        assets .....................          1,282            --              --              --              --              --
      Loss (gain) on disposal of
        assets .....................            185              20              11              10            (259)           (252)
                                     --------------  --------------  --------------  --------------  --------------  --------------
          Total Expenses ...........        189,437         208,920          51,447         149,072         204,730         190,146
                                     --------------  --------------  --------------  --------------  --------------  --------------
      Income (loss) from
         operations.................          4,036           6,829          (4,736)         13,391           5,081           9,772
                                     --------------  --------------  --------------  --------------  --------------  --------------
Non-operating income (expense):
      Interest income ..............          1,067           2,671           1,338             518             649             961
      Interest expense .............        (11,640)        (11,279)         (3,133)           (366)           (295)           (313)
      Reorganization costs .........           --              --                34          (2,807)         (2,154)         (4,069)
                                     --------------  --------------  --------------  --------------  --------------  --------------
          Total non-operating
             expense, net ..........        (10,573)         (8,608)         (1,761)         (2,655)         (1,800)         (3,421)
                                     --------------  --------------  --------------  --------------  --------------  --------------
Income (loss) before income taxes
      and extraordinary item .......         (6,537)         (1,779)         (6,497)         10,736           3,281           6,351
Income tax provision ...............           (784)            (55)           --              --              (133)           --
                                     --------------  --------------  --------------  --------------  --------------  --------------
Income (loss) before extraordinary
   item ............................         (7,321)         (1,834)         (6,497)         10,736           3,148           6,351
Extraordinary gain on prepetition
      debt discharge ...............           --              --              --            14,795            --              --
                                     --------------  --------------  --------------  --------------  --------------  --------------
Net income (loss) .................. $       (7,321) $       (1,834) $       (6,497) $       25,531  $        3,148  $        6,351
                                     ==============  ==============  ==============  ==============  ==============  ==============
Basic/diluted income (loss) per
   common share:
      Before extraordinary item .... $        (0.73) $        (0.18) $        (0.65) $         1.07  $         0.32  $         0.64
      Extraordinary item ...........           --              --              --              1.48            --              --
Net income (loss) per common
   share ........................... $        (0.73) $        (0.18) $        (0.65) $         2.55  $         0.32  $         0.64
                                     ==============  ==============  ==============  ==============  ==============  ==============
      Weighted avaerage common
        shares .....................                                                       (2)             (2)             (2)
          outstanding ..............     10,000,000      10,000,000      10,000,000      10,000,000      10,000,000      10,000,000
                                     ==============  ==============  ==============  ==============  ==============  ==============
</TABLE>

<TABLE>
<CAPTION>
Balance Sheet Data:                               Post-reorganization                             Pre-reorganization
                                     ----------------------------------------------  ----------------------------------------------
                                      December 31,    December 31,     December 31,   September 30,   December 31,     December 31,
                                          2002            2001            2000            2000            1999            1998
                                     --------------  --------------  --------------  --------------  --------------  --------------
<S>                                  <C>             <C>             <C>             <C>             <C>             <C>
Total assets ....................... $      244,712  $      255,922  $      264,247  $      272,676  $      208,416  $      199,148
Total long-term debt ...............        110,000         110,371         110,838         110,858         197,898         198,234
Shareholder's equity (deficit) .....        109,348         116,669         118,503         125,000         (39,593)        (42,741)
</TABLE>

----------

(1)   On January 5, 1998, Holdings, GB Property Funding and GBHC filed petitions
      for relief under Chapter 11 of the United States Bankruptcy Code in the
      United States Bankruptcy Court for the District of New Jersey. The accrual
      of interest expense on the First Mortgage Notes, the Subordinated Notes
      (as hereafter defined) and other affiliate advances for periods subsequent
      to the filing was suspended.

(2)   Income (loss) per share information is presented on a pro forma basis for
      periods presented prior to the Effective Date.

                                       13
<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS

       This Annual Report on Form 10-K contains forward-looking statements about
the business, financial condition and prospects of Holdings, GB Property Funding
and GBHC. The actual results could differ materially from those indicated by the
forward-looking statements because of various risks and uncertainties. Such
risks and uncertainties are beyond management's ability to control and, in many
cases, cannot be predicted by management. When used in this Annual Report on
Form 10-K, the words "believes", "estimates", "anticipates", "expects",
"intends" and similar expressions as they relate to Holdings, GB Property
Funding and GBHC or its management are intended to identify forward-looking
statements (see "Private Securities Litigation Reform Act" below).

LIQUIDITY AND CAPITAL RESOURCES

        Operating Activities

        At December 31, 2002, the Company had cash and cash equivalents of $50.6
million. The Company generated $9.7 million of net cash from operations during
the year ended December 31, 2002 compared to $5.7 million during the same prior
year period. Despite a net loss in 2002, depreciation and amortization expense
of $15.5 million and a decrease in accounts receivables of $2.4 million
contributed to the positive cash flow from operations. During 2002, based upon a
periodic review of long-lived assets for impairment in conjunction with a review
of the Company's marketing programs and product mix, certain expenditures
incurred for property expansion plans, that were included in construction in
progress, were determined to be unusable and resulted in a loss on asset
impairment in the amount of $1.3 million.

        Investing Activities

        Capital expenditures at the Sands for the year ended December 31, 2002
amounted to approximately $14.1 million. In order to enhance its competitive
position in the market place, the Sands may determine to incur additional
substantial costs and expenses to maintain, improve and expand its facilities
and operations. Management anticipates that capital expenditures for 2003 will
be approximately $14.9 million. The Company may require additional financing in
connection with those activities.

       The Sands is required by the Casino Act to make certain quarterly
deposits based on gross revenue with the Casino Reinvestment Development
Authority ("CRDA") in lieu of a certain investment alternative tax. Deposits for
the year ended December 31, 2002 amounted to $2.5 million. The Sands has agreed
to contribute certain of its future investment obligations to the CRDA in
connection with the renovation related to the Atlantic City Boardwalk Convention
Center. The projected total contribution will amount to $6.9 million, which will
be paid through 2011 based on an estimate of certain of the Sands' future CRDA
deposit obligations. As of December 31, 2002, the Sands had satisfied $2.0
million of this obligation.

        Financing Activities

        During 2002, the Company repaid $371,000 in long-term debt. There were
no other financing activities during the year ended December 31, 2002.



                                       14
<PAGE>

        As of December 31, 2002 the only scheduled payment of long-term debt is
the $110 million for New Notes, due September 29, 2005.

        Summary

        Management believes that cash flows generated from operations during
2002, as well as available cash reserves, will be sufficient to meet its
operating plan and provide for scheduled capital expenditures. However, any
significant other capital expenditures may require additional financing.

        Critical Accounting Policies and Estimates

        The Company's discussion and analysis of its results of operations and
financial condition are based upon its consolidated financial statements that
have been prepared in accordance with accounting principles generally accepted
in the United States of America ("US GAAP"). The preparation of financial
statements in conformity with US GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses, and the disclosure of contingent assets and liabilities. Estimates
and assumptions are evaluated on an ongoing basis and are based on historical
and other factors believed to be reasonable under the circumstances. The results
of these estimates may form the basis of the carrying value of certain assets
and liabilities and may not be readily apparent from other sources. Actual
results, under conditions and circumstances different from those assumed, may
differ from estimates. The impact and any associated risks related to estimates,
assumptions, and accounting policies are discussed within Management's
Discussion and Analysis of Results of Operations and Financial Condition, as
well as in the Notes to the Consolidated Financial Statements, if applicable,
where such estimates, assumptions, and accounting policies affect the Company's
reported and expected financial results.

        The Company believes the following accounting policies are critical to
its business operations and the understanding of results of operations and
affect the more significant judgments and estimates used in the preparation of
its consolidated financial statements:

        Allowance for Doubtful Accounts - The Company maintains accounts
receivable allowances for estimated losses resulting from the inability of its
customers to make required payments. The adequacy of the allowance is determined
by management based on a periodic review of the receivable portfolio. Additional
allowances may be required if the financial condition of the Company's customers
deteriorates.

        Commitments and Contingencies - Litigation - On an ongoing basis, the
Company assesses the potential liabilities related to any lawsuits or claims
brought against the Company. While it is typically very difficult to determine
the timing and ultimate outcome of such actions, the Company uses its best
judgment to determine if it is probable that it will incur an expense related to
the settlement or final adjudication of such matters and whether a reasonable
estimation of such probable loss, if any, can be made. In assessing probable
losses, the Company makes estimates of the amount of insurance recoveries, if
any. The Company accrues a liability when it believes a loss is probable and the
amount of loss can be reasonably estimated. Due to the inherent uncertainties
related to the eventual outcome of litigation and potential insurance recovery,
it is possible that certain matters may be resolved for amounts materially
different from any provisions or disclosures that the Company has previously
made.



                                       15
<PAGE>

        Impairment of Long-Lived Assets - The Company periodically reviews
long-lived assets for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable.
Assumptions and estimates used in the determination of impairment losses, such
as future cash flows and disposition costs, may affect the carrying value of
long-lived assets and possible impairment expense in the Company's consolidated
financial statements.

        Self-Insurance - The Company retains the obligation for certain losses
related to customer's claims of personal injuries incurred while on the Company
property. The Company accrues for outstanding reported claims, claims that have
been incurred but not reported and projected claims based upon management's
estimates of the aggregate liability for uninsured claims using historical
experience, an adjusting company's estimates and the estimated trends in claim
values. Although management believes it has the ability to adequately project
and record estimated claim payments, it is possible that actual results could
differ significantly from the recorded liabilities.

        Allowance for Obligatory Investments - The Company maintains obligatory
investment allowances for its investments made in satisfaction of its CRDA
obligation. The obligatory investments may ultimately take the form of CRDA
issued bonds, which bear interest at below market rates, direct investments or
donations. CRDA bonds bear interest at approximately one-third below market
rates. Management bases its reserves on the type of investments the obligation
has taken or is expected to take. Donations of the Sands' quarterly deposits to
the CRDA have historically yielded a 51% future credit or refund of obligations.
Therefore, management has reserved the predominant balance of its obligatory
investments at between 33% and 49%.


                                       16
<PAGE>


        RESULTS OF OPERATIONS

        Gaming Operations

        Information contained herein, regarding Atlantic City casinos other than
the Sands, was obtained from reports filed with the Commission.

        The following table sets forth certain unaudited financial and operating
data relating to the Sands' and all other Atlantic City casinos' capacities,
volumes of play, hold percentages and revenues:

<TABLE>
<CAPTION>
                                                                            Year Ended December 31,
                                                            -------------------------------------------------------
                                                                 2002                2001                2000
                                                            ---------------     ---------------     ---------------
                                                                            (Dollars In Thousands)
<S>                                                         <C>                 <C>                 <C>
Units: (at year-end)
      Table Games   - Sands                                              40                  69                  92
                    - Atlantic City (ex. Sands)                       1,167               1,061               1,238
      Slot Machines - Sands                                           2,322               2,060               1,987
                    - Atlantic City (ex. Sands)                      35,795              35,423              34,291
Gross Wagering (1)
      Table Games   - Sands                                 $       242,731     $       457,992     $       471,769
                    - Atlantic City (ex. Sands)                   6,684,168           6,773,640           7,157,418
      Slot Machines - Sands                                       2,227,830           2,348,180           2,114,444
                    - Atlantic City (ex. Sands)                  38,237,932          36,772,969          35,714,927
Hold Percentages (2)
      Table Games   - Sands                                          15.00%              14.92%              14.09%
                    - Atlantic City (ex. Sands)                      15.73%              15.65%              15.52%
      Slot Machines - Sands                                           7.57%               6.87%               7.58%
                    - Atlantic City (ex. Sands)                       8.08%               8.09%               8.18%
Revenues (2)
      Table Games   - Sands                                 $        36,401     $        68,351     $        66,456
                    - Atlantic City (ex. Sands)                   1,051,103           1,059,881           1,110,512
      Slot Machines - Sands                                         168,697             161,503             160,224
                    - Atlantic City (ex. Sands)                   3,089,067           2,974,610           2,923,224
      Other (3)     - Sands                                           1,319               2,515               3,077
                    - Atlantic City (ex. Sands)                         N/A                 N/A                 N/A
</TABLE>

----------

(1)     Gross wagering consists of the total value of chips purchased for table
        games (excluding poker) and keno wagering (the "Drop") and coins wagered
        in slot machines (the "Handle").
(2)     Casino revenues consist of the portion of gross wagering that a casino
        retains and, as a percentage of gross wagering, is referred to as the
        "hold percentage." The Sands' hold percentages and revenues are
        reflected on an accrual basis. Comparable accrual basis data for the
        remainder of the Atlantic City gaming industry as a whole is not
        available; consequently, industry hold percentages and revenues are
        based on information available from the Commission.
(3)     Consists of revenues from poker and simulcast horse racing wagering.
        Comparable information for the remainder of the Atlantic City gaming
        industry is not available.


                                       17
<PAGE>

        Patron Gaming Volume

        Information contained herein, regarding Atlantic City casinos other than
the Sands, was obtained from reports filed with the Commission.

        Table game drop decreased by $215.3 million (47.0%) during 2002 compared
with 2001 and by $13.8 million (2.9%) in 2001 compared to 2000. By comparison,
according to Commission reports, table game drop at all other Atlantic City
casinos during the same periods decreased 1.3% and 5.4%, respectively. The
decrease in table game drop is attributable to the reduction of the number of
table games from 69 in 2001 to 40 by the end of 2002. The decrease in the number
of table games was the result of a change in business strategy, begun in the
second quarter of 2002 by newly appointed President, Herbert Wolfe, to reduce
the table game business and increase the slot machine business. Historically the
table game business has a lower profit margin percentage than the slot machine
business. The strategy was to focus specifically on the higher profit margin
mass slot player business. The original strategy reduced the number of table
games from 69 to 26. By late in the third quarter of 2002, it became apparent
that this strategy, among other things, could not generate an increase in slot
revenue sufficient to overcome the loss in table revenue. Mr. Wolfe resigned on
September 30, 2002, and Richard Brown was appointed Chief Executive Officer on
October 9, 2002. The Company strategy shifted to, among other things, increase
the number of table games to 40 by the end of 2002. During the second quarter of
2002, there was considerable disruption of the casino floor related to the
removal of table games and their replacement with slot machines. For the year
ended December 31, 2002, the table game hold percentage decreased 0.08
percentage points to 15.0% compared to the same prior year period. The 2001
decrease in table game drop was due to a 25.0% decrease in the number of table
games compared to 2000.

        Slot machine handle decreased $120.4 million (5.1%) during 2002,
compared with 2001 and increased by $234 million (11.1%) in 2001 compared to
2000. By comparison, according to Commission reports, the percentage increase in
slot machine handle for all other Atlantic City casinos for the same periods was
4.0% and 3.0%, respectively. The decreased Sands slot handle during 2002 can be
attributed to the strategic change in the denominational mix of slot machines
from higher denomination, lower hold percentage machines, toward lower
denomination, higher hold percentage machines, which caused the hold percentage
to increase to 7.6% in 2002 from 6.9% in 2001. The number of slot machines
increased 12.7% at the Sands to 2,322 at December 31, 2002 compared to December
31, 2001. On an industry-wide basis, the number of slot machines increased 1.1%
in 2002 compared to 2001.

        Aggregate gaming space at all other Atlantic City casinos increased by
approximately 35,000 square feet (3.0%) at December 31, 2002 compared to
December 31, 2001. The amount of gaming space at the Sands decreased
approximately 209 square feet (0.3%) between periods.

Revenues

        Casino revenues at the Sands decreased by $26.0 million (11.2%) in 2002
compared to 2001 and increased by $2.6 million (1.1%) in 2001 compared to 2000.
The 2002 decrease was due to the $32.1 million decline in table game revenues,
which was a result of the $215.3 million (47.0%) decrease in table game drop.
The decrease in table game drop was primarily due to fewer table games available
during the peak third quarter. Slot revenues increased during 2002 as result of
increased hold percentage despite a decrease in handle of $120.4 million. The
increase in slot machine revenue was not enough to offset the decrease in table
game revenue. As a result, the Company, by the end of 2002, had replaced 14 of
the table games removed in the second quarter of 2002 and shifted its marketing
strategy to focus on the middle to premium slot player business. The increase in
2001 was attributed to increased revenue in both table games and slots. Slot win
increased due to higher handle, despite a lower hold percentage. Table game win
increased due to a higher hold percentage, despite lower drop. The 2001 slot
results were due to a 5.8% increase in the number of slot machines and the
"loosest" slots strategy in effect at that time. The 2001 table game results
were due to a marketing focus that attracted profitable customer categories and
offset the impact of fewer table games.


                                       18
<PAGE>

        Room revenues decreased by $430,000 (3.7%) in 2002 compared to 2001 and
increased by $2.1 million (22.0%) in 2001 compared to 2000. The 2002 decrease is
due to a decrease in occupied room nights and a slightly lower average daily
room rate. The decrease in 2002, occupied room nights is due to a decrease in
complimentary rooms. The increase in 2001 was a result of increased occupied
room nights and a higher average daily room rate. The increase in 2001 occupied
room nights was due to the increase in rooms inventory related to the Madison
House addition.

        Food and beverage revenues decreased $6.1 million (20.8%) in 2002
compared to 2001 and increased by $1.1 million (3.8%) in 2001 compared to 2000.
The 2002 decrease was due to a decrease in the average check of $6.89 (25.6%) as
a result of fewer complimentaries to premium outlets. The increase in 2001 was a
result of an increase in the number of patrons by 42,000 (3.2%).

