<PAGE>

                                   FORM 10-K
                       SECURITIES AND EXCHANGE COMMISSION
                                WASHINGTON, D.C.

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

For the fiscal year ended                 DECEMBER 31, 1996
                         -------------------------------------------------------

                                      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)

   TWO GALLERIA TOWER, SUITE 2200
       13455 NOEL ROAD, LB48
         DALLAS, TEXAS                                   75240
------------------------------------------   -----------------------------------
(Address of principal executive offices)               (Zip Code)

(Registrant's telephone number, including area code):      (972) 386-9777
                                                     ---------------------------

          Securities registered pursuant to Section 12(b) of the Act:

         $185,000,000 PRINCIPAL
AMOUNT OF 10 7/8% FIRST MORTGAGE NOTES DUE
            JANUARY 15, 2004                      AMERICAN STOCK EXCHANGE
------------------------------------------  ------------------------------------
     Title of each class                    Name of exchange on which registered

          Securities registered pursuant to Section 12(g) of the Act:

                                     NONE
--------------------------------------------------------------------------------
                               (Title of Class)

          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
                                                             -----      -----

          As of March 25, 1997, 1,000 shares of Common Stock of GB Holdings,
Inc., $1.00 par value, were outstanding, all of which were held by an affiliate.
As of March 25, 1997, 1,000 shares of Common Stock of GB Property Funding Corp.,
$1.00 par value, and 100 shares of Common Stock of Greate Bay Hotel and Casino,
Inc., no par value, were outstanding, all of which were held by GB Holdings,
Inc.

                      DOCUMENTS INCORPORATED BY REFERENCE

          Portions of the following documents are incorporated by reference into
the indicated part or parts of this report.

                                     NONE

          Each of the Registrants meet the conditions set forth in General
Instruction (J)(1)(a) and (b) of Form 10-K and is therefore filing this Form
with the reduced disclosure format.

                                       1
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                                    PART I


ITEM 1.  BUSINESS

GENERAL
-------

          The registered securities consist of 10 7/8% First Mortgage Notes (the
"10 7/8% First Mortgage Notes") in the principal amount of $185,000,000 due
January 15, 2004 issued by GB Property Funding Corp. ("GB Property Funding") and
listed on the American Stock Exchange.  GB Property Funding's obligations are
unconditionally guaranteed by GB Holdings, Inc. ("Holdings"), a Delaware
corporation with principal executive offices at Two Galleria Tower, Suite 2200,
13455 Noel Road, LB48, Dallas, TX 75240 and by Greate Bay Hotel and Casino, Inc.
("GBHC"), a New Jersey corporation and a wholly owned subsidiary of Holdings
with principal offices at 136 South Kentucky Avenue, Atlantic City, New Jersey
08401.

          GB Property Funding is wholly owned by Holdings.  Holdings is a wholly
owned subsidiary of Pratt Casino Corporation ("PCC"), which is an indirect,
wholly owned subsidiary of Greate Bay Casino Corporation ("GBCC", formerly known
as Pratt Hotel Corporation).  GBCC is an American Stock Exchange listed company
subject to the reporting requirements of the Securities Act of 1934.

          GB Property Funding was organized during September 1993 as a special
purpose subsidiary of Holdings for the purpose of borrowing funds through the
issuance of the 10 7/8% First Mortgage Notes for the benefit of GBHC.  GBHC owns
the Sands Hotel and Casino located in Atlantic City, New Jersey (the "Sands").
Substantially all of Holdings' assets and operations relate to the Sands.  The
Sands is managed by New Jersey Management, Inc. ("NJMI"), also an indirect,
wholly owned subsidiary of GBCC.

THE SANDS
---------

          For a description of the Sands' facilities, please refer to "Item 2. -
Properties."  The Sands has begun a phased introduction of a motion picture
theme (the "Hollywood Theme") currently used by other gaming facilities managed
by subsidiaries of GBCC on behalf of Hollywood Casino Corporation ("HCC") which,
prior to December 31, 1996, owned approximately 80% of the outstanding stock of
GBCC.  The Hollywood Theme incorporates designs inspired by famous movies,
displays of motion picture memorabilia and movie themed gaming, entertainment,
retail and dining areas.  Management believes the timelessness and flexibility
of the Hollywood Theme will have particular appeal to Atlantic City casino
patrons who tend to visit frequently.  Implementation of the Hollywood Theme,
which will be accomplished as part of the ongoing capital improvements program,
began with the 1995 openings of the "Epic Buffet," a highly themed food and
beverage facility, and the Hollywood Casino(R) Studio Store, a highly themed
retail store. The conversion is expected to be completed in the near future.

          Business Strategy. The Sands' marketing strategy in the highly
          -----------------
competitive Atlantic City market has consisted of seeking higher-value repeat
patrons though its ongoing capital improvements program and its use of
sophisticated casino information technology to monitor and control certain
casino operations and to target marketing efforts toward frequent visitors.
Traditionally, the Sands has been successful in its marketing efforts toward the
high end, frequent table game and slot patron through its offering of private,
limited-access facilities and related amenities to premium patrons.  While the
Sands has strived to maintain its position in this segment, the completion of
the Sands' expansion in 1994 has allowed the Sands to broaden its appeal to the
mass drive-in patron for continued growth in this market segment.

          Generally, the Sands has three types of patrons: high-end patrons,
drive-in patrons, and bus patrons.  High-end patrons have gaming budgets of
$5,000 or more per visit, drive-in patrons typically live

                                       2
<PAGE>

within a 200 mile radius of the Sands and utilize the Sands' parking garage and
bus patrons are generally day-travelers who purchase "ticket coin packages"
which include bus transportation to and from the casino and a specified amount
of coins to use in the casino.

          The marketing strategy of the Sands has been to attract higher-value,
repeat patrons who return frequently and typically have larger gaming budgets
than other patrons who do not gamble regularly.  The Sands has implemented this
strategy through its focus of capital dollars in its high-end product and
conversion  to the Hollywood Theme.  The Sands' facilities and programs,
including the Plaza Club, the Island Club and hotel suites, have been designed
to appeal principally to these target patrons.

          In implementing the Sands' marketing and operating strategy, the Sands
uses proprietary casino information technology developed by Advanced Casino
Systems Corporation ("ACSC"), an affiliate of GBHC.  This technology includes
ACSC's table game and slot machine monitoring systems which enable the Sands to
track and rate patron play through the use of a casino player's card.  These
systems provide management with the key characteristics of patron play as slot
machines and table games are connected with its data base monitoring system.
When patrons use the casino player's card at slot machines or table games, the
information is immediately available to management and allows management to
implement marketing programs to recognize and reward patrons during their visits
to the casino.  Such promotions and complimentaries include free meals, hotel
accommodations, retail merchandise, parking and sweepstakes giveaways based on
slot machine patrons' gross wagering.  Management believes that its ability to
reward its customers on a "same-visit" basis is valuable in developing a loyal
base of higher value patrons.  ACSC's systems also allow the Sands to monitor,
analyze and control the granting of gaming credit, promotional expenses and
other marketing costs.  ACSC also has developed a system that the Sands utilizes
to capture and maintain patron information necessary in implementing its casino
players' card and other data base marketing programs.

          Management uses its data bases to focus its marketing efforts on
patrons who have been identified as higher value patrons.  Management believes
that its process of identifying higher value patrons, encouraging participation
in its casino player's card program and tailoring promotions and special events
to cater to this market segment enhances the profitability of the Sands.

          The Sands also markets to the "mass" casino patron market segment
through various forms of advertising media as well as through group and bus tour
packages.  Once new patrons are introduced to the Sands' gaming facilities and
the casino player's card program, management uses its data base capabilities to
direct market to these patrons in an attempt to convert them into higher value
patrons.

          Competition.  The Sands faces intense competition from the 11 other
          -----------
existing Atlantic City casinos. According to reports of the New Jersey Casino
Control Commission (the "Casino Commission"), the twelve Atlantic City casinos
currently offer over one million square feet of gaming space.  Several companies
recently announced plans to build and operate additional casino/hotels over the
next few years. For example,  Mirage Resorts and Circus Circus have jointly
submitted a proposal to the city for an approximately $1 billion resort complex
consisting of two casinos, two 2,000 room hotels, several theaters and an
upscale shopping concourse. The State of New Jersey has committed funding to
build a tunnel to access this complex.  Also, Sun International recently
acquired an existing casino in Atlantic City and has announced plans for a $500
million expansion and renovation including the addition of 1,400 hotel rooms and
a 22,000 square foot expansion of gaming space.  Also during 1996, Hilton Hotels
Corporation ("Hilton") acquired Bally Entertainment Corporation which operated
two casino properties in Atlantic City. The acquisition immediately established
Hilton as a presence in the Sands' market and, given the strength of the Hilton
brand name, has resulted in a new and formidable competitor.  Hilton has also
announced its intention to launch a tender offer for control of ITT Corporation,
owner and operator of Caesars Atlantic City, and is attempting to acquire
control of Claridge Hotel and Casino Corp. through the acquisition of a
significant portion of its outstanding debt.  Other individuals have also
submitted

                                       3
<PAGE>

applications and have been qualified in New Jersey to hold casino licenses.
Legislation enacted during 1996 and 1993 requires the allocation of an aggregate
of $175 million of Casino Reinvestment Development Authority ("CRDA") funds and
credits to subsidize the construction of new hotel rooms by casinos in Atlantic
City.  The CRDA is a governmental agency which administers the statutorily
mandated investments made by casino licensees.  Competitors of the Sands which
have the financial resources and that can currently access such funds and are
capable of physically expanding their facilities so as to take advantage of such
subsidy may benefit disproportionately from such legislation.  Plans have been
announced by other casino operators to complete in excess of 3,400 rooms within
the required subsidy period.  The expansion of existing gaming facilities and
the addition of new casinos could significantly increase the competitiveness of
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 availability and number of parking facilities, hotel
accommodations, proximity to the Boardwalk, proximity to other casino/hotels,
and access to the main expressway entering into Atlantic City.  GBHC believes
its operating strategy and facilities will enable it to compete against most
other Atlantic City casino/hotels, many of which have greater sources of funding
for capital improvements and financial resources for marketing and promotional
budgets than GBHC.

          Management estimates that a significant amount of the Sands' revenues
is derived from patrons living within a 120 mile radius of Atlantic City, New
Jersey, particularly from southeastern Pennsylvania, northern New Jersey and
metropolitan New York City.  Proposals to allow casino gaming in certain areas
of Pennsylvania and New York have been defeated within the past two 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, slot machines are
now allowed at race tracks in the State of Delaware.

          Industry Developments.  A number of significant changes to the
          ---------------------
regulations governing the casino industry have been approved by New Jersey
regulators in recent years.  Additional deregulation of the industry occurred in
1995 with the enactment of legislation amending the New Jersey Casino Control
Act (the "Casino Act").  Among other things, the amendments allow an increase
from 50,000 to 60,000 square feet of casino space for the minimum required 500
hotel rooms, eliminate any licensing requirements for certain hotel employees,
provide for temporary licensing for all casino employees, increase the maximum
renewal period of casino licenses for up to four years, permit the square
footage of simulcast space to be considered in determining the permissible
density of slot machines, and eliminate business and experience requirements for
employee licensing.  The legislation also removes the ownership limit of three
casino licenses per person.

          Partly as a result of such regulatory changes, the Atlantic City
gaming industry has continued to grow. Revenues have increased from $3.4 billion
in 1994 to $3.7 billion in 1995 (an increase from the previous year of 9.5%) and
to $3.8 billion in 1996 (an increase from the previous year of 1.8%).  The 1996
increase resulted primarily from an overall expansion of gaming space to
approximately one million square feet at the end of 1996 from approximately
950,000 square feet at the end of 1995, an increase in the number of hotel rooms
available in the Atlantic City market and an intense marketing campaign
undertaken by the industry during most of 1996.

          Casino/hotel operators have also benefited in recent years from a
trend toward increased slot play as slot machines have increasingly become more
popular than table games with loyal and frequent patrons, as well as 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 which are linked

                                       4
<PAGE>

between the various casinos to pay out a pooled jackpot and more attractive
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 significantly
outpaced table game revenue growth in recent years to the point where for 1996
slot win accounted for approximately 68.9% of total Atlantic City gaming win.
Table games remain important, however, in catering to the higher-end segment of
gaming patrons as well as in adding to the gaming ambience and providing a
varied gaming experience.