        Other revenues decreased $944,000 (20.2%) in 2002 compared to 2001 and
increased by $183,000 (4.1%) in 2001 compared to 2000. The 2002 decrease is
predominantly due to the decline in entertainment revenues, $470,000 (47.9%)
which was primarily a result of discontinuation of review shows in 2002. The
increase in 2001 was due to more entertainment revenue offset by a reduction in
parking revenue.

        Promotional Allowances

        Promotional allowances are comprised of (i) the estimated retail value
of goods and services provided free of charge to casino customers under various
marketing programs, (ii) the cash value of redeemable points earned under a
customer loyalty program based on the amount of slot play and (iii) coin and
cash coupons and discounts. As a percentage of casino revenues, promotional
allowances decreased to 24.8% during 2002 compared to 26.8% during 2001 and
27.4% in 2000. The decrease is primarily attributable to the elimination of
marketing programs and other promotional activities that were deemed less
profitable and a continued focus on, and development of, the segments of play
that created more volume with less expense.

        Departmental Expenses

        Casino expenses at the Sands decreased by $25.5 million (15.1%) in 2002
compared to 2001 and increased by $6.3 million in 2001 compared to 2000. The
decrease in casino expenses is primarily due to the reduction of complimentary
costs associated with food and beverage provided free of charge. Casino payroll
expenses decreased due to the reduction in table games. The decrease in the
provision for doubtful accounts expense was caused by a reduction in credit
issuance due to lower table game activity. Lower costs for customer
transportation were a result of reduced volume in air travel and ground
transportation. Reductions in advertising expense and gaming revenue tax also
contributed significantly to the decreases in casino expenses in 2002. The
increase in 2001 was due to increased television advertising and complimentary
expenses.

        Rooms expenses decreased by $406,000 (12.0%) in 2002 compared to 2001
and increased $1.6 million in 2001 compared to 2000. The 2002 decreases were due
to a decrease in housekeeping supplies expense, amenity package costs, linen and
uniform usage, which resulted from fewer occupied room nights and also outside
maintenance contracts. The 2001 increase was due to costs associated with
operating the Madison House, which had no similar costs in 2000.



                                       19
<PAGE>

        Food and beverage expenses increased by $1.1 million (11.2%) in 2002
compared to 2001 and by $837,000 in 2001 compared to 2000. The increases were
due to a smaller share of costs allocated to casino expense as a result of a
decrease in food and beverage complimentaries generated by casino operations.
These were offset slightly by decreases in payroll, benefits and food and
beverage cost of sales as a result of the lower volume. The 2001 increase was
due to higher volume of business offset by a greater allocation of costs to
casino expense.

        Other expenses decreased by $749,000 (22.2%) in 2002 compared to 2001
and by $367,000 in 2001 compared to 2000. The decrease in 2002 is primarily due
to savings resulting from discontinuation of review shows in the theatre. The
2001 decrease was due to promoter fees for special events in 2000 that had no
similar costs in 2001.

        General and Administrative Expenses

        General and administrative expenses increased by $1.3 million (11.2%) in
2002 compared to 2001 and by $1.7 million in 2001 compared to 2000. The 2002
increase was due to costs arising from severance packages and higher costs for
insurance, property taxes and utilities. The increase in 2001 was due to costs
associated with the attempted acquisition of the Claridge Hotel Casino and
severance packages.

        Depreciation and Amortization

        Depreciation and amortization expense increased by $3.3 million (27.4%)
in 2002 compared to 2001 and decreased by $1.1 million in 2001 compared to 2000.
The 2002 increase is a result of the continued investment in and renovation of
the casino, hotel and administrative complex at the Sands. The 2001 decrease was
a result of depreciation expense being impacted by the asset valuation reduction
associated with "fresh start reporting" implemented in September 2000.

        Interest Income and Expense

        Interest income decreased by $1.6 million (60.1%) in 2002 compared to
2001 and increased by $815,000 (43.9%) in 2001 compared to 2002. The decrease in
2002 was due to earnings on decreased cash reserves and lower interest rates.

        Interest expense increased by $361,000 (3.2%) in 2002 compared to 2001
and $7.8 million (222.3%) in 2001 compared to 2000. The 2002 increase is due to
a lower amount of capitalized interest partially offset by the elimination of
debt. The increase in 2001 is due to a full year of interest expense associated
with the New Notes.

        Income Tax Provision

        On July 2, 2002, the Business Tax Reform Act (BTR) was signed into law.
The BTR revises and updates the New Jersey corporation business tax and
establishes filing fees for certain returns. Included in the BTR is a deferral
on the use of State NOL's until tax year 2005. Those State NOL's that would have
been utilized in tax years 2002 and 2003 will be granted a two year extension of
their expiration period. Additionally, the BTR imposes an alternative minimum
assessment ("AMA") based on gross receipts or gross profits. The taxpayer pays
the greater of the AMA or the regular corporate business tax ("CBT") and to the
extent AMA exceeds CBT, an AMA tax credit is generated. The AMA provision is
discontinued for tax years beginning after June 30, 2006 and any remaining AMA
tax credit is allowed as a non-expiring future tax credit carryforward. Due to
various uncertainties, management is unable to determine that realization of the
future tax credit carryforward is more likely than not and, thus, has provided a
valuation allowance for the entire amount at December 31, 2002 and 2001.



                                       20
<PAGE>

       The State income tax provision of $784,000 for the year ended December
31, 2002 includes $774,000 of AMA for GBHC and $10,000 of CBT for GBH.

        Contractual Obligations

        The following table sets forth the contractual obligations of the
Company at December 31, 2002:

<TABLE>
<CAPTION>
                                                                         Payments Due By Period
                                     -----------------------------------------------------------------------------------------------
                                                                                                                          More
                                                           Less than               1-3                 3-5                Than
Contractual Obligations                   Total              1 year               years               years             5 years
-----------------------              ---------------     ---------------     ---------------     ---------------     ---------------

<S>                                  <C>                 <C>                 <C>                 <C>                 <C>
Long-Term Debt                       $   110,000,000     $          --       $   110,000,000     $          --       $          --
Operating Leases:
   Madison House                          19,826,000           1,800,000           5,598,000           3,996,000           8,432,000
   Equipment                                 688,000             336,000             352,000                --                  --
                                     ---------------     ---------------     ---------------     ---------------     ---------------
    Total Contractual Obligations    $   130,514,000     $     2,136,000     $   115,950,000     $     3,996,000     $     8,432,000
                                     ===============     ===============     ===============     ===============     ===============
</TABLE>

        Inflation

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

        Seasonality

        Historically, the Sands' operations have been highly seasonal in nature,
with the peak activity occurring from May to September. Consequently, the
results of operations for the first and fourth quarters are traditionally less
profitable than the other quarters of the fiscal year. In addition, the Sands'
operations may fluctuate significantly due to a number of factors, including
chance. Such seasonality and fluctuations may materially affect casino revenues
and profitability.

        New Accounting Pronouncements

        In November 2002, the FASB issued Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others" ("Interpretation No. 45"). Interpretation
No. 45 requires the disclosure of certain guarantees existing at December 31,
2002. The Company had no guarantees meeting the requirements of Interpretation
No. 45 at December 31, 2002. In addition, Interpretation No. 45 requires the
recognition of a liability for the fair value of the obligation of qualifying
guarantee activities that are initiated or modified after December 31, 2002.
Accordingly, the Company will apply the recognition provisions of Interpretation
No. 45 prospectively to applicable guarantee activities initiated after December
31, 2002.


                                       21
<PAGE>

         On January 1, 2003, the Company will adopt FAS No. 143, "Asset
Retirement Obligations" ("SFAS No. 143"), which provides the accounting
requirements for retirement obligations associated with tangible long-lived
assets. This statement requires entities to record the fair value of a liability
for an asset retirement obligation in the period in which it is incurred. The
adoption of FAS No. 143 is not expected to have a material impact on the
Company's consolidated financial statements.



                                       22
<PAGE>

        In June 2002, FASB issued FAS Statement No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities" ("FAS 146"). FAS 146 nullifies EITF
Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits
and Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)" ("EITF 94-3") and requires that a liability for a cost
associated with an exit or disposal activity be recognized and measured
initially at fair value in the period in which the liability is incurred. Under
EITF 94-3, a liability for an exit cost was recognized at the date of an
entity's commitment to an exit plan. The adoption of FAS 146 is expected to
result in delayed recognition for certain types of costs as compared to the
provisions of EITF 94-3. FAS 146 is effective for new exit or disposal
activities that are initiated after December 31, 2002. FAS 146 will affect the
types and timing of costs included in future restructuring programs, if any, but
is not expected to have a material impact on the Company's financial position or
results of operations.

         On January 1, 2003, the Company will adopt FAS No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure" ("FAS No. 148"), which
provides alternative methods of transition for companies that choose to switch
to the fair value method of accounting for stock options. SFAS No. 148 also
makes changes in the disclosure requirements for stock-based compensation,
regardless of which method of accounting is chosen. The adoption of SFAS No. 148
is not expected to have any impact on the Company's consolidated financial
statements.

        Private Securities Litigation Reform Act

          The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. Certain information included in this
Form 10-K and other materials filed or to be filed by Holdings, GB Property
Funding or GBHC with the Securities and Exchange Commission (as well as
information included in oral statements or other written statements made by such
companies) contains statements that are forward-looking, such as statements
relating to future expansion plans, future construction costs and other business
development activities including other capital spending, economic conditions,
financing sources, competition and the effects of tax regulation and state
regulations applicable to the gaming industry in general or Holdings, GB
Property Funding and GBHC in particular. Such forward-looking information
involves important risks and uncertainties that could significantly affect
anticipated results in the future and, accordingly, such results may differ from
those expressed in any forward-looking statements made by or on behalf of
Holdings, GB Property Funding or GBHC. These risks and uncertainties include,
but are not limited to, those relating to development and construction
activities, dependence on existing management, leverage and debt service
(including sensitivity to fluctuations in interest rates), domestic or global
economic conditions, activities of competitors and the presence of new or
additional competition, fluctuations and changes in customer preference and
attitudes, changes in federal or state tax laws or the administration of such
laws and changes in gaming laws or regulations (including the legalization of
gaming in certain jurisdictions).


                                       23
<PAGE>

        Common Stock Listing

          During the second quarter 2002, the Company was contacted orally by a
representative of the American Stock Exchange (the "Exchange") regarding the
continued listing of its common stock. The Exchange representative initially
advised that the Company might fail to meet the minimum requirements for
continued listing on the Exchange. A representative of the Exchange later
advised the Company in another call that the Exchange would not move to delist
the Company's securities at this time.

Item 7a.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        Market risk is the risk of loss arising from changes in market rates and
prices, such as interest rates and foreign currency exchange rates. The Company
does not have securities subject to interest rate fluctuations and has not
invested in derivative-based financial instruments.






                                       24
<PAGE>


ITEM 8.  INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                                          Page

<S>                                                                                                       <C>
GB Holdings, Inc. and Subsidiaries
   Reports of Independent Public Accountants............................................................  26 - 27
       .................................................................................................  and 61
   Consolidated Balance Sheets of GB Holdings, Inc.
     and Subsidiaries as of December 31, 2002 and 2001 .................................................  28 - 29

   Consolidated Statements of Operations of GB Holdings, Inc.
     and Subsidiaries for the Years Ended December 31, 2002 and 2001 (Post-reorganization),
     the Period October 1, 2000 through December 31, 2000 (Post-reorganization),
     the Period January 1, 2000 through September 30, 2000 (Pre-reorganization).........................   30

   Consolidated Statement of Changes in Shareholder's Equity (Deficit) of GB
     Holdings, Inc. and Subsidiaries for the Years Ended December 31, 2002 and
     2001 (Post-reorganization), Period October 1, 2000 through December 31,
     2000 (Post-reorganization), the Period January 1, 2000
     through September 30, 2000 (Pre-reorganization) ...................................................   31

   Consolidated Statements of Cash Flows of GB Holdings, Inc.
     and Subsidiaries for the Years Ended December 31, 2002 and 2001, the Period October 1,
     2000 through December 31, 2000 (Post-reorganization), the Period January 1,
     2000 through September 30, 2000 (Pre-reorganization)...............................................   32

   Notes to Consolidated Financial Statements of GB Holdings, Inc.
     and Subsidiaries ..................................................................................   33

   Schedule II, Valuation and Qualifying Accounts of GB Holdings, Inc. .
     and Subsidiaries for the Years Ended December 31, 2002 and 2001 (Post-reorganization),
     Period October 1, 2000 through December 31, 2000 (Post-reorganization), the Period
     January 1, 2000 through September 30, 2000 (Pre-reorganization) ...................................   62
</TABLE>



                                       25
<PAGE>


                          Independent Auditors' Report

To the Shareholders of GB Holdings, Inc.:

We have audited the accompanying consolidated balance sheet of GB Holdings, Inc.
and subsidiaries as of December 31, 2002 and the related consolidated statements
of operation, shareholders' equity, and cash flows for the year then ended, as
listed in the accompanying index. In connection with our audit of the 2002
consolidated financial statements, we also have audited the 2002 consolidated
financial statement schedule as listed in the accompanying index. These
consolidated financial statements and financial statement schedule are the
responsibility of the company's management. Our responsibility is to express an
opinion on these consolidated financial statements and consolidated financial
statement schedule based on our audit. The 2001 and 2000 consolidated financial
statements of GB Holdings, Inc. and subsidiaries as listed in the accompanying
index were audited by other auditors who have ceased operations. Those auditors
expressed an unqualified opinion on those consolidated financial statements,
before the revision related to the adoption of Emerging Issues Task Force 01-09
"Accounting for Consideration Given by a Vendor to a Customer (Including a
Reseller of the Vendor's Products)" ("EITF 01-09"), described in Note 3 to the
consolidated financial statements, in their report dated March 8, 2002.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the 2002 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
GB Holdings, Inc. and subsidiaries as of December 31, 2002, and the results of
their operations and their cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States of America. Also
in our opinion, the related 2002 consolidated financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information set forth
therein.

As discussed in Note 3 to the consolidated financial statements, the company
adopted EITF 01-09, as of January 1, 2002.

As discussed above, the 2001 and 2000 consolidated financial statements of GB
Holdings, Inc. and subsidiaries as listed in the accompanying index were audited
by other auditors who have ceased operations. As described in Note 3, these
consolidated financial statements have been revised to include application of
EITF 01-09, which was adopted by the company as of January 1, 2002. In our
opinion, the disclosures required by EITF 01-09 for 2001 and 2000 as discussed
in Note 3 are appropriate. However, we were not engaged to audit, review, or
apply any procedures to the 2001 and 2000 consolidated financial statements of
GB Holdings, Inc. and subsidiaries other than with respect to such disclosures
and, accordingly, we do not express an opinion or any other form of assurance on
the 2001 and 2000 consolidated financial statements taken as a whole.


/s/ KPMG LLP
Short Hills, New Jersey

February 20, 2003




                                       26
<PAGE>

INFORMATION REGARDING PREDECESSOR INDEPENDENT PUBLIC ACCOUNTANTS' REPORT

THE FOLLOWING REPORT IS A COPY OF A PREVIOUSLY ISSUED REPORT BY ARTHUR ANDERSEN
LLP ("ANDERSEN"). THE REPORT HAS NOT BEEN REISSUED BY ANDERSEN NOR HAS ANDERSEN
CONSENTED TO ITS INCLUSION IN THIS ANNUAL REPORT ON FORM 10-K. THE ANDERSEN
REPORT REFERS TO THE CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2000 AND THE
CONSOLIDATED STATEMENTS OF INCOME, SHAREHOLDERS' EQUITY/DEFICIT AND CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1999 (PRE-REORGANIZATION) WHICH ARE NO LONGER
INCLUDED IN THE ACCOMPANYING FINANCIAL STATEMENTS.


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders of GB Holdings, Inc.:

We have audited the accompanying consolidated balance sheets of GB Holdings,
Inc. and subsidiaries (the Company, a Delaware corporation) as of December 31,
2001 and 2000, and the related consolidated statements of operations,
shareholders' equity (deficit) and cash flows for the period ended December 31,
2001 (post-reorganization), the periods from October 1, 2000 through December
31, 2000 (post-reorganization), January 1, 2000 through September 30, 2000
(pre-reorganization) and the period ended December 31, 1999
(pre-reorganization). These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of GB Holdings, Inc.
and subsidiaries as of December 31, 2001 and 2000, and the results of their
operations and their cash flows for the period ended December 31, 2001
(post-reorganization), the periods from October 1, 2000 through December 31,
2000 (post-reorganization), January 1, 2000 through September 30, 2000
(pre-reorganization), and the period ended December 31, 1999
(pre-reorganization) in conformity with accounting principles generally accepted
in the United States.