          Casino Credit.  Casino operations are conducted on both a credit and a
          -------------
cash basis.  Gaming debts arising in Atlantic City in accordance with applicable
regulations are enforceable under New Jersey law. For the year ended December
31, 1996, gaming credit extended to Sands' customers accounted for approximately
26.1% of overall table game wagering, while table game wagering accounted for
approximately 22.8% of overall casino wagering during the period.  At December
31, 1996, gaming receivables amounted to $24.4 million before allowances for
uncollectible gaming receivables amounting to $15.5 million.  Management of the
Sands believes that the allowances for uncollectible gaming receivables are
adequate.

          License Agreement.  GBCC entered into a 99-year license agreement (the
          -----------------
"Sands License Agreement") during 1987 to use the trade name "Sands" in Atlantic
City, New Jersey .  GBHC pays an annual royalty of 3% of gross room charges, as
defined in the Sands License Agreement.  Such charges amounted to $283,000
during the year ended December 31, 1996 and $288,000 during each of the years
ended December 31, 1995 and 1994.

          Employees and Labor Relations.  In Atlantic City, all casino
          -----------------------------
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, 1996, there
were approximately 3,200 employees at the Sands.  The Sands has collective
bargaining agreements with two unions that represent approximately 1,000 hotel
employees, substantially all of whom are represented by the Hotel, Restaurant
Employees and Bartenders International Union, AFL-CIO, Local 54.  The collective
bargaining agreements expire in September 1999.  Management considers its labor
relations to be good.

CASINO REGULATION
-----------------

          Casino gaming is strictly regulated in Atlantic City under the Casino
Act and the rules and regulations of the Casino Commission, which affect
virtually all aspects of the operations of the Sands.  The laws, rules and
regulations affecting Atlantic City gaming operations 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
many 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 operations
          ---------------
be licensed by the Casino Commission and that all employees (except for certain
non-casino job positions), major shareholders and other persons or entities
financially interested in the casino operation be either licensed or approved by
the Casino Commission.  A license is not transferable and may be revoked or
suspended under certain circumstances by the Casino Commission.  A plenary
license authorizes the operation of a casino with the games authorized in an
operation certificate issued by the Casino 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,

                                       5
<PAGE>

GBHC and NJMI have been issued plenary casino licenses, and GBCC has been
approved as a holding company of a casino licensee.

          The plenary licenses issued to GBHC and NJMI to own and operate the
Sands were renewed by the Casino Commission in September 1996 and extended
through September 30, 2000, subject to review of the Sands' financial stability
during 1997.  Terms of the current license require GBHC to comply with periodic
financial reporting requirements and to obtain prior Casino Commission approval
of certain cash transactions with affiliates.

          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 accounts of up to 4% of casino win.  During the
years ended December 31, 1996, 1995 and 1994, the taxes assessed by, and the
license and other fees paid by the Sands to the Casino Commission amounted to
$23.5 million, $25 million and $24.5 million, respectively.

          The Casino Act also requires a casino licensee to make certain
approved investments (including CRDA bonds) in New Jersey of at least 1.25% of
its gross casino revenues (as defined in the Casino Act) or pay an investment
alternative tax of 2.5% of its gross casino revenues.

          GBHC has, from time to time, contributed certain amounts held in
escrow to the CRDA.  In return, the CRDA granted GBHC waivers of certain of its
investment obligations in future periods.  GBHC made such contributions during
the years ended December 31, 1996, 1995 and 1994 totaling $1.5 million, $250,000
and $2.5 million, respectively, resulting in waivers granted by the CRDA during
1995 totaling $128,000.  No such waivers were granted during 1996 and 1994;
however, the contributions have  been designated for projects expected to
benefit the community and the Sands facility.

          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 Casino
Commission.  In the case of corporate holding companies whose stock is publicly
traded, the Casino Commission may require divestiture of the 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 Casino 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 to the New Jersey Division of Gaming Enforcement that the
"Institutional Investor" may be found unqualified, the Casino Commission shall
grant a waiver of this qualification requirement with respect to publicly traded
debt or equity securities if the investor will own (i) less than 10% of the
common stock of the company in question on a fully diluted basis, (ii) less than
20% of such company's indebtedness or (iii) less than 50% of an outstanding
issue of indebtedness of such company; the Casino 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 criteria. An Institutional
Investor must also purchase securities for investment and have no intent to
influence the management or operations of such company.  The Casino Commission
may, in its sole discretion, grant a waiver of the qualification requirement to
investors not qualifying as "Institutional Investors" under the

                                       6
<PAGE>

Casino Act if such investor 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.

ITEM 2.  PROPERTIES

          The Sands is located in Atlantic City, New Jersey on approximately 4.8
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 76,000 square
feet of gaming space containing approximately 2,000 slot machines and
approximately 125 table games; a hotel with 532 rooms (including 58 suites); six
restaurants; a cocktail lounge, two private lounges for invited guests (the
Plaza Club and the Island Club); an 800-seat cabaret theater; retail space; an
adjacent nine-story executive 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; and parking for approximately 1,900 vehicles.  In
addition, a warehouse near Atlantic City and a building located in Atlantic City
that houses a print shop and auto shop support the operations of the Sands.

          On February 17, 1994, GB Property Funding issued the 10 7/8% First
Mortgage Notes collateralized by a first mortgage on the Sands.  Interest on the
notes accrues at the rate of 10 7/8% per annum, payable semiannually commencing
July 15, 1994.  Interest only is payable during the first three years.
Commencing on July 15, 1997, semiannual principal payments of $2.5 million will
become due on each interest payment date with the balance due at maturity.  The
10 7/8% First Mortgage Notes are redeemable at the option of the issuer, in
whole or in part, on or after January 15, 1999 at stated redemption prices
ranging up to 104.08% of par plus accrued interest.

          The indenture to the 10 7/8% First Mortgage Notes contains various
provisions which, among other things, restrict the ability of certain
subsidiaries of GBCC to pay dividends to GBCC, to merge, consolidate or sell
substantially all of their assets or to incur additional indebtedness beyond
certain limitations.  In addition, the indenture provides for the maintenance of
certain cash balances and requires minimum expenditures, as defined in the
indenture, for property and fixture renewals, replacements and betterments at
the Sands.

ITEM 3.  LEGAL PROCEEDINGS

          GBHC is a party in various legal proceedings with respect to the
conduct of casino and hotel operations.  Although a possible range of loss can
not be estimated, in the opinion of management, based upon the advice of
counsel, settlement or resolution of these  proceedings should not have a
material adverse impact upon the consolidated financial position or results of
operations of Holdings or GBHC.

                                       7
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                                    PART II

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

          GB Property Funding's common stock, 1,000 shares with par value of
$1.00 per share, is its sole voting security; all of the 1,000 shares
outstanding are owned by Holdings.

          GBHC's common stock, 100 shares with no par value per share, is its
sole voting security; all of the 100 shares are owned by Holdings.

          Holdings' common stock, 1,000 shares with par value of $1.00 per
share, is its sole voting security; all of the 1,000 shares are owned by PCC.

          Neither GB Property Funding nor Holdings have paid any dividends in
the past and have no plans to pay any dividends in the future.  GBHC is
currently restricted from the payment of dividends by the Casino Commission
without prior approval.

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

RESULTS OF OPERATIONS

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

     GENERAL

          The Sands sustained a loss from operations of $8.3 million for the
year ended December 31, 1996 compared to income from operations of $17.4 million
earned during 1995. Operating results have been adversely affected in 1996 by
the advent of unprecedented and highly aggressive marketing programs instituted
by certain other Atlantic City casinos seeking to increase their market share
and to a lesser degree by severe winter snowstorms in January and February.
These factors, as well as declines in both the table games and slot machine hold
percentages, resulted in a decline in net revenues of 6.8% (to $264.8 million in
1996 from $284 million in 1995).  In addition, marketing and advertising costs
increased by $10.9 million (17.3%) during 1996 compared to 1995 in response to
competitive pressures.

                                       8
<PAGE>

     GAMING OPERATIONS

          The following table sets forth certain unaudited financial and
operating data relating to the Sands' operations:
<TABLE>
<CAPTION>
                                 YEAR ENDED DECEMBER 31,
                          -------------------------------------
                             1996         1995         1994
                          -----------  -----------  -----------
                           (IN THOUSANDS, EXCEPT PERCENTAGES)
<S>                       <C>          <C>          <C>
REVENUES:
 Table games              $   79,127   $   95,835   $   96,485
 Slot machines               159,972      163,821      155,381
 Other (1)                     3,790        4,392        4,341
                          ----------   ----------   ----------

  Total                   $  242,889   $  264,048   $  256,207
                          ==========   ==========   ==========
TABLE GAMES:
 Gross Wagering
  (Drop) (2)              $  576,577   $  606,283   $  605,854
                          ==========   ==========   ==========
 Hold Percentages: (3)
  Sands                         13.7%        15.8%        15.9%
  Atlantic City Casino
   Gaming Industry              15.5%        15.9%        15.8%

SLOT MACHINES:
 Gross Wagering
  (Handle) (2)            $1,954,612   $1,892,159   $1,760,279
                          ==========   ==========   ==========
 Hold Percentage:(3)
  Sands (4)                      8.2%         8.7%         8.8%
</TABLE>
____________________________

(1)  Consists of revenues from poker and simulcast horse racing wagering.

(2)  Gross wagering consists of the total value of chips purchased for table
     games (excluding poker) and keno wagering (collectively, the "drop") and
     coins wagered in slot machines ("handle").

(3)  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".

(4)  The Sands' hold percentage with respect to slot machines is reflected on an
     accrual basis. Comparable data for the Atlantic City gaming industry is not
     available.  The 1994 hold percentage calculations for the Sands have been
     adjusted to exclude the recognition of approximately $1 million, in slot
     machine revenues resulting from the reversal of certain progressive jackpot
     liabilities (see "Revenues" below).

          Table games drop at the Sands declined $29.7 million (4.9%) during
1996 compared with 1995. The Sands' decrease compares with an increase of 5% in
table drop for all other Atlantic City casinos during the same period. As a
result, the Sands' table game market share (expressed as a percentage of the
Atlantic City industry aggregate table game drop) decreased to 7.7% during 1996
from 8.5% during 1995.

                                       9
<PAGE>

Table game drop throughout the year was adversely impacted by the increase in
competitive pressures in the rated table market segment, of which a significant
portion was in the "high end" and mid-market segments.  The last six months of
1996 also saw a decline in the unrated table market segment as expansions at
competing properties, construction on roadways into the city and other factors
all served to reduce unrated table play at the Sands.

          Slot machine handle increased $62.5 million (3.3%) during 1996
compared with 1995. The Sands' increase compares with a 4.9% increase in slot
machine handle for all other Atlantic City casinos. As a result, the Sands'
market share of slot machine play declined slightly to 6.1% from 6.2% during
1995. The increase in slot machine handle is largely attributable to increases
in marketing programs, such as coin incentive and direct marketing programs,
which resulted in significant increases in the number of bus patrons for 1996
compared to 1995. The Sands' average number of slot machines increased by less
than 1% during 1996 compared to an increase of 11.3% for all other Atlantic City
casinos. The greater percentage increase in the number of slot machines for
other Atlantic City casinos reflects, in part, expansions of certain facilities
during 1996 which resulted in an overall increase of approximately 121,000
square feet of casino space and further contributed to the Sands' decline in
market share.

     REVENUES

          Casino revenues at the Sands decreased by $21.2 million (8%) during
1996 compared with 1995. Most of the decline in casino revenues is attributable
to table games which were impacted by both a decline in gross wagering as
discussed previously and by a significant and unusual decrease in the table
games hold percentage at the Sands to 13.7% during 1996 compared to 15.8% during
1995. The 3.3% increase in slot machine wagering at the Sands during 1996
compared to 1995 was more than offset by a decline in the slot machine hold
percentage to 8.2% from 8.7%.

          Rooms revenue did not change significantly during 1996 compared with
1995. Food and beverage revenues increased $1.6 million (4.9%) during 1996
compared with 1995 primarily as a result of the opening of the Epic Buffet
during the third quarter of 1995. Other revenues increased $1.4 million (31.3%)
during 1996 compared to 1995 as a result of an increase in theater entertainment
revenue.

          Promotional allowances represent the estimated value of goods and
services provided free of charge to casino customers under various marketing
programs. As a percentage of rooms, food and beverage and other revenues at the
Sands, these allowances decreased to 56.1% during 1996 from 57.6% during 1995.
Such decrease is primarily attributable to increases in other types of marketing
programs in lieu of promotional allowances.