                                                             ARTHUR ANDERSEN LLP

Roseland, New Jersey
March 8, 2002



                                       27
<PAGE>

                       GB HOLDINGS, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                              (Post-reorganization)

                                     ASSETS

<TABLE>
<CAPTION>
                                                                                          December 31,        December 31,
                                                                                              2002                2001
                                                                                         ---------------     ---------------

<S>                                                                                      <C>                 <C>
Current Assets:
      Cash and cash equivalents                                                          $    50,645,000     $    57,369,000
      Accounts receivable, net of allowances
         of $11,301,000 and $14,406,000, respectively                                          4,976,000           8,911,000

      Inventories                                                                              1,857,000           2,431,000
      Income tax deposits                                                                      1,359,000             759,000
      Prepaid expenses and other current assets                                                3,067,000           2,266,000
                                                                                         ---------------     ---------------
         Total current assets                                                                 61,904,000          71,736,000
                                                                                         ---------------     ---------------

Property and Equipment:
      Land                                                                                    54,344,000          54,814,000
      Buildings and improvements                                                              91,657,000          84,890,000
      Equipment                                                                               46,119,000          27,321,000
      Construction in progress                                                                 3,597,000          17,003,000
                                                                                         ---------------     ---------------
                                                                                             195,717,000         184,028,000
      Less - accumulated depreciation and
         amortization                                                                        (26,095,000)        (13,016,000)
                                                                                         ---------------     ---------------
      Property and equipment, net                                                            169,622,000         171,012,000
                                                                                         ---------------     ---------------

Other Assets:
      Obligatory investments, net of allowances of
        $10,028,000 and $9,290,000, respectively                                              10,069,000           9,302,000

      Other assets                                                                             3,117,000           3,872,000
                                                                                         ---------------     ---------------
         Total other assets                                                                   13,186,000          13,174,000
                                                                                         ---------------     ---------------
                                                                                         $   244,712,000     $   255,922,000
                                                                                         ===============     ===============
</TABLE>

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


                                       28
<PAGE>

                       GB HOLDINGS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                              (Post-reorganization)

                      LIABILITIES AND SHAREHOLDER'S EQUITY

<TABLE>
<CAPTION>
                                                                                           December 31,       December 31,
                                                                                              2002                2001
                                                                                         ---------------     ---------------

<S>                                                                                      <C>                 <C>
Current Liabilities
      Current maturities of long-term debt                                               $          --       $        19,000
      Accounts payable                                                                         5,598,000           6,843,000
      Accrued liabilities -
         Salaries and wages                                                                    3,717,000           4,144,000
         Interest                                                                              3,092,000           3,092,000
         Gaming obligations                                                                    3,752,000           4,692,000
         Insurance                                                                             1,805,000           1,670,000
         Other                                                                                 3,955,000           4,602,000
                                                                                         ---------------     ---------------

         Total current liabilities                                                            21,919,000          25,062,000
                                                                                         ---------------     ---------------

Long-Term Debt, net of current maturities                                                    110,000,000         110,352,000
                                                                                         ---------------     ---------------

Other Noncurrent Liabilities                                                                   3,445,000           3,839,000
                                                                                         ---------------     ---------------

Commitments and Contingencies

Shareholder's Equity:
      Preferred stock, $.01 par value per share;
         20,000,000 shares authorized; 0 shares outstanding                                         --                  --
      Common Stock, $.01 par value per share;
        20,000,000 shares authorized;
        10,000,000 shares issued and outstanding                                                 100,000             100,000
      Additional paid-in capital                                                             124,900,000         124,900,000
      Accumulated deficit                                                                    (15,652,000)         (8,331,000)
                                                                                         ---------------     ---------------
         Total shareholder's equity                                                          109,348,000         116,669,000
                                                                                         ---------------     ---------------
                                                                                         $   244,712,000     $   255,922,000
                                                                                         ===============     ===============
</TABLE>

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

                                       29
<PAGE>

                       GB HOLDINGS, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                        Post-reorganization                     Pre-reorganization
                                                      -------------------------------------------------------     ---------------
                                                        Year Ended          Year Ended        October 1, 2000    January 1, 2000
                                                       December 31,         December 31           through             through
                                                           2002                2001          December 31, 2000   September 30, 2000
                                                      ---------------     ---------------     ---------------     ---------------
<S>                                                   <C>                 <C>                 <C>                 <C>
Revenues:
     Casino                                           $   206,417,000     $   232,369,000     $    52,026,000     $   177,731,000
     Rooms                                                 11,140,000          11,570,000           2,307,000           7,173,000
     Food and beverage                                     23,305,000          29,408,000           7,201,000          21,122,000
     Other                                                  3,739,000           4,683,000             951,000           3,549,000
                                                      ---------------     ---------------     ---------------     ---------------
                                                          244,601,000         278,030,000          62,485,000         209,575,000
     Less - promotional allowances                        (51,128,000)        (62,281,000)        (15,774,000)        (47,112,000)
                                                      ---------------     ---------------     ---------------     ---------------
        Net revenues                                      193,473,000         215,749,000          46,711,000         162,463,000
                                                      ---------------     ---------------     ---------------     ---------------
Expenses:
     Casino                                               143,189,000         168,676,000          41,581,000         120,343,000
     Rooms                                                  2,985,000           3,391,000             664,000           2,106,000
     Food and beverage                                     10,915,000           9,814,000           2,292,000           6,685,000
     Other                                                  2,625,000           3,374,000             890,000           2,851,000
     General and administrative                            12,799,000          11,512,000           2,175,000           7,663,000
     Depreciation and amortization                         15,457,000          12,133,000           3,834,000           9,414,000
     Loss on impairment of fixed assets                     1,282,000                --                  --                  --
     Loss on disposal of assets                               185,000              20,000              11,000              10,000
                                                      ---------------     ---------------     ---------------     ---------------
        Total expenses                                    189,437,000         208,920,000          51,447,000         149,072,000
                                                      ---------------     ---------------     ---------------     ---------------
Income (loss) from operations                               4,036,000           6,829,000          (4,736,000)         13,391,000
                                                      ---------------     ---------------     ---------------     ---------------
Non-operating income (expense):
     Interest income                                        1,067,000           2,671,000           1,338,000             518,000
     Interest expense (contractual interest
        of $16,545,000 for the nine months
        ended September 30, 2000)                         (11,640,000)        (11,279,000)         (3,133,000)           (366,000)
     Reorganization and other related costs                      --                  --                34,000          (2,807,000)
                                                      ---------------     ---------------     ---------------     ---------------
     Total non-operating expense, net                     (10,573,000)         (8,608,000)         (1,761,000)         (2,655,000)
                                                      ---------------     ---------------     ---------------     ---------------
Income (loss) before income taxes,
     and extraordinary items                               (6,537,000)         (1,779,000)         (6,497,000)         10,736,000
     Income tax provision                                    (784,000)            (55,000)               --                  --
                                                      ---------------     ---------------     ---------------     ---------------
     Income (loss) before extraordinary items              (7,321,000)         (1,834,000)         (6,497,000)         10,736,000
     Extraordinary gain on prepetition debt
          discharge                                              --                  --                  --            14,795,000
                                                      ---------------     ---------------     ---------------     ---------------
Net income  (loss)                                    $    (7,321,000)    $    (1,834,000)    $    (6,497,000)    $    25,531,000
                                                      ===============     ===============     ===============     ===============
Basic/diluted loss per common share                   $         (0.73)    $         (0.18)    $         (0.65)
                                                      ===============     ===============     ===============
Weighted average common shares outstanding                 10,000,000          10,000,000          10,000,000
                                                      ===============     ===============     ===============
</TABLE>

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


                                       30
<PAGE>

                       GB HOLDINGS, INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF CHANGES
                        IN SHAREHOLDER'S EQUITY (DEFICIT)
      For the Year ended December 31, 2002 and 2001 (Post-reorganization),
 For the Period October 1, 2000 through December 31, 2000 (Post-reorganization),
         January 1, 2000 through September 30, 2000 (Pre-reorganization)


<TABLE>
<CAPTION>
                                                                                                Additional
                                                                  Common Stock                    Paid-in           Accumulated
                                                           Shares             Amount              Capital             Deficit
                                                      ---------------     ---------------     ---------------     ---------------

<S>                                                   <C>                 <C>                 <C>                 <C>
BALANCE, January 1, 2000                                        1,000               1,000          27,946,000         (67,540,000)
      Net Income Pre-reorganization                              --                  --                  --            25,531,000
      Cancellation of old common stock
        pursuant to the plan for reorganization                (1,000)             (1,000)              1,000                --
      Issuance of new common stock pursuant
        to the plan for reorganization                     10,000,000             100,000          64,954,000                --
      Elimination of accumulated deficit
        pursuant to the plan of reorganization                   --                  --           (42,009,000)         42,009,000
      Additional paid in capital pursuant to the
        plan of reorganization                                   --                  --            74,008,000                --
                                                      ---------------     ---------------     ---------------     ---------------

BALANCE, September 30, 2000                                10,000,000             100,000         124,900,000                --
      Net Loss Post-reorganization                               --                  --                  --            (6,497,000)
                                                      ---------------     ---------------     ---------------     ---------------

BALANCE, December 31, 2000                                 10,000,000             100,000         124,900,000          (6,497,000)
      Net Loss Post-reorganization                               --                  --                  --            (1,834,000)
                                                      ---------------     ---------------     ---------------     ---------------

BALANCE, December 31, 2001                                 10,000,000     $       100,000     $   124,900,000     $    (8,331,000)
      Net Loss Post-reorganization                               --                  --                  --            (7,321,000)
                                                      ---------------     ---------------     ---------------     ---------------

BALANCE, December 31, 2002                                 10,000,000     $       100,000     $   124,900,000     $   (15,652,000)
                                                      ===============     ===============     ===============     ===============
</TABLE>

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


                                       31
<PAGE>

                       GB HOLDINGS, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                        Post-reorganization                     Pre-reorganization
                                                       -------------------------------------------------------    ---------------
                                                         Year Ended          Year Ended       October 1, 2000     January 1, 2000
                                                         December 31,        December 31,         through             through
                                                            2002                2001         December 31, 2000  September 30, 2000
                                                       ---------------     ---------------     ---------------    ---------------

<S>                                                   <C>                 <C>                 <C>                 <C>
OPERATING ACTIVITIES:
     Net income (loss)                                $    (7,321,000)    $    (1,834,000)    $    (6,497,000)    $    25,531,000
     Adjustments to reconcile net income (loss)
        to net cash provided by (used in)
        operating activities:
        Depreciation and amortization                      15,457,000          12,133,000           3,834,000           9,414,000
        Loss on impairment of fixed assets                  1,282,000                --                  --                  --

        Loss on disposal of assets                            185,000              20,000              11,000              10,000
        Provision for doubtful accounts, net                1,547,000           4,991,000           1,423,000           1,637,000
        Deferred income tax (provision) benefit              (682,000)            292,000                --                  --
        Decrease (increase) in accounts receivable          2,349,000          (2,930,000)         (3,157,000)           (184,000)
        (Decrease) increase in accounts payable
           and accrued expenses                                (3,125)             (5,605)          5,370,000               1,956
        Net change in other current assets and
           liabilities                                         (1,026)             27,000            (405,000)              3,452
        Net change in other noncurrent assets and
           liabilities                                        285,000              (2,580)         (4,708,000)            (11,083)
        Extraordinary gain on prepetition debt
           discharge                                             --                  --                  --           (14,795,000)
                                                      ---------------     ---------------     ---------------     ---------------
           Net cash (used in) provided by
               operating activities                             9,673           5,748,000          (4,129,000)         15,938,000
                                                      ---------------     ---------------     ---------------     ---------------
INVESTING ACTIVITIES:
     Purchase of property and equipment                       (14,058)        (23,095,000)         (2,934,000)        (14,422,000)

     Proceeds from disposition of assets                      320,000               4,000                --                13,000
     Proceeds from sale of obligatory investments             208,000             114,000             111,000             330,000
     Purchase of obligatory investments                    (2,496,000)         (2,838,000)           (803,000)         (2,014,000)
                                                      ---------------     ---------------     ---------------     ---------------
        Net cash used in investing activities             (16,026,000)        (25,815,000)         (3,626,000)        (16,093,000)
                                                      ---------------     ---------------     ---------------     ---------------
FINANCING ACTIVITIES:
     Proceeds from issuance of common stock                      --                  --                  --            65,000,000
     Repayments of long-term debt                            (371,000)           (467,000)            (20,000)            (64,000)
                                                      ---------------     ---------------     ---------------     ---------------
        Net cash (used in) provided by financing
           activities                                        (371,000)           (467,000)            (20,000)         64,936,000
                                                      ---------------     ---------------     ---------------     ---------------
        Net (decrease) increase in cash and cash
           equivalents                                     (6,724,000)        (20,534,000)         (7,775,000)         64,781,000
           Cash and cash equivalents at beginning
              of period                                    57,369,000          77,903,000          85,678,000          20,897,000
                                                      ---------------     ---------------     ---------------     ---------------
           Cash and cash equivalents at end of
              period                                  $    50,645,000     $    57,369,000     $    77,903,000     $    85,678,000
                                                      ===============     ===============     ===============     ===============
</TABLE>

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


                                       32
<PAGE>

                       GB HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(1)    Organization, Business and Basis of Presentation

        GB Holdings, Inc. ("Holdings") is a Delaware corporation and was a
wholly owned subsidiary of Pratt Casino Corporation ("PCC") through December 31,
1998. PCC, a Delaware corporation, was incorporated in September 1993 and was
wholly owned by PPI Corporation ("PPI"), a New Jersey corporation and a wholly
owned subsidiary of Greate Bay Casino Corporation ("GBCC"). Effective after
December 31, 1998, PCC transferred 21% of the stock ownership in Holdings to
PBV, Inc. ("PBV"), a newly formed entity controlled by certain stockholders of
GBCC. As a result of a certain confirmed plan of reorganization of PCC and
others in October 1999, the remaining 79% stock interest of PCC in Holdings was
transferred to Greate Bay Holdings, LLC ("GBLLC"), whose sole member as a result
of the same reorganization was PPI. In February 1994, Holdings acquired Greate
Bay Hotel and Casino, Inc. ("GBHC"), a New Jersey corporation, through a capital
contribution by its then parent. GBHC's principal business activity is its
ownership of the Sands Hotel and Casino located in Atlantic City, New Jersey
(the "Sands"). GB Property Funding Corp. ("GB Property Funding"), a Delaware
corporation and a wholly owned subsidiary of Holdings, was incorporated in
September 1993 as a special purpose subsidiary of Holdings for the purpose of
borrowing funds for the benefit of GBHC. Holdings has no operating activities
and its only source of income is interest on cash equivalent investments.
Holdings only significant assets are its investment in GBHC and its cash and
cash equivalents of $31.8 million and $37.9 million as of December 31, 2002 and
2001, respectively.

       The accompanying consolidated financial statements include the accounts
and operations of Holdings and its subsidiaries (Holdings, GBHC and GB Property
Funding, collectively, the "Company"). All significant intercompany balances and
transactions have been eliminated. Throughout this document, references to Notes
are referring to the Notes to Consolidated Financial Statements contained
herein.

          The Sands is located in Atlantic City, New Jersey on approximately 6.1
acres of land one-half block from the Boardwalk at Brighton Park between Indiana
Avenue and Dr. Martin Luther King, Jr. Boulevard. The Sands facility currently
consists of a casino and simulcasting facility with approximately 79,000 square
feet of gaming space containing approximately 2,322 slot machines and
approximately 40 table games; a hotel with 637 rooms (including 57 suites); six
restaurants; one cocktail lounge; two private lounges for invited guests; an
800-seat cabaret theater; retail space; an adjacent nine-story office building
with approximately 77,000 square feet of office space for its executive,
financial and administrative personnel; the "People Mover", an elevated,
enclosed, one-way moving sidewalk connecting the Sands to the Boardwalk using
air rights granted by an easement from the City of Atlantic City and a garage
and surface parking for approximately 1,750 vehicles.

       On January 5, 1998, the Company filed petitions for relief under Chapter
11 of the United States Bankruptcy Code (the "Bankruptcy Code") in the United
States Bankruptcy Court for the District of New Jersey (the "Bankruptcy Court").
On August 14, 2000, the Bankruptcy Court entered an order (the "Confirmation
Order") confirming the Modified Fifth Amended Joint Plan of Reorganization Under
Chapter 11 of the Bankruptcy Code Proposed by the Official Committee of
Unsecured Creditors and High River Limited Partnership and its affiliates (the
"Plan") for the Company. High River Limited Partnership ("High River") is an
entity controlled by Carl C. Icahn. On September 13, 2000, the New Jersey Casino
Control Commission (the "Commission") approved the Plan. On September 29, 2000,
the Plan became effective (the "Effective Date") (see Note 2). All material
conditions precedent to the Plan becoming effective were satisfied on or before
September 29, 2000. Accordingly, the accompanying consolidated financial
statements have been prepared in accordance with Statement of Position No. 90-7,
"Financial Reporting by Entities in Reorganization under the Bankruptcy Code"
("SOP 90-7"). In addition, as a result of the Confirmation Order and the
occurrence of the Effective Date, and in accordance with SOP 90-7, the Company
has adopted "fresh start reporting" in the preparation of the accompanying
consolidated financial statements. The Company's emergence from Chapter 11
resulted in a new reporting entity with no retained earnings or accumulated
deficit as of September 30, 2000. As a result, the consolidated financial
statements for the periods subsequent to September 30, 2000 reflect the new
basis of accounting and are not comparable to consolidated financial statements
presented prior to September 30, 2000. A black line has been drawn on the
accompanying consolidated financial statements to distinguish between the
pre-reorganization and post-reorganization entities.


                                       33
<PAGE>

                       GB HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


       A significant amount of the Sands' revenues are derived from patrons
living in northern New Jersey, southeastern Pennsylvania and metropolitan New
York City. Competition in the Atlantic City gaming market is intense and
management believes that this competition will continue or intensify in the
future, especially with the expected opening of a new gaming property in
Atlantic City in 2003.

(2)      Financial Reorganization

       On the Effective Date, GB Property Funding's existing debt securities,
consisting of its 10 7/8% First Mortgage Notes due January 15, 2004 (the "Old
Notes") and all of Holdings' issued and outstanding shares of common stock owned
by PBV and GBLLC (the "Old Common Stock"), were cancelled. As of the Effective
Date, an aggregate of 10,000,000 shares of new common stock of Holdings (the
"New Common Stock") were issued and outstanding, and $110,000,000 of 11% First
Mortgage Notes due 2005 were issued by GB Property Funding (the "New Notes").
Holders of the Old Notes received a distribution of their pro rata shares of (i)
the New Notes and (ii) 5,375,000 shares of the New Common Stock (the "Stock
Distribution"). In addition, $65,000,000 in cash was obtained from affiliates of
the majority shareholder.

       Pursuant to SOP 90-7, "fresh start reporting" has been reflected as of
September 30, 2000 in the accompanying consolidated financial statements
because: (i) the sum of the allowed claims, plus postpetition liabilities,
exceeded the reorganization value of the preconfirmation assets of the emerging
entity and (ii) Holdings experienced a change of control (as defined in SOP
90-7). SOP 90-7 requires under these circumstances the creation of a new
reporting entity and the recording of assets and liabilities at their fair
values. In support of the restructuring process, the Company retained an
independent third party to determine, among other things, the value of the
equity of Holdings. This independent third party set the value of the equity
between a range of $11 and $14 per share. The Bankruptcy Court, considering the
testimony of that third party and others offered at the confirmation hearing on
the Plan, accepted this range and used the mid-point of $12.50 per share for the
purpose of determining the value of the unsecured portion of the claim of the
holders of the Old Notes. For these reasons, Holdings has set the value of the
post confirmation assets of the reorganized entity based upon that value of the
equity and the New Notes and by the post petition liabilities assumed. The
resulting difference between the equity, New Notes and post petition liability
assumed and the liabilities subject to compromise and equity eliminated has been
allocated to long term assets based upon a pro rata determination of their fair
values, as required by SOP 90-7.

       The discharge of debt and "fresh start reporting" have been reflected in
the accompanying September 30, 2000 consolidated financial statements. The gain
from discharge of debt has been regarded as an extraordinary item.

       Assuming the reorganization had been effective January 1, 2000,
depreciation and amortization expense would have decreased an estimated
$1,100,000 and interest expense would have increased an estimated $9,008,000 for
the year ended December 31, 2000. On a pro forma basis, reorganization costs of
$2,773,000 and the extraordinary gain on pre-petition debt discharge of
$14,795,000 would not have been reported in 2000.



                                       34
<PAGE>

                       GB HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(3)    Summary of Significant Accounting Policies

       The significant accounting policies followed in the preparation of the
accompanying consolidated financial statements are discussed below. The
consolidated financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America. 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 balance sheets, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

       The accompanying consolidated financial statements include the accounts
and operations of Holdings and its subsidiaries (Holdings, GBHC and GB Property
Funding, collectively, the "Company"). All significant intercompany balances and
transactions have been eliminated. Throughout this document, references to Notes
are referring to the Notes to Consolidated Financial Statements contained
herein.

Casino revenues, promotional allowances and departmental expenses -

        The Sands recognizes the net win from gaming activities (the difference
between gaming wins and losses) as casino revenues. Casino revenues are net of
accruals for anticipated payouts of progressive and certain other slot machine
jackpots. Such anticipated jackpots and payouts are included in gaming
liabilities on the accompanying consolidated balance sheets.

        In 2001, the Emerging Issues Task Force (the "EITF") reached a consensus
on Issue No. 01-09: "Accounting for Consideration Given by a Vendor to a
Customer (Including a Reseller of the Vendor's Products)" ("EITF 01-09"). For a
sales incentive offered voluntarily by a vendor to its patrons, EITF 01-09
requires the vendor to recognize the cost of the sales incentive at the later of
the date at which the related revenue is recorded by the vendor, or the date at
which the sales incentive is offered. Application of EITF 01-09 is required in
annual or interim financial statements for periods beginning after December 15,
2001. EITF 01-09 requires, among other things, that cash or other consideration
provided to customers as part of a transaction is presumed to be a reduction in
revenue unless the vendor is able to establish both that it received or will
receive a separate identifiable benefit and the fair value of the benefit can be
reasonably estimated. The Company offers cash inducements to encourage
visitation and play at the casino and, as the Company was unable to meet the
criteria as discussed in EITF 01-09, these costs have been classified as
promotional allowances on the accompanying consolidated statements of
operations.

        With the adoption of the new standards, the prior year periods presented
have been reclassified to conform to the new presentation. This resulted in a
$20.1 million, $5.1 million and $16.5 million increase in promotional allowances
(and a corresponding reduction in casino expenses) for the year ended December
31, 2001, the three months ended December 31, 2000 and the nine months ended
September 30, 2000, respectively. Application of the requirements of EITF 01-09
do not have an impact on previously reported operating income or net income and
have no impact on the previously reported consolidated financial statements
other than the reclassifications noted above.


                                       35
<PAGE>

                       GB HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


       The estimated value of rooms, food and beverage and other items that were
provided to customers without charge has been included in revenues and a
corresponding amount has been deducted as promotional allowances. The costs of
such complimentaries have been included in casino expenses on the accompanying
consolidated statements of operations. Costs of complimentaries allocated from
the rooms, food and beverage and other operating departments to the casino
department were as follows:

<TABLE>
<CAPTION>
                                                       Post-reorganization                               Pre-reorganization
                             ----------------------------------------------------------------------     --------------------
                                  Year Ended               Year Ended            October 1, 2000           January 1, 2000
                                  December 31,            December 31,               through                  through
                                     2002                     2001              December 31, 2000        September 30, 2000
                             --------------------     --------------------     --------------------     --------------------

<S>                          <C>                      <C>                      <C>                      <C>
Rooms                        $          8,194,000     $          8,139,000     $          1,630,000     $          4,299,000
Food and Beverage                      19,846,000               26,409,000                6,867,000               18,745,000
Other                                   2,223,000                4,614,000                  602,000                3,172,000
                             --------------------     --------------------     --------------------     --------------------
                             $         30,263,000     $         39,162,000     $          9,099,000     $         26,216,000
                             ====================     ====================     ====================     ====================
</TABLE>


Cash and cash equivalents -

       Cash and cash equivalents are generally comprised of cash and investments
with original maturities of three months or less, such as commercial paper,
certificates of deposit and fixed repurchase agreements.

 Allowance for doubtful accounts -

        In its normal course of business the Sands incurs receivables arising
from credit provided to casino customers, hotel customers and accrued interest
receivable. The allowance for doubtful accounts adjusts these gross receivables
to Management's estimate of their net realizable value. The provision for
doubtful accounts charged to expense is determined by Management based on a
periodic review of the receivable portfolio. This provision is based on
estimates, and actual losses may vary from these estimates. The allowance for
doubtful accounts is maintained at a level that Management considers adequate to
provide for possible future losses. Provisions for doubtful accounts amounting
to $1,586,000 and $4,991,000 for the years ended December 31, 2002 and 2001,
respectively, $1,423,000 for the period October 1, 2000 through December 31,
2000 and $1,637,000 for the period January 1, 2000 through September 30, 2000
were recorded in Casino Expenses on the accompanying consolidated statements of
operations.


                                       36
<PAGE>

                       GB HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


 Inventories -

       Inventories are stated at the lower of cost (on a first-in, first-out
basis) or market.

 Property and equipment -

        As of the Effective Date, property and equipment were restated pursuant
to SOP 90-7 (see Note 2) and are being depreciated utilizing the straight line
method over their remaining estimated useful lives.

        Property and equipment purchased after the Effective Date have been
recorded at cost and are being depreciated utilizing the straight-line method
over their estimated useful lives as follows:

       Buildings and improvements                            25-40 years
       Operating equipment                                     3-7 years

       Interest costs related to property and equipment acquisitions are
capitalized during the acquisition period and are being amortized over the
useful lives of the related assets (see Note 11).

 Deferred financing costs -

       The costs of issuing long-term debt, including all related underwriting,
legal, directors and accounting fees, were capitalized and are being amortized
over the term of the related debt issue. Deferred financing costs of $180,000
were incurred in connection with GB Property Funding's offering of $110,000,000
11% New Notes. During 2001, additional costs associated with a Consent
Solicitation by GB Property Funding to modify the original indenture for the
$110,000,000 New Notes were capitalized and are also being amortized over the
remaining term of the New Notes. Total Consent Solicitation costs, including
expenses, amounted to $2,083,000 in 2001 (see Note 4). For the years ended
December 31, 2002 and 2001 and the three months ended December 31, 2000,
amortization of deferred financing costs were $555,000, $174,000 and $10,000
respectively. There was no amortization of deferred financing costs for the nine
months ended September 30, 2000.

 Long-lived assets -

        In 2002, the Company adopted FASB Statement No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" ("FAS No. 144"), which excludes
from the definition of long-lived assets goodwill and other intangibles that are
not amortized in accordance with FAS No. 142. FAS No. 144 requires that
long-lived assets to be disposed of by sale be measured at the lower of carrying
amount or fair value less cost to sell, whether reported in continuing
operations or in discontinued operations. FAS No. 144 also expands the reporting
of discontinued operations to include components of an entity that have been or
will be disposed of rather than limiting such discontinuance to a segment of a
business. The adoption of FAS No. 144 did not have an impact on the Company's
consolidated financial statements.



                                       37
<PAGE>
                       GB HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

       The Company periodically reviews long-lived assets, for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Impairments are recognized when the expected
future undiscounted cash flows derived from such assets are less than their
carrying value. For such cases, losses are recognized for the difference between
the fair value and the carrying amount. Assets to be disposed of by sale or
abandonment, and where management has the current ability to remove such assets
from operations, are recorded at the lower of carrying amount or fair value less
cost of disposition. Depreciation for these assets is suspended during the
disposal period, which is generally less than one year. Assumptions and
estimates used in the determination of impairment losses, such as future cash
flows and disposition costs, may affect the carrying value of long-lived assets
and possible impairment expense in the Company's consolidated financial
statements.

        As of September 30, 2000, assets were valued in accordance with SOP 90-7
(see Note 2). As a result of this and subsequent reviews and adjustment,
Management does not believe that any material impairment currently exists
related to its long-lived assets.

Accrued insurance -

       GBHC is self insured for a portion of its general liability, certain
health care and other liability exposures. A third party insures losses over
prescribed levels. Accrued insurance includes estimates of such accrued
liabilities based on an evaluation of the merits of individual claims and
historical claims experience. Accordingly, GBHC's ultimate liability may differ
from the amounts accrued.

 Income taxes -

       Prior to 1997, Holdings was included in the consolidated federal income
tax return of Hollywood Casino Corporation ("HCC"). Holdings' operations were
included in GBCC's consolidated federal income tax returns for the years ended
December 31, 1998 and 1997, but GBCC agreed to allow Holdings to become
deconsolidated from the GBCC group effective after December 31, 1998. In
accordance therewith, HCC transferred 21% of the stock ownership in Holdings to
PBV, effecting the deconsolidation of Holdings from the GBCC group for federal
income tax purposes (the "Deconsolidation"). Accordingly, beginning in 1999,
Holdings' provision for federal income taxes is calculated and paid on a
consolidated basis with GB Property Funding and GBHC (see Note 5).

       Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted rates
expected to apply to taxable income in the years in which temporary differences
are expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in the tax rates is recognized in income in the period
of the enactment date.

Income (Loss) Per Share

       Financial Accounting Standards No. 128, "Earnings Per Share" (FAS 128),
requires, among other things, the disclosure of basic and diluted earnings per
share for public companies. Since the capital structure of Holdings is simple,
in that no potentially dilutive securities were outstanding during the periods
presented, basic income (loss) per share is equal to diluted income (loss) per
share. Basic income (loss) per share is computed by dividing net income (loss)
by the weighted average number of common shares outstanding.



                                       38
<PAGE>
                       GB HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

        Additionally, FAS 128 requires among other things, the income (loss) per
share effect of extraordinary items and is computed by dividing the
extraordinary item by the weighted average number of common shares outstanding.

        On a pro forma basis, for the period presented prior to the Effective
Date, the income per share would have been as follows:

<TABLE>
<CAPTION>
                                                                                                Pre-reorganization
                                                                                               --------------------
                                                                                                  January 1, 2000
                                                                                                      through
                                                                                                September 30, 2000
                                                                                               --------------------
<S>                                                                                            <C>
 Basic/diluted income per common share:
      Before extraordinary item                                                                $               1.07
      Extraordinary item                                                                                       1.48
 Net income per share                                                                          $               2.55
                                                                                               ====================
 Weighted average common shares
      outstanding                                                                                        10,000,000
                                                                                               ====================
</TABLE>

New Accounting Pronouncements -

         On January 1, 2003, the Company adopted FAS No. 143, "Asset Retirement
Obligations" ("SFAS No. 143"), which provides the accounting requirements for
retirement obligations associated with tangible long-lived assets. This
statement requires entities to record the fair value of a liability for an asset
retirement obligation in the period in which it is incurred. The adoption of FAS
No. 143 is not expected to have a material impact on the Company's consolidated
financial statements.

         In June 2002, the FASB issued FAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities" ("FAS No. 146"). FAS No. 146
nullifies Emerging Issues Task Force ("EITF") Issue No. 94-3, "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring)" ("EITF 94-3")
and requires that a liability for a cost associated with an exit or disposal
activity be recognized and measured initially at fair value in the period in
which the liability is incurred. Under EITF 94-3, a liability for an exit cost
was required to be recognized at the date of an entity's commitment to an exit
plan. The adoption of SFAS No. 146 is expected to result in delayed recognition
for certain types of costs as compared to the provisions of EITF 94-3. FAS No.
146 is effective for new exit or disposal activities that are initiated after
December 31, 2002, and does not affect amounts currently reported in the
Company's consolidated financial statements. FAS No. 146 will affect the types
and timing of costs included in future restructuring programs, if any.

         On January 1, 2003, the Company will adopt FAS No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure" ("FAS No. 148"), which
provides alternative methods of transition for companies that choose to switch
to the fair value method of accounting for stock options. SFAS No. 148 also
makes changes in the disclosure requirements for stock-based compensation,
regardless of which method of accounting is chosen. The adoption of SFAS No. 148
is not expected to have any impact on the Company's consolidated financial
statements.



                                       39
<PAGE>
                       GB HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

         In November 2002, the FASB issued Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others" ("Interpretation No. 45"). Interpretation
No. 45 requires the disclosure of certain guarantees existing at December 31,
2002. The Company had no guarantees meeting the requirements of Interpretation
No. 45 at December 31, 2002. In addition, Interpretation No. 45 requires the
recognition of a liability for the fair value of the obligation of qualifying
guarantee activities that are initiated or modified after December 31, 2002.
Accordingly, the Company will apply the recognition provisions of Interpretation
No. 45 prospectively to applicable guarantee activities initiated after December
31, 2002.

 Reclassifications -

       Certain reclassifications have been made to prior years' consolidated
financial statements to conform to the current year consolidated financial
statement presentations.

(4)    Long-Term Debt

       Long-term debt is comprised of the following:

                                            December 31,      December 31,
                                               2002               2001
                                           -------------      -------------

11% notes, due September 29, 2005 (a)      $ 110,000,000      $ 110,000,000
Other                                               --              371,000
                                           -------------      -------------

Total indebtedness                           110,000,000        110,371,000
Less - current maturities                           --              (19,000)
                                           -------------      -------------

Total long-term debt                       $ 110,000,000      $ 110,352,000
                                           =============      =============


(a)    As a result of the Confirmation Order and the occurrence of the Effective
       Date and under the terms of the Plan, the Old Notes were cancelled and
       replaced with $110,000,000 of 11% notes due 2005 ("New Notes"). Interest
       on the New Notes is payable on March 29 and September 29, beginning March
       29, 2001. The outstanding principal is due on September 29, 2005. The New
       Notes are unconditionally guaranteed, on a joint and several basis, by
       both Holdings and GBHC, and are secured by substantially all of the
       assets, as of the Effective Date, other than cash and gaming receivables
       of Holdings and GBHC.

       The original indenture for the New Notes contained various provisions,
       which, among other things, restricted the ability of Holdings, and GBHC
       to incur certain senior secured indebtedness beyond certain limitations,
       and contained certain other limitations on the ability to merge,
       consolidate, or sell substantially all of their assets, to make certain
       restricted payments, to incur certain additional senior liens, and to
       enter into certain sale-leaseback transactions.



                                       40
<PAGE>

                       GB HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


       In a Consent Solicitation Statement and Consent Form dated September 14,
       2001, GB Property Funding sought the consent of holders of the New Notes
       to make certain changes to the original indenture (the "Modifications").
       The Modifications included, but were not limited to, a deletion of, or
       changes to, certain provisions the result of which would be (i) to permit
       Holdings and its subsidiaries to incur any additional indebtedness
       without restriction, to issue preferred stock without restriction, to
       make distributions in respect of preferred stock and to prepay
       indebtedness without restriction, to incur liens without restriction and
       to enter into sale-leaseback transactions without restriction, (ii) to
       add additional exclusions to the definition of "asset sales" to exclude
       from the restrictions on "asset sales" sale-leaseback transactions,
       conveyances or contributions to any entity in which Holdings or its
       subsidiaries has or obtains equity or debt interests, and transactions
       (including the granting of liens) made in accordance with another
       provision of the Modifications relating to collateral release and
       subordination or any documents entered into in connection with an
       "approved project" (a new definition included as part of the
       Modifications which includes, if approved by the Board of Directors of
       Holdings, incurrence of indebtedness or the transfer of assets to any
       person if Holdings or any of its subsidiaries has or obtain debt or
       equity interests in the transferee or any similar, related or associated
       event, transaction or activity) in which a release or subordination of
       collateral has occurred including, without limitation, any sale or other
       disposition resulting from any default or foreclosure, (iii) to exclude
       from the operation of covenants related to certain losses to collateral,
       any assets and any proceeds thereof, which have been subject to the
       release or subordination provisions of the Modifications, (iv) to permit
       the sale or other conveyances of Casino Reinvestment Development
       Authority investments in accordance with the terms of a permitted
       security interest whether or not such sale was made at fair value, (v) to
       exclude from the operation of covenants related to the deposit into a
       collateral account of certain proceeds of "asset sales" or losses to
       collateral any assets and any proceeds thereof, which have been subject
       to the release or subordination provisions of the Modifications, (vi) to
       add new provisions authorizing the release or subordination of the
       collateral securing the New Notes in connection with, in anticipation of,
       as a result of, or in relation to, an "approved project", and (vii)
       various provisions conforming the text of the original indenture to the
       intent of the preceding summary of the Modifications.