     DEPARTMENTAL EXPENSES

          Casino expenses at the Sands increased $9.7 million (4.6%) during 1996
compared to 1995.  The increase is primarily due to the expansion of various
marketing programs in response to competitive pressures.  During much of 1996,
an unprecedented and highly aggressive industry wide attempt to increase market
share resulted in significantly higher costs with respect to coin incentive
packages offered to bus patrons.  The additional costs of such programs result
in greater allocation of rooms, food and beverage and other expenses to casino
expense.  Such increases have been partially offset by a $1.6 million reduction
in gaming taxes during 1996 compared with 1995.

          Rooms expense decreased $186,000 (7.1%) during 1996 as compared to
1995 primarily due to increased allocation of rooms expense to casino expense
resulting from increases  in casino marketing activities relating to rooms.
Food and beverage expense increased $867,000 (8.9%) during 1996 compared to
1995.  This increase reflects increased costs associated with the Epic Buffet
which were partially offset by increases in marketing programs, the costs of
which are allocated to the casino department.  Other

                                       10
<PAGE>

expenses increased $1.3 million (63.5%) during 1996 compared with 1995 as
increases in theater entertainment costs were partially offset by increased
allocations to the casino department.

     GENERAL AND ADMINISTRATIVE

          General and administrative expenses decreased $4.5 million (19.7%)
during 1996 as compared to 1995 primarily due to decreases in management fees
and equipment rentals. In addition, cost containment measures implemented by
management contributed to a reduction in administrative costs during the second
half of 1996.

     INTEREST

          Interest income decreased $218,000 (12.1%) during 1996 compared with
1995 due to a decrease in the amount of cash available for temporary cash
investments. Interest expense did not change significantly during 1996 compared
to the prior year.

     INCOME TAX BENEFIT (PROVISION)

          Holdings' operations have been included in HCC's consolidated federal
income tax return for periods through December 31, 1996. Pursuant to agreements
between Holdings, GBCC and HCC, Holdings' provision for federal income taxes is
based on the amount of tax which would have been provided if a separate return
were filed .

          Holdings and its subsidiaries have net operating loss carryforwards
("NOL's") totaling approximately $24 million, none of which expire before the
year 2009 for federal tax purposes and the year 2001 for state tax purposes.
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("SFAS 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, a valuation
allowance should be recorded. Due to the continued availability of NOL's
originating in 1994 for federal and state tax purposes and the significant book
and tax losses sustained in 1996, management is unable to determine that the
realization of such asset was more likely than not and, thus, has provided a
valuation allowance for the entire deferred tax asset at December 31, 1996.

     INFLATION

          Management believes that in the near term, modest inflation, together
with increasing 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 Holdings' 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 Holdings' casino revenues and profitability.

LIQUIDITY AND CAPITAL RESOURCES

          Holdings' only operations and resulting sources of liquidity and
capital resources are those of its wholly owned subsidiary, GBHC, whose only
operations in turn are those of the Sands. Prior to 1996,

                                       11
<PAGE>

GBHC's earnings before depreciation, interest, amortization, taxes and
intercompany management fees were sufficient to meet its debt service
obligations (other than certain maturities of principal that have been
refinanced) and to fund a substantial portion of its capital expenditures.  GBHC
has also used short-term borrowings to fund seasonal cash needs and for certain
capital projects.

     OPERATING ACTIVITIES

          At December 31, 1996, GBHC had cash and cash equivalents of $15.6
million. GBHC sustained an operating cash flow deficit of $6.1 million for 1996
compared to net cash generated from operations of $20.7 million during 1995,
resulting in an aggregate decline in operating cash flow of $26.8 million and a
decline in working capital of $28.2 million compared to December 31, 1995. GBHC
utilized its existing cash, available lines of credit and borrowings from
affiliates during 1996 to meet its operating needs, to fund capital additions
totaling $5.5 million and to make obligatory investments of $3.1 million.

     FINANCING ACTIVITIES

          During February 1994, GBHC refinanced virtually all of its outstanding
debt as part of an overall restructuring by GBCC (the "GBCC Recapitalization").
The refinancing was completed through a public offering of $270 million of debt
securities consisting of $185 million of 10 7/8% First Mortgage Notes due
January 15, 2004 and $85 million of 11 5/8% Senior Notes due April 15, 2004.
Proceeds from the debt offerings were used, in part, to refinance the Sands'
first mortgage and other indebtedness scheduled to mature in 1994 and to provide
partial funding for an expansion of gaming space at the Sands. As part of the
GBCC Recapitalization, a subsidiary of GBCC also issued $15 million of 14 5/8%
junior subordinated notes due in 2005 to HCC; the subsidiary loaned $10 million
of such proceeds to GBHC on the same terms.  Interest on this subordinated
affiliate debt is payable semiannually commencing August 17, 1994, with payment
subject to meeting certain tests required by the indenture for the 10 7/8% First
Mortgage Notes.

          As of April 30, 1996, GBHC extended $2 million of its bank line of
credit until April 30, 1997. As of December 31, 1996, $2 million was outstanding
under the line of credit; the outstanding balance was repaid in January 1997
with proceeds from affiliate borrowings and the line of credit was cancelled.

          During the third quarter of 1996, GBHC borrowed $6.5 million from GBCC
for working capital purposes with interest at the rate of 13 3/4% per annum
payable quarterly commencing October 1, 1996. During the first quarter of 1997,
GBHC borrowed an additional $1.5 million from GBCC and $5 million from other
subsidiaries of GBCC on similar terms. Repayment of such borrowings and payment
of the related accrued interest is subject to regulatory approval.

          Commencing in July 1997, semiannual principal payments of $2.5 million
will become due with respect to the 10 7/8% First Mortgage Notes. Total
scheduled maturities of long-term debt during 1997 are $2.5 million.

     CAPITAL EXPENDITURES AND OBLIGATORY INVESTMENTS

          Capital expenditures at the Sands during 1996 amounted to
approximately $5.5 million and management anticipates capital expenditures
during 1997 will be approximately $4.6 million. Projects currently planned
during 1997 include additional upgrades and improvements to rooms at the Sands,
including its higher-end suite product, and other departmental expenditures.

          The Sands is required by the New Jersey Casino Control Act to make
certain investments with the Casino Reinvestment Development Authority, a
governmental agency which administers the statutorily

                                       12
<PAGE>

mandated investments made by casino licensees.  Deposit requirements for 1996
totaled $3.1  million and are anticipated to be approximately $3.1 million
during 1997 as well.

     SUMMARY

          As reflected in the consolidated financial statements, Holdings has
incurred a net loss exclusive of management fees of $26.7 million in 1996 which
in turn generated an operating cash flow deficit of $6.1 million. As a
consequence Holdings has had to rely on borrowings from affiliates to meet its
debt service requirements and to fund working capital needs during its seasonal
low operating periods. The availability of additional borrowings from GBCC and
other subsidiaries of GBCC during 1997 is limited. HCC, which has loaned $6.5
million to GBCC for use by the Sands, is subject to certain indenture provisions
which restrict its ability to provide ongoing financial support to an additional
$3.5 million.

          Holdings' remaining principal and interest requirements during 1997,
exclusive of interest of $10.1 million paid in January, amount to $12.6 million.
Due to mild winter weather conditions compared to a year ago and an abatement of
the intense marketing competition for bus customers, operating results for the
first two months of 1997 reflect a substantial improvement over 1996. In the
absence of a resumption of the marketing wars which plagued Atlantic City
casinos in 1996 or other unforeseen events, management believes that its
operating plan for 1997 is attainable and will provide sufficient funds from
operating cash flow which, together with funds available from affiliates, if
required, will enable Holdings to satisfy its debt service requirements for
1997.

                                       13
<PAGE>

ITEM 8.  INDEX TO FINANCIAL STATEMENTS

                                                                          PAGE
                                                                          ----
GB PROPERTY FUNDING CORP.
 Report of Independent Public Accountants to GB Property
  Funding Corp............................................................ 15

 Balance Sheets of GB Property Funding Corp. as of
  December 31, 1996 and 1995.............................................. 16

 Statements of Operations of GB Property Funding Corp.
  for the Years Ended December 31, 1996, 1995 and 1994.................... 17

 Statements of Cash Flows of GB Property Funding Corp.
  for the Years Ended December 31, 1996, 1995 and 1994.................... 18

 Notes to Financial Statements of GB Property Funding Corp................ 19


GB HOLDINGS, INC. AND SUBSIDIARIES
 Report of Independent Public Accountants to GB Holdings, Inc.
  and Subsidiaries........................................................ 22

 Consolidated Balance Sheets of GB Holdings, Inc.
  and Subsidiaries as of December 31, 1996 and 1995....................... 23

 Consolidated Statements of Operations of GB Holdings, Inc.
  and Subsidiaries for the Years Ended December 31, 1996, 1995 and 1994... 25

 Consolidated Statement of Changes in Shareholder's (Deficit)
  Equity of GB Holdings, Inc. and Subsidiaries for the Three Years
  Ended December 31, 1996................................................. 26

 Consolidated Statements of Cash Flows of GB Holdings, Inc.
  and Subsidiaries for the Years Ended December 31, 1996, 1995 and 1994... 27

 Notes to Consolidated Financial Statements of GB Holdings, Inc.
  and Subsidiaries........................................................ 28


                                       14
<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To GB Property Funding Corp.:

          We have audited the accompanying balance sheets of GB Property Funding
Corp. (the Company, a Delaware corporation and wholly owned subsidiary of GB
Holdings, Inc.) as of December 31, 1996 and 1995 and the related statements of
operations and cash flows for each of the three years in the period ended
December 31, 1996.  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 generally accepted auditing
standards.  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 financial statements referred to above present
fairly, in all material respects, the financial position of GB Property Funding
Corp. as of December 31, 1996 and 1995, and the results of its operations and
its cash flows for each of the three years in the period ended December 31,
1996, in conformity with generally accepted accounting principles.

                                                ARTHUR ANDERSEN LLP



Roseland, New Jersey
March 21, 1997

                                       15
<PAGE>

                           GB PROPERTY FUNDING CORP.
                      (WHOLLY OWNED BY GB HOLDINGS, INC.)

                                BALANCE SHEETS


                                    ASSETS
<TABLE>
<CAPTION>
                                              DECEMBER 31,
                                       --------------------------
                                           1996          1995
                                       ------------  ------------
<S>                                    <C>           <C>
Current assets:
 Cash                                  $      1,000  $      1,000
 Interest receivable from affiliate       9,277,000     9,277,000
 Note receivable from affiliate           2,500,000             -
                                       ------------  ------------

  Total current assets                   11,778,000     9,278,000
                                       ------------  ------------

Note receivable from affiliate          182,500,000   185,000,000
                                       ------------  ------------

                                       $194,278,000  $194,278,000
                                       ============  ============

                      LIABILITIES AND SHAREHOLDER'S EQUITY

Current liabilities:
 Current maturities of long-term debt        $  2,500,000  $          -
 Accrued interest payable                       9,277,000     9,277,000
                                             ------------  ------------

 Total current liabilities                     11,777,000     9,277,000
                                             ------------  ------------

Long-term debt                                182,500,000   185,000,000
                                             ------------  ------------

Shareholder's equity (Note 1):
 Common stock, $1.00 par value per share,
  1,000 shares authorized and outstanding           1,000         1,000
                                             ------------  ------------

                                             $194,278,000  $194,278,000
                                             ============  ============
</TABLE>
                The accompanying notes to financial statements
                 are an integral part of these balance sheets.

                                       16
<PAGE>

                           GB PROPERTY FUNDING CORP.
                      (WHOLLY OWNED BY GB HOLDINGS, INC.)

                           STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                                       YEAR ENDED DECEMBER 31,
                           ------------------------------------------------
                              1996               1995               1994
                           -----------        -----------        ----------
<S>                        <C>                <C>                <C>

Revenues:
 Interest income           $20,119,000        $20,119,000        $17,548,000

Expenses:
 Interest expense           20,119,000         20,119,000         17,548,000
                           -----------        -----------        -----------

  Net income               $         -        $         -        $         -
                           ===========        ===========        ===========
</TABLE>
                The accompanying notes to financial statements
              are an integral part of these financial statements.

                                       17
<PAGE>

                           GB PROPERTY FUNDING CORP.
                      (WHOLLY OWNED BY GB HOLDINGS, INC.)