       Holders representing approximately 98% in principal amount of the New
       Notes provided consents to the Modifications. Under the terms of the
       original indenture, the consent of holders representing a majority in
       principal amount of New Notes was a necessary condition to the
       Modifications. Accordingly, GB Property Funding, as issuer, and Holdings
       and GBHC, as guarantors, and Wells Fargo Bank Minnesota, National
       Association, as Trustee, entered into an Amended and Restated Indenture
       dated as of October 12, 2001, containing the Modifications to the
       original indenture described in the Consent Solicitation Statement (the
       "Amended and Restated Indenture"). In accordance with the terms of the
       Consent Solicitation Statement, holders of New Notes, who consented to
       the Modifications and who did not revoke their consents ("Consenting
       Noteholders"), were entitled to $17.50 per $1,000 in principal amount of
       New Notes, subject to certain conditions including entry into the Amended
       and Restated Indenture. Upon entry into the Amended and Restated
       Indenture on October 12, 2001, the Company transferred approximately $1.9
       million to the Trustee for distribution to Consenting Noteholders.

         As of December 31, 2002 the only scheduled payment of long-term debt is
the $110 million for New Notes, due September 29, 2005.



                                       41
<PAGE>

                       GB HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


        Interest paid amounted to $12,128,000 and $12,156,000 for the years
ended December 31, 2002 and 2001, respectively. Interest paid amounted to
$18,000 for the three months ended December 31, 2000 and $57,000 for the nine
months ended September 30, 2000. At December 31, 2002 and 2001, accrued interest
on the New Notes was $3,092,000 and $3,092,000, respectively.

(5)      Income Taxes

        The components of the (provision) benefit for income taxes are as
follows:


<TABLE>
<CAPTION>
                                                       Post-reorganization                          Pre-reorganization
                                              ----------------------------------------------------  -------------------
                                               Year Ended        Year Ended      October 1, 2000    January 1, 2000
                                               December 31,      December 31,        through            through
                                                 2002               2001         December 31, 2000  September 30, 2000
                                               ---------          ---------      -----------------  -----------------
<S>                                            <C>                <C>            <C>                     <C>
Federal income tax (provision) benefit         $                  $                  $                   $
Current                                             --             (292,000)            --                    --
Deferred                                            --              292,000             --                    --

State income tax (provision) benefit
Current                                         (784,000)           (55,000)            --                    --
Deferred                                            --                 --               --                    --
                                               ---------          ---------          -------             ---------
                                               $(784,000)         $ (55,000)         $  --                  $ --
                                               =========          =========          =======             =========

</TABLE>



                                       42
<PAGE>


                       GB HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



         Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes, and the amounts used for income tax purposes. The major
components of deferred tax liabilities and assets as of December 31, 2002 were
as follows:

                                                                      2002
                                                                 ------------

Deferred tax assets:
        Bad debt reserve                                          $  5,137,000
        Deferred financing costs                                     1,053,000
        Group insurance                                                936,000
        Accrued vacation                                               732,000
        Action cash awards accrual                                     499,000
        Jackpot accrual                                                337,000
        Medical reserve                                                109,000
        Other                                                          101,000
        CRDA                                                         5,512,000
        Federal and state net operating loss carryforward            8,163,000
        Grantors trust income                                        3,570,000
        Credit carryforwards                                         2,421,000
        Other                                                          229,000
                                                                  ------------
              Total deferred tax assets                             28,799,000

Deferred tax liabilities:
     Noncurrent:
        Depreciation of plant and equipment                        (18,466,000)
        Chips and tokens                                               (76,000)
                                                                  ------------
              Total deferred tax liabilities                       (18,542,000)
                                                                  ------------

              Less valuation allowance                             (10,257,000)
                                                                  ------------

              Net deferred tax assets (liabilities)               $       --
                                                                  ============


Federal net operating loss carryforwards were generated in 2002 and will
expire in the year 2022. The enactment of the Business Tax Reform Act ("BTR") on
July 2, 2002 deferred New Jersey net operating losses ("State NOL's") set to
expire in 2003, for a two year period. The general business credit carryforwards
expire in 2003 through 2022.

       Financial Accounting Standards No. 109 ("FAS 109") requires that the tax
benefit of NOL's 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 all or a portion of such NOL's and deferred tax assets is more
likely than not, requires the recording of a valuation allowance. Due to various
uncertainties, management is unable to determine that realization of the
Company's deferred tax asset is more likely than not and, thus, has provided a
valuation allowance for the entire amount at December 31, 2002 and 2001.

                                       43
<PAGE>

                       GB HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


       The provision for income taxes differs from the amount computed at the
federal statutory rate as a result of the following:

                                                    Year Ended
                                                 December 31, 2002
                                                 ------------------
Federal statutory rate                                   35.0%
State taxes net of federal benefit                        1.6%
Permanent differences                                    (0.9)%
Tax credits                                              13.2%
Deferred tax valuation allowance                        (57.8)%
Other                                                    (3.1)%
                                                    -----------
                                                        (12.0)%
                                                    ===========

       The Internal Revenue Service has completed the examination of the
consolidated federal income tax returns of HCC for the years 1995 and 1996 and
the consolidated federal income tax returns for GBCC for the years 1997 and 1998
in which the Company was included (the "Audit"). The Company has fulfilled all
obligations pertaining to its share of adjustments stemming from the audit and
accounted for all impacts on its Federal NOL's and credit carryforwards.

       The State of New Jersey is examining the state corporate business tax
return of GBHC for the years 1996, 1997 and 1998. It is management's position
that any claims by the State of New Jersey against GBHC attributable to anytime
prior to January 5, 1998 is barred by applicable provisions of the Bankruptcy
Code. Management is presently unable to estimate the impact of New Jersey's tax
audit on the financial position or results of operations of GBHC.

       As a result of the Confirmation Order and the occurrence of the Effective
Date and under the terms of the Plan, the Company's outstanding debt was
discharged (see Note 2). Pursuant to the Internal Revenue Code, debt that is
cancelled or discharged under the Bankruptcy Code does not generate taxable
income in the current period to the debtor. Instead, certain tax attributes
otherwise available to the debtor are reduced. This attribute reduction is
effective for tax purposes beginning January 1, 2001. Approximately $14.9
million of the Company's tax attributes relating to the tax bases of noncurrent
assets were reduced as of January 1, 2001. Holdings also had a change of
ownership as defined under Internal Revenue Code Section 382 upon the effective
date of the plan. Management currently estimates there will be no significant
limitations on the ability of the Company to use its tax credit carryforwards on
a post confirmation basis as a result of this change of ownership.

        The State income tax provision of $784,000 for the year ended December
31, 2002 includes $774,000 of alternative minimum assessment for GBHC and
$10,000 of corporate business tax for GBH.



                                       44
<PAGE>

                       GB HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(6)    Transactions with related parties

       GBHC's rights to the trade name "Sands" (the "Trade Name") were derived
from a license agreement between GBCC and an unaffiliated third party. Amounts
payable by the Sands for these rights were equal to the amounts paid to the
unaffiliated third party. As a result of the Confirmation Order and the
occurrence of the Effective Date and under the terms of the Plan, GBHC was
assigned by High River the rights under a certain agreement with the owner of
the Trade Name to use the Trade Name as of the Effective Date. High River
received no payments for its assignment of these rights. Payment is made
directly to the owner of the Trade Name. The calculation of the license fee is
the same as under the previous agreement. For the years ended December 31, 2002
and 2001, the license fee amounted to $272,000 and $268,000, respectively. Such
charges amounted to $66,000 for the three months ended December 31, 2000 and
$215,000 during the nine months ended September 30, 2000.

       During the year ended December 31, 2002, GBHC borrowed $6.5 million from
Holdings. This borrowing is eliminated in the consolidation of, and has no
impact on, the accompanying consolidated financial statements.

(7)      New Jersey Regulations and Obligatory Investments

       The Sands conducts gaming operations in Atlantic City, New Jersey and
operates a hotel and several restaurants, as well as related support facilities.
The operation of an Atlantic City casino/hotel is subject to significant
regulatory control. Under the New Jersey Casino Control Act (the "Casino Act"),
GBHC was required to obtain and is required to periodically renew its operating
license. A casino license is not transferable and, after the initial licensing
and two one-year renewal periods, is issued for a term of up to four years. The
plenary license issued to the Sands was renewed by the Commission in September,
2000 and extended through September 2004. The Commission may reopen licensing
hearings at any time. If it were determined that gaming laws were violated by a
licensee, the gaming license could be conditioned, suspended or revoked. In
addition, the licensee and other persons involved could be subject to
substantial fines.

       The Casino Act requires casino licensees to pay an investment alternative
tax of 2.5% of Gross Revenue (the "2.5% Tax") or, in lieu thereof, to make
quarterly deposits of 1.25% of quarterly Gross Revenue with the CRDA (the
"Deposits"). The Deposits are then used to purchase bonds at below-market
interest rates from the CRDA or to make qualified investments approved by the
CRDA. The CRDA administers the statutorily mandated investments made by casino
licensees and is required to expend the monies received by it for eligible
projects as defined in the Casino Act. The Sands has elected to make the
Deposits with the CRDA rather than pay the 2.5% Tax.

       As of December 31, 2002 and 2001, the Sands had purchased bonds totaling
$6,946,000 and $6,980,000, respectively. In addition, the Sands had remaining
funds on deposit and held in escrow by the CRDA at December 31, 2002 and 2001,
of $13,151,000 and $11,612,000, respectively. The bonds purchased and the
amounts on deposit and held in escrow are collectively referred to as
"obligatory investments" on the accompanying consolidated financial statements.

       Obligatory investments at December 31, 2002 and 2001, are net of
accumulated valuation allowances of $10,028,000 and $9,290,000, respectively,
based upon the estimated realizable values of the investments. Provisions for
valuation allowances for the years ended December 31, 2002 and 2001 amounted to
$1,521,000 and $1,341,000, respectively. Provisions for valuation allowances for
the three months ended December 31, 2000 and the nine months ended September 30,
2000 amounted to $243,000 and $1,044,000, respectively.



                                       45
<PAGE>

                       GB HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


       The Sands has, from time to time, contributed certain amounts held in
escrow by the CRDA to fund CRDA sponsored projects. During 2002, the Sands
contributed $925,000 of its escrowed funds to CRDA sponsored projects and
received $116,000 in a cash refund. In 2001, the Sands contributed $322,000 of
its escrowed funds to CRDA sponsored projects and received $80,000 in a cash
refund and $84,000 in waivers of certain future Deposit obligations. During the
three months ended December 31, 2000, the Sands contributed $3,310,000 of its
escrowed funds to a CRDA sponsored project and received a cash refund of
$828,000 in consideration for the contribution. Prior to this, the CRDA had
granted the Sands waivers of certain of its future Deposit obligations in
consideration of similar contributions. The Sands had made such contributions of
Deposits during the nine months ended September 30, 2000, totaling $142,000,
resulting in waivers granted by the CRDA totaling $72,000. Other assets
aggregating $811,000 and $1,010,000, respectively, have been recognized on the
accompanying consolidated balance sheets at December 31, 2002 and 2001, and are
being amortized over a period of ten years commencing with the completion of the
projects. Amortization of other assets totaled $199,000, $202,000, $51,000 and
$151,000 for the years ended December 31, 2002 and 2001, the three months ended
December 31, 2000 and the nine months ended September 30, 2000, respectively.

(8)    Legal Proceedings

        The Company filed tax appeals with the New Jersey Tax Court (the "NJ Tax
Court") challenging the amount of its real property assessment for calendar
years 1996 through 2001, inclusive, and filed an appeal for calendar year 2002
with the Atlantic County Tax Board ("AC Tax Board"). The City of Atlantic City
also appealed the amount of assessments for the years 1996 through 2001,
inclusive, and filed a cross-petition with the Atlantic County Tax Board for
calendar year 2002. The AC Tax Board declined to hear the appeal and therefore
the appeal and cross-petition for calendar year 2002 is now pending before the
NJ Tax Court. The Sands has also filed a tax appeal for calendar year 2003 with
the New Jersey Tax Court and it is expected that the City of Atlantic City will
file a counterclaim.

        The Company discovered certain failures relating to currency transaction
reporting and self-reported the situation to the applicable regulatory agencies.
The Company conducted an internal examination of the matter and the New Jersey
Division of Gaming Enforcement conducted a separate review. The Company has
revised internal control processes and taken other measures to address the
situation. The Company may be subjected to regulatory sanctions, which may
include cash penalties. However, the potential cash penalties cannot be
estimated at this time.

        The Company is a party in various legal proceedings with respect to the
conduct of casino and hotel operations and has received employment related
claims. Although a possible range of losses cannot be estimated, in the opinion
of management, based upon the advice of counsel, the Company does not expect
settlement or resolution of these proceedings or claims to have a material
adverse impact upon the consolidated financial position or results of operations
of the Company, but the outcome of litigation and the resolution of claims is
subject to uncertainties and no assurances can be given. The accompanying
consolidated financial statements do not include any adjustments that might
result from these uncertainties.

        On February 26, 2003, the Sands received a letter from counsel for Mr.
Frederick H. Kraus, Executive Vice President, General Counsel and Secretary,
indicating that he had been retained to represent Mr. Kraus "in regards to a
constructive discharge, breach of contract, severance pay" and other claims.
This matter has been referred to legal counsel for evaluation. Management does
not believe this matter will have a material impact, if any, on the financial
position or results of operations of the Company.



                                       46
<PAGE>


                       GB HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(9)      Acquisition of Claridge Administration Building

       In April 2000, GBHC entered into an agreement with the entities
controlling the Claridge Hotel and Casino (the "Claridge") to acquire the
Claridge Administration Building. The purchase price was $3.5 million,
consisting of $1.5 million in cash at closing and $2.0 million consideration
tendered through the elimination for 40 months of a $50,000 monthly license fee
paid by the Claridge to GBHC, under an agreement between the Claridge and GBHC
governing the development and operation of the "People Mover" leading from the
boardwalk to the Sands and the Claridge. The present value of the $2.0 million
consideration has been recorded in other accrued and other noncurrent
liabilities sections of the balance sheet. GBHC reduces and adjusts the
respective liabilities as it records the People Mover license fee in other
income and interest expense at an imputed rate of 10%. At December 31, 2002,
$339,000 remained in other accrued liabilities related to the Claridge
Administration Building acquisition.

(10)     Employee Retirement Savings Plan

       Effective January 1, 1999, GBHC administers and participates in the Sands
Retirement Plan, a qualified defined contribution plan for the benefit of all of
GBHC's employees, who satisfy certain eligibility requirements.

       The Sands Retirement Plan is qualified under the requirements of Section
401(k) of the Internal Revenue Code allowing participating employees to benefit
from the tax deferral opportunities provided therein. All employees of GBHC, who
have completed one year of service, as defined, and who have attained the age of
21, are eligible to participate in the Savings Plan.

       The Sands Retirement Plan provides for a matching contribution by GBHC
based upon certain criteria, including levels of participation by GBHC's
employees. GBHC incurred matching contributions totaling $575,000, $700,000,
$192,000 and $561,000, for the years ended December 31, 2002 and 2001, the three
months ended December 31, 2000 and the nine months ended September 30, 2000,
respectively.



                                       47
<PAGE>

                       GB HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(11)   Supplemental Cash Flow Information

       Interest Paid, Interest Capitalized and Income Taxes paid during the
periods presented are set forth below:

<TABLE>
<CAPTION>
                                          Post-reorganization                      Pre-reorganization
                             --------------------------------------------------    ------------------
                             Year Ended          Year Ended    October 1, 2000       January 1, 2000
                             December 31,        December 31,      through              through
                               2002                 2001       December 31, 2000    September 30, 2000
                             -----------         -----------       ---------        ------------------
<S>                          <C>                 <C>              <C>                  <C>
Interest paid                $12,128,000         $12,156,000      $  18,000            $    57,000
                             ===========         ===========      =========            ===========

Interest Capitalized         $   766,000         $ 1,207,000      $    --              $      --
                             ===========         ===========      =========            ===========

Income Taxes paid            $ 1,764,000         $   205,000      $    --              $   932,000
                             ===========         ===========      =========            ===========
</TABLE>


(12)   Disclosures about Fair Value of Financial Instruments

       Disclosure of the estimated fair value of financial instruments is
required under FAS No 107, "Disclosure About Fair Value of Financial
Instruments." The fair value estimates are made at discrete points in time based
on relevant market information and information about the financial instruments.
These estimates may be subjective in nature and involve uncertainties and
significant judgment and therefore cannot be determined with precision.

       Cash and cash equivalents are valued at the carrying amount. Such amount
approximates the fair value of cash equivalents because of the short maturity of
these instruments.

       Obligatory investments are valued at a carrying amount which includes an
allowance reflecting the below market interest rate associated with such
investments.

       Other debt obligations with a short remaining maturity are valued at the
carrying amount.

       New Notes are valued at the market closing price on December 31, 2002 and
2001, respectively.