                           STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                              YEAR ENDED DECEMBER 31,
                                                    --------------------------------------------
                                                       1996             1995            1994
                                                    ----------       ----------      -----------
<S>                                                    <C>             <C>           <C>
OPERATING ACTIVITIES:
 Net income                                            $   -           $   -        $         -
 Adjustments to reconcile net income to net cash
  provided by operating activities:
  Increase in interest receivable from affiliate           -               -         (9,277,000)
  Increase in accrued interest payable                     -               -          9,277,000
                                                       ------          -----        -----------

   Net cash provided by operating activities               -               -                  -
                                                       ------          -----        -----------

FINANCING ACTIVITIES:
 Issuance of long-term debt                                -               -         18,500,000
 Loans to affiliate                                        -               -        (18,500,000)
                                                       ------         ------        -----------

  Net cash provided by financing activities                -               -                  -
                                                       ------          -----        -----------

  Net change in cash                                                                          -
  Cash at beginning of year                             1,000          1,000              1,000
                                                       ------         ------        -----------

  Cash at end of year                                  $1,000         $1,000        $     1,000
                                                       ======         ======        ===========
</TABLE>
                The accompanying notes to financial statements
              are an integral part of these financial statements.

                                       18
<PAGE>

                           GB PROPERTY FUNDING CORP.
                      (WHOLLY OWNED BY GB HOLDINGS, INC.)

                         NOTES TO FINANCIAL STATEMENTS

(1)  ORGANIZATION AND OPERATIONS

   GB Property Funding Corp. ("GB Property Funding"), a Delaware corporation,
was incorporated on September 29, 1993.  GB Property Funding is a wholly owned
subsidiary of GB Holdings, Inc. ("Holdings"), a Delaware corporation which is an
indirect, wholly owned subsidiary of Greate Bay Casino Corporation ("GBCC",
formerly known as Pratt Hotel Corporation).  Holdings was incorporated in
September 1993 and, on February 17, 1994, acquired through capital
contributions by its parent, all of the outstanding capital stock of Greate Bay
Hotel and Casino, Inc. ("GBHC"), which owns the Sands Hotel and Casino in
Atlantic City, New Jersey (the "Sands").  GB Property Funding was formed for the
purpose of borrowing $185,000,000 for the benefit of GBHC; such debt was issued
during February 1994 at the rate of 10 7/8% per annum and the proceeds were
loaned to GBHC (see Note 2).

   GB Property Funding has no operations and is dependent on the repayment of
its note to GBHC for servicing its debt obligations.  Administrative services
for GB Property Funding are provided by other GBCC subsidiaries at no charge.
The cost of such services is not significant.

   The operation of an Atlantic City casino/hotel is subject to significant
regulatory control.  Under provisions of the New Jersey Casino Control Act, GBHC
is required to maintain a nontransferable license to operate a casino in
Atlantic City.

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

(2)  LONG-TERM DEBT

   On February 17, 1994, GB Property Funding issued $185,000,000 of non-recourse
first mortgage notes due January 15, 2004 (the "10 7/8% First Mortgage Notes").
Interest on the notes accrues at the rate of 10 7/8% per annum, payable
semiannually commencing July 15, 1994.  Interest only is payable during the
first three years.  Commencing on July 15, 1997, semiannual principal payments
of $2,500,000 will become due on each interest payment date with the balance due
at maturity.

   The indenture for the 10 7/8% First Mortgage Notes contains various
provisions which, among other things, restrict the ability of certain
subsidiaries of GBCC to pay dividends to GBCC, to merge, consolidate or sell
substantially all of their assets or to incur additional indebtedness beyond
certain limitations.  In addition, the indenture requires the maintenance of
certain cash balances and requires minimum expenditures, as defined in the
indenture, for property and fixture renewals, replacements and betterments at
the Sands.  The proceeds of the 10 7/8% First Mortgage Notes were loaned to GBHC
on the same terms and conditions.

                                       19
<PAGE>

                           GB PROPERTY FUNDING CORP.
                      (WHOLLY OWNED BY GB HOLDINGS, INC.)

                         NOTES TO FINANCIAL STATEMENTS

   Interest paid and received with respect to the 10 7/8% First Mortgage Notes
and the loan to GBHC was $20,119,000 during each of the years ended December 31,
1996 and 1995 and $8,271,000 during the year ended December 31, 1994.

(3)  INCOME TAXES

   GB Property Funding's operations have been included in the consolidated
federal income tax return of Hollywood Casino Corporation ("HCC") for periods
through December 31, 1996.  Prior to December 31, 1996, HCC owned approximately
80% of the outstanding common stock of GBCC. Pursuant to agreements between
Holdings, GBCC and HCC, GB Property Funding's provision for federal income taxes
is calculated as if a separate federal return were filed.  For the years ended
December 31, 1996, 1995 and 1994, no provisions or payments have been made under
the agreements.

(4)  DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

   The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate that
value:

   CASH - The carrying amount approximates fair value.
   ----

   INTEREST RECEIVABLE AND INTEREST PAYABLE - The carrying amount approximates
   ----------------------------------------
fair value because of the short maturity of the obligation.

   NOTE RECEIVABLE AND LONG-TERM DEBT - The fair value of GB Property Funding's
   ----------------------------------
note receivable and long-term debt was estimated based on the quoted market
prices for recent trades of the issue.

                                       20
<PAGE>

                           GB PROPERTY FUNDING CORP.
                      (WHOLLY OWNED BY GB HOLDINGS, INC.)

                         NOTES TO FINANCIAL STATEMENTS

   The estimated carrying amounts and fair values of GB Property Funding's
financial instruments are as follows:
<TABLE>
<CAPTION>
                                        DECEMBER 31, 1996          DECEMBER 31, 1995
                                   --------------------------  --------------------------
                                     CARRYING                    CARRYING
                                      AMOUNT      FAIR VALUE      AMOUNT      FAIR VALUE
                                   ------------  ------------  ------------  ------------
<S>                                 <C>          <C>           <C>           <C>
Financial Assets
  Cash                             $      1,000  $      1,000  $      1,000  $      1,000
  Interest receivable                 9,277,000     9,277,000     9,277,000     9,277,000
  Note receivable from affiliate    185,000,000   154,475,000   185,000,000   160,950,000

Financial Liabilities
  Interest payable                    9,277,000     9,277,000     9,277,000     9,277,000
  10 7/8% First Mortgage Notes      185,000,000   154,475,000   185,000,000   160,950,000
</TABLE>

                                       21
<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To GB Holdings, Inc.:

   We have audited the accompanying consolidated balance sheets of GB Holdings,
Inc. (the Company, a Delaware corporation and wholly owned subsidiary of Pratt
Casino Corporation) and subsidiaries as of December 31, 1996 and 1995, and the
related consolidated statements of operations, changes in shareholder's
(deficit) equity and cash flows for each of the three years in the period ended
December 31, 1996.  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 generally accepted auditing
standards.  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 financial statements referred to above present fairly, in
all material respects, the financial position of GB Holdings, Inc. and
subsidiaries as of December 31, 1996 and 1995, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting principles.

                                  ARTHUR ANDERSEN LLP



Roseland, New Jersey
March 21, 1997

                                       22
<PAGE>

                       GB HOLDINGS, INC. AND SUBSIDIARIES
                   (WHOLLY OWNED BY PRATT CASINO CORPORATION)

                          CONSOLIDATED BALANCE SHEETS


                                     ASSETS
<TABLE>
<CAPTION>
                                                           DECEMBER 31,
                                                  -----------------------------
                                                       1996            1995
                                                  -------------   -------------
<S>                                               <C>             <C>
Current Assets:
 Cash and cash equivalents                        $  15,624,000   $  21,769,000
 Accounts receivable, net of allowances
  of $15,524,000 and $16,494,000, respectively       10,112,000      11,350,000
 Inventories                                          3,873,000       4,268,000
 Due from affiliate                                   2,382,000       7,638,000
 Refundable deposits and other current
  assets                                              3,180,000       4,736,000
                                                  -------------   -------------

  Total current assets                               35,171,000      49,761,000
                                                  -------------   -------------

Property and Equipment:
 Land                                                38,093,000      37,807,000
 Buildings and improvements                         185,508,000     185,077,000
 Operating equipment                                 91,865,000      87,489,000
 Construction in progress                             1,535,000       2,310,000
                                                  -------------   -------------

                                                    317,001,000     312,683,000
 Less - accumulated depreciation and
  amortization                                     (160,987,000)   (145,243,000)
                                                  -------------   -------------

 Net property and equipment                         156,014,000     167,440,000
                                                  -------------   -------------

Other Assets:
 Obligatory investments                               6,382,000       5,521,000
 Due from affiliate                                  17,606,000      13,681,000
 Deferred financing costs and other assets            9,265,000       9,155,000
                                                  -------------   -------------

  Total other assets                                 33,253,000      28,357,000
                                                  -------------   -------------

                                                  $ 224,438,000   $ 245,558,000
                                                  =============   =============
</TABLE>
               The accompanying notes to consolidated financial
     statements are an integral part of these consolidated balance sheets.

                                       23
<PAGE>

                      GB HOLDINGS, INC. AND SUBSIDIARIES
                  (WHOLLY OWNED BY PRATT CASINO CORPORATION)

                          CONSOLIDATED BALANCE SHEETS


                LIABILITIES AND SHAREHOLDER'S (DEFICIT) EQUITY
<TABLE>
<CAPTION>
                                                     DECEMBER 31,
                                             ---------------------------
                                                 1996           1995
                                             ------------   ------------
<S>                                          <C>            <C>

Current Liabilities:
 Current maturities of long-term debt        $  2,512,000   $     11,000
 Short-term credit facilities                   2,000,000              -
 Short-term borrowings from affiliates          6,500,000              -
 Accounts payable                               7,881,000      8,409,000
 Accrued liabilities -
  Salaries and wages                            4,981,000      5,108,000
  Interest                                     10,978,000      9,828,000
  Insurance                                     3,112,000      2,330,000
  Other                                         6,683,000      6,365,000
 Due to affiliates                                826,000        359,000
 Other current liabilities                      5,429,000      4,890,000
                                             ------------   ------------

  Total current liabilities                    50,902,000     37,300,000
                                             ------------   ------------

Long-Term Debt                                192,930,000    195,442,000
                                             ------------   ------------

Other Noncurrent Liabilities                    1,550,000      2,390,000
                                             ------------   ------------

Commitments and Contingencies

Shareholder's (Deficit) Equity:
 Common stock, $1.00 par value per share;
  1,000 shares authorized and
  outstanding                                       1,000          1,000
 Additional paid-in capital                    18,438,000     18,438,000
 Accumulated deficit                          (39,383,000)    (8,013,000)
                                             ------------   ------------

  Total shareholder's (deficit) equity        (20,944,000)    10,426,000
                                             ------------   ------------

                                             $224,438,000   $245,558,000
                                             ============   ============
</TABLE>
               The accompanying notes to consolidated financial
     statements are an integral part of these consolidated balance sheets.

                                       24
<PAGE>

                      GB HOLDINGS, INC. AND SUBSIDIARIES
                  (WHOLLY OWNED BY PRATT CASINO CORPORATION)

                CONSOLIDATED STATEMENTS OF OPERATIONS (NOTE 1)
<TABLE>
<CAPTION>
                                              YEAR ENDED DECEMBER 31,
                                    ------------------------------------------
                                        1996           1995           1994
                                    ------------  -------------  -------------
<S>                                 <C>            <C>            <C>
Revenues:
 Casino                             $242,889,000   $264,048,000   $256,207,000
 Rooms                                 9,446,000      9,602,000      9,611,000
 Food and beverage                    34,638,000     33,029,000     29,762,000
 Other                                 5,717,000      4,354,000      4,502,000
                                    ------------   ------------   ------------

                                     292,690,000    311,033,000    300,082,000
 Less - Promotional allowances       (27,929,000)   (27,083,000)   (24,943,000)
                                    ------------   ------------   ------------

  Net revenues                       264,761,000    283,950,000    275,139,000
                                    ------------   ------------   ------------

Expenses:
 Casino                              218,990,000    209,282,000    198,270,000
 Rooms                                 2,419,000      2,605,000      3,005,000
 Food and beverage                    10,618,000      9,751,000     10,171,000
 Other                                 3,258,000      1,993,000      3,635,000
 General and administrative           18,486,000     23,021,000     23,439,000
 Depreciation and amortization        19,310,000     19,937,000     18,872,000
                                    ------------   ------------   ------------

  Total expenses                     273,081,000    266,589,000    257,392,000
                                    ------------   ------------   ------------

(Loss) income from operations         (8,320,000)    17,361,000     17,747,000
                                    ------------   ------------   ------------

Non-operating income (expense):
 Interest income                       1,590,000      1,808,000      2,186,000
 Interest expense, net of
  capitalized interest of $762,000
  in 1994                            (22,236,000)   (21,680,000)   (21,053,000)
 Gain on sale of assets                   13,000         56,000         73,000
                                    ------------   ------------   ------------

  Total non-operating expense, net   (20,633,000)   (19,816,000)   (18,794,000)
                                    ------------   ------------   ------------

Loss before income taxes             (28,953,000)    (2,455,000)    (1,047,000)
 Income tax provision                 (2,417,000)      (186,000)      (920,000)
                                    ------------   ------------   ------------

Net loss                            $(31,370,000)  $ (2,641,000)  $ (1,967,000)
                                    ============   ============   ============
</TABLE>
      The accompanying notes to consolidated financial statements are an
                integral part of these consolidated statements.