                                       48
<PAGE>



       The estimated carrying amounts and fair values of Holdings' financial
instruments at December 31, 2002 and 2001 are as follows:


<TABLE>
<CAPTION>
                                        December 31, 2002            December 31, 2001
                                    ---------------------------   ---------------------------
                                     Carrying                      Carrying
                                      Amount        Fair Value      Amount         Fair Value
                                    ------------   ------------   ------------   ------------
<S>                                 <C>            <C>            <C>            <C>
Financial Assets:
      Cash and cash equivalents     $ 50,645,000   $ 50,645,000   $ 57,369,000   $ 57,369,000
      Obligatory investments, net     10,069,000     10,069,000      9,302,000      9,302,000

Financial Liabilities:
      Interest payable                 3,092,000      3,092,000      3,092,000      3,092,000
      New Notes                      110,000,000     88,000,000    110,000,000     90,750,000
      Other Notes Payable                   --             --          371,000        371,000

</TABLE>

Operating Leases

        The Company leases certain equipment and property. Total lease expense
was $2.5 million for the year ended December 31, 2002. The following table sets
forth the future minimum rental commitments for operating leases:

                  2003                            $ 2,136,000
                  2004                              1,986,000
                  2005                              1,966,000
                  2006                              1,998,000
                  2007                              1,998,000
                  Thereafter                      $10,430,000
                                                  -----------
                  Total                           $20,514,000
                                                  ===========





                                       49
<PAGE>



(14) Selected Quarterly Financial Data (Unaudited)

<TABLE>
<CAPTION>
                                                                                        QUARTER
                                                           -----------------------------------------------------------------
                                                               FIRST           SECOND           THIRD             FOURTH
                                                           --------------   --------------   --------------   --------------
<S>                                                        <C>               <C>             <C>              <C>
Year Ended December 31, 2002
      Net revenues                                         $  53,244,000     $ 49,582,000    $  49,797,000    $  40,850,000
                                                           ==============   ==============   ==============   ==============

      Income (loss) from operations                        $   5,958,000     $    867,000    $   1,938,000    $  (4,727,000)
                                                           ==============   ==============   ==============   ==============

      Net income/(loss)                                    $   2,258,000     $ (1,218,000)   $    (906,000)   $  (7,455,000)
                                                           ==============   ==============   ==============   ==============

      Net income (loss) per share                          $        0.23     $      (0.12)   $       (0.09)   $       (0.75)
                                                           ==============   ==============   ==============   ==============

Year Ended December 31, 2001
      Net revenue (A)                                      $  48,601,000     $ 56,888,000    $  60,985,000    $  49,275,000
                                                           ==============   ==============   ==============   ==============

      Income (loss) from operations                        $  (2,509,000)    $  3,913,000    $   7,187,000    $  (1,762,000)
                                                           ==============   ==============   ==============   ==============

      Net income/(loss)                                    $  (3,056,000)    $    837,000    $   3,086,000    $  (2,701,000)
                                                           ==============   ==============   ==============   ==============

      Net income (loss) per share                          $       (0.31)    $       0.08    $        0.31    $       (0.27)
                                                           ==============   ==============   ==============   ==============
</TABLE>

(A) Restated for EITF 01-09 to conform to 2002 presentation.





                                       50
<PAGE>



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

       On March 27, 2002, the Commission entered an order prohibiting the
Company, as well as all other New Jersey casino licensees, from conducting
business with Arthur Andersen LLP after May 15, 2002.

       The Company's Board of Directors' dismissed Arthur Andersen LLP as
independent auditors and appointed KPMG LLP (KPMG) to serve as the Company's
independent auditors for the fiscal year ended December 31, 2002. The change in
auditors was effective May 16, 2002. The decision to appoint KPMG was made after
an extensive evaluation process by the Board of Directors, its Audit Committee
and management of the Company.

       None of the Registrants had disagreements with its independent
accountants to report under this item.


                                    PART III

ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS


The Boards of Directors of Holdings, GB Property Funding and GBHC consist of:
Carl C. Icahn, Michael L. Ashner, Martin Hirsch, Harold First, Auguste E.
Rimpel, Jr. and John P. Saldarelli. Messrs. Ashner, First and Rimpel, Jr. were
elected to the Boards of Directors of Holdings, GB Property Funding and GBHC, as
independent members, and to the Audit Committee of Holdings.

       No family relationships exist between any directors or executive officers
of GB Property Funding, Holdings or GBHC.

       Directors and Officers

       Certain information is set forth below concerning the directors and
executive officers of each of GB Property Funding, Holdings and GBHC.

            Name              Age          Position
---------------------------   ---    --------------------------

Carl C. Icahn (1)             67     Chairman of the Board

Martin Hirsch (2)             48     Director

John P. Saldarelli (3)        61     Director

Michael L. Ashner (4)         50     Director

Harold First (5)              66     Director

Auguste E. Rimpel, Jr. (6)    63     Director

Richard P. Brown (7)          __     Chief Executive Officer

Timothy A. Ebling (8)         44     Executive Vice President, Chief Financial
                                     Officer and Principal Accounting Officer

Thomas Davis (9)              53     President

Frederick H. Kraus (10)       53     Executive Vice President, General Counsel

Herbert Wolfe (11)            61     President and Chief Executive Officer



                                       51
<PAGE>

--------------------
(1)      Carl C. Icahn has served as Chairman of the Board and a Director of
         Starfire Holding Corporation (formerly Icahn Holding Corporation), a
         privately-held holding company, and Chairman of the Board and a
         Director of various subsidiaries of Starfire, including ACF Industries,
         Incorporated, a privately-held railcar leasing and manufacturing
         company, since 1984. He has also been Chairman of the Board and
         President of Icahn & Co., Inc., a registered broker-dealer and a member
         of the National Association of Securities Dealers, since 1968. Since
         November 1990, Mr. Icahn has been Chairman of the Board of American
         Property Investors, Inc., the general partner of American Real Estate
         Partners, L.P., a public limited partnership that invests in real
         estate. Mr. Icahn has been a Director of Cadus Pharmaceutical
         Corporation, a firm which holds various biotechnology patents, since
         1993. Since August 1998 he has also served as Chairman of the Board of
         Lowestfare.com, LLC, an internet travel reservations company. From
         October 1998, Mr. Icahn has been the President and a Director of
         Stratosphere Corporation which operates the Stratosphere Hotel and
         Casino. Mr. Icahn received his B.A. from Princeton University. Since
         September 29, 2000, Mr. Icahn has served as the Chairman of the Board
         of Holdings, GB Property Funding and GBHC.

(2)      Martin Hirsch has served as a Vice President of American Property
         Investors, Inc. since March 18, 1991, where he is involved in
         investing, managing and disposing of real estate properties and
         securities. Mr. Hirsch was elected as Executive Vice President and
         Director of Acquisitions of American Property Investors, Inc. in 2000.
         From January 1986 to January 1991, he was at Integrated Resources, Inc.
         as a Vice President where he was involved in the acquisition of
         commercial real estate properties and asset management. From 1985-1986,
         he was a Vice President of Hall Financial Group where he acquired and
         financed commercial and residential properties. Mr. Hirsch currently
         serves on the Board of Directors of Stratosphere Corp. He received his
         MBA from The Emory University Graduate School of Business. Mr. Hirsch
         has served as a Director of Holdings and GB Property Funding since
         September 29, 2000 and as a Director of GBHC since February 28, 2001.

(3)      John P. Saldarelli has served as Vice President, Secretary and
         Treasurer of American Property Investors, Inc. (general partner of
         American Real Estate Partners) since March 18, 1991. Mr. Saldarelli was
         also President of Bayswater Realty Brokerage Corp. from June 1987 until
         November 19, 1993, and Vice President of Bayswater Realty & Capital
         Corp. from September 1979 until April 15, 1993. In October 1998, Mr.
         Saldarelli was appointed to the Board of Directors of Stratosphere and
         in June 2000, Mr. Saldarelli was given the additional title of Chief
         Financial Officer. Mr. Saldarelli has served as a Director of Holdings,
         GB Property Funding and GBHC since February 28, 2001.

(4)      Michael L. Ashner has served as Chairman, President and CEO of Winthrop
         Associates, a real estate consulting firm, since 1995. Mr. Ashner has
         also served as General Partner of Cecil Associates, a limited liability
         company which owns twenty Comfort Inns, since 1996. Mr. Ashner has been
         CEO of Newkirk Associates, a limited liability company which owns and
         manages more than 40 million square feet of office and retail space,
         since 1997. Mr. Ashner has also been Managing Director of AP-USX, LLC,
         a limited liability company which owns a 28 million square foot office
         tower, since 1998. Since 1999, Mr. Ashner has served as President and
         CEO of Presidio Capital Corporation, an investment banking firm. Mr.
         Ashner has been President and CEO since 2000 of GFB-AP Fort, LLC, a
         limited liability company involved in independent and assisted living
         communities. Mr. Ashner has been President and Sole Shareholder since
         1981 of Exeter Capital Corporation, which provides real estate
         consulting to real estate investors. Mr. Ashner currently serves as a
         director of, NBTY, Inc. and Burnham Pacific Properties, which are
         publicly traded. Mr. Ashner has served as a Director of Holdings and GB
         Property Funding since September 29, 2000, as a member of the Audit
         Committee of Holdings since October 3, 2000, and as a member of the
         Board of Directors of GBHC since June 6, 2001.



                                       52
<PAGE>

(5)      Harold First has been a financial consultant since 1993. From December
         1990 through January 1993, Mr. First served as Chief Financial Officer
         of Icahn Holding Corp., a privately held holding company. He has served
         as a director of Taj Mahal Holding Corporation, a public casino and
         gaming corporation, Trump Taj Mahal Realty Corporation, a privately
         held real estate company, Memorex Telex N.V., a public technology
         company, Trans World Airlines, Inc., a public airline company, ACF
         Industries, Inc., a privately held railcar leasing and manufacturing
         company, Cadus Pharmaceutical Corporation, a biotech research company,
         Talk.com, a public long distance telephone service company, Marvel
         Entertainment Group, Inc., a public entertainment company, Toy Biz,
         Inc., a public toy company and vice chairman of the board of directors
         of American Property Investors, Inc., the general partner of American
         Real Estate Partners, L.P., a public limited partnership that invests
         in real estate. Mr. First currently serves on the boards of directors
         of Panaco Inc., an oil and gas drilling company, and Philip Services
         Corporation, a leading integrated provider of industrial and metals
         services. He is a Certified Public Accountant and holds a B.S. from
         Brooklyn College. He has served as a member of the Audit Committee and
         Board of Directors of Holdings since April 25, 2001, and as a Director
         of GB Property Funding and GBHC since June 6, 2001.

(6)      Auguste E. Rimpel, Jr. has been a retired partner of
         PricewaterhouseCoopers LLP (PwC) since 2000. He was with PwC and its
         predecessor firm, Price Waterhouse, since 1983, most recently as
         Managing Partner of International Consulting Services for the
         Washington Consulting Practice of the firm. Prior to his tenure at PwC,
         he served as a Partner with Booz Allen & Hamilton, Inc. and as a Vice
         President of Arthur D. Little International, Inc. Dr. Rimpel currently
         serves as Chairman of the Board of Trustees of the University of the
         Virgin Islands. Dr. Rimpel received a PhD in chemical engineering from
         Carnegie Institute of Technology and was an International Fellow at
         Columbia University Graduate School of Business. He has served as a
         member of the Audit Committee and Board of Directors of Holdings since
         April 25, 2001, and as a Director of GB Property Funding and GBHC since
         June 6, 2001.

(7)      Richard P. Brown, serves as President and Chief Executive Officer
         for Carl C. Icahn's Nevada gaming properties, the Stratosphere
         Casino Hotel and Tower, Arizona Charlie's Decatur and Arizona
         Charlie's Boulder. All three properties are located in Las Vegas. In
         addition, Brown serves as Chief Executive Officer of Icahn's Greate
         Bay Hotel and Casino, Inc., GB Holdings and GB Property Funding
         Corporation. Brown reports directly to Icahn and oversees strategic
         planning, operating, financial and capital investment direction for
         the Icahn gaming properties. His role also encompasses development
         of new business opportunities and company policies. Brown joined the
         Icahn gaming properties in March 2000 as Executive Vice President of
         Marketing for the Stratosphere and both Arizona Charlie's properties
         while also serving as one of three key executives responsible for
         overall operations of the Stratosphere. In January 2001 he was
         promoted to Chief Operating Officer, responsible for the operations
         of all three properties. Brown was promoted to the position of
         President and Chief Executive Officer of the Icahn gaming properties
         in Nevada in June 2002. In addition, he was promoted to the role of
         Chief Executive Officer of Greate Bay Hotel and Casino, Inc., GB
         Holdings and GB Property Funding Corporation in September 2002.
         Prior to joining the Stratosphere, Brown held executive positions
         with Harrah's Entertainment (1994-2000) and the Hilton Corporation
         (1992-1994). In addition, he has held vice president positions with
         the New York Racing Association, the Travelers Companies of
         Hartford, Connecticut and the J. Walter Thompson Company in New
         York, New York. Brown earned a bachelor's degree in business
         economics from Southern Connecticut State College.

(8)      Timothy A. Ebling is presently and formerly Executive Vice President,
         Chief Financial Officer and Principal Accounting Officer of GBHC, and
         appointed Interim Chief Operating Officer beginning January 2002 and
         ending March 18, 2002 and as President from October 1, until January
         10, 2003.

(9)      Thomas Davis, has served as President of GBHC since February 2003.
         Previously, Mr. Davis served as Vice President of Business Development
         at Stratosphere Corporation from November 2002 until February 2003,
         General Manager of Little River Casino Resort, General Manager at
         Chinook Winds Resort-Casino and General Manager of Pioneer Gambling
         Hall & Hotel.



                                       53
<PAGE>

(10)     Frederick H. Kraus has served as Executive Vice President, General
         Counsel and Secretary of each of the companies since 1998. Mr. Kraus
         also served as a Director of each of the companies from January 1998 to
         October 3, 2000 for Holdings and February 28, 2001 for GBHC and GB
         Property Funding. Prior to 1998, Mr. Kraus served as Vice President,
         Corporate Counsel and Secretary since 1994. Mr. Kraus left the employ
         of the Company as of March 26, 2003.

(11)     Herbert R. Wolfe has served as President and Chief Executive Officer of
         Holdings, GB Property Funding and GBHC from March 18, 2002 until he
         resigned September 30, 2002. Prior to that, Mr. Wolfe served as
         President of Showboat Casino-Hotel in Atlantic City (Showboat) from
         July 1994 until October 2000. During 2001, Mr. Wolfe completed his B.A.
         degree in Liberal Studies at Rider University. Mr. Wolfe also served as
         Senior Vice President of Marketing of Showboat from January 1989 until
         July 1994.

       Section 16(A) Beneficial Ownership Reporting Compliance
..
       Section 16(a) of the Securities Exchange Act of 1934 requires Holdings'
officers and directors, and persons who own more than ten percent of a
registered class of Holdings' equity securities, to file reports of ownership
and changes in ownership with the Securities and Exchange Commission (the "SEC")
and the American Stock Exchange. Officers, directors and greater than ten
percent shareholders are required by SEC regulation to furnish Holdings with
copies of all Section 16(a) forms they file. Based solely on a review of the
copies of such forms furnished by the Company, or written representations that
no Forms 5 were required, Holdings believes that during the fiscal year ended
December 31, 2002, all Section 16(a) filing requirements applicable to its
officers, directors and greater than ten-percent beneficial owners were
satisfied.

         Other Matters

         On January 5, 2001, Reliance Group Holdings, Inc. ("Reliance")
commenced an action in the United States District Court for the Southern
District of New York against Carl C. Icahn, Icahn Associates Corp. and High
River alleging that High River's tender offer for Reliance 9% senior notes
violated Section 14(e) of the Exchange Act of 1934. Reliance sought a temporary
restraining order and preliminary and permanent injunctive relief to prevent
defendants from purchasing the notes. The Court initially imposed a temporary
restraining order. Defendants then supplemented the tender offer disclosures.
The Court conducted a hearing on the disclosures and other matters raised by
Reliance. The Court then denied Reliance's motion for a preliminary injunction
and ordered dissolution of the temporary restraining order following
dissemination of the supplement. Reliance took an immediate appeal to the United
States Court of Appeals for the Second Circuit and sought a stay to restrain
defendants from purchasing notes during the pendency of the appeal. On January
30, 2001, the Court of Appeals denied plaintiffs' stay application. On January
30, Reliance also sought a further temporary restraining order from the District
Court. The Court considered the matter and reimposed its original restraint
until noon the next day, at which time the restraint against Mr. Icahn and his
affiliates was dissolved. On March 22, 2001, the Court of Appeals ruled in favor
of Mr. Icahn by affirming the judgment of the District Court.





                                       54
<PAGE>

ITEM 11.    EXECUTIVE COMPENSATION


         Summary of Cash and Certain Other Compensation

       Neither Holdings nor GB Property Funding pays any compensation to any
employee, executive officer or director. GBHC pays the compensation of the
independent directors (see "Compensation of Directors" below). The following
table provides certain summary information concerning compensation paid or
accrued by GBHC, to or on behalf of (i) GBHC's Chief Executive Officer; (ii)
each of the other executive officers of GBHC determined as of the end of the
last fiscal year; and (iii) additional individuals who would have qualified as
among the executive officers of GBHC but for the fact that the individual was
not serving as an executive officer at the end of the last year (hereafter
referred to as the named executive officers), for the years ended December 31,
2002, 2001 and 2000.