                                       25
<PAGE>

                      GB HOLDINGS, INC. AND SUBSIDIARIES
                  (WHOLLY OWNED BY PRATT CASINO CORPORATION)


                       CONSOLIDATED STATEMENT OF CHANGES
                  IN SHAREHOLDER'S (DEFICIT) EQUITY (NOTE 1)
                  FOR THE THREE YEARS ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
                                                      ADDITIONAL
                              COMMON STOCK             PAID-IN     ACCUMULATED
                                 SHARES     AMOUNT     CAPITAL        DEFICIT
                              ------------  -------  -----------   -------------
<S>                           <C>           <C>      <C>           <C>

BALANCE, JANUARY 1, 1994         1,000      $1,000   $ 3,438,000   $ (3,405,000)
  Capital contribution               -           -    15,000,000              -
  Net loss                           -           -             -     (1,967,000)
                                 -----      ------   -----------   ------------

BALANCE, DECEMBER 31, 1994       1,000       1,000    18,438,000     (5,372,000)
  Net loss                           -           -             -     (2,641,000)
                                 -----      ------   -----------   ------------

BALANCE, DECEMBER 31, 1995       1,000       1,000    18,438,000     (8,013,000)
  Net loss                           -           -             -    (31,370,000)
                                 -----      ------   -----------   ------------

BALANCE, DECEMBER 31, 1996       1,000      $1,000   $18,438,000   $(39,383,000)
                                 =====      ======   ===========   ============
</TABLE>
      The accompanying notes to consolidated financial statements are an
                 integral part of this consolidated statement.

                                       26
<PAGE>

                      GB HOLDINGS, INC. AND SUBSIDIARIES
                  (WHOLLY OWNED BY PRATT CASINO CORPORATION)

                CONSOLIDATED STATEMENTS OF CASH FLOWS (NOTE 1)
<TABLE>
<CAPTION>
                                                                    YEAR ENDED DECEMBER 31,
                                                           --------------------------------------------
                                                               1996            1995          1994
                                                           ------------   -------------  --------------
<S>                                                        <C>            <C>            <C>
OPERATING ACTIVITIES:
 Net loss                                                  $(31,370,000)  $ (2,641,000)  $  (1,967,000)
 Adjustments to reconcile net loss to net cash
  (used in) provided by operating activities:
  Depreciation and amortization, including
    accretion of debt discount                               19,310,000     19,937,000      18,917,000
  Gain on sale of assets                                        (13,000)       (56,000)        (73,000)
  Provision for doubtful accounts                             2,167,000      2,988,000       3,283,000
  Deferred income tax provision (benefit)                     2,417,000     (2,458,000)      3,711,000
  Increase in accounts receivable                            (1,235,000)      (965,000)     (3,098,000)
  Increase in accounts payable and accrued expenses           1,795,000      3,297,000         605,000
  Net change in other current assets and liabilities          2,044,000      2,560,000      (1,693,000)
  Net change in other noncurrent assets and liabilities      (1,185,000)    (1,921,000)     (2,030,000)
                                                           ------------   ------------   -------------

    Net cash (used in) provided by operating activities      (6,070,000)    20,741,000      17,655,000
                                                           ------------   ------------   -------------

INVESTING ACTIVITIES:
 Net property and equipment additions                        (5,505,000)   (19,156,000)    (20,133,000)
 Proceeds from disposition of assets                             13,000         56,000          73,000
 Obligatory investments                                      (3,062,000)    (2,967,000)       (826,000)
                                                           ------------   ------------   -------------

   Net cash used in investing activities                     (8,554,000)   (22,067,000)    (20,886,000)
                                                           ------------   ------------   -------------

FINANCING ACTIVITIES:
 Issuance of long-term debt                                           -              -     195,000,000
 Net borrowings on credit facilities                          2,000,000              -               -
 Deferred financing costs                                       (10,000)       (32,000)     (6,827,000)
 Repayments of long-term debt                                   (11,000)       (10,000)   (161,676,000)
 Capital contributions                                                -              -      15,000,000
 Net borrowings from (repayments to) affiliates               6,500,000              -     (28,083,000)
                                                           ------------   ------------   -------------

  Net cash provided by (used in) financing activities         8,479,000        (42,000)     13,414,000
                                                           ------------   ------------   -------------

  Net (decrease) increase in cash and cash equivalents       (6,145,000)    (1,368,000)     10,183,000
    Cash and cash equivalents at beginning of year           21,769,000     23,137,000      12,954,000
                                                           ------------   ------------   -------------

    Cash and cash equivalents at end of year               $ 15,624,000   $ 21,769,000   $  23,137,000
                                                           ============   ============   =============
</TABLE>
      The accompanying notes to consolidated financial statements are an
                integral part of these consolidated statements.

                                       27
<PAGE>

                      GB HOLDINGS, INC. AND SUBSIDIARIES
                  (WHOLLY OWNED BY PRATT CASINO CORPORATION)

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(1)  ORGANIZATION, BUSINESS AND BASIS OF PRESENTATION

     GB Holdings, Inc. ("Holdings") is a Delaware corporation and a wholly owned
subsidiary of Pratt Casino Corporation ("PCC"), also a Delaware corporation.
PCC was incorporated during September 1993 and is wholly owned by PPI
Corporation, a New Jersey corporation and a wholly owned subsidiary of Greate
Bay Casino Corporation ("GBCC", formerly known as Pratt Hotel Corporation).  On
February 17, 1994, Holdings acquired Greate Bay Hotel and Casino, Inc. ("GBHC"),
a New Jersey corporation, through a capital contribution by its parent.  GBHC's
principal business activity is its ownership of the Sands Hotel and Casino in
Atlantic City, New Jersey (the "Sands").  The Sands is managed by New Jersey
Management, Inc. ("NJMI"), also a wholly owned subsidiary of PCC.  Holdings has
no operating activities and its only significant asset is its investment in
GBHC.  As the above entities were under common control, the merger was accounted
for similar to a pooling of interests; accordingly, the accompanying 1994
consolidated financial statements have been presented as if the accounts and
operations of Holdings and GBHC had always been combined.  All significant
intercompany balances and transactions have been eliminated.  Holdings had no
operating activities prior to the merger.

     GB Property Funding Corp. ("GB Property Funding"), a Delaware corporation
and a wholly owned subsidiary of Holdings, was incorporated in September 1993
for the purpose of borrowing funds through the issuance of $185,000,000 of ten-
year, nonrecourse first mortgage notes for the benefit of GBHC; such debt was
issued in February 1994 at the rate of 10 7/8% per annum and the proceeds were
loaned to GBHC (see Note 4).

     GBHC estimates that a significant amount of the Sands' revenues are derived
from patrons living in southeastern Pennsylvania, northern New Jersey 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.

     The accompanying consolidated financial statements have been prepared
assuming Holdings will continue as a going concern.  As reflected in the
consolidated financial statements, Holdings has incurred a net loss exclusive of
management fees of $26,726,000 in 1996 which in turn generated an operating cash
flow deficit of $6,070,000.  As a consequence, Holdings has had to rely on
borrowings from affiliates to meet its debt service requirements and to fund
working capital needs during its seasonal low operating periods.  The
availability of additional borrowings from GBCC and other subsidiaries of GBCC
during 1997 is limited.  HCC, which has loaned $6,500,000 to GBCC for use by the
Sands (see Note 6), is subject to certain indenture provisions which restrict
its ability to provide ongoing financial support to an additional $3,500,000.

     Holdings' remaining principal and interest requirements during 1997,
exclusive of interest of $10,078,000 paid in January, amount to $12,610,000.
Due to mild winter weather conditions compared

                                       28
<PAGE>

                      GB HOLDINGS, INC. AND SUBSIDIARIES
                  (WHOLLY OWNED BY PRATT CASINO CORPORATION)

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

to a year ago and an abatement of the intense marketing competition for bus
customers, operating results for the first two months of 1997 reflect a
substantial improvement over 1996.  In the absence of a resumption of the
marketing wars which plagued Atlantic City casinos in 1996 or other unforseen
events, management believes that its operating plan for 1997 is attainable and
will provide sufficient funds from operating cash flow which, together with
funds available from affiliates, if required, will enable Holdings to satisfy
its debt service requirements for 1997.

(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     The significant accounting policies followed in the preparation of the
accompanying consolidated financial statements are discussed below.  The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

  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 and certain progressive table game payouts.  Such anticipated jackpots
and payouts are reflected as current liabilities in the accompanying
consolidated balance sheets.  During the year ended December 31, 1994, the Sands
removed certain progressive jackpots from the gaming floor in accordance with
regulations of the New Jersey Casino Control Commission (the "Casino
Commission"), resulting in the reduction of $1,035,000 of progressive jackpot
liabilities, and the corresponding recognition of an equal amount of slot
machine revenues.

     The estimated value of rooms, food and beverage and other items which 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 as casino expenses in the accompanying
consolidated statements of operations.  Costs of complimentaries allocated from
the rooms,

                                       29
<PAGE>
                      GB HOLDINGS, INC. AND SUBSIDIARIES
                  (WHOLLY OWNED BY PRATT CASINO CORPORATION)

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

food and beverage and other operating departments to the casino department
during the years ended December 31, 1996, 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
                             1996            1995            1994
                          -----------     -----------     -----------
<S>                       <C>             <C>             <C>

Rooms                     $ 6,170,000     $ 6,023,000     $ 6,080,000
Food and Beverage          29,357,000      28,259,000      24,611,000
Other                       4,435,000       3,631,000       3,393,000
                          -----------     -----------     -----------

                          $39,962,000     $37,913,000     $34,084,000
                          ===========     ===========     ===========
</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 -

     The allowance for doubtful accounts is maintained at a level considered
adequate to provide for possible future losses. Provisions for doubtful accounts
amounting to $2,167,000, $2,988,000 and $3,283,000 were made during the years
ended December 31, 1996, 1995 and 1994, respectively.

  INVENTORIES -

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

  PROPERTY AND EQUIPMENT -

     Property and equipment 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

     On October 1, 1996, GBHC revised the estimated useful life of its buildings
from 25 years to 40 years. Management believes the change in estimated life more
appropriately reflects the timing of the economic benefit to be received from
these assets. For the year ended December 31, 1996, the effect of this change
reduced depreciation and amortization expense and net loss by approximately
$761,000.

                                       30
<PAGE>

                      GB HOLDINGS, INC. AND SUBSIDIARIES
                  (WHOLLY OWNED BY PRATT CASINO CORPORATION)

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

     Interest costs related to property and equipment acquisitions were
capitalized during the acquisition period and are being amortized over the
useful lives of the related assets.

  DEFERRED FINANCING COSTS -

     The costs of issuing long-term debt, including all underwriting, legal and
accounting fees, have been capitalized and are being amortized over the term of
the related debt issue. The unamortized balance of deferred financing costs
amounted to $5,045,000 and $5,764,000 at December 31, 1996 and 1995,
respectively. Amortization of such costs was $729,000, $755,000 and $657,000 for
the years ended December 31, 1996, 1995 and 1994, respectively.

  LONG-LIVED ASSETS -

     Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets" requires, among other things, that an entity
review its long-lived assets and certain related intangibles for impairment
whenever changes in circumstances indicate that the carrying amount of an asset
may not be fully recoverable. As a result of its review, GBHC 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. 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 -

     Holdings' operations have been included in the consolidated federal income
tax return of Hollywood Casino Corporation ("HCC") for periods through December
31, 1996. Prior to December 31, 1996, HCC owned approximately 80% of the
outstanding stock of GBCC. Pursuant to agreements between Holdings, PCC, GBCC
and HCC, Holdings' provision for federal income taxes is based on the amount of
tax which would be provided if a separate federal income tax return were filed.

INTEREST EXPENSE -

     Interest expense includes the accretion of debt discount amounting to
$45,000 for the year ended December 31, 1994.

                                       31
<PAGE>

                      GB HOLDINGS, INC. AND SUBSIDIARIES
                  (WHOLLY OWNED BY PRATT CASINO CORPORATION)

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

RECLASSIFICATIONS -

     Certain reclassifications have been made to prior years' consolidated
financial statements to conform to the 1996 consolidated financial statement
presentation.  Such reclassifications include the reallocation of certain costs
among the various operating departments and general and administrative expenses
resulting from the completion of a comprehensive internal review of departmental
allocations.  Management believes that such reclassifications better reflect the
matching of costs with the associated revenues.

(3)  SHORT-TERM CREDIT FACILITIES

     During June 1994, GBHC entered into an agreement for a bank line of credit
in the amount of $5,000,000. The agreement, which was renewed in April 1995,
provided for interest on borrowings at the bank's prime lending rate plus 3/4%
per annum. Borrowings under the line of credit were guaranteed to the extent of
$2,000,000 by PCC. As of April 30, 1996, GBHC extended $2,000,000 of the line of
credit until April 30, 1997. Additionally, PCC pledged a certificate of deposit
in the face amount of $2,000,000 as collateral for the line of credit. As of
December 31, 1996, $2,000,000 was outstanding under the line of credit; no such
borrowings were outstanding under the line of credit at December 31, 1995. The
line of credit was repaid upon maturity of the pledged certificate of deposit
during January 1997 with proceeds from affiliate borrowings (see Note 6) and the
line of credit was cancelled.

(4)  LONG-TERM DEBT AND PLEDGE OF ASSETS

     Substantially all of Holdings' and GBHC's assets are pledged in connection
with their long-term indebtedness.
<TABLE>
<CAPTION>
                                          DECEMBER 31,
                                  ---------------------------
                                      1996           1995
                                  ---------------------------
<S>                               <C>            <C>

10 7/8% first mortgage
 notes, due 2004 (a)              $185,000,000   $185,000,000
14 5/8% affiliate loan,
 due 2005 (b)                       10,000,000     10,000,000
Other                                  442,000        453,000
                                  ------------   ------------

 Total indebtedness                195,442,000    195,453,000
Less - current maturities           (2,512,000)       (11,000)
                                  ------------   ------------

 Total long-term debt             $192,930,000   $195,442,000
                                  ============   ============
</TABLE>
--------------------------
(a)  On February 17, 1994, the Sands obtained $185,000,000 from GB Property
     Funding, which issued $185,000,000 of non-recourse first mortgage notes due
     January 15, 2004 (the "10 7/8% First

                                       32
<PAGE>

                      GB HOLDINGS, INC. AND SUBSIDIARIES
                  (WHOLLY OWNED BY PRATT CASINO CORPORATION)

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

     Mortgage Notes").  Interest on the notes accrues at the rate of 10 7/8% per
     annum, payable semiannually commencing July 15, 1994.  Interest only is
     payable during the first three years. Commencing on July 15, 1997,
     semiannual principal payments of $2,500,000 will become due on each
     interest payment date with the balance due at maturity.  The 10 7/8% First
     Mortgage Notes are redeemable at the option of the issuer, in whole or in
     part, on or after January 15, 1999 at stated redemption prices ranging up
     to 104.08% of par plus accrued interest.

     The indenture for the 10 7/8% First Mortgage Notes contains various
     provisions which, among other things, restrict the ability of certain
     subsidiaries of GBCC to pay dividends to GBCC, to merge, consolidate or
     sell substantially all of their assets or to incur additional indebtedness
     beyond certain limitations. In addition, the indenture requires the
     maintenance of certain cash balances and requires minimum expenditures, as
     defined in the indenture, for property and fixture renewals, replacements
     and betterments at the Sands.

(b)  On February 17, 1994, GBHC issued a $10,000,000 subordinated promissory
     note to an affiliate. The note bears interest at the rate of 14 5/8% per
     annum, payable semiannually commencing August 17, 1994, subject to
     maintaining average daily cash balances required by the indenture for the
     10 7/8% First Mortgage Notes, with the principal due in February 2005.

     Scheduled payments of long-term debt as of December 31, 1996 are set forth
     below:
<TABLE>
<CAPTION>
             <S>                       <C>
             1997                      $  2,512,000
             1998                         5,013,000
             1999                         5,014,000
             2000                         5,016,000
             2001                         5,017,000
             Thereafter                 172,870,000
                                       ------------

             Total                     $195,442,000
                                       ============
</TABLE>
     Interest paid, net of amounts capitalized,  amounted to $21,086,000,
$22,411,000 and  $12,992,000, respectively, during the years ended December 31,
1996, 1995 and 1994.

                                       33
<PAGE>

                      GB HOLDINGS, INC. AND SUBSIDIARIES
                  (WHOLLY OWNED BY PRATT CASINO CORPORATION)

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(5)  INCOME TAXES

     Components of the provision for income taxes consisted of the following:
<TABLE>
<CAPTION>
                                               YEAR ENDED DECEMBER 31,
                                      -----------------------------------------
                                          1996           1995          1994
                                      -------------  ------------  ------------
<S>                                   <C>            <C>           <C>
(Provision for) benefit in lieu
of federal income taxes:
  Current                             $  7,412,000   $(2,052,000)  $ 2,089,000
  Deferred                                 657,000     1,953,000    (2,827,000)
State income tax (provision)
 benefit:
  Current                                2,156,000      (592,000)      702,000
  Deferred                                 187,000       505,000      (884,000)
Valuation allowance                    (12,829,000)            -             -
                                      ------------   -----------   -----------

                                      $ (2,417,000)  $  (186,000)  $  (920,000)
                                      ============   ===========   ===========
</TABLE>

     Holdings made no federal tax payments during the years ended December 31,
1996, 1995 and 1994. The payment of taxes in accordance with the tax allocation
agreements is subject to the approval of the Casino Commission. Holdings also
paid no state income taxes during the years ended December 31, 1996 and 1995.
During the year ended December 31, 1994, Holdings paid state income taxes of
$1,000. Additionally, $278,000 of current federal taxes payable were offset
against other intercompany obligations in 1995 (see Note 9).

     A reconciliation between the calculated tax provision based on the
statutory rates in effect and the effective tax rates follows:
<TABLE>
<CAPTION>
                                                 YEAR ENDED DECEMBER 31,
                                         -------------------------------------
                                             1996          1995        1994
                                         -------------  ----------  ----------
<S>                                      <C>            <C>         <C>
Calculated income tax benefit at 34%     $  9,844,000   $ 835,000   $ 356,000
Amortization of excess purchase price        (601,000)   (803,000)   (803,000)
Disallowance of meals and
 entertainment                               (337,000)   (353,000)   (335,000)
State income taxes                          1,546,000     (57,000)   (121,000)
Utilization of tax credits                     99,000      98,000           -
Adjustment to prior year taxes               (134,000)     96,000           -
Valuation allowance change                (12,829,000)          -           -
Other                                          (5,000)     (2,000)    (17,000)
                                         ------------   ---------   ---------
Tax provision as shown on
consolidated statements of
 operations                              $ (2,417,000)  $(186,000)  $(920,000)
                                         ============   =========   =========
</TABLE>

                                       34
<PAGE>

                      GB HOLDINGS, INC. AND SUBSIDIARIES
                  (WHOLLY OWNED BY PRATT CASINO CORPORATION)

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

     Deferred income taxes result primarily from the use of the allowance method
rather than the direct write-off method for doubtful accounts, the use of
accelerated methods of depreciation for federal and state income tax purposes
and differences in the timing of deductions taken between tax and financial
reporting purposes for contributions of and adjustments to the carrying value of
certain investment obligations and for vacation and other accruals.

     The components of the deferred tax asset as of December 31, 1996 and 1995
were as follows:
<TABLE>
<CAPTION>
                                           DECEMBER 31,
                                    ---------------------------
                                        1996           1995
                                    -------------  ------------
<S>                                 <C>            <C>

Deferred tax assets:
 Net operating loss carryforwards   $ 10,746,000   $ 1,506,000
 Allowance for doubtful accounts       6,429,000     6,829,000
 Other liabilities and accruals        2,734,000     2,204,000
 Other                                 2,037,000     1,262,000
                                    ------------   -----------

  Total deferred tax assets           21,946,000    11,801,000
                                    ------------   -----------

Deferred tax liabilities:
 Depreciation and amortization        (8,520,000)   (8,679,000)
 Other                                  (597,000)     (597,000)
                                    ------------   -----------

  Total deferred tax liabilities      (9,117,000)   (9,276,000)
                                    ------------   -----------

Net deferred tax asset                12,829,000     2,525,000
Valuation allowance                  (12,829,000)            -
                                    ------------   -----------

                                    $          -   $ 2,525,000
                                    ============   ===========
</TABLE>

     At December 31, 1996, Holdings and its subsidiaries have net operating loss
carryforwards ("NOL's") totaling approximately $24 million, none of which expire
before the year 2009 for federal tax purposes and the year 2001 for state tax
purposes. Statement of Financial Accounting Standards No. 109 ("SFAS 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, a valuation allowance should be
recorded. Due to the continued availability of NOL's originating in 1994 for
federal and state tax purposes and the significant book and tax losses sustained
in 1996, management is unable to determine

                                       35
<PAGE>

                      GB HOLDINGS, INC. AND SUBSIDIARIES
                  (WHOLLY OWNED BY PRATT CASINO CORPORATION)

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

that realization of such asset was more likely than not and, thus, has provided
a valuation allowance for the entire deferred tax asset at December 31, 1996.

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

     Receivables from (net of valuation allowances in 1996) and payables to
affiliates in connection with the aforementioned tax allocation agreements were
as follows:
<TABLE>
<CAPTION>
                                                    DECEMBER 31,
                                              ------------------------
                                                  1996         1995
                                              -----------  -----------
          <S>                                 <C>          <C>

          Due from affiliate - current        $2,010,000   $7,365,000
          Due from affiliate - non-current     8,892,000    5,903,000
          Due to affiliate - current            (129,000)    (129,000)
</TABLE>

     All amounts set forth above at December 31, 1996 represent deferred federal
taxes. Included in current due from affiliate at December 31, 1995 are current
federal taxes receivable of $1,339,000 with the balance representing current
deferred federal taxes receivable.

(6)  TRANSACTIONS WITH RELATED PARTIES

     NJMI, under a management agreement with the Sands, is responsible for the
supervision, direction and control of the day-to-day operations of the Sands.
NJMI is entitled to receive annually (i) a basic consulting fee of 1.5% of
"adjusted gross revenues," as defined, and (ii) incentive compensation of
between 5% and 7.5% of gross operating profits in excess of certain stated
amounts should annual "gross operating profits," as defined, exceed $5,000,000.
Such fees amounted to $4,644,000, $6,811,000 and $6,493,000 during the years
ended December 31, 1996, 1995 and 1994, respectively, and are included in
general and administrative expenses in the accompanying consolidated financial
statements. Management fees payable to NJMI at December 31, 1996 and 1995
amounted to $231,000 and $28,000, respectively.

     GBHC licenses the trade name "Sands" from a subsidiary of GBCC which
licenses the name from an unaffiliated third party.  Amounts payable by the
Sands under this agreement are equal to the amounts paid to the unaffiliated
third party.  Such charges amounted to $283,000 for the year ended December 31,
1996 and $288,000 for each of the years ended December 31, 1995 and 1994.