<TABLE>
<CAPTION>
                                                                Annual Compensation
                                             --------------------------------------------------------------            --------
                                                                                                 Other Annual        All Other
Name and Principal Position                    Year            Salary            Bonus           Compensation      Compensation (1)
---------------------------                  --------         --------         --------            --------            --------
<S>                                         <C>          <C>              <C>                 <C>                 <C>
Herbert R. Wolfe                                 2002         $184,167         $   --              $   --              $   --
      Chief Executive Officer,                   2001             --               --                  --                  --
      and President                              2000             --               --                  --                  --

Timothy A. Ebling                                2002          250,000             --                 8,400               4,500
      Executive Vice President,                  2001          250,000             --                 8,400               4,250
      Chief Financial Officer                    2000          207,610          149,349(4)            8,400               4,000
      Principal Accounting Officer

Frederick H. Kraus                               2002          235,815             --                10,800               4,500
      Executive Vice President,                  2001          235,815             --                10,800               4,250
      General Counsel, Secretary                 2000          235,815          176,861(4)           10,800               4,000

Signe C. Huff (2)                                2002          140,900             --               200,816(5)            2,352
      Senior Vice President Hotel                2001          188,166             --                 8,400               4,250
      Operations and Human Resources             2000          186,522           41,147(4)            8,400               4,000

Thomas Biglan (3)                                2002           83,468             --               171,504(5)            1,054
      Vice President Food and                    2001          168,703             --                 8,400               4,218
      Beverage                                   2000          166,243           41,147(4)            8,400               4,000
</TABLE>


(1)      Includes matching contributions by GBHC to The Sands Retirement Savings
         Plan on behalf of the named executive officer.

(2)      Signe C. Huff served as Senior Vice President Hotel Operations and
         Human Resources from January 2002 until her resignation in August 9,
         2002. During 2001, Ms. Huff served as Senior Vice President Marketing
         Operations and Human Resources. Ms. Huff served as Senior Vice
         President of Hotel Operations from 1995 to 2000. From 1989 to 1995, Ms.
         Huff served as Vice President of Hotel Operations. Prior to 1989, Ms.
         Huff held various senior hotel operating positions with GBHC.

(3)      Thomas Biglan served as Vice President Food and Beverage from April
         1996 until his resignation April 24, 2002.

(4)      Represents payment of a Bankruptcy Court approved bonus for certain
         management employees as an incentive for them to stay through the
         bankruptcy proceedings (Stay Bonus).

(5)      Includes severance compensation.


       Option Grants in Last Fiscal Year

       The Company does not have a stock option plan.


                                       55
<PAGE>


       Employment Contracts

         Timothy A. Ebling, presently and formerly Executive Vice President,
Chief Financial Officer and Principal Accounting Officer of GBHC, and appointed
Interim Chief Operating Officer beginning January 2002 and ending March 18, 2002
and as President from October 2002 until January 10, 2003, is under an
employment agreement, amended as of March 11, 1998, in his present capacity
continuing through November 30, 2003. The terms of the agreement provide for an
annual base salary of $190,000, subject to annual increases on each anniversary
date of the agreement equal to no less than the change in the Consumer Price
Index, as defined, and no more than five percent. In October 2000, Mr. Ebling's
base salary was increased to $250,000.

         Frederick H. Kraus, Executive Vice President, General Counsel and
Secretary of GBHC, was under an employment agreement, amended as of March 11,
1998, in such capacities continuing through December 31, 2003. Mr. Kraus left
the employ of the Company as of March 26, 2003.

         Each of the agreements provides for automatic renewal for additional
one year periods in accordance with the terms thereof. In addition, the
Bankruptcy Court approved a Stay Bonus and Severance Plan for certain management
employees, including Mr. Kraus and Mr. Ebling. Under the Stay Bonus Plan, Mr.
Kraus and Mr. Ebling received a bonus equal to 75% of their base salary. To the
extent provided in the Severance Plan, if the Reorganized Entity, as defined in
the Severance Plan, terminated the employment of Mr. Kraus or Mr. Ebling without
cause, as defined in their employment agreements, Mr. Kraus and Mr. Ebling would
be entitled to a lump sum payment equal to the greater of two years of their
base salary or the remaining terms of their employment agreements.

            On February 26, 2003, the Sands received a letter from counsel for
Mr. Frederick H. Kraus, indicating that he had been retained to represent Mr.
Kraus "in regards to a constructive discharge, breach of contract, severance
pay" and other claims. This matter has been referred to legal counsel for
evaluation.

       Employee Retirement Savings Plan

       Effective January 1, 1999, GBHC administers and participates in the Sands
Retirement Plan, a qualified defined contribution plan for the benefit of all of
GBHC's employees, who satisfy certain eligibility requirements.

       The Sands Retirement Plan is qualified under the requirements of Section
401(k) of the Internal Revenue Code allowing participating employees to benefit
from the tax deferral opportunities provided therein. All employees of GBHC, who
have completed one year of service, as defined, and who have attained the age of
21, are eligible to participate in the Savings Plan.

       The Sands Retirement Plan provides for a matching contribution by GBHC
based upon certain criteria, including levels of participation by GBHC's
employees. GBHC incurred matching contributions totaling $575,000, $700,000,
$192,000 and $561,000, for the years ended December 31, 2002 and 2001, the three
months ended December 31, 2000, the nine months ended September 30, 2000,
respectively.

       Compensation of Directors

       Prior to the Effective Date, independent directors of Holdings, GB
Property Funding and GBHC received an annual fee of $10,000 for service on the
Boards of Directors and a fee of $500 for each meeting attended. Independent
directors of the Board of Directors of Holdings are entitled to receive an
annual fee of $22,500. The Board of Directors of Holdings held 11 meetings
either in person or by unanimous consent during the year ended December 31,
2002. All directors attended at least 75% of all meetings of the Board of
Directors and committees thereof for which they were eligible to serve.



                                       56
<PAGE>

       The Board of Directors of Holdings also has an Audit Committee. Prior to
the Effective Date, the external members of the Audit Committee received an
annual fee of $5,000 for service on the committee and a fee of $500 for each
meeting attended. As of the Effective Date, compensation for members of the
Audit Committee is included in the compensation described above.

       Compensation Committee Interlocks and Insider Participation

       On October 3, 2000, Holdings established a Compensation Committee
consisting of Messrs. Hirsch and Ashner.

       Mr. Icahn (including certain related entities) is actively involved in
the gaming industry and currently owns 77.49% of Holdings' New Common Stock (see
Item 12). Casinos owned or managed by Mr. Icahn may directly or indirectly
compete with the Company. In addition, the potential for conflicts of interest
exists among the Company and Mr. Icahn for future business opportunities. Mr.
Icahn may pursue other business opportunities and there is no agreement
requiring that such additional business opportunities be presented to Holdings.

       Audit Committee.

       The Audit Committee has the duty to (i) review the engagement and
performance of the independent auditors, including the remuneration to be paid;
(ii) recommend annually to the Board of Directors the independent public
accountants to be engaged to audit the books, records and accounts of the
Company for the ensuing year; (iii) review with the Company's independent
auditors, as well as the Company's management, the Company's system of internal
control including the programs and policies of the Company designed to ensure
compliance with applicable laws and regulations as well as monitoring results of
these compliance efforts; (iv) review with financial management and the
independent auditors the Company's annual financial statements and any financial
reports or other financial information submitted to any governmental body or the
public by either the Company or its independent auditors and the review of the
Forms 10-Q and 10-K prepared by the financial management and the independent
auditors of the Company prior to their filing and release; discuss any
significant changes to the Company's accounting principles; (v) review of any
significant disagreement among management of the Company and the independent
auditors in connection with the preparation of the financial reports of the
companies and prior to releasing the year-end earnings, discuss with the
independent auditors matters required to be communicated to audit committees in
accordance with SAS 61 and (vi) make such reports and recommendations to the
Board of Directors in connection with the foregoing as it shall deem appropriate
or as the Board of Directors may request, and take such action thereon as the
Board of Directors may direct it to take. During 2000, the Audit Committee was
comprised of Mr. Frederick H. Kraus (until October 3, 2000) and Ms. Barbara
Lang. As of the Effective Date, Mr. Michael L. Ashner became a member of the
Audit Committee. Mr. Ashner does not receive any additional compensation for his
participation on the Audit Committee. Effective February 28, 2001, Holdings
adopted a charter for the Audit Committee conforming to the listing requirements
of the American Stock Exchange. Messrs. Harold First and Auguste E. Rimpel, Jr.
have served as members of the Board of Directors and the Audit committee, of
Holdings since April 25, 2001, at which time Ms. Lang resigned as a member of
the Audit Committee. Messrs First and Rimpel, Jr. have also served as Directors
of GB Property Funding and GBHC since June 6, 2001.

       On March 27, 2002, the Commission entered an order prohibiting the
Company, as well as all other New Jersey casino licensees, from conducting
business with Arthur Andersen LLP after May 15, 2002. The Companies' Board of
Directors dismissed Arthur Andersen LLP as independent auditors and appointed
KPMG LLP (KPMG) to serve as the Company's independent auditors for the fiscal
year ended December 31, 2002. The change in auditors was effective May 16, 2002.
The decision to appoint KPMG was made after an extensive evaluation process by
the Board of Directors, its Audit Committee and management of the Company.



                                       57
<PAGE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

            In a Securities and Exchange Commission Form 13D filed by Carl C.
Icahn and certain entities controlled by Carl C. Icahn (collectively, "Icahn"),
Icahn has reported that it holds an aggregate beneficial ownership of
approximately 77.49% of the New Common Stock and approximately 64% of the New
Notes.

            The following table sets forth as of December 31, 2002, certain
information regarding the beneficial ownership of shares of New Common Stock by
each director of the Company, each of the executive officers listed in the
Summary Compensation Table, each person known to the Company to be the
beneficial owner of more than 5% of the outstanding shares and all directors and
executive officers as a group.

                                       Number
Name                                  of Shares              Percent
----                                  ---------              -------

Carl C. Icahn (1)                    7,748,744                77.49%
Merrill Lynch & Co., Inc.            2,068,299                20.68%
Martin Hirsch                             --                   --
John P. Saldarelli                        --                   --
Michael L. Ashner                         --                   --
Harold First                              --                   --
Auguste E. Rimpel, Jr                     --                   --
Timothy A. Ebling                         --                   --
Frederick H. Kraus                        --                   --
Herbert R. Wolfe                          --                   --
Thomas Biglan                             --                   --
Signe C. Huff                             --                   --

----------------
(1)      As of March 27, 2003, Cyprus LLC, an entity controlled by Mr. Icahn,
         directly beneficially owned 4,121,033 shares of New Common Stock and
         American Real Estate Holdings L.P., a limited partnership controlled by
         Mr. Icahn, directly beneficially owned 3,627,711 shares of New Common
         Stock.


ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS


       Prior to the Effective Date, GBHC's rights to the trade name "Sands" (the
"Trade Name") were derived from a license agreement between GBCC and an
unaffiliated third party. Amounts paid by the Sands during the nine months ended
September 30, 2000 were $215,000, which equaled the amounts payable to the
unaffiliated third party. As a result of the Confirmation Order and the
occurrence of the Effective Date and under terms of the Plan, GBHC was assigned
by High River the rights under a certain agreement with the owner of the Trade
Name to use the Trade Name as of the Effective Date. Amounts payable after the
Effective Date are calculated in the same manner as they were prior to the
Effective Date. Amounts payable by the Sands subsequent to the Effective Date
were $272,000 for the year ended December 31, 2002 and $268,000 for the year
December 31, 2001. High River received no payments for its assignment of these
rights.


                                       58
<PAGE>


ITEM 14.  CONTROLS AND PROCEDURES

          Within the 90 days prior to the filing of this report, the Company
carried out an evaluation, under the supervision and with the participation of
the Company's management, including the Company's Chief Executive Officer and
Chief Financial Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures pursuant to Rule 13a-15 of the
Securities Exchange Act of 1934 (the "Exchange Act"). Based upon that
evaluation, the Company's Chief Executive Officer and Chief Financial Officer
concluded that the Company's disclosure controls and procedures are effective to
ensure that information required to be disclosed by the Company in the reports
that it files or submits under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Securities and
Exchange Commission's rules and forms. There were no significant changes in the
Company's internal controls or in other factors that could significantly affect
these controls subsequent to the date of their evaluation.


                                     PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K


(a) The following documents are filed as a part of this report:

       1.     Financial Statements

       The financial statements filed as part of this report are listed on the
Index to Financial Statements on page 25.

2.       Financial Statement Schedule

       --     Report of Independent Public Accountants

       --     Schedule II; Valuation and Qualifying Accounts

       All other schedules for which provision is made in the applicable
       accounting regulation of the Securities and Exchange Commission are not
       required under the related instructions and are inapplicable and
       therefore have been omitted.

       3. Exhibits

            +++2.1    --      Order Confirming Modified Fifth Amended
                              Joint Plan of Reorganization under Chapter
                              11 of The Bankruptcy Code Proposed by The
                              Official Committee of Unsecured Creditors
                              and High River

              +3.1    --      Restated Certificate of Incorporation of GB
                              Property Funding.

       ++++++++3.2    --      Restated Certificate of Incorporation, of
                              GBHC.

             ++3.3    --      Restated Certificate of Incorporation of
                              Holdings.

              +3.4    --      Amended and Restated Bylaws of GB Property
                              Funding.

        +++++++3.5    --      Amended and Restated Bylaws of GBHC.

             ++3.6    --      Amended and Restated Bylaws of Holdings.

          +++++3.12   --      Amended License Agreement by and between
                              Hughes Properties, Inc. and Pratt Hotel
                              Corporation (now known as GBCC) dated May
                              19, 1987.

         ++++++3.13   --      First and Second Amendments to Employment
                              Agreement dated as of January 1, 1998 and
                              March 11, 1998, respectively, between GBHC
                              and Frederick H. Kraus.

         ++++++3.14   --      First and Second Amendments to Employment
                              Agreement dated as of January 1, 1998 and
                              March 11, 1998, respectively, between GBHC
                              and Timothy A. Ebling.

           ++++4.1    --      Indenture, dated as of September 29, 2000,
                              among GB Property Funding, as Issuer,
                              Holdings and GBHC, as Guarantors, and Wells
                              Fargo Bank Minnesota, N.A., as Trustee.

        +++++++4.2    --      Mortgage, Fixture Filing and Security
                              Agreement dated September 29, 2000, by GBHC
                              in favor of Wells Fargo Bank Minnesota,
                              N.A., as Mortgagee.



                                       59
<PAGE>

        +++++++4.3    --      Security Agreement dated September 29, 2000,
                              made by GB Property Funding Corp., GBHC, and
                              GB Holdings, Inc., to Wells Fargo Bank
                              Minnesota, N.A., as Trustee.


        +++++++4.4    --      Collateral Assignment of Leases dated as of
                              September 29, 2000, by GBHC, in favor of
                              Wells Fargo Bank Minnesota, N.A., as
                              Assignee.

               4.5    --      Amended and Restated Indenture, dated
                              October 12, 2001 among GB Property Funding
                              as Issuer, Holdings and GBHC, as Guarantors,
                              and Wells Fargo Bank Minnesota, N.A. as
                              Trustee.

              99.1    --      Holdings Letter to the Securities and
                              Exchange Commission Pursuant to Temporary
                              Note 3T.

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

        +      Filed as an exhibit to GB Property Funding's Registration
               Statement on Form 8-A, filed with the Securities and
               Exchange Commission on March 23, 2001, and incorporated
               herein by reference.

       ++      Filed as an exhibit to Holdings' Registration Statement on
               Form 8-A filed with the Securities and Exchange Commission
               on September 29, 2000, and incorporated herein by
               reference.

      +++      Filed as an exhibit to Holdings' Current Report on Form
               8-K, filed with the Securities and Exchange Commission on
               August 21, 2000, and incorporated herein by reference.

     ++++      Filed as an exhibit to GB Property Funding's Amended
               Current Report on Form 8-K/A, filed with the Securities
               and Exchange Commission on October 2, 2000, and
               incorporated herein by reference.

    +++++      Filed as an exhibit to Hollywood Casino Corporation's
               Registration Statement on Form S-1 (Registration No.
               33-58732), filed with the Securities and Exchange
               Commission on February 26, 1993, and incorporated herein
               by reference.

   ++++++      Filed as an exhibit to GB Property Funding's Quarterly
               Report on Form 10-Q for the quarter ended September 30,
               1998.

  +++++++      Filed as an exhibit to the Company's Annual Report on Form
               10K for the year ended December 31, 2000, and incorporated
               herein by reference.


(b)     Reports on Form 8-K

         During the quarter ended December 31, 2002, the Registrants did not
file any reports on Form 8-K:



                                       60
<PAGE>


                                   SIGNATURES

       Pursuant to the requirements of Section 13 or 15(d) 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, in the City of
Atlantic City, State of New Jersey on March 28, 2003.

                                                  GB HOLDINGS, INC.
                                              GB PROPERTY FUNDING CORP.
                                          GREATE BAY HOTEL AND CASINO, INC.

                                  By:
                                     -----------------------------------------
                                                   Timothy A. Ebling
                                              Chief Financial Officer and
                                             Principal Accounting Officer

       Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant in
the capacities and on the dates indicated:

<TABLE>
<CAPTION>
              Signature                               Title                         Date
              ---------                               -----                         -----

<S>                                     <C>                                     <C>
                                        Chairman of the Board of,                March 28, 2003
------------------------------------    GB Holdings, Inc.                       -------------------
            Carl C. Icahn               GB Property Funding Corp. and
                                        Greate Bay Hotel and Casino, Inc.

                                        Director of                              March 28, 2003
------------------------------------    GB Holdings, Inc.                       -------------------
            Martin Hirsch               GB Property Funding Corp. and
                                        Greate Bay Hotel and Casino, Inc.


                                        Director of                              March 28, 2003
------------------------------------    GB Holdings, Inc.                       -------------------
         John P. Saldarelli             GB Property Funding Corp. and
                                        Greate Bay Hotel and Casino, Inc.


                                        Director of                              March 28, 2003
------------------------------------    GB Holdings, Inc.                       -------------------
          Michael L. Ashner             GB Property Funding Corp. and
                                        Greate Bay Hotel and Casino, Inc.