                                       36
<PAGE>

                      GB HOLDINGS, INC. AND SUBSIDIARIES
                  (WHOLLY OWNED BY PRATT CASINO CORPORATION)

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

     GBHC has, from time to time, advanced monies to subsidiaries of GBCC and
GBCC and certain of its subsidiaries have advanced monies to GBHC primarily for
working capital purposes. An advance to a GBCC subsidiary in the amount of
$5,672,000 was outstanding as of December 31, 1996 and 1995, accrues interest at
the rate of 16.5% per annum and is included in noncurrent due from affiliates on
the accompanying consolidated balance sheets. During the third quarter of 1996,
GBCC borrowed a total of $6,500,000 from HCC which it then loaned to GBHC for
working capital purposes. Such borrowings accrue interest at the rate of 13 3/4%
per annum payable quarterly commencing October 1, 1996. During the first quarter
of 1997, GBHC borrowed an additional $1,500,000 from GBCC and $5,000,000 from
other subsidiaries of GBCC on similar terms. Repayment of such borrowings from
GBCC and the payment of the related interest are subject to approval by the
Casino Commission. Interest income (expense) incurred with respect to affiliate
advances and borrowings is as follows:

<TABLE>
<CAPTION>

                                       YEAR ENDED DECEMBER 31,
                               ----------------------------------------
                                   1996          1995          1994
                               ------------  ------------  ------------
<S>                            <C>           <C>           <C>

Net advances                   $   525,000   $   936,000   $   936,000
Affiliate loan (Note 4)         (1,463,000)   (1,463,000)   (1,276,000)
Other affiliate loans
 (repaid in 1994)                        -             -      (525,000)
</TABLE>

     Interest receivable on affiliate advances, included in non-current due from
affiliates in the accompanying consolidated balance sheets at December 31, 1996
and 1995 was $3,042,000 and $2,106,000, respectively. Interest accrued on the
affiliate loan and advances from GBCC aggregating $1,686,000 and $544,000,
respectively, is included in interest payable in the accompanying consolidated
balance sheets at December 31, 1996 and 1995.

     From time to time, GBHC performs certain services for HCC and its
subsidiaries and invoices those companies for the Sands' cost of providing those
services. Similarly, GBHC is charged for certain legal, accounting and other
expenses incurred by HCC and its subsidiaries that relate to the Sands'
business. Such affiliate transactions are summarized below:
<TABLE>
<CAPTION>

                                             YEAR ENDED DECEMBER 31,
                                        ----------------------------------
                                            1996        1995       1994
                                        ----------  ----------  ----------
<S>                                     <C>         <C>         <C>

Billings to affiliates                  $1,594,000  $1,023,000  $  998,000
Charges from affiliates                  1,178,000     659,000   1,817,000
</TABLE>

                                       37
<PAGE>

                      GB HOLDINGS, INC. AND SUBSIDIARIES
                  (WHOLLY OWNED BY PRATT CASINO CORPORATION)

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(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.
However, the Casino Commission still has the authority to reopen license
hearings at any time. During September 1996, the Casino Commission renewed
GBHC's license to operate the Sands through September 30, 2000, subject to
review of the Sands' financial stability during 1997.  Terms of the current
license require the Sands to comply with periodic financial reporting
requirements as well as obtain prior Casino Commission approval of certain cash
transactions with affiliates.  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 make certain approved
investments in New Jersey or to pay an investment alternative tax.  Casino
licensees may obtain investment credits, which amount to 1.25% of casino
revenues, by purchasing bonds at below-market interest rates from the Casino
Reinvestment Development Authority (the "CRDA") or by making qualified
investments approved by the CRDA.  This governmental agency administers the
statutorily mandated investments made by casino licensees and is required to
expend the monies received by it for eligible projects defined in the statute.
The investment alternative tax amounts to 2.5% of casino revenues.  Payments of
the investment obligations must be made quarterly.  The Sands has elected to
comply with the requirements by obtaining investment credits or by making
qualified investments.

     As of December 31, 1996 and 1995, the Sands had purchased bonds totaling
$5,237,000 and $4,630,000, respectively. In addition, the Sands had remaining
funds on deposit and held in escrow by the CRDA at December 31, 1996 and 1995 of
$5,546,000 and $4,683,000, respectively. The bonds purchased and the amounts on
deposit and held in escrow are collectively referred to as "obligatory
investments" in the accompanying consolidated financial statements.

     Obligatory investments at December 31, 1996 and 1995 are net of accumulated
valuation allowances of $4,401,000 and $3,792,000, respectively, based upon the
estimated realizable values of the investments. Provisions for valuation
allowances during the years ended December 31, 1996, 1995 and 1994 amounted to
$1,344,000, $1,457,000 and $617,000, respectively.

     The Sands has, from time to time, contributed certain amounts held in
escrow to the CRDA. In consideration thereof, the CRDA granted the Sands waivers
of certain of its investment obligations in future periods. GBHC made such
contributions of obligatory investments during the years ended December 31,

                                       38
<PAGE>

                      GB HOLDINGS, INC. AND SUBSIDIARIES
                  (WHOLLY OWNED BY PRATT CASINO CORPORATION)

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1996, 1995 and 1994 totaling $1,500,000, $250,000 and $2,500,000, respectively,
resulting in waivers granted by the CRDA during 1995 totaling $128,000.  No such
waivers were granted during 1996 and 1994; however, the contributions have been
designated for projects expected to benefit the community and the Sands
facility.  Accordingly, intangible assets aggregating $2,040,000 and $1,275,000,
respectively, have been included in other assets on the accompanying
consolidated balance sheets at December 31, 1996 and 1995, and will be amortized
over a period of ten years effective with the completion of the projects.
Amortization of waivers granted totaled $128,000 and $1,727,000, respectively,
during the years ended December 31, 1995 and 1994.  At December 31, 1995, all
waivers were fully amortized.

(8)  LITIGATION

     GBHC is a party in various legal proceedings with respect to the conduct of
casino and hotel operations. Although a possible range of loss can not be
estimated, in the opinion of management, based upon the advice of counsel,
settlement or resolution of these proceedings should not have a material adverse
impact upon the consolidated financial position or results of operations of
Holdings and GBHC. The accompanying consolidated financial statements do not
include any adjustments that might result from the outcome of the uncertainties
described above.

(9)  SUPPLEMENTAL CASH FLOW INFORMATION

     During 1995, GBHC and a subsidiary of GBCC settled certain intercompany
obligations on a noncash basis. An intercompany receivable totaling $278,000 in
1995 was eliminated against a portion of GBHC's current federal tax obligations
under the tax allocation agreement (see Note 5). The effects of this elimination
have been excluded from the accompanying consolidated statements of cash flows
as a noncash transaction.

(10) DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

     The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value:

     CASH AND CASH EQUIVALENTS - The carrying amounts approximate fair value
     -------------------------
because of the short maturity of these instruments.

     OBLIGATORY INVESTMENTS - The carrying amount of obligatory investments
     ----------------------
approximates fair value as a result of an allowance  reflecting the below market
interest rate associated with such investments.

     INTEREST RECEIVABLE AND INTEREST PAYABLE - The carrying amount of interest
     ----------------------------------------
payable approximates fair value because of the short maturity of the obligation.

                                       39
<PAGE>

                      GB HOLDINGS, INC. AND SUBSIDIARIES
                  (WHOLLY OWNED BY PRATT CASINO CORPORATION)

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

     NOTE RECEIVABLE AND LONG-TERM DEBT - The fair value of Holdings' long-term
     ----------------------------------
debt is estimated based on either the quoted market prices of the issue or on
the discounted cash flow of future payments utilizing current rates available to
Holdings for debt of similar remaining maturities. Debt obligations with a short
remaining maturity and obligations to and from affiliates are valued at the
carrying amount.

     The estimated carrying amounts and fair values of Holdings' financial
instruments at December 31, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
                                 DECEMBER 31, 1996          DECEMBER 31, 1995
                             ------------------------- ------------ ------------
                               CARRYING    CARRYING
                                AMOUNT    FAIR VALUE      AMOUNT     FAIR VALUE
                             ------------ ------------ ------------ ------------
<S>                          <C>          <C>          <C>          <C>
Financial Assets
  Cash and cash equivalents  $ 15,624,000 $ 15,624,000 $ 21,769,000 $ 21,769,000
  Interest receivable           3,042,000    3,042,000    2,106,000    2,106,000
  16 1/2% affiliate advance     5,672,000    5,672,000    5,672,000    5,672,000
  Obligatory investments        6,382,000    6,382,000    5,521,000    5,521,000


Financial Liabilities
  Interest payable             10,978,000   10,978,000    9,828,000    9,828,000
  10 7/8% First Mortgage
   Notes                      185,000,000  154,475,000  185,000,000  160,950,000
  14 5/8% affiliate loan       10,000,000   10,000,000   10,000,000   10,000,000
  Other notes payable             442,000      442,000      453,000      453,000
</TABLE>

                                       40
<PAGE>

                      GB HOLDINGS, INC. AND SUBSIDIARIES
                  (WHOLLY OWNED BY PRATT CASINO CORPORATION)

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(11) SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
                                                QUARTER
                           ---------------------------------------------------
                              FIRST         SECOND       THIRD       FOURTH
                           -----------  ------------  -----------  -----------
<S>                        <C>          <C>           <C>          <C>

YEAR ENDED DECEMBER 31,
 1996:
  Net revenues, as
    previously reported    $62,699,000  $ 70,472,000  $71,720,000  $59,583,000
  Reclassifications            135,000       152,000            -            -
                           -----------  ------------  -----------  -----------

  Net revenues             $62,834,000  $ 70,624,000  $71,720,000  $59,583,000
                           ===========  ============  ===========  ===========

  Net loss                 $(6,233,000) $(13,305,000) $(4,227,000) $(7,605,000)
                           ===========  ============  ===========  ===========


YEAR ENDED DECEMBER 31,
 1995:
  Net revenues, as
    previously reported    $67,836,000  $ 70,764,000  $78,078,000  $66,728,000
  Reclassifications            150,000       150,000       94,000      150,000
                           -----------  ------------  -----------  -----------

  Net revenues             $67,986,000  $ 70,914,000  $78,172,000  $66,878,000
                           ===========  ============  ===========  ===========

  Net (loss) income        $(1,763,000) $    927,000  $ 1,078,000  $(2,883,000)
                           ===========  ============  ===========  ===========
</TABLE>

                                       41
<PAGE>

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

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

                                   PART III

ITEM 14. 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 14.

  2.  FINANCIAL STATEMENT SCHEDULES

  --  Report of Independent Public Accountants
  --  Schedule I; Condensed Financial Information of Registrant, GB Holdings,
      Inc. (Parent Company)
      --  Balance Sheets
      --  Statements of Operations
      --  Statements of Cash Flows
      --  Note to Parent Company Financial Statements
  --  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

    +3.1 -- Certificate of Incorporation of GB Property Funding. (Exhibit 3.1)
    +3.2 -- Certificate of Incorporation, as amended, of GBHC. (Exhibit 3.2)
    +3.3 -- Certificate of Incorporation of Holdings. (Exhibit 3.3)
    +3.4 -- Bylaws of GB Property Funding. (Exhibit 3.4)
    +3.5 -- Bylaws of GBHC. (Exhibit 3.5)
    +3.6 -- Bylaws of Holdings. (Exhibit 3.6)
    *4.1 -- Indenture dated as of February 15, 1994 among GB Property Funding,
            as Issuer, Holdings and GBHC, as Guarantors, and Shawmut Bank
            Connecticut, N.A., as Trustee. (Exhibit 10.50)
    *4.2 -- Mortgage, Fixture Filing and Security Agreement dated February 17,
            1994, by GBHC in favor of Shawmut Bank Connecticut, National
            Association, as Mortgagee. (Exhibit 10.51)
    *4.3 -- Security Agreement dated February 17, 1994 made by GB Property
            Funding Corp., GBHC, GB Holdings, Inc., Advanced Casino Systems
            International,

                                       42
<PAGE>

            Inc., Computerized Management Systems International, Inc. and any
            Additional Collateral Grantor to Shawmut Bank Connecticut, National
            Association, as Trustee. (Exhibit 10.52)
    *4.4 -- Collateral Assignment of Leases dated as of February 17, 1994, by
            GBHC in favor of Shawmut Bank Connecticut, National Association, as
            Assignee. (Exhibit 10.53)
  ++10.1 -- Management Services Agreement dated August 19, 1987, between Pratt
            Hotel Management, Inc. ("PHMI"), the predecessor of NJMI, and GBHC.
            (Exhibit  10.1)
  ++10.2 -- Tax Allocation Agreement by and among Pratt Casino Properties, Inc.,
            PHMI, PCPI Funding Corp., GBHC and certain other parties effective
            as of January 1, 1987. (Exhibit 10.18)
  ++10.3 -- Amended License Agreement by and between Hughes Properties, Inc. and
            Pratt Hotel Corporation (now known as GBCC) dated May 19, 1987.
            (Exhibit 10.3)
  **10.4 -- Employment Agreement, as amended, dated November 17, 1995, between
            GBHC and Leonard M. DeAngelo. (Exhibit 10.15)
 ***10.5 -- Fifth Amendment to Employment Agreement dated January 1, 1997,
            between HCC and Jack E. Pratt. (Exhibit 10.1)
 ***10.6 -- Fifth Amendment to Employment Agreement dated January 1, 1997,
            between HCC and Edward T. Pratt, Jr. (Exhibit 10.2)
 ***10.7 -- Fifth Amendment to Employment Agreement dated January 1, 1997,
            between HCC and William D. Pratt. (Exhibit 10.3)
  **10.8 -- Employment Agreement dated January 1, 1996, between ACSC and
            Lawrence C. Cole.  (Exhibit 10.16)
   +10.9 -- Deed dated November 27, 1978, from Colony Associates, L.P. to GBHC.
            (Exhibit 10.13)
+++10.10 -- Employment Agreement dated December 1, 1995, as amended, between
            GBHC and Robert J. DeSalvio. (Exhibit 10.13)
    27.1 -- Financial Data Schedule - GB Property Funding Corp.
    27.2 -- Financial Data Schedule - GB Holdings, Inc. and Subsidiaries
   +99.1 -- Appraisal of the Sands as of August 1, 1993. (Exhibit 99.1)
-------------------------

       + Incorporated by reference from the exhibit shown in parenthesis to Form
         S-1 Registration Statement (Registration No. 33-69716) for GB Property
         Funding Corp. as filed with the SEC on February 2, 1994.

      ++ Incorporated by reference from the exhibit shown in parenthesis to Form
         S-1 Registration Statement (Registration No. 33-58732) for Hollywood
         Casino Corporation as filed with the SEC on February 26, 1993.

     +++ Incorporated by reference from the exhibit shown in parenthesis to
         GBCC's Annual Report on Form 10-K for the year ended December 31, 1996.

       * Incorporated by reference from the exhibit shown in parenthesis to Form
         S-1 Registration Statement (Registration No. 33-77502) for Hollywood
         Casino Corporation as filed with the SEC on April 8, 1994.

                                       43
<PAGE>

      ** Incorporated by reference from the exhibit shown in parenthesis to
         Hollywood Casino Corporation's Annual Report on Form 10-K for the
         fiscal year ended December 31, 1995.

     *** Incorporated by reference from the exhibit shown in parenthesis to
         Hollywood Casino Corporation's Annual Report on Form 10-K for the year
         ended December 31, 1996.

(b)  REPORTS ON FORM 8-K

     None of the Registrants filed any reports on Form 8-K during the quarter
ended December 31, 1996.

                                       44
<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 Dallas,
State of Texas on March 27, 1997.

                                                GB PROPERTY FUNDING CORP.

                                                By: /s/  Jack E. Pratt
                                                   -----------------------------
                                                         Jack E. Pratt
                                                    Chief Executive 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:

             SIGNATURE                      TITLE                   DATE
             ---------                      -----                   ----

/s/       Jack E. Pratt            Chairman of the Board,        March 27, 1997
--------------------------------    Chief Executive Officer,    ----------------
           Jack E. Pratt            President and Director


/s/     Edward T. Pratt, Jr.       Vice Chairman of the          March 27, 1997
--------------------------------    Board and Director          ----------------
        Edward T. Pratt, Jr.

/s/       William D. Pratt         Executive Vice President,     March 27, 1997
--------------------------------    General Counsel, Secretary  ----------------
          William D. Pratt          and Director

/s/     Edward T. Pratt III        Executive Vice President      March 27, 1997
--------------------------------    and Director                ----------------
        Edward T. Pratt III

/s/       John C. Hull             Principal Accounting Officer  March 27, 1997
--------------------------------                                ----------------
          John C. Hull

                                       45
<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 Dallas,
State of Texas on March 27, 1997.

                                                     GB HOLDINGS, INC.

                                                     By: /s/  Jack E. Pratt
                                                        ------------------------
                                                              Jack E. Pratt
                                                        Chief Executive 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:

            SIGNATURE                      TITLE                      DATE
            ---------                      -----                      ----

/s/       Jack E. Pratt           Chairman of the Board,         March 27, 1997
--------------------------------   Chief Executive Officer      ----------------
          Jack E. Pratt            and Director

/s/    Edward T. Pratt, Jr.       Vice Chairman of the           March 27, 1997
--------------------------------   Board and Director           ----------------
       Edward T. Pratt, Jr.

/s/      William D. Pratt         Executive Vice President,      March 27, 1997
--------------------------------   General Counsel, Secretary   ----------------
         William D. Pratt          and Director

/s/    Edward T. Pratt III        President, Chief Operating     March 27, 1997
--------------------------------   Officer and Director         ----------------
       Edward T. Pratt III

/s/       John C. Hull            Principal Accounting Officer   March 27, 1997
--------------------------------                                ---------------
          John C. Hull

                                       46
<PAGE>

                    INDEX TO FINANCIAL STATEMENT SCHEDULES


GB HOLDINGS, INC. AND SUBSIDIARIES

       --  Report of Independent Public Accountants

       --  Schedule I; Condensed Financial Information of Registrant
           --  Balance Sheets
           --  Statements of Operations
           --  Statements of Cash Flows
           --  Note to Parent Company Financial Statements

       --  Schedule II; Valuation and Qualifying Accounts
<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To GB Holdings, Inc.:

     We have audited in accordance with generally accepted auditing standards,
the consolidated financial statements of GB Holdings, Inc. and subsidiaries
included in this Form 10-K and have issued our report thereon dated March 21,
1997.  Our audit was made for the purpose of forming an opinion on the basic
financial statements taken as a whole.  The schedules listed in the index to
financial statement schedules are the responsibility of the Company's management
and are presented for purposes of complying with the Securities and Exchange
Commission's rules and are not part of the basic financial statements.  These
schedules have been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, fairly state 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 21, 1997
<PAGE>

                                                                      SCHEDULE I
                                                                      PAGE 1

                      GB HOLDINGS, INC. AND SUBSIDIARIES
                  (WHOLLY OWNED BY PRATT CASINO CORPORATION)

                 CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                               GB HOLDINGS, INC.
                               (PARENT COMPANY)

                                BALANCE SHEETS


                                    ASSETS
<TABLE>
<CAPTION>


                                                   DECEMBER 31,
                                              -------------------------
                                                  1996         1995
                                              ------------  -----------
<S>                                           <C>          <C>

Investment in and advances to consolidated
 subsidiaries                                 $      1,000  $10,426,000
                                              ------------  -----------

  Total assets                                $      1,000  $10,426,000
                                              ============  ===========

</TABLE>
                LIABILITIES AND SHAREHOLDER'S (DEFICIT) EQUITY
<TABLE>
<CAPTION>
<S>                                           <C>           <C>
Investment in and advances to consolidated
  subsidiary                                  $ 20,945,000  $         -
                                              ------------  -----------

Shareholder's (deficit) equity:
 Common stock, $1.00 par value per share,
  1,000 shares authorized and outstanding            1,000        1,000
 Additional paid-in capital                     18,438,000   18,438,000
 Accumulated deficit                           (39,383,000)  (8,013,000)
                                              ------------  -----------

  Total shareholder's (deficit) equity         (20,944,000)  10,426,000
                                              ------------  -----------

                                              $      1,000  $10,426,000
                                              ============  ===========
</TABLE>

          The accompanying notes to consolidated financial statements
                     are an integral part of this schedule.
<PAGE>

                                                                      SCHEDULE I
                                                                      PAGE 2

                      GB HOLDINGS, INC. AND SUBSIDIARIES
                  (WHOLLY OWNED BY PRATT CASINO CORPORATION)

                 CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                               GB HOLDINGS, INC.
                               (PARENT COMPANY)

                           STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>


                                             YEAR ENDED DECEMBER 31,
                                    -----------------------------------------
                                        1996           1995          1994
                                    -------------  ------------  ------------
<S>                                 <C>            <C>           <C>

Equity in losses of consolidated
 subsidiaries                       $(31,370,000)  $(2,641,000)  $(1,967,000)
                                    ------------   -----------   -----------

Net loss                            $(31,370,000)  $(2,641,000)  $(1,967,000)
                                    ============   ===========   ===========

</TABLE>


          The accompanying notes to consolidated financial statements
                     are an integral part of this schedule.
<PAGE>

                                                                      SCHEDULE I
                                                                      PAGE 3

                      GB HOLDINGS, INC. AND SUBSIDIARIES
                  (WHOLLY OWNED BY PRATT CASINO CORPORATION)

                 CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                               GB HOLDINGS, INC.
                               (PARENT COMPANY)

                           STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                    YEAR ENDED DECEMBER 31,
                                                   --------------------------------
                                                     1996      1995       1994
                                                   -------   -------   ------------

<S>                                                <C>       <C>       <C>
Net cash provided by operating activities          $    -    $    -    $        -
                                                   -------   -------   ------------

Investing activities:
 Investment in consolidated subsidiaries                -         -     (15,000,000)
                                                   -------   -------   ------------

  Net cash used in investing activities                 -         -     (15,000,000)
                                                   -------   -------   ------------

Financing activities:
 Capital contribution                                   -         -      15,000,000
                                                   -------   -------   ------------

  Net cash provided by financing activities             -         -      15,000,000
                                                   -------   -------   ------------

  Net change in cash                                    -         -             -
  Cash at beginning of year                             -         -             -
                                                   -------   -------   ------------

  Cash at end of year                              $    -    $    -    $        -
                                                   =======   =======   ============

</TABLE>



          The accompanying notes to consolidated financial statements
                    are an integral part of this schedule.
<PAGE>

                                                                      SCHEDULE I
                                                                      PAGE 4

                      GB HOLDINGS, INC. AND SUBSIDIARIES
                  (WHOLLY OWNED BY PRATT CASINO CORPORATION)

                 CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                               GB HOLDINGS, INC.
                               (PARENT COMPANY)

                  NOTE TO PARENT COMPANY FINANCIAL STATEMENTS


(1)  GUARANTEE OF REGISTRANT

          GB Holdings, Inc. has unconditionally guaranteed the debt obligations
of GB Property Funding Corp., a wholly owned subsidiary, as to the timely
payment of principal, premium, if any, and interest.



               The accompanying notes to consolidated financial
               statements are an integral part of this schedule.
<PAGE>

                                                                     SCHEDULE II

                      GB HOLDINGS, INC. AND SUBSIDIARIES
                  (WHOLLY OWNED BY PRATT CASINO CORPORATION)

                       VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>


                                                         AMOUNTS
                                            BALANCE AT  CHARGED TO                          BALANCE
                                            BEGINNING   COSTS AND                           AT END
               DESCRIPTION                  OF PERIOD    EXPENSES      DEDUCTIONS          OF PERIOD
              -------------                -----------  ----------  ----------------      -----------
<S>                                        <C>          <C>         <C>                   <C>

          YEAR ENDED DECEMBER 31, 1996:
            Allowance for doubtful
                    accounts receivable    $16,494,000  $2,167,000  $    (3,137,000) (1)  $15,524,000
            Allowance for obligatory
                    investments              3,792,000   1,344,000         (735,000) (2)    4,401,000
                                           -----------  ----------  ---------------       -----------
                                           $20,286,000  $3,511,000  $    (3,872,000)      $19,925,000
                                           ===========  ==========  ===============       ===========
          YEAR ENDED DECEMBER 31, 1995:
            Allowance for doubtful
                    accounts receivable    $15,288,000  $2,988,000  $    (1,782,000) (1)  $16,494,000
            Allowance for obligatory
                    investments              2,458,000   1,457,000         (123,000) (2)    3,792,000
                                           -----------  ----------  ---------------       -----------
                                           $17,746,000  $4,445,000  $    (1,905,000)      $20,286,000
                                           ===========  ==========  ===============       ===========

          YEAR ENDED DECEMBER 31, 1994:
            Allowance for doubtful
                    accounts receivable    $14,805,000  $3,283,000  $    (2,800,000) (1)  $15,288,000
            Allowance for obligatory
                    investments              3,065,000     617,000       (1,224,000) (2)    2,458,000
                                           -----------  ----------  ---------------       -----------
                                           $17,870,000  $3,900,000  $    (4,024,000)      $17,746,000
                                           ===========  ==========  ===============       ===========

</TABLE>

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

(1)  Represents net write-offs of uncollectible accounts.
(2)  Represents write-offs of obligatory investments in connection with the
     contribution of certain obligatory investments to the Casino Reinvestment
     Development Authority.



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