                                        Director of                              March 28, 2003
------------------------------------    GB Holdings, Inc.                       -------------------
            Harold First                GB Property Funding Corp. and
                                        Greate Bay Hotel and Casino, Inc.



                                        Director of                              March 28, 2003
------------------------------------    GB Holdings, Inc.                       -------------------
        August E. Rimpel, Jr.           GB Property Funding Corp. and
                                        Greate Bay Hotel and Casino, Inc.
</TABLE>



                                       61
<PAGE>

                                   SIGNATURES

       Pursuant to the requirements of Section 13 or 15(d) 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, in the City of
Atlantic City, State of New Jersey on March 28, 2003.

                                                   GB HOLDINGS, INC.
                                               GB PROPERTY FUNDING CORP.
                                           GREATE BAY HOTEL AND CASINO, INC.

                                    By:   /s/   Timothy A. Ebling
                                       --------------------------------------
                                                  Timothy A. Ebling
                                             Chief Financial Officer and
                                            Principal Accounting Officer

       Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant in
the capacities and on the dates indicated:


<TABLE>
<CAPTION>
              Signature                               Title                           Date
              ---------                              -------                        --------
<S>                                     <C>                                     <C>
/s/         Carl C. Icahn               Chairman of the Board of,                March 28, 2003
------------------------------------    GB Holdings, Inc.                       ------------------
            Carl C. Icahn               GB Property Funding Corp. and
                                        Greate Bay Hotel and Casino, Inc.


/s/         Martin Hirsch               Director of                              March 28, 2003
------------------------------------    GB Holdings, Inc.                       ------------------
            Martin Hirsch               GB Property Funding Corp. and
                                        Greate Bay Hotel and Casino, Inc.


/s/      John P. Saldarelli             Director of                              March 28, 2003
------------------------------------    GB Holdings, Inc.                       ------------------
         John P. Saldarelli             GB Property Funding Corp. and
                                        Greate Bay Hotel and Casino, Inc.


/s/       Michael L. Ashner             Director of                              March 28, 2003
------------------------------------    GB Holdings, Inc.                       ------------------
          Michael L. Ashner             GB Property Funding Corp. and
                                        Greate Bay Hotel and Casino, Inc.



/s/         Harold First                Director of                              March 28, 2003
------------------------------------    GB Holdings, Inc.                       ------------------
            Harold First                GB Property Funding Corp. and
                                        Greate Bay Hotel and Casino, Inc.



/s/     August E. Rimpel, Jr.           Director of                              March 28, 2003
------------------------------------    GB Holdings, Inc.                       ------------------
        August E. Rimpel, Jr.           GB Property Funding Corp. and
                                        Greate Bay Hotel and Casino, Inc.

</TABLE>



                                       62
<PAGE>


                     INDEX TO FINANCIAL STATEMENT SCHEDULE



GB Holdings, Inc. And Subsidiaries

        -         Report of Independent Public Accountants

        -         Schedule II; Valuation and Qualifying Accounts



<PAGE>

INFORMATION REGARDING PREDECESSOR INDEPENDENT PUBLIC ACCOUNTANTS' REPORT

THE FOLLOWING REPORT IS A COPY OF A PREVIOUSLY ISSUED REPORT BY ARTHUR ANDERSEN
LLP ("ANDERSEN"). THE REPORT HAS NOT BEEN REISSUED BY ANDERSEN NOR HAS ANDERSEN
CONSENTED TO ITS INCLUSION IN THIS ANNUAL REPORT ON FORM 10-K.







                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders of GB Holdings, Inc.:

We have audited in accordance with auditing standards generally accepted in the
United States, the consolidated financial statements of GB Holdings, Inc. and
subsidiaries included in this Form 10-K and have issued our report thereon dated
March 8, 2002. Our audit was made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The schedule listed in the index to
financial statement schedule is the responsibility of the Company's management
and is presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.



                                                   ARTHUR ANDERSEN LLP



Roseland, New Jersey
March 8, 2002



                                       63
<PAGE>


                                                                     SCHEDULE II
                      GB HOLDINGS, INC. AND SUBSIDIARIES

                      Valuation and Qualifying Accounts

<TABLE>
<CAPTION>
                                                                                        Additions
                                                                                  -----------------------
                                                                           Amounts
                                                          Balance of      Charged to                             Balance
                                                          Beginning       Costs and                              At End
                                                          Of Period        Expenses          Deductions         of Period
                                                        ---------------   --------------   ---------------     ---------------
<S>                                                     <C>               <C>              <C>            <C>  <C>
Post-reorganization
Year Ended December 31, 2002:
      Allowance for doubtful
           accounts receivable                          $   14,406,000    $   1,586,000    $   (4,691,000)(1)  $   11,301,000
      Allowance for obligatory
           investments                                       9,290,000        1,521,000          (783,000)         10,028,000
                                                        ---------------   --------------   ---------------     ---------------
                                                        $   23,696,000    $   2,835,000    $   (5,202,000)     $   21,329,000
                                                        ===============   ==============   ===============     ===============

Year Ended December 31, 2001:
      Allowance for doubtful
           accounts receivable                          $   11,408,000    $   4,991,000    $   (1,993,000)(1)  $   14,406,000
      Allowance for obligatory
           investments                                       8,418,000        1,341,000          (469,000)          9,290,000
                                                        ---------------   --------------   ---------------     ---------------
                                                        $   19,826,000    $   6,332,000    $   (2,462,000)     $   23,696,000
                                                        ===============   ==============   ===============     ===============

October 1, 2000 through December 31, 2000:
      Allowance for doubtful
           accounts receivable                          $   10,366,000    $   1,423,000    $     (381,000)(1)  $   11,408,000
      Allowance for obligatory
           investments                                       9,806,000          243,000        (1,609,000)(3)       8,418,000
                                                        ---------------   --------------   ---------------     ---------------
                                                        $   20,172,000    $   1,666,000    $   (1,990,000)     $   19,826,000
                                                        ===============   ==============   ===============     ===============

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

Pre-reorganization
January 1, 2000 through September 30, 2000:
      Allowance for doubtful
           accounts receivable                          $   11,413,000    $   1,636,000    $   (2,683,000)(1)  $   10,366,000
      Allowance on
           affiliate receivables                            11,522,000          624,000       (12,146,000)(2)               -
      Allowance for obligatory
           investments                                       9,122,000        1,044,000          (360,000)          9,806,000
                                                        ---------------   --------------   ---------------     ---------------
                                                        $   32,057,000    $   3,304,000    $  (15,189,000)     $   20,172,000
                                                        ===============   ==============   ===============     ===============
</TABLE>

----------------------
(1)        Represents net write-offs of uncollectible accounts.

(2)        Represents write-off of affiliated receivables.

(3)        Represents write-offs of obligatory investments in connection with
           the contribution of certain obligatory investments to CRDA approved
           projects.




                                       64
<PAGE>







CERTIFICATIONS

                    Certification of Chief Executive Officer
                               Pursuant to 13a-14
         of the Securities Exchange Act of 1934, as amended (the "Act")

         I, Richard P. Brown, Chief Executive Officer of GB Holdings, Inc.,
GB Property Funding Corp. and Greate Bay Hotel and Casino, Inc. certify that:

         (1) I have reviewed the Registrant's Annual Report on Form 10-K for the
period ended December 31, 2002 of the Registrant (the "Report");

         (2) Based on my knowledge, the Report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by the Report; and

         (3) Based on my knowledge, the consolidated financial statements, and
other financial information included in the Report, fairly present in all
material respects the financial condition, results of operations and cash flows
of the Registrant as of, and for, the periods presented in the Report.

         (4) The other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as such term is
defined in Section 13a-14(c) of the Act) for the issuer and have:

                  (i) designed such disclosure controls and procedures to ensure
that material information relating to the Registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which the periodic reports are being prepared;

                  (ii) evaluated the effectiveness of the Registrant's
disclosure controls and procedures as of a date within 90 days prior to the
filing date of this Report (the "Evaluation Date"); and

                  (iii) presented in the Report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

         (5) The other certifying officer(s) and I have disclosed, based on our
most recent evaluation, to the issuer's auditors and the audit committee of the
board of directors (or persons fulfilling the equivalent function):

                  (i) all significant deficiencies in the design or operation of
internal controls which could adversely affect the Registrant's ability to
record, process, summarize and report financial data and have identified for the
Registrant's auditors any material weaknesses in internal controls; and

                  (ii) any fraud, whether or not material, that involves
management or other employees who have a significant role in the Registrant's
internal controls; and

         (6) The other certifying officer(s) and I have indicated in the report
whether or not there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date
of their most recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.

    /s/ Richard P. Brown
-------------------------------------
Name: Richard P. Brown


Date: March 28, 2003


<PAGE>

                    Certification of Chief Executive Officer
                           Pursuant to 18 U.S.C. 1350
                (Section 906 of the Sarbanes-Oxley Act of 2002)

I, Richard P. Brown, Chief Executive Officer of GB Holdings, Inc., GB Property
Funding Corp., and Greate Bay Hotel and Casino, Inc. (collectively, the
"Registrant") certify that to the best of my knowledge, based upon a review of
the Annual Report on Form 10-K for the period ended December 31, 2002 of the
Registrant (the "Report"):

         (1)      The Report fully complies with the requirements of Section 13
                  (a) or 15(d) of the Securities Exchange Act of 1934, as
                  amended; and

         (2)      The information contained in the Report fairly presents, in
                  all material respects, the financial condition and results of
                  operations of the Registrant.


    /s/   Richard P. Brown
------------------------------------
Name: Richard P. Brown

Date: March 28, 2003




<PAGE>

                    Certification of Chief Financial Officer
                               Pursuant to 13a-14
         of the Securities Exchange Act of 1934, as amended (the "Act")

         I, Timothy A. Ebling, Chief Financial Officer of GB Holdings, Inc., GB
Property Funding Corp. and Greate Bay Hotel and Casino, Inc. certify that:

         (1) I have reviewed the Registrant's Annual Report on Form 10-K for the
period ended December 31, 2002 of the Registrant (the "Report");

         (2) Based on my knowledge, the Report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by the Report; and

         (3) Based on my knowledge, the consolidated financial statements, and
other financial information included in the Report, fairly present in all
material respects the financial condition, results of operations and cash flows
of the Registrant as of, and for, the periods presented in the Report.

         (4) The other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as such term is
defined in Section 13a-14(c) of the Act) for the issuer and have:

                  (i) designed such disclosure controls and procedures to ensure
that material information relating to the Registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which the periodic reports are being prepared;

                  (ii) evaluated the effectiveness of the Registrant's
disclosure controls and procedures as of a date within 90 days prior to the
filing date of this Report (the "Evaluation Date"); and

                  (iii) presented in the Report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

         (5) The other certifying officer(s) and I have disclosed, based on our
most recent evaluation, to the issuer's auditors and the audit committee of the
board of directors (or persons fulfilling the equivalent function):

                  (iii) all significant deficiencies in the design or operation
of internal controls which could adversely affect the Registrant's ability to
record, process, summarize and report financial data and have identified for the
Registrant's auditors any material weaknesses in internal controls; and

                  (iv) any fraud, whether or not material, that involves
management or other employees who have a significant role in the Registrant's
internal controls; and

         (6) The other certifying officer(s) and I have indicated in the report
whether or not there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date
of their most recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.

/s/  Timothy A. Ebling
-----------------------------------
Name: Timothy A. Ebling

Date: March 28, 2003




<PAGE>




                    Certification of Chief Financial Officer
                           Pursuant to 18 U.S.C. 1350
                 (Section 906 of the Sarbanes-Oxley Act of 2002)

         I, Timothy A. Ebling, Chief Financial Officer of GB Holdings, Inc., GB
Property Funding Corp., and Greate Bay Hotel and Casino, Inc. (collectively, the
"Registrant") certify that to the best of my knowledge, based upon a review of
the Annual Report on Form 10-K for the period ended December 31, 2002 of the
Registrant (the "Report"):

         (1)      The Report fully complies with the requirements of Section 13
                  (a) or 15(d) of the Securities Exchange Act of 1934, as
                  amended; and

         (2)      The information contained in the Report fairly presents, in
                  all material respects, the financial condition and results of
                  operations of the Registrant.

 /s/  Timothy A. Ebling
-----------------------------------
Name: Timothy A. Ebling

Date:      March 28, 2003





<PAGE>





CERTIFICATIONS


                    Certification of Chief Executive Officer
                               Pursuant to 13a-14
         of the Securities Exchange Act of 1934, as amended (the "Act")


         I, Richard P. Brown, Chief Executive Officer of GB Holdings, Inc., GB
Property Funding Corp. and Greate Bay Hotel and Casino, Inc. certify that:

         (1) I have reviewed the Registrant's Annual Report on Form 10-K for the
period ended December 31, 2002 of the Registrant (the "Report");

         (2) Based on my knowledge, the Report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by the Report; and

         (3) Based on my knowledge, the consolidated financial statements, and
other financial information included in the Report, fairly present in all
material respects the financial condition, results of operations and cash flows
of the Registrant as of, and for, the periods presented in the Report.

         (4) The other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as such term is
defined in Section 13a-14(c) of the Act) for the issuer and have:

                  (i) designed such disclosure controls and procedures to ensure
that material information relating to the Registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which the periodic reports are being prepared;

                  (ii) evaluated the effectiveness of the Registrant's
disclosure controls and procedures as of a date within 90 days prior to the
filing date of this Report (the "Evaluation Date"); and

                  (iii) presented in the Report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

         (5) The other certifying officer(s) and I have disclosed, based on our
most recent evaluation, to the issuer's auditors and the audit committee of the
board of directors (or persons fulfilling the equivalent function):

                  (v) all significant deficiencies in the design or operation of
internal controls which could adversely affect the Registrant's ability to
record, process, summarize and report financial data and have identified for the
Registrant's auditors any material weaknesses in internal controls; and

                  (vi) any fraud, whether or not material, that involves
management or other employees who have a significant role in the Registrant's
internal controls; and

         (6) The other certifying officer(s) and I have indicated in the report
whether or not there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date
of their most recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.



Name:  Richard P. Brown
--------------------------------
Date:  March 28, 2003

<PAGE>

                    Certification of Chief Executive Officer
                           Pursuant to 18 U.S.C. 1350
                 (Section 906 of the Sarbanes-Oxley Act of 2002)

I, Richard P. Brown, Chief Executive Officer of GB Holdings, Inc., GB Property
Funding Corp., and Greate Bay Hotel and Casino, Inc. (collectively, the
"Registrant") certify that to the best of my knowledge, based upon a review of
the Annual Report on Form 10-K for the period ended December 31, 2002 of the
Registrant (the "Report"):

         (1)      The Report fully complies with the requirements of Section 13
                  (a) or 15(d) of the Securities Exchange Act of 1934, as
                  amended; and

         (2)      The information contained in the Report fairly presents, in
                  all material respects, the financial condition and results of
                  operations of the Registrant.



-----------------------------------------
Name:   Richard P. Brown

Date:   March 28, 2003


<PAGE>

                    Certification of Chief Financial Officer
                               Pursuant to 13a-14
         of the Securities Exchange Act of 1934, as amended (the "Act")

         I, Timothy A. Ebling, Chief Financial Officer of GB Holdings, Inc., GB
Property Funding Corp. and Greate Bay Hotel and Casino, Inc. certify that:

         (1) I have reviewed the Registrant's Annual Report on Form 10-K for the
period ended December 31, 2002 of the Registrant (the "Report");

         (2) Based on my knowledge, the Report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by the Report; and

         (3) Based on my knowledge, the consolidated financial statements, and
other financial information included in the Report, fairly present in all
material respects the financial condition, results of operations and cash flows
of the Registrant as of, and for, the periods presented in the Report.

         (4) The other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as such term is
defined in Section 13a-14(c) of the Act) for the issuer and have:

                  (i) designed such disclosure controls and procedures to ensure
that material information relating to the Registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which the periodic reports are being prepared;

                  (ii) evaluated the effectiveness of the Registrant's
disclosure controls and procedures as of a date within 90 days prior to the
filing date of this Report (the "Evaluation Date"); and

                  (iii) presented in the Report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

         (5) The other certifying officer(s) and I have disclosed, based on our
most recent evaluation, to the issuer's auditors and the audit committee of the
board of directors (or persons fulfilling the equivalent function):

                  (vii) all significant deficiencies in the design or operation
of internal controls which could adversely affect the Registrant's ability to
record, process, summarize and report financial data and have identified for the
Registrant's auditors any material weaknesses in internal controls; and

                  (viii) any fraud, whether or not material, that involves
management or other employees who have a significant role in the Registrant's
internal controls; and

         (6) The other certifying officer(s) and I have indicated in the report
whether or not there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date
of their most recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.


-----------------------------------------
Name:  Timothy A. Ebling

Date:  March 28, 2003


<PAGE>

                    Certification of Chief Financial Officer
                           Pursuant to 18 U.S.C. 1350
                (Section 906 of the Sarbanes-Oxley Act of 2002)

I, Timothy A. Ebling, Chief Financial Officer of GB Holdings, Inc., GB Property
Funding Corp., and Greate Bay Hotel and Casino, Inc. (collectively, the
"Registrant") certify that to the best of my knowledge, based upon a review of
the Annual Report on Form 10-K for the period ended December 31, 2002 of the
Registrant (the "Report"):

         (1)      The Report fully complies with the requirements of Section 13
                  (a) or 15(d) of the Securities Exchange Act of 1934, as
                  amended; and

         (2)      The information contained in the Report fairly presents, in
                  all material respects, the financial condition and results of
                  operations of the Registrant.



Name:   Timothy A. Ebling

Date:      March 28, 2003